Your Pitch Sucks

I have yet to meet a founder who knows how to pitch their company so that it immediately resonates with investors.

[ I’ve moved this post to Crowdfunder, and Google dings you on SEO if you have the content in both places. ]

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From Wall Street to Main Street

My TED Talk on the Magic of Crowdfunding

Why Crowdfunding Changes Everything

I have a new column on Unreasonable.is, which is where this five part series is published:

  • Part 1: The JOBS Act will unlock $30 Trillion in long-term investment capital that can legally be invested in startups and small businesses through crowdfunding portals.
  • Part 2: Currently, investors have a stranglehold on the fundraising process. Once the JOBS Act is implemented, there will be a leveling of the playing field in which entrepreneurs and citizen-investors control the process.
  • Part 3: Investment crowdfunding enables individuals to invest in companies they are passionate about, and in so doing, outperform professional investors.
  • Part 4: “Do you want to sell sugar water for the rest of your life or do you want to come with me and change the world?”
  • Part 5: There is a second revolution coming: investing directly in people. When it collides with crowdfunding, this will create a perfect storm….

Revenue Sharing

In my last blog entry I talked about the perils and evils of debt for both the lender and debtor.  Here I’d like to discuss an alternative which I believe could replace the entire concept of debt.

Revenue sharing, sometimes referred to revenue-based finance and income-contingent loans, is just recently starting to take off. The White House is making a big push for income-based repayment of student loans.*  And at least two private (and highly capitalized) startups are launching soon to provide revenue-based financing options for individuals who agree to pay a portion of their future income in exchange for cash upfront.

With U.S. consumer debt topping $2.5 Trillion and student loans now totaling over $1 Trillion, it’s no wonder that there’s a lot of interest in revenue-based finance. Let’s look at several common debt scenarios and see how they could be different — and better for all parties — if they were based on revenue-sharing instead.

There are many ways to structure a revenue-share …

Lo@n, D*bt and Other Four-Letter Words

Prior to the mid-19th century, those who could not pay their debts were routinely tossed into prison.  Actually, you can still go to debtor’s prison in Germany, Greece, China and Dubai.  In the United States, two of the signatories to the Declaration of Independence (James Wilson and Robert Morris) were incarcerated for their unpaid debts.  In theory, the U.S. abolished such practices in the 1830s.  But six states still allow you to be arrested and detained indefinitely until you “work it out” with your creditors.

And while we humans seem to have a visceral negative reaction to welshers, our disdain for bad faith lenders goes deeper.  Condemnation of usury dates back to the Vedic texts in ancient India, and is condemned as well in all the other major religious texts in the world.  Islamic law (Sharia) prohibits the charging of interest at all, and considers the practice to be one of the seven heinous sins, right up there with murder and “unlawfully taking an orphan’s …

The Economics of Abundance

Here are some things I used to believe:

  1. The power of the free market comes from competition
  2. If you are nice to someone, you will be rewarded commensurately
  3. A penny saved is a penny earned
  4. The more scarce something is the more valuable it is

I no longer believe these statements to be true.  To understand why, I’d like to share a little of my journey as an entrepreneur and investor.

In the mid to late ’90s I was working on a startup and getting my feet wet as an angel investor in Silicon Valley.  I, like everyone I knew, was an adherent of the Chicago School of Economics and the Efficient Market Hypothesis.  One of the mantras of this religion is that

The invisible hand of the marketplace will feed us all, but we have to compete vigorously with one another for it to work its magic.

Signing a Non-Disclosure Agreement on a first date — that’s not just good business, but a moral …

25 Important Facts About the Startup Economy

  1. Startups add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually. (ref)
  2. Without startups, job growth in the US would be negative 1.2 percent. (ref)
  3. Angel investments created 370,000 U.S. jobs in 2010, nearly half of the private sector jobs created that year. (ref)
  4. 265,400 individuals provided $20.1B in angel investment capital to a total of 61,900 entrepreneurial ventures in 2010. (ref)
  5. In contrast, the private equity industry invested $180B in 2010. (ref)
  6. Historically, angels invest $50B per year into 50,000 companies, representing 70% of capital for new ventures; 11 times more than the amount provided by Venture Capitalists. (ref)
  7. The long-term historical return of the U.S. Angel market is 27% annually, three times higher than the public stock market. (ref)
  8. Warren Buffett’s historical return is 24% annually. (ref)
  9. Venture Capital historical returns are around 20%, but over the last

Universal Constants

To get the theory of relativity Einstein held the speed of light constant and let time and space vary.

