The Revolution Will Be Tweeted - Saturday May Bring Change to Iran

As we sleep tonight in America, there is history afoot. Never before has the social web been used to such an extent within a country to attempt to remove a leader and coordinate a political revolution. Tomorrow, Saturday, will be an important day in the history of Iran.

For the sake of this post and citizen journalistic integrity, I’ll try to be as objective as I can here as few of us outside of Iran can know enough to truly know what is accurate. This noted, the consensus of the digerati has been made known and it is clear. In the world of Twitter, Facebook, Flickr, and YouTube–the crowdsourced view is behind the ‘Green Uprising.’

A tipping point may be reached after today’s day of prayer and Ayatollah Khameni’s speech which may only inflame protesters. The momentum behind a movement has begun and it won’t easily taper.

As I browse Twitter tonight, I see tweets like the following:

• ravenclawgirl RT from Iran: Many of my friends calling & say goodbye, as they feel in 2morrow’s demonstration they may get killed #iranelection
• Macagogo A small body of determined spirits fired by an unquenchable faith in their mission can alter the course of history. Gandhi..#Iranelection
• dijitalboy RT @chestkneeshawk: RT BBC adds 3 satellites to overcome signal jamming in Iran. Yay BBC! http://budurl.com/ea4f #Iranelection
• KDSarge All followers of #iranelection think and review before you act or retweet. Iran govt out in full force on Twitter now
• maryamwebster Until we are all heard, none of us are free. Pray for those who are silenced/killed in Iran. Violence isn’t answr. #pray #iranelection #gr88

I am seeing Facebook Statuses tonight like this one:

• Shervin Pishevar - please pray for Iran and the brave Iranian people. In 5 hours we meet our destiny. I will not be able to sleep.

The informative Green Brief is coming out nightly from an Afghan man named NiteOwl, sourced entirely from Tweets from inside Iran. There are instructions on “Anonymous Iran” on how to surf in Iran using proxies so one can access the social web. There is a tremendous set of Flickr photos of the protests on the Fhashemi Flickr account. There are 180 posters from protesters shown at Design for Iran.

In two days, hundreds of thousands of Twitter members have turned their avatar green in support of the Iranian protesters using a tool at HelpIranElection.com.

Here are some videos seemingly showing violent oppression of the protests:

There are so many ethical issues here that we must tread carefully on. We must be careful in the West to so naturally and quickly support this uprising simply because we tend to lean toward the beliefs and views of the more moderate candidate Mousavi. Here is a good article supporting Ahmadinejad’s win. There are folks on the Ahmadinejad/Khameni side who are claiming that the support for the “American led coup in Iran” is causing unneccessary blodshed. Here is an example:

• @JimJones45 - 99% of tweets are from US backing a BLOODY revolution. People are dying. STOP destabilizing the Iranian state! #IranElection

This noted, others on Twitter seem to suggest these twitter accounts, most of which have no history before yesterday, are agents of the Iranian government.

To me, this doesn’t seem to be a Western-led coup. The pictures and videos of the hundreds of thousands of people in the street lay doubt to this claim.

Here is an excerpt of an email posted on Iran Fax Blog the that seemingly comes from an Iranian citizen:

Tomorrow, people will gather again in Valiasr Square for another peaceful march toward the IRIB building which controls all the media and which spreads filthy lies. The day before Yesterday, Ahmadinejad had hold his victory ceremony. Government buses had transported all his supporters from nearby cities. There was full coverage of that ceremony where fruit juice and cake was plenty. A maximum of 100,000 had gathered to hear his speech. These included all the militia and the soldiers and all supporters he could gather by the use of free TV publicity. Today, at least 2 million came only relying on word of mouth while reformists have no newspaper, no radio, no TV. All their internet sites are filtered as well as social networks such as facebook. Text messaging and mobile communication was also cut off during the demonstration. Since yesterday, the Iranian TV was announcing that there is no license for any gathering and riot police will severely punish anybody who may demonstrates. Ahmadinejad called the opposition as a bunch of insignificant dirt who try to make the taste of victory bitter to the nation. He also called the western leaders as a bunch of “filthy homosexuals”. All these disgusting remarks was today answered by that largest demonstration ever. Older people compared the demonstration of today with the Ashura Demonstration of 1979 which marks the downfall of the Shah regime and even said that it outnumbered that event. The militia burnt a house themselves to find the excuse to commit violence. People neutralized their tactic to a large degree by their solidarity, their wisdom and their denial to enage in any violent act. I feel sad for the loss of those young girls and boys. It is said that they also killed 3 students last night in their attack at Tehran University residence halls. I heard that a number of professors of Sharif University and AmirKabir University (Tehran Polytechnic) have resigned. Democracy is a long way ahead. I may not be alive to see that day. With eyes full of tear in these early hours of Tuesday 16th June 2009, I glorify the courage and bravery of those martyrs and I hope that their blood will make every one of us more committed to freedom, to democracy and to human rights. Viva Freedom, Viva Democracy, Viva Iran

On balance, to me the evidence seems to show that a reasonable person could come to the conclusion that this election may have been rigged. To avoid a revolution and further bloodshed, a new fair election must be held.

In an age of instant communication you cannot deceive your population for long. If you throw an election, it will get out. In an age of transparency, the days of leaders who don’t serve their people are numbered.

If you’re on Twitter, you can connect with me via @ryanallis.

The revolution will be Tweeted.

P.S. - Here is an interesting article on how protests were organized before the days of social media.

MIT IDEAS Competition Slides - The Great Opportunity of Our Generation

I wanted to post my Powerpoint slides from the presentation I gave at MIT for their 2009 IDEAS Competition on Monday night. You can view them on Scribd or below via this blog post.

The topic was “The Great Opportunity of Our Generation”

Some of the formatting is off in Scrib but mostly OK…

MIT IDEAS Social Entrepreneurship Competition, Ryan Allis, The Great Opportunity of Our Generation, May 200…

Here are some notes from the award ceremony following my presentation from Joe Chung. Congratulations to the winners! AquaPort, HeatSource and EGGTech were especially interesting to me.

Opening: Nick Fontaine
Keynote: Ryan Allis

Chancellor introduced
$2.5k IDEAS Award Winners
Aquaport
Oladapo Bakare
Ashley
Mary
Rob
Joonhaeng
Ash
Rebecca
Daniel
(water filtration)

Professor Thomas Byrne introduced
$2.5k winner
Vision Group (seeing machine)
Quinn Smithwick
Brandon Taylor
Yi Fei Wu
(project image directly into eye, bypass distorting part)

Barbara Baker introduced
$5k IDEAS Award winner
sponsored by Baruch Family
Global Citizen Water Initiative
Scott Frank
Stephanie Bachar
(place water in tube for 24 hrs to see if clean)

Allan Powell introduced
$5k IDEAS Award Winner
sponsored by The MIT COOP
BLISS
Saba Gul
Dr. Ishrat Hussain
Nadeem Mazen
Ghanzala Mehmood

Presented by Dean Stephen Lerman
$5k IDEAS Award Winner
sponsored by the office of dean of grad education/Yunus Challenge Winner
EGGTech Blandine Antoine Emmanuel Cassimatis Alla Jezmir
(providing battery for lighting to those in tanzania without electricity)

Yunus Challenge Winner
$7,500 IDEAS Award Winner
Lebone
Alexander Fabry
Aviva Presser
Hugo Van Zuuren
(microbial fuel cell solution for providing electricity)

Presented by Professor Thomas Byrne, MD
$7,500 IDEAS Award Winner
Braille Labeler
Aleksander and Anna Anita Leyfell
Adelaide Calbry-Muzyka
Josh Karges
Karina Pikhart
Maria Prus
Rachel Tatem
(electromechanical braille labeler)

Presented by Professor Michael Cima
Sponsored by the Lemelson - MIT Program
$7,500 IDEAS Award Winner
HeatSource
Amy Qian
Celeste Chudyk
Scot Frank
Allen Lin
Mary Masterman
Catlin Powers
Saad S
(encapsulating solar radiation through textile/material that provides heat during night)

Winner’s Retreat 2 Days at Endicott House

Inside The White House Friday…

On Sunday March 1 I got a voicemail. The call was from Elliott Bisnow. It said, “Come to The White House on Friday.”

Background on The Summit Series

I’ve written about Elliott before. He’s 23 and somehow, with an excellent team, has put together The Summit Series, designed to bring together the top entrepreneurs, social entrepreneurs, and innovators under 40 in the world. The group started in April 2008 in Utah wanting to bring together cool people. The purpose has evolved and strengthened as the group as grown.

