Tuesday, December 20, 2011

Holiday Carol - A Few of My Favorite Things

I thought you would all enjoy a little holiday cheer this time of year.

(sung to the holiday tune from The Sound of Music)
Collecting on eBay, and tweeting on Twitter
Surfing on iTunes, new music aglitter
Downloading fun apps for iPhone Siri
These are a few of my favorite things

Friending on Facebook, and saving with Groupon
Shopping adventures, at Abe Books and Amazon
Streaming my Netflix on PlayStation 3
These are a few of my favorite things

Watching on YouTube, and E.S.P.N.
Gaming with Zynga, and Words With My Friends
Angry Birds that will fly into most anything
These are a few of my favorite things

When PC's crash
When our stocks fall
When our boards are mad
I simply remember my favorite things
And then I don't feel so bad
[Repeat All Verses]


For future posts, please follow me at: www.twitter.com/georgedeeb

Monday, December 12, 2011

Lessons from the Lost Decade: Alternative Investing

The last ten years have not been very good to the average investor or the economy: (i) the stock market has basically traded up and down within a tight range, having 401k plans flat; (ii) the real estate market has been plagued with declining home values and foreclosures; (iii) the banks are paying close to zero interest rates on cash accounts; (iv) college 529 plans have not lived up to expectations, requiring additional deposits to catch them up; (v) unemployment is probably double the reported 9% levels when you include "under employed" persons; (vi) healthcare and education costs continue to skyrocket, while salaries have been basically flat; and (vii) consumers are buried under tons of credit card debt, student loans and upside-down mortgages.  Not a pretty ten years, making it near impossible for the average person to accumulate wealth.  This may be the first generation that will actually be financially worse off than their parents' generation. 

That said, plenty of money was made, by people that knew how to take advantage of these conditions:  hedge fund managers that understood how to deal with risk, day traders playing on the high volatility and venture capitalists who bet on smart entrepreneurs with innovative new products and services.

I am challenging everybody to start to rethink their entire investment strategies.  We can't assume that conditions will be any better in the next decade than their were in the last one.  Especially since conditions could actually get worse with a global economic meltdown or fears of a double dip recession in the U.S.  Frankly, people can no longer retire comfortably at age 65, forcing them to work more years, and tying up jobs that otherwise would have opened for the next generation of workers.  And, we can't simply keep doing the "same old, same old" strategies our parents used to accumulate wealth, as those strategies are outdated, haven't worked in the last decade and may no longer work in future generations.  We must plan ahead, in new and unique ways.

It has gotten to the point that I am modeling what would happen if I liquidate my 401k and college 529 plans (both of which are tied to the broader U.S. stock market which has basically been flat for ten years), and reinvesting them more like a venture capitalist would, into early stage companies that are poised for future growth.  If the average venture capitalist experiences a 35-50% annual return on their investment, even with only 1 of 10 investments hitting it big and several startups going out of business, you can drive a materially higher long term portfolio value in the next ten years, even after paying any 10% early withdrawl penalties or required taxes.

But, venture investing is not for everybody.  Maybe you don't have that level of appetite for risk?  Maybe you are not tied into deal flow for hot startups?  Maybe you are not an accredited investor?  But, if you are open to thinking out of the box, there are plenty of websites out there that can help you get started.  This includes: (i) AngelList, the marketplace for startups and angel investors; (ii) Kickstarter, to find startups looking to crowd fund their business; and (iii) SecondMarket or SharesPost to find shares in later stage businesses, prior to their IPO (although valuations can be pretty rich).  And, don't forget to consider joining the angel investor networks in your town, like Hyde Park Angels, Cornerstone Angels, Heartland Angels and Wildcat Angels in Chicago, which do a good job of vetting quality startups for angel investors.

For future posts, please follow me at:  www.twitter.com/georgedeeb

Friday, December 9, 2011

[VIDEO] George Deeb Teaches Financial Modeling

Earlier this week, I had the pleasure of mentoring the inaugural class of entrepreneurs at Founder Institute Chicago.  Below is a video of the lesson I taught on "Revenues, Costs and Profits".  I thought it would be useful to the Red Rocket Blog readers, as well.