These days cosmologists are holding the infinity of the universe as constant and letting its density and expansion/contraction rate vary.

In some sense quantum mechanics is about holding the observer constant and letting the physical interpretation vary (particle or wave; position or momentum; exist or not).

What would we get if we held consciousness constant and let the universe vary?…

How is Social Enterprise?

A friend recently commented to me that he was really excited about a new business he was about to undertake, but then added almost apologetically, “I know it’s not much of a social enterprise.” This seemed odd to me because in my experience Jason is as socially/environmentally/interpersonally conscious a person as I know. To me it was obvious: as long as Jason didn’t stray from his own values and ways of being, whatever ventures he undertook would by definition be social enterprise. As always, he would find a way to make sure nobody he interacted with was worse off for it. And if successful, at least a few groups of people (including himself and his investors) would be better off.

I then remembered another colleague who was universally praised by the media and others as being a one-man savior in Haiti after the earthquake. He had quite admirably hit the ground running, on his own initiative, with incredible resources, to set up a refugee camp. …

Education 2.0

In what turned out to be the most popular TED talk of all time, Ken Robinson asked us to wake up and smell the coffee: our system of education is stuck in the Industrial Revolution where it was invented.  Moreover, it’s killing creativity, crushing spirits, and preparing students, not for success and wellbeing, but rather unemployment and dysfunction.  Waiting for Superman confirmed this this, adding that the public schools in the U.S. are bankrupt, both financially and morally.

Yet, all around the world, there are signs that the Berlin Wall of education reform is crumbling. Here are a few shining lights:

TEDucation

No single institution or movement has done more to spark educational change than TED.com.  Hundreds of millions of people are watching their videos and learning from inspiring individuals sharing ideas and experiences that cannot be learned in a traditional school environment.  And there’s an acceleration effect because many of the talks are about education and the transformation that’s going on …

Practical Artificial Intelligence

There’s an old saying in computer science circles that when we have no idea how to make a piece of software do something smart we call it “Artificial Intelligence” but once it’s solved we look back with 20-20 hindsight and say it was “Software Engineering”.  A computer becoming the world chess champion is the quintessential example of this.  Once considered a holy grail of AI, by the time Deep Blue actually dethroned Kasparov, the computing world yawned, “Oh it was just brute force computing power, nothing truly intelligent is really happening”.

Beating the world champions at Jeopardy was slightly more interesting because we acknowledge the vast range of knowledge and language understanding involved.  But ultimately, since Jeopardy is just a game, we are left with the feeling, “so what?”  How does this affect my life one way or another?  Enter, Siri, the voice recognition system integrated into the new iPhone 4S.

When I heard about the feature and saw what it claimed to do, …

Investing in Superstars, part 4

[NOTE: I updated this post with more detailed examples]

Background: part 3part 2 and part 1.

In the interview with Jon Gunn in Part 3, I mention that I’ve been thinking of what “version 2″ of the Personal Investment Contract might look like.  Here’s the model:

  1. Investment Amount - Same as before, intended to give the individual some time to pursue their passion (or figure out what that is) without having to worry about how to support themselves.
  2. Maximum Return - The cumulative total amount that the investor can receive as return on their investment.  If and when this amount is reached, the contract is over.
  3. Annual Exclusion - The amount of annual income the entrepreneur can make without having to share any of it with the investor.
  4. Minimum Revenue Share - The minimum percentage of gross income the entrepreneur returns to the investor after deducting the Annual Exclusion.

Following are some examples of various different career paths and uses for a …

Investing in Superstars, part 3

For the background to this post, start with part 2 and part 1.  The follow up is part 4.

I get a lot of questions from folks who are interested in learning more about Personal Investment Contracts and so I felt it was time to synthesize some of the most common ones and give you some answers.

Who is the first person you invested in?

A film maker named Jon Gunn.

What is your relationship with Jon outside of this investment?