Today, the purpose of The Summit Series is to bring future global leaders together to figure out how to make the world better. They’ve brought together people like Jessica Jackley, co-founder of Kiva, Scott Harrison, the founder of Charity Water, Eric Ryan and Adam Lowry, co-founders of environmentally-friendly soap maker Method, and Blake Mycoskie, CEO of TOM’s Shoes, who has given away tens of thousands of shoes to children in developing countries.

They’re working to build a community of the most influential young entrepreneurs, social entrepreneurs, and innovators to make a positive impact. It’s the Clinton Global Initiative, Davos, and TED for Generation Y.

At the next Summit Series in April in Aspen, the focus is on philanthropy. They’ll be bringing in Mikkel Vestergaard Frandsen (inventor of the LifeStraw) and Elizabeth Gore from Nothing But Nets, Lauren Bush from Feed Projects which sells bags that enable a contribution to feed a child for a year, Bobby Bailey from Invisible Children which works with child soldiers in Uganda, and Ethan Zohn from Grassroots Soccer, who took his $1 million from winning Survivor:Africa to set up soccer leagues in Africa that enable children there to get tested for HIV/AIDS.

In just one year, The Summit Series has grown through hustle, hard work, and word of month to 120 members, including some of the most well-known and respected ‘under-40′ entrepreneurs and social entrepreneurs in the world.

This brings us to three weeks ago.

How The Meeting Transpired

On February 22, Elliott met David Washington and Yosi Sergant (the guy who launched the iconic HOPE poster) from the White House Office of Public Liaison at a DC event. Elliot told David and Yosi about Summit Series. They were interested in getting the message out on the Obama Administration’s efforts on job creation, the economy, energy, health care, transparency, and new media and building relationships over time with the attendees.

So it happened. David and Yosi told Elliot to find 30 people from Summit Series to come to a meeting at The White House on March 6th.

When someone calls to tell you to come to a meeting at The White House, you go. The White House has a “strong gravitational pull” as David Sutphen of Brunswick Group put it on Friday morning. And so I went.

Friday At The White House

So on Friday morning I flew to D.C. After getting a last minute haircut at an ‘old-school barbershop’ on 15th and H and running into my NASA-friend Stephanie Fibbs on the walk back, the Summit group met at 12pm at the Hay Adams Hotel for a reception.

At the reception I had a chance to meet Jake Nickell from Threadless, Evan Williams with Twitter, Mark Ecko from Ecko, Michael Chasen from Blackboard, and investor Chris Sacca from Lowercase Capital and reconnect with Tony Hsieh from Zappos, Aaron Patzer from Mint.com, Ben Kauffman from Kluster, and Josh Abramson from College Humor.

Lunch followed. At the table was Jessica Jackley from Kiva, Aaron from Mint, Ivanka Trump and her fiance Jared Kushner of the New York Observer, Catherine Levene of Daily Candy, and David Sutphen of Brunswick Group.

Setting Expectations

Prior to heading to The White House, David Sutphen and Phillipe Lanier of Eastbanc set expectations. We were not there to add on to the endless to-do list of the Administration. We were there to understand what was currently being done, ask questions, and build a long term relationship.

We heard that the Administration members we were about to meet were “drinking from a firehose” currently. They explained that we not there to give lots of ideas, but rather to learn what was happening so that we could be the entrepreneurial implementers and doers in our own communities working toward addressing critical needs. It wasn’t just about one day, but an ongoing relationship that started that day.

They shared that the Obama Administration saw us as one medium to communicate what they were working on to others via new media and as one filter of constituent thoughts and suggestions. With the CEOs of web firms Twitter, Zappos, iContact, Threadless, Mint, and Blackboard in the room we could certainly do that. They wanted to build a long term relationship with us and authentically wanted our contribution and ideas–just not all at once and in a usable ’summarized, bulletted form.’

So we walked over. We got our security passes at The Eisenhower Building and then went inside. We went up three floors and down a hallway to a room with thirty chairs and a table.

The Agenda from The Meeting

The meetings during the 90 minute session went as follows:

2:00pm - David Washington, Ph.D - Assoc. Director of the White House Office of Public Liaison and Michael Strautmanis - Chief of Staff to the Assistant to the President for Intergovernmental Relations and Public Liaison

2:15pm - Jason Furman - Deputy Director of the National Economic Council

2:30pm - Martha Coven, Special Assistant to the President for Mobility and Opportunity; Greg Nelson, White House Office of Public Liaison; and Heather Zichal, White House Office of Energy and Climate Change

2:50pm to 3:30pm - Macon Phillips, Director of New Media

Notes from The White House Meeting

Here are my rough notes from each session. All quotes are paraphrased and could be incorrectly attributed in some cases due to my sub-par note taking system

David Washington

• We want to know your ideas on how we can make government more transparent.
• We want examples of how the stimulus is helping–anecdotes and stories that you see.
• Our focus is creating jobs–but we need your help in doing this.

Michael Strautmanis

• Some of the stimulus may work. Some may not. We’re here for solutions not banter.
• When I met Michelle Robinson, she treated me as if I had value.
• President Obama challenged us to make government more transparent.
• From transparency comes legitimacy.
• The OMB is more transparent now. Longer explanations. Posting on Recovery.gov.
• As entrepreneurs, I want you to think creatively about the world of making the world a better place for our children.
• Only way to fix economy is to get on a sustainable path with fiscal responsibility.
• We have to create dynamism and energy. It takes heart.
• Other generations have had other challenges. Together we can meet these challenges.
• We are partners for creating a sustainable future.
• In response to question from Chris Sacca on will Obama start Twittering again: That is up to the Secret Service.

Jason Furman

• We’re working on unfreezing credit, bringing down the cost of health care, energy independence, the climate, education, and fiscal sustainability.
• In response to question on budget deficit from Aaron Patzer of Mint: Right now a fear is deflation. A deflationary spiral is the biggest nightmare for economists. The amount we’re borrowing today is small in comparison to our GDP and needed. Our economy can afford the deficit. We have a path to cut the [annual] deficit by 50% in 5 years. People are lending to the U.S. cheaply at 2.5%.
• We have 12.5M unemployed. Some banks may have negative net worth. Housing was overpriced.

Martha Coven

• We are working on creating green jobs.
• I want the best ideas from the private and social sector to bubble up to Federal Policy making.

Heather Zichal

• In response to question on solar power and home owners selling energy back to grid: We will think about homeowners selling electricity back to the grid.
• We are focused on energy and climate change.
• Administration making a commitment to CAFE standards and reducing dependency on foreign oil
• Cap and trade revenues to start in 2012 according to budget

Greg Nelson

• As business leaders you have a chance to redefine what the role of a business leader is.

Macon Phillips

• Creator of change.gov, whitehouse.gov, and recovery.gov
• We want to work with you on creating a PSA 2.0
• I love free dissemination
• We’ve made time for this because we want you to be empowered.
• Wants abilities to get mass response, but with usable outcomes. 8,000 comments can be unusable sometimes.

What They Asked of Us

Overall, I was very glad to participate. Each of the 30 attendees has been asked to do the following:

1. Act as a filter/community ambassador for the best ideas/suggestions/thoughts on what we can do on the economy, budget, energy, healthcare, education, and new media. Get feedback from your community and send the best to us from time-to-time in summarized, bulleted form.
2. Send any examples/anecdotes/stories that we hear of due to investments from the Stimulus making a positive impact in your community.
3. Send any ideas/suggestions/thoughts on how to make government more transparent and open.

Finally, they asked us to go back to our communities and work entrepreneurially to create positive change, address social needs, and create jobs. They said we must create a true partnership between the public, private, and non-profit sector for it to work.

My Thoughts on The Meeting

I very much appreciated the meeting. It was done with good intentions, and not as a media stunt. They shared with us what they were working on and how we could be part of it to increase the chance of success.

It was clear how smart, busy, and focused these people were. They were glad to meet us and we were certainly glad to meet them. They could be us and we could be them.

They gave us their direct email addresses and encouraged us to act as a filter for them for them on the best ideas. Finally, they invited us to build a long term relationship and explained that as we built trust over time, our influence as a group would grow.

After the Meeting

After the meeting, we all went to a local restaurant to discuss what we had experienced. We broke out into four groups to talk about our ideas and begin to refine them. The groups were:

1. Economy and the stimulus
2. Education and job creation
3. New media and transparency
4. Energy and the environment

I led the group on the economy and the stimulus. I’ll be writing up my notes and posting them soon.

Where It Goes from Here

So we’ve been asked to be one informal filter (of many) for these individuals in the Administration and Office of Public Liaison and help ensure they’re getting the best ideas from the best people filtered to them every few months in summarized form.

