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No Market Is Best Market

Marc Andreessen wrote a very good article that introduces a new point of view as to what is the most important factor for successful startups. He says its good market. I won’t explain why. Just go and check out his arguments. I think they are very logical and seem right.

On the other side I am reading a book named “Stumbling on happiness” by Daniel Gilbert and there is one specific topic I want to bring to your attention. He basically says that humans almost never realize what they missed when trying to imagine something. In other words, our brains can’t deal very well with lack of information. The following experiment was done:sets of trigrams (three letter words such as SDF DFU DKI OET) are given to people and at each set, one of them is pointed and said to be special for a reason. As results show, it takes roughly 34 sets of 4 trigrams before people realize the simple rule that governs which one will be special (such as a rule that the special trigram is always the one that contains T). However, when this experiment is done the same way but the rule of the special trigram is a MISSING T, no one ever manages to figure it out, no matter how many sets are presented. Fascinating. “Pigeons have no trouble figuring out that the presence of a light signals an opportunity for eating, but they cannot learn the same thing about the absence of light” says Daniel.

So then what is the connection between the two? I think there are two markets: the ones we can spot due to knowledge, experience, and studies, and the ones that we can’t. Because those invisible opportunities exist, there is plenty of potential for everybody. “And how exactly am I supposed to see what I can’t see?” Easy. Just do things. Plenty of the most famous startups did not imagine their future like it is now. They just did it. Neither Flickr, nor Paypal, nor plenty of others started with the idea they became famous for. But by just starting, they had the chance to see those new clues for new markets that were otherwise invisible.

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Summer 2007

It’s the end of August and I am back to college. This marks the official end of summer of 2007. Here’s what I managed to do and not do:

Summer ’07 achievements:
– I am finally on the track to doing what I like. I started coding on my startup. I made decent progress for 3 weeks, considering how many things I had to learn. It is also the first idea that I have actually started building, so that has its significance too.
– I made some Flash sites and accordingly some money that I can use for school.
– I took the CLEP marketing test from CollegeBoard. I saved $1200 and 1 semester time for not taking the class at college.
– Took a summer class in Econometrics. Got A. It was important to pass, since it is a prerequisite to any other class that I have left on my senior schedule.
– I got in the habit of reading books. I read a bunch of decent ones. Reviews of some can be found on this blog.
Not bad for summer. I also had some fun:
– I did manage to go home for 10 days. Haven’t been in Bulgaria summertime for 3, maybe 4 years, so this was great. I saw most of my important friends. Quality experience. I had a good amount of family time too.
– I did go to a wonderfully relaxing 1 week vacation to Costa Rica with my American family. Big nice house, amazing weather, lots of sleep, decent amount of reading, soccer with locals, delicious food served 3 times a day in the house, warm ocean (warm ocean, hear that!) swimming/surfing.

Summer ’07 flops:
– I thought I might be able to finish my prototype for the startup. It is number one priority and is coming soon I promise.
– I didn’t manage to convince Baruch College that I don’t need Tier III for my degree, and I would rather take CIS minor than one that satisfies this Tier III. Baruch didn’t think so. I have to be like everybody else. 7 different offices were quite united around this issue. Was angry but after all, “Never try to teach a pig to sing; it wastes your time and it annoys the pig” by Robert Heinlein. Taking psychology with some cool brain/thinking classes. It’s also somewhat connected to my startup so it’s acceptable.
– I didn’t make really a lot of friends. Maybe because I am too busy and introverted currently. Maybe because people are in general very in a hurry in NYC. I dunno. Want to be my friend? Now accepting…

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Idea: Blog + SocialNetworking = Blog2.0

THE TRIGGER:
I just finished reading Blog! By David Kline and Dan Burstein which I reviewed last post. A bunch of interesting points appeared but one paragraph really drew my attention. It appeared in an interview with David Teten and Scott Allen(from Virtual Hanshake):

???The major difference between blogs and social networking sites is that, while still social in nature, blogs are far more individualistic. You don??™t need to join a particular online site to participate in a discussion around, say, new technology trends. And in terms of the discussion itself, the communication is centered around the personal voice or views of the blogger rather than on the group, as it is in discussion forums on networking sites.???