He is my brother-in-law, and a former business partner of mine in an instructional DVD company we co-founded with Phil Gordon.  I’ve also invested in a couple of his independent films.

Why did you invest in Jon directly?

I have been a big believer in his talent for a long time.  None of the ventures I just mentioned though have made me any return on my investment.  Phil had been suggesting for a while that if we simply invested directly in …

Innovation as Moral Leverage

“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.”  (Margaret Mead)

“Be the change you want to see in this world” (Gandhi)

There is an idea virus within American culture that has the power to destroy.  The idea is that technology and innovation are fundamentally good.  Whether you consider yourself a technologist, an entrepreneur or a scientist (all labels I use to identify myself at times) I’d like to propose an alternative to to this idea and an inoculation against the virus.

Observation #1: Innovation amplifies whatever values and beliefs are held by the innovator.

For instance, if I value my time, I might invent the first clock, or start a business to create time-management products, or devote my life to unlocking deep mysteries of the physics of time.  And if I believe clean drinking water is a fundamental human right, I might invent a new method of water purification, or …

Complex Adaptive Monetary Policy

Complex Adaptive Monetary Policy (CAMP) is, in essence, a reconciliation of Keynes’ top-down view of macroeconomics with Hayek’s bottom up view.  The particular details of the proposed policy below are not as important as the recognition of the fundamental forces at play and empirical evidence that we are at a very dangerous chaos point in history.  Both Keynes and Hayek have deep truths to tell, and we discount one or the other at our collective peril.  For those who want a primer on the great debate, this rap battle sums it up better than any text book could.  Now on to the idea…

The fragility of the global financial system (as measured by the US dollar) is a function of the gap between rich and poor.  In the past, only a small ruling elite could decide to use capital to purchase all of the following: food/clothing/shelter; savings; insurance; personal free time; investment; starting a business; buying a private jet; leverage/volatility; political influence; fame.  Today an …

What is Fear?

Based on an informal assessment and polling I’ve done recently, here’s what we fear:

  • Identity
    • LOSING ONESELF
      • Death / Pain / Insignificance
    • BEING WRONG
      • Self-Exploration / Failure / Change
    • INAUTHENTICITY
      • Being Found Out / Self-Expression / Lying
  • Control
    • EMOTIONAL
      • Power / Anticipation / Fear-Itself
    • OTHERS
      • Intimacy / Just Doing It / (Lack of) Freedom
    • THE UNCONTROLLABLE
      • Disaster / Crisis / Unknown-Unknowns
  • Authority
    • RIGHTS
      • Being Unworthy / Unmet Expectation / Meaninglessness
    • MORALITY
      • Unfairness / Inequality / Injustice
    • RULES
      • Doing it Wrong / Shame / Guilt

Each of us has a unique profile of what fear is depending on how we related to various value dimensions (intrinsic, extrinsic and systemic).  For me the scariest are: (1) Unknown-Unknowns (2)  Power (3) Being Wrong (4) Self-Expression (5) Injustice

How about you?…

Personal Cosmology

In some measure or other, progress is always a transcendence of what is obvious. (Alfred North Whitehead, Process & Reality)

Science tells us that there are Four Fundamental Forces: Electromagnetic, Strong Nuclear, Weak Nuclear, and Gravity.  The Reality that Science helps us perceive consists of Time, Space, Matter and Energy.  If we accept TSME as the basis for Reality, then we can do Science.  Without these things as Fundamentals, the activity of Science makes no sense.  You are doing something, metaphysics or philosophy perhaps, but not Science.

What if we played a game though and I asked you to come up with an alternate cosmology, a way to make sense of the world around you that is completely personal, which you don’t have to justify to anyone, but it makes total and complete sense to you. You can speak in this private language to yourself, it feels right, and when you are perceiving the world through this lens it’s all very clear.  Before you identified it, …

How to Be a Good Representative

Are you someone who has been given (and accepted) responsibility for someone else’s well-being?  Maybe you are an elected official?  A board member? A parent?  A friend?  If so, you may resonate with the following realization I just had about my own successes and failures in the role of Representative.

I used to believe that what a Representative does is to act and react as if they were the one being represented.  I felt like my job was to get inside their head, and channel them, sort of like a medium or a conduit.  The problem with this though is it always ends badly.  Why?  Because it’s an impossible job.

Nobody can speak for you, as if they were you.  Sure, if you know one another really, really well, then at times it can seem as though they read your mind, know what’s in your heart.  But the times I have been most frustrated in any relationship is when the other person believes and acts …

Big Mind, Big Heart

Do you have 15 minutes to be enlightened?

Ready for more?

Getting Things Undone

Have you ever felt overwhelmed by your inbox, meeting schedule, and list of phone calls to make or return?  Have you ever wished you could include a wide audience in your one-on-one communications so that we could all benefit from wisdom of the crowd?  If so, you might like my new policy for all business-related communications.

Email

  • Non-private: instead use Accelerating Possibilities FB Group.  (and I don’t do FB private messages).
  • Private: I read every email but only respond if I feel it’s truly a private matter and I’m interested in responding.

Phone & Video Chat

  • Non-private: Create a Vokle Event and post the subject of the discussion to the FB group above.  If I can make it, I will, but hopefully others will join you regardless.
  • Private: Email me your phone number and I will put you on my list of people to call when I have time.  I can’t promise if/when I will call you though.

In Person Meetings

  • Non-private: Try me at 

Mutual Disclosure Agreement

When I was in Silicon Valley in the 90’s the joke was that you couldn’t go on a first date without having your love-interest sign a Non-Disclosure Agreement; after all, they might be working on a competitive venture.

These days when I’m hit with the “I’d love to talk to you about my startup, will you first sign this NDA?” my first reaction is to laugh in their face.  I know instantly that they don’t get it and are doomed to failure.  While the NDA may once have been a necessary tool, in today’s environment (and increasingly so) it’s a hinderance to ultimate business success.  If you don’t get this, I’m not going to waste your time trying to convince you otherwise.  You’ll either learn the hard way or prove me wrong.  Either outcome is fine by me.

But if you do get it, and you also encounter this old-school naiveté, I invite you to do what I do, which is to thank the person …

The Secret to a Great TED Talk

Recently I learned from two separate people how the Obama campaign won the 2008 presidential election and it’s fascinating.  Basically everyone who was a part of it learned the “campaign narrative” structure and delivered their personal message to spread the gospel:

  • The Story of Me: why I’ve personally been inspired by this campaign
  • The Story of We: why we (me speaking and you listening) are united and inspired by this campaign
  • The Story of Now: why it’s urgent that you take action now; the train is leaving and you can jump aboard or be left behind

If you think about it, this is a very powerful narrative for creating grass-roots action of any sort.  Having just spent the last week watching many dozens of TED talks (and having watched hundreds of them over the past few years), I’ve been thinking about the fact that the great ones all follow a shared structure, which I will share with you now:

  • The Story of

Being Present

I’m practicing being present all the time.  It’s really difficult for people like me who are analytically-inclined.  I’m reminded of my improv teacher in college who told us at the beginning of the class: “This class is really hard for Stanford students because it requires turning off your judgment and simply going with the flow, and by virtue of you being here, I know that does not come naturally to you.”  At the same time, being present is the easiest thing in the world to do.  You were born with this natural ability, and everything else about you has been added on since.…

Scientific Singularity?

A couple of weeks ago Kevin and I went around on the topic of whether or not science is “broken”.  We came to the point of agreeing that we have different basic assumptions of what constitutes “utility”.  And because of this, while we could agree that each of our arguments made sense logically, we ultimately end up with opposite conclusions.  After all, for something to be broken it means that it once served a purpose that it no longer is able to serve due to mechanical/structural failure.  And to have a purpose means that it has value (i.e. utility) to someone.

So whether science is broken or still works depends your definition of utility.  Kevin and I agreed on a measurement for scientific utility, based on (a) how well it explains observed phenomena, (b) how well it predicts new phenomena, and (c) how directly it leads to creation of technologies that improve human lives.  We can call it “explanatory power” or EP for short.  We might argue …

Investing in Superstars, part 2

For the background to this post, start with part 1.  The follow up is here: part 3part 4.

YouTube Preview Image

In a subsequent post, I’ll talk about some lessons we’ve learned.  In the mean time, what questions would you have, either as a prospective investor or investee in the above scenario?…