Lessons I Learned Today 6/6/09 – Twittering Entrepreneurs

This is a digest and recap of highlights, quotes, and comments from articles and discussions posted on this date on the Applied Entrepreneurship, LinkedIn group site.

 

*Meet the PayPal mafia by Jeffrey M. O’Brien 

This article is “an inside look at the hyperintelligent, superconnected pack of serial entrepreneurs who left the payment service and are turning Silicon Valley upside down.”

“Holy cannoli. Peter Thiel has a butler. The 40-year-old entrepreneur runs a $3 billion hedge fund. He’s the founder of a new venture capital firm that’s the talk of Silicon Valley. He’s got an early $500,000 stake in Facebook that’s now worth about $1 billion on paper. The man has bankrolled everything from restaurants to movies and is lauded by many as some kind of free-market genius. He drives a half-million-dollar McLaren supercar. And now a butler”

“Max Levchin (left) and Peter Thiel hatched the idea for PayPal over breakfast. Their brainchild would change the course of the Internet. They’d bring on several hundred employees to what would become PayPal. They’d sign up more than 20 million users and burn $180 million in funding before breaking even and selling out to eBay for $1.5 billion.”

“During the past five years they’ve been furiously building things – investment firms, philanthropies, solar-power companies, an electric-car maker, a firm that aims to colonize Mars, and of course a slew of Internet companies. It’s amazing how many hot web properties can trace their ancestries to PayPal.”

“Besides Facebook and Slide, there’s Yelp, Digg, and YouTube. Thiel and Levchin, the don and consigliere of the mafia, figure that all told, there are dozens of enterprises worth a total of roughly $30 billion – and that value is growing rapidly, as evidenced by Thiel’s good fortune with Facebook.”

PayPal was a petri dish for entrepreneurs. The obvious question is, Why?

“Maybe it comes back to the early hires. After their first breakfast, Thiel and Levchin began recruiting everyone they knew at their alma maters. “It basically started by hiring all these people in concentric circles.”

“They were looking for a specific type of candidate. They wanted competitive, well-read, multilingual individuals who, above all else, had a proficiency in math. Levchin’s original idea for PayPal was to beam money between PalmPilots, but Thiel has a way of seeing the bigger picture.”

“Thiel and Levchin also wanted workaholics who were not MBAs, consultants, frat boys, or, God forbid, jocks. ‘This guy came in, and I asked what he liked to do for fun,’ Levchin recalls. ‘He said, ‘I really enjoy playing hoops.’ I said, ‘We can’t hire the guy. Everyone I knew in college who liked to play hoops was an idiot.'”

“In other words, they were looking for people like themselves.”

Recruiting underclassmen from the middle of the country assured Levchin that his charges would have few preconceived notions and fewer social distractions. “Most of them were very introverted anyway,” Levchin recalls. “They’d come in, eat crappy food all day, and sleep under their desks.” “The difference between Google and PayPal was that Google wanted to hire Ph.D.s, and PayPal wanted to hire the people who got into Ph.D. programs and dropped out.”

“Thiel’s leadership style is as unconventional as his worldview. His hallmark management MO at PayPal (at least, pre-IPO) was the all-hands open-book session. Customer logs, revenue flow, fraud losses, burn rate: He’d display it all for every employee to see. This access to information, coupled with the lack of offices, created a flat structure where any idea could win the day.”

 

*The Consequences of Real-Time Information by Sam Huleatt

Consumers are switching from ‘conspicuous’ to ‘conscious’ consumption, according to investment strategist Edward Kerschner. “There are assumptions that consumers make when a brand lowers its price. 61% of consumers think the price will just change again soon. 60% think it will go down further. Instead, it will be the companies that offer the perception of value – as opposed to just putting things on sale – that will be the ones that benefit.”

“In the last few decades, we have become the experiential generation. People crave unique experiences, not necessarily just products.”

“People want a sense of identity and community. Sports clubs will become popular. For every 1% increase in unemployment, we’ve found, there’s a half-point reduction in inactivity.”

“Consumers will plan purchases more carefully. 70% say they won’t delay if it will save them money in the long run, like socially or environmentally conscious products. We’re seeing no reduction in the purchase of environmentally-friendly products.”

“10% of consumers are spending less on green products, but 35% are spending more. 65% of consumers say they are spending more on products that they know will benefit a good cause.”

“It’s not about price. It’s about the whole value proposition. And that result is true for consumers who say they have a lot economic anxiety, too.”