What bothers me in this paragraph is the word ???individualistic??™. Just like the interviewee, we make one big assumption ??“ that blogs are individualistic. For many years we have seen the blog as something personal, private, and almost sacred. These are the characteristics of a (online) diary, which is quite natural given that blogs are descendants of the personal diaries. However, as we dig deeper in the social networking models we realize that our true nature is social and not individualistic. People write blogs because they want to be heard and recognized, because they want to communicate, get advice, and make new friends. True, blogs do have a personal and distinguishable voice, but this is exactly what they should use to socialize. Yet, they don??™t. Blogging these days is more like sitting on the top of the hill and screaming your lungs out to the crowd. Linking is more like pointing with fingers left and right, rather than shaking hands, hugging people and making new introductions. We are screaming so loud though, that we forget to identify who our listeners are.

THE IDEA:
We should stop thinking of the blog as an online journal. Blog is actually the closest thing that comes to a profile of a person. No Facebook, Myspace, or any other proprietary site can squeeze such detailed, impassioned stream of consciousness. With pictures, video and text, the blog has it all. There are plenty of apps that can be used ??“ look at Fred Wilson??™s blog. It??™s got it all- Twitter, profile picture, voki avatar, music, name it -he’s got it. What we still don??™t realize is that blog is the unit of the most organic, largest, universal social network. The best part? It??™s not a proprietary site, it??™s a network pushed by a multitude of users, open source software, and private web2.0 applications.

HOW WE DO THAT:
We are actually closer to that vision than it seems. We have all the components in place, all we have to do is rewire them ??“ RSS, blogs, enthusiastic useful information swap, critical mass, a plethora of apps.
Small changes (such as few new tags in the RSS) can define the difference between blog1.0 and blog2.0. From then on blog2.0 will develop in a totally different direction with two main characteristics:

1) Blog2.0 parts will be unified under the single profile they represent. Anything people use to identify themselves in social networking sites will also be integrated in blogs ??“ status updates, profile picture, ‘About me’, interests, albums, friends, topics for discussion – anything.
2) Blog2.0 will become a platform for applications, just like Facebook did. Gmail blended email with chat very successfully and blogging will do the same – friends lists, VoIP, chat, email, etc.

THE RESULT:
-You either install an open source package on your server or you take advantage of an already existing company like Typepad to create.
-You upload an avatar, fill in details, write your first post. You also change your status to ???John has a new blog2.0???
-After lunch you have 4 invitations to become friends with your buddies??™ blog2.0s. You accept them.
-You look at the activity on your post. Commenting resembles a Facebook wall but also has threading/voting like reddit.com
-You then check your inbox, send out a couple of messages, upload pictures. Just like people get notified by RSS for the new posts, they get notified for the uploaded pictures.
-A photographer happens to stumble upon one of your pictures of the gorgeous Costarican jungles and starts chatting with you on Blog2.0. You become friends and you add her to the friends list. Potential date.
-The followin day you decide to change your avatar. All the comments you’ve ever made in the blogworld have now your new picture.

NAYSAYERS:
“But I am happy with what I have. My blog is private, individualistic and I want it to stay like that!”
No one will force anybody to make that transition, so whoever is happy with what they have, they are welcome to keep it (say hello to ‘backward compatibility’). However as our imaginary blog2.0 picks up, it will increasingly look (for naysayers) like they are left out of the big party. They will simply be missing out, just like it happened with blogs, with social networking sites, with emails, and pretty much any technological improvement, and the blog2.0 as a profile unit in an organic social networking, may be one of those improvements.

What do you say?

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Book: Blog!

Blog!
by David Kline & Dan Burstein

ISBN-10: 1593151411

I had already been blogging for a year, when my mentor dropped this book in my lap. I already knew how blogging affected my life since I have been both reading and writing by then. I thought I knew all I needed to know about blogs so I never even opened that book. Recently though, I set my mind on it just so that I didn’t miss anything. And boy did I miss. I actually had no clue as to what a monster the blogging phenomenon had become. The book opened my eyes and made me realize what a revolution is happening in the media world.

Blog! is divided in 3 sections: politics, business, and culture. What I liked is mostly the business part since that is what I am interested, but it is definitely worth reading the whole book.