This lesson helps entrepreneurs get started with business planning, revenue modeling and financial projections, in a conservative and credible way that should help startups attract investors.  The lesson provides high level guidance on: (i) how to make money; (ii) how to build a financial model; (iii) how to scale expenses; (iv) how to attract investors; and (v) how to set key metrics for ongoing success.

George Deeb Teaches "Revenues, Costs & Profits" to Founder Institute Class from George Deeb on Vimeo.

I hope you enjoyed this video (despite the bad lighting).  And, if you desire to see more "how to" videos in the future, let me know in the comments field, and I can build some into my editorial calendar.

For future posts, please follow me on Twitter at: www.twitter.com/georgedeeb.

Monday, December 5, 2011

Lessons in Leadership: Mount Everest

I am a Mount Everest fanatic, as an avid mountain hiker and reader.  I have always been intrigued by the various styles and personalities of people that would put their lives at risk, in trying to summit Mount Everest.  It certainly takes a special breed of person to willingly enter the Death Zone (much like founders of startups).  In this post, we are going to compare and contrast two different expeditions and management styles: (i) the failed 1924 attempt by George Mallory and Andrew Irvine, organized by  Sir Francis Younghusband; and (ii) the successful first summit attempt in 1953 by Edmund Hillary and Tenzing Norgay, organized by Sir John Hunt.

After the South Pole was successfully reached by Norwegian explorer, Roald Amundsen, in 1912,  there was only one major objective not yet acheived by explorers: successfully getting to the summit of Mount Everest, the highest point on the planet (at 29,035 feet above sea level) located on the border of Nepal and Tibet in the Himalayas.  And, in the great age of exploration, as empassioned by many great British explorers (e.g., David Livingstone, Robert Falcon Scott, Ernest Shackleton), Britain was determined to get a team to the summit first.

So, in 1921 and 1922, Britain sent two reconnaisance expeditions into the Everest region, both of which included George Mallory.  The expeditions were tasked with mapping a route into uncharted territory (in 1921) and for finding a navigable path to the summit (in 1922).  With such objectives acheived, the British launched their first formal summit attempt in 1924.

The 1924 Expedition is best summarized as an incredible feat for its day (given the inadequate equipment involved), but ended in tragedy with the deaths of four members of the expedition, including George Mallory and Andrew Irvine, who were last seen around 800 feet from the summit  (so close to their objective) before a storm rolled in and they were lost forever.  The 1924 Expedition is well detailed in "The Epic of Mount Everest" by expedition leader, Sir Francis Younghusband.  It very much reads like a romance novel from the great age of exploration, with George Mallory famously saying he wanted to climb Mount Everest "because it is there."

In comparison, we have the 1953 Expedition that got Edmund Hillary and Tenzing Norgay successfully up to the summit and back, with no deaths on the expedition.  It was the culmination of thirteen preceding failed attempts by the British, Americans and Swiss over a thirty year period.  The 1953 Expedition is well detailed in "The Conquest of Mount Everest" by expedition leader, Sir John Hunt.  It very much reads like a military war plan, with detailed logistics on moving all the required people, food and state-of-the-art equipment into the region, and up and down the mountain.  In comparison to the 1924 Expedition, it is pretty self-explanatory which approach worked best.  The British finally acheived their goal, but only after decades of learnings and failures that preceded it.

So, when building your startups, if this lesson has taught us anything, passion by itself will take you a long way.  But, it is not enough to always get you to the finish line.  You need to have good tutelage and wisdom from mentors that have "been there, and done that", who can help you build a better "blue print" than you could build by yourself.  The 1953 Expedition was successful, in large part, due to the learnings and failures of the 1924 and other expeditions that preceded it.  Who are your mentors that can help set your successful path to the summit??

And, secondarily, startup success can only be achieved with a crystal clear vision about what your mission is.  The 1924 Expedition meandered between exploration and scientific research objectives.  And, the 1953 Expedition was solely focused on getting a climbing team successfully up to the summit (and back!!).  So, make sure you and your team are firmly focused on the mission at hand with clearly communicated and agreed upon objectives.

For future posts, please follow me at:  www.twitter.com/georgedeeb