“We’re seeing a huge increase in the middle-class population, a huge increase in spending, and a tendency to trade up and buy better brands. That trend won’t be stopped by this recession.”

 

*New Path by Michael Karnjanaprakorn

“I’ve always lived my life and made decisions based on a couple of key principles.  These may sound like tried and true cliches, but i actually DO follow them.  Stop and think about what they actually mean instead of letting them fall on deaf ears.”

  1. Never chase the money.
  2. Every step moves you closer to your goals.
  3. Do what makes you happy.
  4. Live life with no regrets.
  5. Trust your gut.
  6. Most importantly, have fun because life is short.

“People shouldn’t make decisions based on past investments.  And if you’re wondering how this applies back to poker.  Once you make a bet and put your chips in the middle, that money is no longer yours (so you shouldn’t make bad decisions on getting it back).”

“Instead, you should look toward the future and look at all the different paths, opportunities, and possibilities presented to you right now.  The sky is the limit.  Everything in your past gets you to this point but it’s up to you to make the best possible decision on which path you want to go down. And that’s where gut intuition, happiness, and the rest of my cliche life principles come into play.  Because at the end of the day, if you make the right decision for yourself, there’s no way that it’s a bad one!”

 

*Interview with Tyler Cruz

“What started as an assignment at school now earns Tyler Cruz 6 figures a year. He runs over a dozen websites, and has sold domains for as much as $200,000!”

“I actually wasn’t all that young when I started. I started making my living from the web at around the age 21 which these days isn’t very young. Then again, it’s far easier to make money online now than it was back then. Once I moved out and started to truly rely on my web income for a living, it only took around a year to a year-and-a-half to where I was making $100,000 a year.”

“It’s amazing how such simple ideas are so often the most successful.”

“Find a job you love, and you’ll never work a day in your life.”

 

*The fight for startup cash by Adriana Gardella

This article tracks one of forty-two startups who “duked it out in the world’s most lucrative business plan competition.” “Striking deals with the San Francisco Giants and landing millions in venture financing, these top teams from last year’s Rice Business Plan Competition have battled the downturn to push their ventures forward.”

“The stakes include a share of $800,000 in cash and prizes. But the prize money is almost incidental. Judges at Rice offer invaluable contacts and feedback, even contact numbers and possible financing. Competitors are evaluated on the potential of their businesses, not the academic merit of their plans.”

“Business plan competitions are gaining popularity nationwide.” “Students who would have gone into high-paying jobs are now willing to take a chance on an entrepreneurial venture,” says Philippe Sommer, director of entrepreneurship programs at the University of Virginia’s Darden School of Business. Darden sponsors a competition that drew 91 submissions this year, up from 42 in 2008. “You could argue that this is a bad time to start a business,” he says. “But good ideas are always likely to get funded, and in a down economy there’s less money chasing marginal ones.”

 

*Interview with Young Entrepreneur David Nilssen by Adam Toren

“David Nilssen is co-founder and CEO of Guidant Financial Group, Inc. Guidant helps aspiring entrepreneurs to invest their retirement funds into a business or franchise without taking a taxable distribution or incurring penalties.”

“I believe our achievements are due to the fact that we hired a great team, focused on our customers as unique individuals with unique needs, and we continue to invest in scalable technology. Each year we realize productivity gains because we continue to improve our customer experience without having to scale overhead.”

Nilssen’s advice for to aspiring entrepreneurs:

  • Don’t take yourself so goddamn seriously
  • Invest in technology so your business can scale!
  • Hire potential first, experience second
  • Have fun

The pattern or formula to becoming a successful entrepreneur:

  • Be manically focused on your vision
  • Hire great people
  • Love what you do
  • Do the right thing no matter what

 

What I Think

I think the further we push the envelope with our virtual world, the more opportunities there will be for entrepreneurs who are able to give people a sense of community and identity. As much as you may twitter at the thought, we are all becoming more and less connected at the same time.

If you stop at an intersection and watch the cars turning from one of the other side streets, chances are that well over fifty percent of the drivers cutting across the intersection will be on a cell phone. Probably a good chunk of the rest will have just hung up or are trying to figure out what to say or who to call next while they drive along, oblivious to the real world around them.

Likewise, if you go to church, sit waiting for a movie to start at the theatre (presuming you even still physically go to the movies or church) you will undoubtedly see a few folks frantically trying to get in one or two more messages before the show starts. Many others will keep anxiously looking at their Blackberry, seemingly wondering why it hasn’t vibrated, lit up, or rung in the last thirty seconds.