I’ll be holding an Entrepreneur & Social Entrepreneur Meetup at my house in Chapel Hill on Friday March 20th at 8pm at which I’ll present what we’ve been asked to do and start the discussion with the group.

We’ll likely hold a separate meetup (date TBA) in early April to discuss and debate ideas and policy proposals on the topics of: economy, budget, energy, healthcare, education, transparency, and new media. We’ll then filter the ideas and present a summarized form to our new contacts in the Obama Administration.

If you have any ideas or thoughts please post them below via the comment section.

The Tweets From The Meeting

Since Evan Williams, the founder of Twitter with 231,000 followers, Tony Hsieh of Zappos with 197,000 followers, and Chris Sacca with 132,000 followers were with us, we may have been in the most tweeted meeting at The White House in the history of the world.

The post-meeting Tweets were positive.

@ev wrote: “Lessons from today: Obama’s team: smart and committed. Learned a lot and was inspired.” and

@saaca wrote: “The folks from the White House are sharp. Obama made it cool once again for awesome people to serve in government.”

@tomsshoes wrote: “Just left the meeting - pretty inspirational. The administration really does want our input, each gave their personal email addresses and encouraged dialogue.

Feedback from Readers and Friends Prior to the Meeting

I was amazed at the response I got by soliciting feedback prior to and during the meeting on Facebook and Twitter. More comments flowed in than I’ve ever gotten before on a status update or Tweet.

I asked on Thursday night via Facebook and Twitter, “meeting at White House Friday to discuss ways to improve economy. Any suggestions?” I got 29 responses. Note that you’ll have to be my Facebook friend or in the UNC or Raleigh-Durham network to read them I believe.

I also asked on Friday, “just challenged by the Obama Administration to provide idea on how to make govt more transparent and open. Ideas?” I got 17 responses.

Photos from The Day

Here’s a photo of the front of the brochure for the day:

And here is Jeff Rosenthal and I with Jessica Jackley of Kiva inside the Einsenhower Building.

Comments Sought

What are your thoughts/ideas/policy proposals in the areas of economy, budget, energy, healthcare, education, transparency, and new media? Post and get the discussion going…

StartingBloc Presentation: A Vision for the World in 50 Years

The last two Saturday mornings of my life have been spent on Powerpoint. But it was worth it.

So I’m standing in front of 150 social entrepreneurial peers at Yale on Saturday, attempting to set the scene for why I think we can actually end poverty, hunger, genocide, warfare, and preventable disease in our lifetimes.

First, I start with the challenges.

This is a continuation of the last post “The Great Challenge of our Generation.” The material comes from my StartingBloc presentation on Saturday, “The Immense Opportunity our Generation Has.”

First, let me take a step back and take a shot at some of the major the causes of this economic decline. Some of these causes may be controversial or debatable, but it’s a stab.

The Major Causes of the Economic Decline

1. De-regulation of financial industry in 1999 (Glass-Steagall)
2. Low interest rates to stem 2001-2002 recession
3. Easy credit to unqualified home buyers from 2002-2007
4. Lack of consumer savings in the U.S.
5. Over-leveraging of trading accounts
6. Over-derivitization of securities, de-linked from their underlying assets (CDOs, credit swaps, MBSs)
7. The collapse of key counterparties to risk

And the resulting effects of the declines…

The Effects of the Economic Decline

Mar 2008 - Forced Sale of Bear Sterns to JP Morgan
Jul 2008 - IndyMac Bank collapses
Sep 2008 - Bailout of Fannie Mae, Freddie Mac, and AIG, Forced Sale of Merrill Lynch and Wachovia, Collapse of Lehman Brothers
Oct 2008 - $700 billion U.S. government TARP
Feb 2009 - Unemployment rises to 7.6%, over 3.6 million jobs lost, DJIA down 50% from Oct 2007 peak, $787 billion U.S. government stimulus package

I showed graphs showing of the rise in collateralized debt obligations…

the decline in NASDAQ to levels not seen since 1998…

the decline of the DJIA to the lowest levels since 1996…

the decline of the Brazil-Russia-India-China ETF down 61.47% since June 2008…

the rise in unemployment to the highest level since 1992…

the rise in U.S. foreclosures…

and the drop in IPO pricings, down 84% in 2008…

Finally, I listed the key global challenges we currently have:

Key Global Challenges

1. Extreme hunger and food distribution
2. Water sanitation and distribution
3. An $11 trillion U.S. government debt and unfunded liabilities in Medicare, Medicaid, and Social Security
4. Lack of access to childhood education
5. Infant mortality, Malaria, measles, TB, diarrhea, HIV/AIDS
6. Human rights violations and sex trafficking
7. Climate change causing increasing temperatures
8. Nuclear proliferation
9. Major conflicts in Congo, Palestine, Sudan, Afghanistan, Iraq
10. Lack of transparent leadership in Zimbabwe, N. Korea, Somalia

And the wonderful graphic I showed next to illustrate just how scary these challenges are…

Yes, this baby has good reason to cry.

And to transition to the section on opportunities I started by showing…

I showed the DJIA over a 40 year period to show a longer term perspective…

I showed the DJIA from 1969 to 1982 to show another 13 year period that was flat…

Then showed what happened to the DJIA in the thirteen year period from 1982 to 1995 (from 900 to 4700)…

And showed Yale Economics Professor Robert Schiller’s P/E10 ratio that shows Price to Earnings ratio over a 10 year period to give a longer term perspecitve, showing that the P/E10 today is 13.38 down from 43 in May 2000.

And showed the 13.38 P/E10 lower than the long term average since 1881 of 16.84 indicating it may be a good time to buy.

And showed that only 23.5% of the world population (only 1.5B people so far) have access to the Internet today and that this percentage is rapidly expanding, which may provide a great coming power from a connected humanity that can communicate…

Showed that infant mortality has been cut in half in the last 45 years via the chart from Bill Gates’ annual letter…

Talked about the old model of government-to-government bi-lateral aid…

And shared three case studies of non-profits that are following a new model of aid, Aid 2.0, that could make a huge impact…

And finally listed all the great entrepreneurial opportunities there are in the world that entrepreneurs can work to solve–all of which could generate a billion dollar business…

Key Global Entrepreneurial Opportunities

1. Agricultural production yields
2. Food distribution and logistics
3. Water collection, sanitation and distribution
4. Wireless electricity distribution
5. Wireless mesh broadband networks
6. Ending conflict through trust and communication
7. Leadership transparency consulting
8. Improved education and reform
9. Improved preventative health care and reform
10. Clean tech/alternative fuel (the coming Green Revolution)

And finally ended with…

Perhaps, it’s time to invest long in our futures.

A Vision for the World

So, with these great challenges and opportunities in mind, I’d like to work with each and every one of you over the next fifty years to shape a world that addresses the great inequities of opportunity in the world all based on the principle that all human lives have equal value. A world in which…

1. There is no killing of humans on a mass scale (genocide or warfare)
2. All humans have access to the basic human needs of clean water, nutritious food, shelter, and primary education
3. We end preventable diseases like malaria, TB, and measles
4. We are environmentally sustainable

Is this possible?

Some may laugh.

But there’s no legitimate reason why humans have to kill thousands, tens of thousands of humans on a mass scale. Especially not in an age of increased communication and hopefully increased trust. Is there?

There’s no legitimate reason why if we have the logistical ability to get a package to Shanghai by the morning that we can’t create a system that enables basic, inexpensive food to be produced and distributed to starving children in the developing world, especially not in an age of increased grain yields. Is there?

There is no legitimate reason why preventable diseases can’t be prevented in the next 50 years. By definition. Is there?

And there is no legitimate reason why we cannot find alternative energies to fossil fuels that don’t destroy the world. Is there? We already have them. They’re just a bit more expensive per KWh than fossil fuels. This price doesn’t include the true cost of the externalities caused by the fossil fuels currently being paid by society. As Tom Friedman talks about in Hot, Flat, and Crowded, once we scale the usage of alternative energies, their price per KWh will quickly come down to be sustainable from an economic and environmental standpoint.

We’ve had bigger challenges before. In 1962 in the midst of the Cuban missile crisis. In 1943 in the midst of World War II. In 1930 in the middle of the Great Depression when unemployment was at 25%. These are challenges our generation can overcome if we make the right sacrifices and investments in education, infrastructure, leadership, and sustainability.

People laughed at Edison when he said he had a device that recorded sound.

People laughed at Marconi when he claimed had a device that wirelessly transmitted sound.

People laughed at Yunus when he said he could lend to poor women with no assets.

Your thoughts? Is this world possible?

Beware: The Beijing Tea Ceremony Scam

The fireworks are blasting outside my window as I write. I happened to have arrived in Beijing on the night of the Festival of the Laterns, which involves hours upon hours of continuous fireworks all over the city. Today is the 15th day after the Chinese New Year on January 26, and thus the fireworks. Here’s a photo from my hotel window about 20 minutes ago.

On the way from Chicago this afternoon, instead of flying West like I expected we would, our plane flew North to the North Pole, and then South down to China. Here’s a photo of what the map looked like from the video monitor on the plane seat. What an interesting way to view the Northern Hemisphere.

So after flying over Canada, the North Pole, Siberia, Russia, and Mongolia I landed in Beijing at 4:30pm this afternoon. I got into my hotel around 5:30pm and although tired decided I’d go out. I decided to go see Tiananmen Square and the Forbidden City and walk around a bit.

Here’s where the scam begins.

Walking right in front of the Forbidden City, two English speaking Chinese students came up to me and asked if they could practice their English with me. Having seen plenty of pickpocketing during planned distractions throughout travels in Europe (especially in front of the Coliseum in Rome), I was very aware and was skeptical of what these two young girls were after. They were dressed conservatively, so it didn’t seem like they were trying to sell themselves.

I said sure to them practicing their English. They explained they were in Beijing for two weeks studying English and had decided to come out to see Tiananmen. They asked lots of questions and gave lots of compliments. After about fifteen minutes of talking and them explaining the Festival of the Laterns and their backgrounds they frankly had gained my trust. Seemed like they were actually two 22 year old college students named Jing Li and Ling studying English. Since I didn’t have anything to do until the morning I said yes when they asked me to get tea with them.

We walked for about ten minutes and ended up at the Si Zhu Xiang Tea House at 15 Nan He Yan Street in the Dong Cheng District. We were led into a room where 10 very small sample teas (less than an ounce) were poured (without ever being provided a menu). When I got the bill for my tea, it was of course in Yuan. I foolishly didn’t know the exchange rate. So I paid the bill thinking to myself, OK 10 small tea samples adding up to about one full cup of tea, this can’t be more than US$20.

When I got back to the hotel, I checked the exchange rate and found out $1 was equal to 6.7 Yuan. They had charged me 2112 Yuan or in U.S. Dollars, $308.90 for the tea.

I then Googled the name of the place, Si Zhu Xiang Tea House and found that I wasn’t even close to being the first to get taken by the now infamous Beijing Tea Ceremony Scam. Those “friendly college students wanting to work on their English” are paid by the tea house. It seems that ‘entrepreneurship’ is alive and well here.

Yep, I was taken on my first night in Beijing. In the very first hour too. Here’s to Visa’s fraud protection.

And hey, I even got a picture with Jing Li in front of the Forbidden City. Here she is, the girl who scammed me with a victory sign…

At least I’ve got a good story now. :-). Here’s to the Festival of the Laterns and to “becoming a more experienced traveler.”

Tomorrow, the real work begins.

The 50 Personal & Business Lessons I Learned in 2008

At the end of each year I post the business and personal lessons I learned that year. You can see the 2007 lessons here, the 2006 lessons here, and the 2005 Lessons here. Here are the 50 Personal and Business Lessons I learned in 2008.

The 25 Personal Lessons I Learned in 2008

1. Don’t Cheat on Your Wife. Don’t cheat on your wife, period. But especially don’t cheat on your wife if you’re planning to run for national office. I learned this lesson from John Edwards in August.
2. Don’t Hire a Prostitute. Don’t hire a prostitute, period. But especially don’t hire a prostitute if you’re already well-recognized and a Governor of a major U.S. state. Thank you Elliot Spitzer.
3. (Some) Women Can Get Very Jealous of Other Women - I am very careful not to over-generalize here. In my experience, some women can get very jealous of other women, especially those that you previously dated, even if there is no real reason for them to be. If you’re in a relationship with a woman that you care about, make every effort to make her feel like she is the only one. Make sure she understands she is the person you want to be with.
4. Women Have Amazing Natural Instincts. Remember when you were a kid and you thought you were getting away with something but your mom knew all along. I thought I had hid the bottle of Bacardi 151 safely in my closet and then one day it was gone without explanation. Yes, women have amazing instincts and will generally catch you at anything you get yourself up to. Be open, honest, up front, and transparent with them.
5. Don’t Fall For A Woman Until You Know Her Well. Don’t fall for what you think women are or who they are on paper, but rather who they actually are, whether they like you back, and how well you can communicate. I’ve made mistakes in this area a few times in the last two years–falling for women based on who I thought they were (or who I wanted them to be) rather than who they actually were, whether they liked me as well, or how we communicated.
6. Life Can End At Any Time. Live Fully And Don’t Wait to Make a Difference. On March 5, 2008 UNC Student Body President Eve Carson was killed in Chapel Hill by multiple gunshots to the head after being kidnapped from her home. I knew Eve when she was Co-Chair of Nourish International. I wrote this post at the time. The words of her father, Bob Carson, at her memorial service on March 9th will forever live with me…
   

   “I see a stunningly beautiful convergence of talent and caring in this, our children’s, generation. I believe that these kids, along with their peers around the globe, can reach reasoned solutions for mitigating violence and tacking many of the inequities of poverty, prejudice, inadequate healthcare, and under-education. This is no pie-in-the-sky-wish! These kids are smart. They’re so capable. They’re more productive because they collaborate and communicate like no generation before them… But I must tell you–even with an aching heart, and yet with such hope and love–that the friends of Eve, and their generation, will not be denied. They’ve got miles to go and missions to keep.”

7. Humor has great power. Jeff Dunham is absolutely hilarious. Achmed the dead terrorist is perhaps the funniest politically incorrect puppet in the history of puppets. “Silence! I kill you!”
8. When You’re Speaking to Middle Schoolers, Use Audience Interaction. In February I talked to 200 middle schoolers at Moore Museum Middle School in Raleigh. It was my first time talking to that age of audience. I learned a few key lessons regardless of your age. Don’t go more than 5 minutes without asking the audience some form of interactive question. Use vocabulary that is at their level. Do cool dances. Do not show vulnerability. Get your message tight and repeat it.
9. It’s Hard to Beat Oprah. On February 5th my book Zero to One Million launched from McGraw-Hill. It reached #2 on Amazon and made the Wall St. Journal Bestseller List after an aggressive launch through social media and friends of mine with large email newsletters. We reached 4 million people and sold about 4,500 copies that day via Amazon, more than the 2,500 books one has to sell on a normal day to reach #1. We would have reached #1 had it not been for Oprah promoting Eckhart Tolle’s new book A New Earth on her show that day causing it to sell 7,500 copies in a day.
10. You’ll Get Sick If You Sleep in the Cold. In January, after speaking at Fairmont State University in West Virginia, I slept in the Extreme Entrepreneurship Tour RV in a parking lot instead of getting an extra room at the hotel we were at. It was about 70 when I went to sleep at 1am but about 40 when I woke up at 9am. I didn’t know that the generator (and thus the heat) had been left off. I was sick for the next week. I learned that when you sleep in a place that gets below 50 degrees, you will more often than not get a cold as your body doesn’t have the heat to kill germs and infections.
11. Arrogance is Being Dismissive of Others Not Overconfidence. Growing up, I thought the definition of arrogance was having too much confidence. This was difficult for me to understand as I’ve always been an extremely confident person and knew that over-confidence was absolutely essential to any chance I had at succeeding at a young age. After a number of good conversations with my former girlfriend Erin I was able to learn the lesson that arrogance is not over-confidence, it’s being dismissive of others and not showing care toward them.
12. In Berlin, People Go Out Every Night of the Week. I was in Berlin in May with the Transatlantic 2020 program. The young people in Berlin tend to go out every night of the week including strange nights like Sunday, Monday, Tuesday, and Wednesday. I went to a Techno Club called Tresor in Berlin on a Tuesday night and it was absolutely packed.
13. In Dubai, You Can’t Get In a Nightclub Unless You Have a Woman With You. I was in Dubai for a night in July with my roommate Roey Rosenblith. We were on a stopover on our way to Uganda for a week. It was a Saturday night. We went out expecting to see the tales of the crazy Dubai we had read about in Rigged. The reality,  two 23 and 26 year old Americans could not get into a nightclub in Dubai without a woman with us unless we bribed the bouncer with $30 each which we refused to do on principle. We should have found a woman to say she was with us.
14. In Uganda, The Driving is Insane. I’m not talking mildly insane or moderately crazy. I’m talking absolutely off-the-heezy psychotic. I remember riding in the passenger side of a van driving on a two-lane dirt road while our driving proceeded to pass a car that was already passing another truck, causing us to end up in the dusty shoulder of the other side of the road while a truck carrying about 35 people standing it its back rambled toward us.
15. There Are Tremendous Investment Opportunities in Africa. In Uganda there were so many business opportunities. Incorporating a business (which Roey did while there) took only 3 days versus 3 weeks in the U.S. There were 20 story skyscrapers, lawyers, and banks. Africa is by no means represented fully by the pictures of suffering children we so often see (which is also real). Much progress can be made in reducing poverty through socially responsible investing and entrepreneurship.
16. Seek to Understand The Other’s Perspective. One of the most valuable things I learned from Vanessa while dating her this year was how she was able to be so compassionate and universally loved. This seems so obvious in hindsight. I learned that she always first looked at things from the point of view of the other person.
17. Don’t Forget To Be Your Age from Time to Time. One of the lessons I’ve learned most from my friends James Forsyth and John Hinson this year is to open up, be real, and take life less seriously. To act my age from time to time rather than acting 40 all the time. Since taking this lesson to heart, I often can be seen dancing to Flo Rida, swimming on the floor of my office with deer or talking to my stuffed animals on a love seat :-). There may not be many CEOs who would do this, but wouldn’t the world be more enjoyable if they did?
18. It Takes 10 Years To Become Great at Anything. Here’s a key learning from Malcolm Gladwell. It takes about 10,000 hours (10 years at 4 hours per day) to become Great at anything. You can only become Great at 6 or 7 things in your life. Choose carefully.
19. Don’t Leave Your Blackberry in Your Pocket When You’re Making a Speech. Even if you’re phone is on silent, your phone will cause the microphone to go nuts when it rings due to interference.
20. If You Drop Your Blackberry in the Toilet, Get it Out Quickly and Remove the Battery. I did this in October at a EO retreat at Lake Gaston. I removed it quickly, dried it upside down, but was unable to save it from certain death. I later learned had I removed the battery right away and let the battery dry separately it would have had a chance due.
21. There Is A Lot of Crap in the World. Genocide, war, people getting hung, shot, run over, earthquakes, vitriol, people who don’t believe in you, murder, rape. Sometimes it’s difficult to cut through it all and believe that anything is possible. And yet, a driven, caring, passionate individual can make a huge positive difference.
22. The Value of a Human Life is Equal, But Most People Don’t Agree With Me. When you see Cyclone Nargis kill 146,000 people in May in Myanmar and an earthquake kill 69,000 in the Sichuan province of China just two weeks later and so few people talk about it or even remember eight months later, it definitely takes a toll on my human spirit. For some reason the value of lives is seen as different based on which nation-state someone is from. When 200 Americans are killed it’s the biggest story for three months. When 100,000 Asians are killed no one remembers 90 days later. What the f? To me a human is a human regardless of where he or she was born or is currently located. I wish our media agreed.
23. Photography Has Great Power. Just look at this collection of 2008 in Photographs (part 2, part 3).
24. It is Better to Love and to Lose Than to Never Love at All. In other words, it is better to live life to its fullest, even if one day you may forget it. The key message of Eternal Sunshine of the Spotless Mind.
25. I Love New York. I was sitting at a Starbucks in Murray Hill (around 30th St and Lexington on the lower east side) over the Memorial Day weekend in May. I love the architecture, the culture, the art, the diversity of people, and the drive of the young people that live there. It’s the commerce capital of the world and you can go hip hop dancing every night of the week. While long term I want to end up in beautiful North Carolina, I do look forward to living in Boston and then NYC at some point in the next ten years. I wrote in my journal while at that Starbucks.
    

    “There are just cute, smart, driven, ambitious 24 year old women fricken everywhere. Especially love the Murray Hill area of town where I’ve been staying with Ryan Alovis. The parks are great. Walk back from Union Square was great last night. And all the investment bankers and private equity managers are here too. You can get anything you want anytime you want. Seriously, 2 more attractive mid-20 year olds just walked by. And another. And all wearing spring dresses. So much great diversity. Columbia was beautiful yesterday. So much activity and action. OMG another one. They are all over the place. People smiling, living. Restaurants, bars, parks, dancing, expression, tall buildings, public transport, sports teams, big concerts, being able to be yourself.”

The 25 Business Lessons I Learned in 2008

1. Business Conditions Can Change Quickly. There was a Sunday night in September that changed everything in the financial world. In one day, Lehman Brothers had filed for bankruptcy and Merrill Lynch had agreed to be acquired by Bank of America. Still to come was the AIG bailout, Morgan Stanley and Goldman Sachs’ conversion into bank holding companies, and the sale of Wachovia to Wells-Fargo. In our world of Software-As-a-Service (SaaS), average valuation multiples dropped from 3.5x to 2x forward year revenues in just 45 days.
2. There Are Parts of the Stock Market I Don’t Yet Fully Understand. Although I’ve been an entrepreneur since age 11, majored in economics, and read everything I can get my hands on about finance I’ve still got a LOT to learn about markets. On September 16th, I thought that the Fed bailout of AIG would stabilize markets and that the DJIA had seen its low at 10,742. Sixty-four days later the Dow closed at a low of 7,552, another 29.7% drop. I’ve still got a lot to learn about the TED spread, credit default swaps, counterparty risk, collateralized debt obligations, liqudity, and the effect of rapid de-leveraging.
3. There Are Parts of the Commodities Market I Don’t Yet Fully Understand. I also thought that the per barrel price of oil had seen it’s low at $88 in September after dropping from $147 in July. As of December 27, the price of a barrel of crude on NYMEX is $37.71. You’d think that the price of such a fundamental commodity to world growth couldn’t possibly drop 74.6% in six months–but you’d be wrong. Ahh, hedge funds, speculation, and perceptions of demand.
4. Don’t Fret About Decisions That Aren’t Yet On The Table. In August I found myself spending hours and hours considering and debating whether iContact should raise another round of venture capital or not. We had six firms interested, all at nice valuations and at favorable terms. It was just a matter of 30 days or so until we got term sheets. I spent four hours one evening while at a Pacific Crest conference in August writing an 8 page analysis of the pros and cons. By the end of September, the market had changed dramatically and all the consideration was irrelevent. I spent a few too many hours considering what we would do in a scenario that wasn’t yet on the table. We ended up choosing not to raise equity capital and went with a venture debt round from North Atlantic.
5. If You Raise Venture Capital, the Required Sale Price of Your Firm Goes Up to Have Equal Success. I learned this lesson in 2007 when we raised our first round from Updata Partners. At that point, we could have had a very successful exit for iContact at any reasonable sale price (since we received our shares at par value of $0.001 each). Once we raised funds at a $30M post-money valuation, suddenly we had to have an exit north of $60M to be seen to have had a success (and $90M for a true success) in the eyes of our investors. This ‘re-setting of the bar’ phenomenon due to a new investor coming in at a higher per share basis price is key for entrepreneurs to consider when deciding whether or not to bring on outside capital.
6. Viral Video Can Be A Powerful Form of Communication. Our iContact iNews videos have been powerful for building and sharing our culture. The Yes We Can video got over 14 million views and made an important impact in the primary election vs. Hillary Clinton. It was released just three days prior to Super Tuesday February 5th. Virtualization server company VMware hosted a viral video contest called “Virtually Famous” in May. They basically got all their users/fans to produce a catchy advertisement for them. Then they had their fans’ colleagues and friends  vote on the best one–which drew tens of thousands of new viewers to watch an ad for their company. My friends from Cary won with their production “Hardware Hotel.”
7. Focus. Something I’ve learned to be critically important is focus. Once I figure out what I want to achieve I go after it until it has been achieved. Right now and for the next few years of my life my focus is building iContact into the leading provider of email marketing services for SMBs and non-profits. Nothing will stop us.
8. Let People Know What You Are Doing And Why. Have conversations with your key people to let them know what you are doing and why. Even if it’s absolutely clear to you why your top 5 business priorities are your top 5 business priorities, that does not mean your direct reports understand why you are working on what you are working on. Have frequent conversations with your team about the company’s top five priorities and your top five current priorities. I choose to list them monthly in a powerpoint package we review as a team.
9. Get Input in the Planning Process. Even if you have the best plan in the world it won’t matter if it doesn’t get executed well. And it won’t get executed well if people aren’t bought into it. They simply cannot buy into it unless they understand the reasons for it and have a role in providing input and structure.
10. What you Measure, Gets Managed. If you measure, set a target for, and compensate on a KPI (key performance indicator) like phone abandonment rates, your phone abandonment rates will suddenly improve. We started measuring phone abandonment rates (the % of your customers who hang up while on hold before you can answer the phone) in July of this year and within 6 weeks the percentage of abandoned calls went from 9% to 4%.
11. Human Psychology Responds Well to Deadlines. There is great, great power in using deadlines, especially as it relates to sales. Our previous record for new customers in a day was 106. On March 31 this year, during an end-of-quarter sale, we added over 225 new customers during the day. Of course, there was an added incentive that day…
12. When You Want a Team to Reach a Stretch-Goal, Say You’ll Shave Your Head. It was March 9th, we were on track for about $930,000 in sales for the month. I told our team at a company lunch if we hit $1 million in sales that month, I’d shave my head. We hit $1,030,000 and there went my hair.
13. Let Your Customers Play a Big Role in Product Management. When you’re ready to improve your product or add additional products, don’t add what you think your customers want, add what they actually want. Ask your customers informally via focus groups and formally via an online survey. Ask them what their needs are and what additional features or products that they would receive value from. Also keep in mind that sometimes having too many features can decrease ease of use of your product and thus lower conversions. The book The Breakthrough Company has a good saying–”As you diversify, let your customers lead you.” The book Ready, Fire, Aim says (and I’m paraphrasing here), “Let your customers determine your development order and timeline by a vote.”
14. My Ideas Matter Less Now. When we had 4 or 8 employees, my ideas were important. Today, at 150 employees my ideas matter much less than those of the team we’ve put together. What’s important is that we’ve hired the right people, put the right systems and processes into place, and empowered them to think and execute. Today, my time isn’t spent writing Product Requirement Documents or Marketing Plans, but rather ensuring our team has what they need (capital, people, systems, metrics) to get their jobs done. Today our focus is to build our team up into leaders, thinkers, and innovators.
15. Everything is Negotiable. At iContact, we have one of the best CFOs in the technology business period, Tim Oakley. He is a tough negotiator. I’ve learned from Tim that everything is negotiable. There is no such thing as “reality” as every single person has a different perception of reality. Therefore, one can guide and structure reality. Reality is negotiable.
16. M&A Firms Position Exit Value Using Synergy Value, Scarcity Value, and Strategic Value. We hired an investment banker to assist us in raising our round of investment this year. As part of this process, we learned a lot about mergers and acquisitions of companies, which they also represent companies for. Investment bankers will work to position a company at a premium to the valuation of comparable companies by assessing synergy value (the value of the added cash flow created by selling the products and services of the acquired company to the customer base of the acquirer), scarcity value (the added value if there are few substitute companies that an acquirer could purchase instead of you) and strategic value (the added value to the acquirer of your brand, competitive position, team, processes, culture, technology, and intellectual property that will help them create added cashflow within their own business).
17. Restate The Other Person’s Point Before You Begin. A lot of managers are poor listeners. Two years ago in improv classes I learned the “Yes And” principle. The same principle can be applied to either external negotiations or internal debates to help people feel heard and valued. It can be extremely helpful when in a discussion or debate to purposely restate the other person’s point and then add on to it. Try starting with “Yes, I see that such and such and…” instead of the too common, “But.” The formula is [RESTATE THEIR POINT]… and…[MY POINT OR COUNTER-POINT].
18. Market Valuation is Determined By One Willing Buyer and Seller. The valuation of any company is determined by a number of factors. All valuation models eventually come down to the present value of future net profits. The challenge is in figuring out what you actually think those future net profits will actually be and then which discount rate to use. But the bottom line is that valuation is simple–it’s the price a willing buyer and a willing seller agree upon.
19. All Disappointment in Life is Caused By Misaligned Expectations. This phrase is the perhaps the favorite saying of Tim our CFO after ‘net-net’ and ‘the sale is different from the install.’ It means that unhappiness in business and in life is caused when reality turns out different than expected. The human mind needs time to adjust, plan, project, and set expectations. For example, if you know that you are going to have to send a team member to Las Vegas for three months for a project (which could be exciting or disappointing depending on the team member), tell them as soon as you know not a couple days before they have to go. By telling them right away they will have time to adjust, plan, project, and set expectations and will be much more likely to enjoy the experience and be productive. I didn’t understand this when I was younger, but people require time to adapt to upcoming change.
20. Always Be Testing. If you or your company is not using at least 15% of your marketing budget to test new marketing channels each month, something is wrong. One should always be testing new customer acquisition channels. And don’t say you’ve tried them all or there aren’t enough to test. Have you tested local radio, network radio, satellite radio, classified ads, magazine ads, trade journal ads, newspaper ads, newspaper inserts, flyers, vertical-targeted direct mail, market-targeted direct mail, direct mail inserts, local television, cable television, DRTV, skywriting, phonebooks, airport ads, online co-registration, offline co-registration, affiliate programs, CPA deals, call centers, tradeshow sponsorships, search engine optimization, paid search, and banner ads? If not, get to work!
21. Don’t Make Too Few Mistakes. The corollary to testing with 15% of your budget is to be willing to make mistakes and learn from them. In business and in life you learn when you make mistakes. Mistakes are how you grow and scale. Make sure you are failing at a high enough pace in order to succeed.
22. Enable an Environment of Trust. As a Director Team we read Patrick Lencioni’sThe Five Dysfunctions of a Team at our annual Director Retreat in Virginia this year. Here’s an overview of The Five Dysfunctions. One of the key principles of the book is to work actively to get your management team to understand each other and where each person comes from. The first exercise we did at the retreat was to share our ‘personal histories’ with one another. We shared basic information like where we were from, siblings, first job, worst job, why you came to iContact, and life goals. It was amazing what we learned from people we had been working with for years.
23. Have Some Conservatism in Your Annual Plan. Most companies once they leave the start-up phase develop what’s called an annual plan. In it, you project your bookings, revenues, expenses, net profits, and cash flows by month usually about 3-4 years into the future, with particular focus on the current and upcoming calendar year. It’s basically a budget with variable drivers (in our case acquisition, churn, and average revenue per user). At iContact, we have an Annual Plan that is reviewed and approved each December by the Board. Once you raise venture capital, you are judged as a CEO primarily by whether you hit or miss your projections. Many CEOs make the mistake of making their projections unreasonably high in order to get a higher valuation which then causes the venture firm to put significant pressure on the CEO to hit these projections which just cannot be done. At iContact, we’ve always had aggressive projections (120% annual growth is always aggressive). But we’ve always been careful not to provide a Plan we didn’t think we could actually hit. I prefer to have plans that I’m 50% sure we’ll hit (expected case plans). Our CFO prefers plans that he’s 75% sure we’ll hit. He’s usually right.
24. Know Your Net Lifetime Value. Quick–what is the value of an average customer to your business? Don’t know? Ha–what type of entrepreneur are you? Seriously, come on. You better know this. To calculate it, take the average purchase price x the number of times a customer will order from you (over the average length of time they’ll be a customer). This will be your lifetime value (LTV). Then multiply your LTV by your gross profit margin % (Revenues minus Cost of Goods Sold) to get your Gross Lifetime Value (GLV). This is the very maximum amount you can spend in advertising costs to acquire a marginal customer and still breakeven in the long run. Then multiply your LTV by your net profit margin % (Revenues minus all expenses) to get your Net Lifetime Value (NLV). This is how much profit an average customer will be worth to your business.
25. Never Ever Undersell Yourself. When I got started with iContact back in 2002 I was 18. I dreamed what I thought then was a big dream. We would build a company to $1 million in sales. Beyond that mark, I didn’t envision. When we reached the $1 million mark in September 2005, we had to re-plan and re-decide what we wanted to go after. When we began, I didn’t think it was possible that we would build a company to 150 employees and $20 million in annualized sales. I certainly didn’t think that we’d have a shot at building a company to 1000 employees with a billion dollar market cap. When I went out to raise venture capital the first time in November 2005, I undersold the company and undersold myself. My goal wasn’t BIG enough HAIRY enough or AUDACIOUS enough. I knew deep down in my soul we’d get there but didn’t know HOW. Because I didn’t yet know exactly HOW I didn’t share what I knew we were going to make happen. We didn’t get a term sheet from a number of VC firms then because I undersold what I knew we were going to make happen. I’m not advocating overselling either–just selling appropriately based on what you know if your heart of hearts you’re going to make happen. I’ll never undersell myself again. As my friend Elliot Bisnow likes to do, “Sell it big and then make it happen.”

I’m off to Charleston for a Renaissance Weekend. I hope you’ve enjoyed these lessons! Comments are very welcome!

Review of The Dream by Gurbaksh Chahal

I’m sitting in the corner of the Starbucks at the Southpoint Barnes and Noble in Durham. I’m reading The Dream by Gurbaksh Chalal (nickname ‘G’), a 26 year old internet entrepreneur from India and San Jose, California. G has a compelling writing style in the beginning, writing of the difficulties he encountered growing up as an Sikh Indian-immigrant. Here are my notes from the book.

G dropped out of high school at age 16 to start a performance-based advertising network called Value Click.

Growing Up a Sikh Immigrant Indian in San Jose

Some of the stories in the first part of the book that initially struck me were:

• His father and him day trading on margin in 1997 and doing equity research together. In October 1997 (right before the Asian Market Crisis) the market had a small dip and in fear of the market falling further and not being able to cover his margin sold at the very bottom, which caused his father shame and nearly to lose their new house.
• G being forced to remove his turban at knifepoint when playing basketball in the ‘hood’ of San Jose.
• G taking a public speaking class in high school and having to give a speech as a very traditional Sikh about the randomly assigned topic of Viagra.

Here’s how G. got started…

• Buying the HP.net and Dell.net domain names in 1997 and sending a letter to the companies offering to sell the names back to them for $10,000–and then receiving threatening cease and desist letters and giving the domains back for free.
• Starting to sell printers on eBay, then starting a performance-based advertising network Click Agents
• Setting us his very first deal in a very ‘Elliot Bisnow’ type of way–by getting one ad agency to commit one $30k insertion order (IO) at $1 CPC and only after having it, building his ‘consortium’ of web sites to traffic the ad at a 50/50 rev share, all along using the fake name Gary Singh.

Results Matter

An excerpt from p. 59:

“All the knew was that Gary Singh delivered, and that’s all they cared about. They had no idea they were dealing with a sixteen-year-old kid because I presented myself as a serious professional. Once again, perception is realty. That’s not a kid on the other end of the line. It’s a guy who delivered on his promises.”

On page 80, G tells a story I can relate to, his servers went down for a week due to a vengeful vendor. His story reminds me of the week in December 2003 our server went down due to hardware failure. An excerpt:

“We were offline for an entire week… A week without the Web. Well that was the lifeblood of my business, and that week almost put us under… Time in the Internet is measured in dog years .For that entire week, Click Agents had ceased to exist.”

Ideas Vs. Execution

Gurbaksh makes a good point about the value of ideas vs. execution on p. 100.

“If you have an idea for a company, that’s just the beginning–that’s your entry point. What really matters is execution. Don’t think about the millions you’re going to make, think instead about creating a company that will be worth millions… The difference is huge. Success is laregely about substance. If your company is about real, tangible assets, and you’re looking the the long term, you are going to be handsomely rewarded for it.”

Struggling With Bureaucracy at ValueClick

On page 117, G laments in an amusing paragraph, working for the slower, bigger, public ValueClick. VCLK had bought Click Agents in November 2000 for $40 million.

He notes, “…in this new environment, I couldn’t move forward without official approval. I had to sell an idea to one guy, then to a second guy, and then to two or three more guys after that, and they all seemed incapable of making a decision. I guess that’s what people mean when they talking about the bureaucracy. It’s a place where absolutely nothing gets done. And the larger the organization, the less one is able to accomplish…I couldn’t understand how corporations actually accomplished anything, since the bureaucracy seemed to be designed solely to steer you into one brick wall after another.”

Getting over The Fake Excitement of Materialism

Around page 136, G. begins to talk of all the Ferraris and Lambourghinis he purchased after selling his ValueClick shares. I was disappointed by the materialistic focus of this part of the book, but I could understand it in my own imperfection. I owned a 350z for two years when I was 21 to 23 before I sold it due to what it was doing to my personality.

On p 139, G writes, “I was breaking one of my own business rules. Need versus necessity. Did I really need that king of luxury.? No. Then again, maybe I’d earned it. So I Lived with it. After all, as they say, all work and no play makes G a dull boy.”

G was close to coming to the conclusion that the two luxurious $240,000 Lambourghini’s he bought was a little over the top but didn’t quite get there. I was disappointed in him at that point.

One of G’s ‘lessons’ later in the book that he shares is “Forget noble motivations.” On this, more than anything else, I disagreed with G.

Blue Lithium

After his three year non-compete agreement with ValueClick was up and after G sued ValueClick for securities fraud, he started BlueLithium in 2004 at the age of 22. He raised $11.5 million from 3i and Walden VC when the company was doing $200,000 per month in sales in February 2005. I’m not sure what G was thinking, but as part of this deal he agreed to a 5 person board, of which 3 were selected by the investors.

In my view, it is not in an entrepreneur’s best interest to let investors pick a majority of the board (and thus effectively control the entire company for a minority investment). It seems like G did not have a choice based on the amount of money raised and the stage but I would have thought he would have had more ability to set terms in the round having had a nice success previously. On p 186, G describes the difficulty he experienced with his Board believing in him when ValueClick sued BlueLithium claiming he had stolen trade secrets.

In the end, BlueLithium did well with its behavioral targeting ad technology that was able to show relevent ads to consumers based on their internet browsing history. They sold the company to Yahoo on September 4, 2007 for $300M when they were about the same size iContact is today. They had good timing and in retrospect sold at a good time, following the DoubleClick/Google, aQuantive/Microsoft, and 24/7 Real Media/WPP Group transactions.

The Secret Millionaire

In Chapter 6,  G describes how he ended up being part of the current Fox show The Secret Millionaire. The premise of the show is that an American millionaire (in this case, G) lives in a distressed community for one week and talks to people and then decides at the end of the week how to allocate $100,000 to non-profit organizations in the area.

As an aside, relevant to the premise of The Secret Millioniare, last night at Crunkleton’s (bar in Chapel Hill), I had an in-depth passionate debate with my friend Jess last night about Easterly’s The White Man’s Burden and whether any benefactor or philanthropist, including myself, can legitimately and morally go into a distressed community for just one week and then appropriately contribute funds without knowing fully how they will be used and whether the impact will in fact be positive or sustainable.

I made the point to Jess (who spent 2 months in Uganda at the Sachs’ Millennium Village Project in Ruhiira last summer) that I had visited Uganda in July to see the impact of the small funds I’d already contributed and to see with my own eyes how the funds were being used and whether the organizations could efficiently and and positively utilize more in the future. I argued that some BHNs like education, healthcare, and clean water were simply fundamental to humanity and that the core issue with aid that Easterly described were mainly caused by bi-lateral government to government aid that was not reaching the people. Instead, providing aid directly to grassroots organizations run by locals in which you could see the impact yourself was qualitatively a better method. The show has gotten some criticism here and here and of course on ValleyWag multiple times, but I’ll hold my view until I can catch an episode.

G’s Entrepreneurship Lessons

Finally, G ends the book with 27 lessons on entrepreneurship. They are:

1. Listen to your heart.
2. Forget noble motivations (one I disagree with)
3. Adjust your attitude
4. Figure out what you’re good at
5. Trust your gut
6. Do your homework
7. Be frugal
8. But don’t be frugal with hiring
9. Hire smart people
10. Don’t expect perfection, but strive for it
11. Learn to listen
12. Own your mistakes
13. Never compromise your morality
14. Never lose sign of the competition
15. Watch your back
16. Don’t procastinate
17. Don’t do anything by half-measures
18. Be nice to people
19. Negotiate from a position of strength
20. Expect the unexpected
21. Perception is reality
22. Don’t get emotional
23. Be fearless
24. Pick your battles
25. Grow a think skin
26. Take chances
27. When you commit, you really have to commit.

Overall, I would recommend the book as for me it was good to understand the process of professional and personal development of a similarly aged internet entrepreneur. It did not provide much how-to and was more biographical in nature.

I’m sure I’ll meet Gurbaksh soon enough at one of Elliot Bisnow’s get-togethers for young technology entrepreneurs sooner or later, and I look forward to the day. I could relate to much of the bananas G went through including being bullied when young for being different, sacrificing other opportunities to build a business, raising venture capital at 21, and finding flow every day by being immersed in a company.

The Brilliant Power of Humor in a Campaign

Two weeks to go in one of the most bitterly contested Presidential elections in U.S. history. Robo-calls and accusations abound. And yet, in the middle of a storm, a night for humor arrived last Thursday at the Alfred Smith Memorial Dinner in New York. These 20 minutes of humor and roasting tell us much about these men. That we can have good-natured ribbing in the middle of the biggest election of our lifetimes is one of the many reasons I love this country. Here are the videos…

An Excerpt from Obama’s Roasting of McCain:

“Recently, one of John’s top advisers told the “Daily News” that if we keep talking about the economy, McCain’s going to lose. So, tonight I’d like to talk about the economy.

Given all that’s happened these past few weeks on Wall Street, it feels like an odd time to be dressed up in white tie, but I must say I got a great deal, rented the whole outfit from the treasury department at a very good price.

Looking around tonight at all the gourmet food and champagne, it’s clear that no expenses were spared. It’s like an executive sale meeting at AIG.

But I don’t need to tell any of you that it’s been a scary time on the stock market, with people losing their investments, their entire fortunes. It’s gotten so bad Bloomberg now has to take the subway. And while the collapse of the housing market’s been tough on every single home owner, I think we all need to recognize that this crisis has been eight times harder on John McCain.

You know, we’ve been debating a lot these economic issues over the course of the campaign, but lately things have been getting a bit tougher. In the last few weeks, John’s been out on the campaign trail and asked the question, who is Barack Obama? I have to admit I was a little surprised by this question. The answer is right there on my Facebook page.

But, look, I don’t want to be coy about this. We’re a couple weeks from an important election.

Americans have a big choice to make, and if anybody feels like they don’t know me by now, let me try to give you some answers. Who is Barack Obama?

Contrary to the rumors you have heard, I was not born in a manger.

I was actually born on Krypton and sent here by my father Jorel to save the Planet Earth.”

An Excerpt from McCain’s Roasting of Obama:

“Events are moving fast in my campaign. And, yes, it’s true that this morning I dismissed my entire team of senior advisers. All of their positions will now be held by a man named “Joe the Plumber.”

Already — and already, my friends, my opponents have been subjecting Joe to their vicious attack machines. His veracity has been questioned by Barack Obama’s running mate Joe the six term senator.

He claims that this honest, hardworking small businessman could not possibly have enough income to face a tax increase under the Obama plan. What they don’t know — what they don’t know is “Joe the Plumber” recently signed a very lucrative contract with a wealthy couple to handle all the work on all seven of their houses.

This campaign needed the common touch of a working man. After all, it began so long ago with the heralded arrival of a man known to Oprah Winfrey as “The One.” Being a friend and colleague of Barack, I just called him that one.

And he — my friends, he doesn’t mind at all. In fact, he even has a pet name for me George Bush.”

Financial Markets: 3 Predictions

I may be wrong, BUT…

(Update 4/1/2009 - Wow, was I wrong or what! I’ve learned a lot.)

1. This is the End of the Financial Crisis–

This is the end, not the beginning, not the middle. AIG will likely get a $85B-$90B bridge loan from the Fed backed by company assets in exchange for a majority stake in the company. The Dow will continue its rise in the morning with the news of AIGs stabilization. Based on March market capitalization, AIG It is five times bigger than Lehman. AIG is the 13th largest company in the world according to the Fortune 500 versus 37 for Lehman. It is an insurance and annuities company mainly and not a broker. It affects Main St. Americans much more than Lehman did. It can’t, and won’t be liquidated.

2. Oil Is At a Bottom–

Oil is at its bottom. Remember $88.90 per barrel, the bottom today before it started rising at 2:30pm. It is the lowest we will see a barrel of oil sell for in the next fifteen years until sustainable energy technology (“ET” as Friedman calls it, “ST” as Sachs calls it) creates green power at a price/KWH that is lower than fossil fuels can and transportation fully converts to electric ( reducing global demand for oil significantly and possibly reducing the price under today’s price). Oil will trend upwards, more slowly, toward $150/barrel by the end of the decade.

3. The Dow and S&P Have Reached Their Bottom–

The DJIA has reached it’s bottom. Remember 10,742.70, the bottom today at market open. It’s the lowest you’ll see the DJIA go in your lifetime. The underlying profits and productivity of American businesses are simply too strong to justify the S&P 500 the same level it was at in December 1998, nearly ten years ago when the U.S. GDP was 58% lower than it is today (8.7T vs. 13.8T).

This graph shows the S&P 500 at the same place it was in December 1998. Today’s bottom was 1174.

I may be wrong here, BUT… I sure hope I’m not.

The Influence of Hank Greenberg on the Fed

As an aside, Hank Greenberg, a WWII hero and the former CEO of AIG for 37 years, has had quite a bit of influence on the Fed policy vis-a-vis AIG it seems. I heard him on Bloomberg radio today sounding like Mikheil Saakashvili on CNN five weeks ago when Russia was “invading” Tskhinvali. Greenberg wrote earlier today in the Financial Times:

“AIG is not an ordinary company. It has opened markets all over the world and, for more than three decades, stood at the vanguard of the liberalisation of the global trade in services. Its stock is owned directly or indirectly by millions of Americans. And it has contributed significantly to US gross domestic product directly and indirectly over the four decades of its existence. But all that is not why it should be saved. AIG has a trillion dollars in assets. It can (and always has) serviced its debt. With the right leadership, it will continue to do so. Action is needed now: AIG needs immediate help, because the threat to our financial system is real. For that reason, if private capital cannot rescue AIG, a temporary federal bridge loan – not a federal bail-out – is in order.”

The Greatest U.S. and Emerging Markets Equities Buying Opportunity of Our Lifetime

Update 10/20/08 - Looks like I was at least a month early on calling a bottom. I could have never predicted a drop to 8400. I just didn’t understand the de-leveraging process prior to watching it happen over the past month. I did love Buffett’s Op-ed from last Thursday. I’m more bullish now than ever about U.S. equities over the next 10 years. It truly is the best buying opportunity of our lifetimes for long-term investors.

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As Warren Buffett says, “Be fearful when others are greedy, and be greedy when others are fearful.”

It was a busy Sunday for Wall Street. It’s about to be a fearful Monday. This may create one of the best buying opportunities of our lifetimes.

After recently adding U.S. Trust and CountryWide into its fold, Bank of America has agreed to purchase Merrill Lynch tonight for $44B or $29 per share.

Lehman Brothers will likely declare bankruptcy on Monday morning due to it’s exposure to Credit Default Swaps and its inability to close the deal on a buy-out by Barclays. It will likely liquidate its assets in the coming weeks.

American International Group, the 18th largest company in the world, is seeking $40B in short-term liquidity from the Fed and will be announcing a restructuring on Monday morning which may including the sale of its aircraft leasing company.

In a move reminiscent of the private Long Term Capital Management bailout in 1998, ten major banks have agreed to create a $70B to $100B emergency fund to protect themselves from the results of the Lehman failure.

At a Bottom

I thought Bear Stearns was the end–then last week I thought Fannie and Freddie was the end. But now, this seems to be the official end of the financial crisis–the end to the credit market and subprime mortgage market crisis.

Tomorrow’s going to be painful day on Wall St. But for the smart Buffett-trained value-oriented buyer I’d suggest waiting about 30 minutes for the market clearing price to be establised and then buy. It may be the greatest U.S. Equities buying opportunity in our lifetime. Two years ago the Dow was at 11,500. One year ago the DOW was at 14,000. Tomorrow, the Dow may go under 11,000–for the last time in our lives. We’re at a bottom.

Buying Opportunities

Buy what? That’s a good question. I’ve never before written about equity opportunities or the positions I hold, but I’ll give it a shot. For full disclosure I currently own long shares of QQQQ, DUG, and SPY. I’m not making any recommendations to buy or sell, but instead recommending research and for you to make your own decisions.

Well, to play it safe, take a look at exchange traded index funds like SPY (S&P 500), DIA (Dow), or QQQQ (NASDAQ). They’ll track the markets and if the general markets go up in the future the value of your shares will go up.

For Higher Beta

For more risky bets look at a long financials ETF like Ultra Financials Pro (AMEX: UYG). But wait until the price resets after the first couple hours. It’s going to reset much lower when the market opens. It’s risky as AIG and WAMU remain at risk and the extent of the Lehman damage may not be immediately known, but it may provide significant upside in the next six months.

A Commodities Play

Or you could look at DIG (Ultralong Oil). Now that oil is under $100/barrel again it may be time to get back into energy for the long-term. I used a small amount of ‘theory testing funds’ in my TD Ameritrade account back in June and bought DUG (Ultrashort Oil) when oil was $130 per barrel and will hopefully sell it tomorrow with oil at $99. DUG’s near-inverse, DIG is down 48% in 90 days. It will hit a bottom as oil prices bottom out in the coming weeks.

Emerging Markets

Of course, you can always look at international opportunities. There is likely to be much more annual GDP in developing nations than in the U.S. over the next fifty years as these countries are starting from a lower base. Take a look at ADRE, an index of 50 emerging markets or BIK, which tracks the markets of Brazil, India, Russia, and China. If you want to look at China, you can take a look at individual equities like the Hong Kong Exchange or China Petroleum. Or you buy the Shanghai Composite, which is down 60% this year in a country with 8% annual GDP growth.

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