The book is a combination of author notes, essays, and interviews so it has a pretty wide perspective encompassing many different viewpoints. After all, the book shows you “how the newest media revolution is changing politics, business, and culture” and it does so very effectively through a multitude of opinions. The authors indeed did a great research and got in touch with a lot of bright people.

A few highlights:

  • The main point for business is that blogging puts a face to a company, establishes trust, communication, allows for feedback on products. This seems to be best achieved by Christian Sarkar’s double-loop marketing, in which company first builds a blog with relevant, important, and useful information for customers and only after building community, they pitch products. Very smart strategy.
  • If you fudge or lie on a blog, you are biting the karmic weenie,” Hayden told Fortune Magazine. “The negative reaction will be so great that, whatever your intention was, it will be overwhelmed and crushed like a bug. You’re fighting with very powerful forces because it’s real people’s opinions.”
    -Got to take that one in consideration!
  • I laughed a lot at this one:
    …how an economist opens a can of soup – i.e. “First, assume a can opener.”
  • “In fact, if you look at the way people get jobs in the New York media world, you see that a lot of it seems to be about who you know and how well you schmooze at parties. Weblogs are more meritocratic, in my opinion.”
    -What a beautiful word, “SCHMOOZE”. This is from the interview with Nick Denton. Very nice observation.
  • “Risk takers by definition often fail,” the workplace philosopher Scott Adams once observed. “So too morons, and in practice it is hard to tell the difference.”
  • Andreas Stavropoulis makes very good points on ways to make money:
    “The first way is to give people something valuable that they’re willing to pay for.” (software, business tools, subscriptions etc) “This second form, advertising, is the oldest way of making money on the Web, of course. And then there’s the third way of making money – by facilitating transactions online and then taking a piece or a cut of those transactions.” (think Ebay). All three he says are potential models for blogs and related sites, with advertisement being the most developed.
  • David Kline makes a very good point when he says that blogs are great and powerful, but will definitely not destroy the Big Media, because, “tomorrow’s possibilities are always forged upon the anvil of today’s social and economic realities.”
  • This last one by Wil Wheaton:
    “Creativity is the absence of fear. When you’re not afraid, you’re really free to be creative.”

Good book! When you read it, you will understand why blogs have to become part of your life, just like Google became years ago.

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Subjectivity Of Information

…And How Much We Actually Don’t Get.

Cheesy movies like Legally Blonde is usually not my type, but I am in Costa Rica and since here you do all that you don’t do in NYC, I did see it. Around the happy end the “believe in yourself” clich?© pops up. Normally if you are not wetting your eyes at such deep wisdom you would be laughing your ass off. I don’t know why but I did try to think about what that phrase really meant and why people say it.

We’ve all been told that if we believe in ourselves, all will be good and we’ll get what we are after. Thousand of times it has zoomed by my ears. And probably eactly for that reason I never thought about it and why (if it is true) it worked. I see the following logical explanation, but there might be plenty others: if you don’t think that you are good enough, you would be more willing to quit, so at the face of a tough moment when despair lures on you, actually not believing in yourself gets you to “I can’t make it anyway, why bother the suffering” as opposed to “I can do it, but I have to get through this crap first”. Thus, solely what you think of yourself may determine whether you are going to get through the Dip or not.

I have always known that, but I have never really reflected on it, so it has never had any meaning to me. Therefore it has never affected my life in any way (Well let’s see how that works now 🙂

A bigger question spins off from this matter: Are we so ignorant that we suck information without really thinking about it, as a result of which we don’t get to live life to its fullest?
I think the answer is yes. And that immediately gets us to the point that you have to constantly analyze anything that you might think is of any worth or interest to you. Try this one “A bird in the hand is worth two in the bush”. What associations does it evoke? What experiences tell you that it is true/wrong? Is it true after all? Why? What kind of mentality does it promote? Is this the mentality you are after?

I have been reading a very strange book that tells the story of the greatest merchant in the world. There are ten two-page chapters that you are supposed to read at wakup, at lunchtime and at bedtime for a month before moving to the next one. At first this seems retarded. It is in a sense brainwashing because you are repeated the same thing over and over until you believe it. I am sure people just breeze through them like a regular book but I tried this rereading thing. I did 10 days instead of a month. I also wasn’t just reading them – I read every word carefully and asked myself at every moment, “what was the author thinking when he was writing that sentence?” I was paying attention to what he MEANT to say, not only what was said. Those two unusal behaviors resulted in a very interesting phenomenon: because of what other things I have read during the day or the things I have experienced, every time I read the same chapter, I saw it in a different light. Every time I reread it I discovered new things in it, I unravelled it more and more and combined it with my personal experience and analysis. It was incredible to understand how much we actually miss by merely reading something and not taking time to understand what it is.

This is true of every kind of information that goes through us. There are plenty of success stories (Marc Cuban), how-to explanations (Paul Graham), data and interpretations (Marc Andreessen) and all kinds of advice out there. But unless you actually pause your life and think about them, they will not be of any value (and some of those can be truly life-changing).

Well, I want to start a startup, but anything you do is equally dependent on how much thought you put in it. Do I have to say what you should do now?

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Depression As A Function Of Procrastination

I have been thinking about procrastination lately. I have one specific task to complete and I have been reluctant to doing it. I have to call and beg the USPS office to give me money back for the lost package. Blah…

Among other things in Wikipedia.org I found, “It is often cited by psychologists as a mechanism for coping with the anxiety[that is not too far from fear] associated with starting or completing any task or decision”

Coping with anxiety is well said. It is exactly what we do, which is much different from coping with the problem. Since the problem stays intact, the anxiety we are “coping” with will not disappear. As a matter of fact it will grow and it will bother the hell out of us. Few nights ago we talked with Ilian about discounting. Just like discounting cash from future to present, when you are procrastinating you are discounting the future anxiety to today. In other words, you prefer to leave it for later at the price of increased anxiety (especially if you have a deadline). Quite an investment I would say.

Well, we kind of know that much. But here is a problem I want to point out and make very clear and visible. I will use Gantt Chart to illustrate it. This is how your normal week may look. You may have 1 or 2 tasks procrastinated but generally things get done:

Normal Week

I am going to hyperbolize [I love new words] this situation a bit but this could happen and does happen sometimes:

Procrastinated Week

When you look at chart No.2 you obviously see that there are plenty tasks none of which are moving. From wiki, “For the person procrastinating this may result in stress, a sense of guilt, the loss of productivity, the creation of crisis, and the chagrin of others for not fulfilling one’s responsibilities or commitments.” The trouble here is that we have not one of those causes but MANY! Procrastinated tasks sit tightly in the person’s subconsciousness, socialize and drink beer steadily. As a result you start feeling unable to cope with life and you get a feeling of worthlessness. Add a pinch of girlfriend breakup, startup going slow, and toenail fungus in the equation and you get a genuine depression.

My point here is that it is important to recognize when depression is caused by procrastination. All you have to do is man up a little, get your fuck*** ass [don’t you love my censoring?] off the couch and work your tasks out one by one. You are going to have a lot of those moments with startups, so better learn to deal with it.

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Book: Monkey Business

Monkey Business
by John Rolfe and Peter Troob

ISBN: 0446676950

The legend it is, I had quite high expectations of this book. I hoped I will get a new perspective of the analyst/associate life. It actually is a quite humorous take on the craziness of working for an investment bank. Instead of giving me answers and making things clear, all I got from this book is a “riddle wrapped in a mystery inside an enigma”: Why do people that have experienced this job come back for it?

What this job is according to the book:
– Crazy hours of work[100/week?]. No weekends, zero social life;
– Being treated like s**t, sucking up to the same people that treat you like s**t;
– It’s a cookie cutter job in most of its parts; Not only repetitive but often meaningless and mindless;

Then there must be something of incredible magnitude that draws people in. I am probably the most anti-corporate, anti-job person that has come around and yet I felt like diving into this world too. I even went to few interviews to wet my feet. Here is my take on the answer of the riddle, but I would appreciate if anyone gives me a better point of view:
– Obviously the organic normal enjoyment of the work itself
– Good money. Sure, starting salary of $50,60,70 thousand out of college is hardly achievable by any other job.
– Promise for promotion and high class life.
– Feeling important. Feeling on top of things. Suits, shiny shoes, expensive dinners. Those are so powerful, I know I want them too.
– [waiting for more suggestions…]

I am probably missing something out, but it ought to be pointed by people that have experience in that field. Don’t be shy.

I can’t really say much more so here is the only thing I marked. It gives a pretty good overview of the tone and purpose of the book:
“When associates finally reach this realization, they no longer waste time during the pitches conjuring visions of greatness. The pitch becomes nothing more than a routine to be suffered through. Since associates have typically been working on the pitch for the entire previous night, their primary activity becomes a struggle to stay awake. Every associate has his own techniques. I used to stick my hands into my pockets and try to pull hairs out of my legs. Rolfe once considered attaching clothespins to his nuts.”

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Marketing Your Startup

Investors seem to love to ask this one question, “How are you going to market your startup?” By now, I have a ready answer that I shoot right away. The concept is a little vague and difficult to get, but I will try to make that clear. The answer to life, the universe, and everything is:

If my product is really damn good, it will market itself. If it is not, I shouldn’t bother marketing it.

It sounds a little bit like ‘Build it and they will come‘ but it is NOT. Let me tell you why.

First let’s have a look at Coca Cola’s marketing strategy. Their drink is a product significantly different than your new, innovative (hopefully) idea for startup. Coke is an old product that we all know. It’s been around for years and there is nothing so cool about it. The ads you see around have one purpose – to make you drink Coke when you don’t really care what you drink. This is the type of thing in which you constantly need to be bombarded with messages that will layer up in your subconsciousness and will finally make you drink Coke. For that purpose, ads are targeted to everybody, all the time, and everywhere (even SecondLife! blah). Marketing of Coca Cola looks probably somewhat like that:

Coca Cola marketing type

That is perfect and in time covers millions and billions of people. However, it only works if your budget is $2.5billion+. If you are like me, you probably don’t even have billionth of that.

So what can we do? Something smaller, like Google AdWords? Nah. AdWords is pretty much the Coke strategy on a much smaller scale:

Online Marketing ONLY

What is happening there is targeting single users according to their searches. True, more efficient than other online advertising services, but still equivalent to buying your new users. You want better than that – you want them to not only join for free but cajole friends to join for free too!

At this point you should have already realized that you are just not able to spread the idea on your own. You want USERS to do it for you. The ominous word of mouth. This is the only way it could work, and since it is the only way, that should get you thinking, “How do I get my users to do that?” The answer is: You get them to work for you by creating the most amazing, best-out-there product, so that when people recommend it to their friends they feel proud of themselves. That is, it must be just really good – easy, cool, useful etc. In that case, the scenario of marketing will look like that:

Word Of Mouth Power

Now this is a different story. All you did was sent an email to your best friends and relatives [red line], that might be interested in it, and the rest was done by them [blue dotted line] because by recommending that amazing ‘grade A’ product will make them look knowledgeable, generous, and cool (oh that coolness factor!)

If you really really want to spend money, here is where online advertising makes sense. At this point, when you have crowd working for you, you want to give them many initiation points at random places with random groups of people, in which case your marketing power can be multiplied many times:

Online Advertising + Word of Mouth

If you can’t make other people talk of you, you got the wrong idea. Get a new one, improve your current concept, or just give up — you are wasting your time.

Do you agree with me now?
“If my product is really damn good, it will market itself. If it is not, I shouldn’t bother marketing it.”

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Book: The Dip

The Dip
by Seth Godin

ISBN: 1591841666

From the blogging sphere I came across one of the most popular marketing gurus – Seth Godin. I have read posts online, so when I walked in Barnes and Noble and saw a little cute blue book with his name on it, it immediately drew my attention. I read those 70 pages on the spot, and then bought the book for home. Its one of those treasure books, that if you start underlining you will have to underline half the stuff.

Every project starts with excitement, energy, and resources. However, as it get progressively difficult, long, and tiresome you experience the dip, where people naturally feel like quitting. The Book is about how you should recognize that pushing a little harder to get to the ultimate returns is what separates the superstars from the rest.

“Winners never quit and quitters never win” We have all heard that expression. Well, Seth Godin explains that there is nothing worse than this advice, because our success depends on the ability to quit the right things at the right moment, and stick to the ones that payoff.
One of my favorite examples is the weight lifting example. When you exercise, your muscle gets tired. Only the last few seconds when the muscle starts hurting is when it actually grows. The problem is that most people naturally quit when pain appears, so they do all the work but get none of the benefits.

One of the best advices that I have heard is the following quotation:
Decide before the race the conditions that will cause you to stop and drop out [of the marathon]. You don’t want to be out there saying, “Well gee, my leg hurts, I’m a little dehydrated, I’m sleepy, I’m tired, and it’s cold and windy.” And talk yourself into quitting. If you are making a decision based on how you feel at the moment, you will probably make the wrong decision.

One other thing that loved — Seth says at one point that almost everything we learn in school is wrong, but the wrongest things of all is the notion that we need to be well rounded. You can only be the best if you quit the rest of the things you are doing, simply because you don’t have enough resources to be the best in anything you do.

So many things in this book can change your life. Buy it. Link to Amazon’s The Dip.

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Fear Drives Our Lives

My mom’s favorite joke goes somewhat like that:

Poor man prays to God, “Please God, let me win the lottery, let me become rich, please…”
Next day he goes on praying, “Please God, let me win only once the lottery, I only one 1 single million, not more…”
Next day again, “Let me win, I will be nice to people, I will do good …” It goes on for weeks and weeks. One day God’s mighty voice falls from the sky, “Bro, you have to fill in at least one ticket …”

Today also, I had the following situation. I found out that one of my $20’s had a ripped corner. The missing piece was not small enough so that it can go unnoticed, but it also wasn’t big enough to be completely unacceptable. So I was getting food at Chipotle (the best fast food you can get) and I faced the following dilemma — should I try to get away with my ripped 20 or should I gave them a regular one. I gave them 2 tens but before the cashier put them away, I pulled my ripped banknote and asked naively, “Would you ever take those ripped 20’s under some circumstances or should I not even try?”, the guy smiled at me, gave me back my tens, took the scarred 20 and joked, “I will get extra 15c for that missing part” I was left in amazement, I got away with it so easy!

So then I thought, why on Earth would people have that completely irrational fear to avoid chances that come with barely any risk? Why did I not give the banknote at first place? Was I afraid of being denied? [so what?] Was I afraid they are going to laugh at me? [so what, I am never going to see them] Was I just shy? [how does that make me a better person if I am shy?] There is nothing significant that I could possibly lose if I try. But I didn’t in the beginning, and a lot of people don’t at all.

Those of you that have read any of my previous posts know that I preach that ‘the only person you should be working is yourself’, so here it comes:

I said last time how luck and risk are almost irrelevant, but Ilian and I calculated chance of not succeeding in any of the ten startups you began under the assumption that on average 1/10 startups succeed: (1-1/10)^10 = 34.9% That pretty much means that from pure statistical calculations in 2/3’s of the scenarios you will make at least 1 startup successful, and as Marc Cuban wrote long time ago – “you only need to be right once”. It is very important to note that this simple statistical measure does not include any of the most important characteristics of startups which include but are not limited to: 1) you gain a lot of experience after each failure, which considerably increases your chances of success 2) you make connections on the way 3) you learn to be critical and firm minded, able to analyze and process information very efficiently [these are things about UNSUCCESSFUL startups, imagine about even half-successful ones] After considering all of those qualities of entrepreneurial thinking, I think chances of not getting where you are going are almost invisible. Assuming that, and the high rewards of success, I wonder again, why would people not start startups? No risk, huge rewards. Nobody wants it!?

Ilian tried to explain it through an interesting psychological observation of fear and happiness. People seem to be happy when they win something, but if they lose this same object, their happiness decreases twice as much. Naturally, a fear evolves from this, that drives our lives and makes us extremely risk averse. So risk averse that we probably won’t take a free ticket to the lottery simply because chances of winning are too small, in which risk of losing is practically zero, therefore the fear is completely irrational!

Same goes on for funding. Paul Graham says its a good idea to calculate your pluses and minuses before you do a major move. Why would you not ask your connections to invest in you if all you lose is a rejection, which is equivalent to not asking at all anyway, and what you win (in our case) is to keep the project on track? Just 2 days ago we managed to overcome the fear of asking people to invest in us. The result? Noah pitched to one person and he agreed to spit 5, 10g on the basis of friendship with no official paperwork. A whole new discussion follows on now: ‘should we take that offer and how should we present the official request’

Fear is powerful…