The excuse we get from business folks is that they have to stay connected to close the deal or be ready to receive it when the big one comes in. For some that is undoubtedly true, but for others, it is clearly just another sign of addiction.

One of the sad parts of the addiction is that, by definition, it involves dependence upon the electronic device rather than upon personal contact. I may be getting off track a bit here, but I have found a decreasing level of proficiency in social skills, including ability to speak or write the language, from the younger generations. In part, this is from a failure of our education systems. In part, I blame video games, including the cell phone, Blackberry, laptop, all of which become a version of an electronic game. While good at connecting virtually, they also have the false benefit of insulating us from personal contact.

They say people who wear a mask while committing a crime are likely to be more impersonal and violent than those not wearing a mask. To some extent, I think some folks are using these devices and technologies as a sort of mask, all the while longing to be asked into the real, live party.

Regardless of the cause, the result may very well be an increasing level of social dysfunction. I think a natural tendency, when one is not good at something but is interjected into a community or group of some sort, where there are others whose skills match up better than yours, is that you feel inadequate. The result of a feeling of inadequacy, for some, is to seek relief. That relief, for many, may be finding a way to fit in somewhere or somehow else.

Queue the virtual community of cell phones, laptops, and twitterers. In these virtual communication worlds, it is not always as necessary to have social grace, speak or understand the language, or to otherwise interact as you would in a real, physical environment. Virtual communications can become something of a haven. You can get that reassuring voice on the other end of the phone, watch your “watchers” or “friends” mount up, and be reassured you are part of a community and do have self-worth.

Talking to a person face-to-face, is a substantially different experience than talking to them on the phone, twittering back and forth, or even video conferencing with them. Perhaps it is the trial lawyer in me, but in comparison to these virtual communications, I can tell a lot more about a person if I can see whether they look me in the eye when talking to me, cross their arms or maintain a more open posture, lean forward or back, cross their legs, fidget, doodle, or, more likely, just keep looking at their cell phone.

To some extent, my generation probably misses personal contact more and more, as we become isolated by the success of our own advances in communications technology. I think the younger generations may as well.

Humans seem, by nature, to be social. This is inherent in our makeup. We can survive without it, but we tend to thrive with it. Witness the PayPal mafia. These boys do so well, aside from being brilliant, partially due to the physical proximity to each other and the rest of their ever-changing group.

While they might not be able to survive without their electronic communication devices of choice, I would suggest they would have become less successful if they were denied in-person human contact, as opposed to being denied virtual communications. In part, I suspect my theory is correct because, as consummate deal spotters and closers, they need that personal touch to separate the rats from the fat cats, and to personally smooth over the inevitable rough edges during the deal making process.

I think we all like to belong to something. There is, of course, the old saw to the effect that “I would never join any club that would admit me as a member.” In reality, however, I think most of us would rather be in “the club” than not. That is the great opportunity I see in these articles and in where our business climate is going. In many ways, it is about making connections and then feeling that warm security of knowing you are connected within a community.

What many of the entrepreneurs in the articles posted on this date are doing, is simply finding different ways of connecting people, whether it be a PayPal or Facebook application. In fact, some of these young entrepreneurs are so concerned with staying within the comfort zone of a friendly community, they won’t even hire employees who are not very much like them. Granted, being like some of these guys means you are a genius workaholic, but that is still a community. You fit in or you don’t.

This presents, in my opinion, a starting point for a good segment of the business plans I see. The overriding question may be, does this proposed business help the customer or client feel like they are part of a community? Does it connect them in some way, which can give you a competitive advantage?

  

Applied Entrepreneurship Logo-small

If you enjoyed my impression of these articles, why don’t you read them for yourself and see what you and I missed or hit? Join the Applied Entrepreneurship group on LinkedIn. Membership is free and I try to post about ten articles a day there. We have some great discussions going and if you are an entrepreneur, we hope you will join us.

Advertisements
Posted in Applied Entrepreneurship, Business life cycle, entrepreneur, Innovation, Personal happiness

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow me on Twitter
June 2009
M T W T F S S
« May   Jul »
1234567
891011121314
15161718192021
22232425262728
2930  
Topsites
Business Blogs
Support local businesses

Help your local favorite business win!

Share
Bookmark and Share
%d bloggers like this: