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WHAT I'M READING NOW

  • Professor Richard E. Foglesong: Married to the Mouse: Walt Disney World and Orlando

    Professor Richard E. Foglesong: Married to the Mouse: Walt Disney World and Orlando
    This is the first book that I am reading via the Kindle reader on my iPod touch. Great book that shows how Disney maneuvered its way into establishing Disney World as it's own pseudo government, free from the oversight and controls of traditional city, county and state control. Hardly, a slam piece, it shows how centralized planning can lead to a better, more fully conceived product (think: Apple), but also shows the pitfalls for eager cities and states willing to agree to any and all pre-conditions to secure major corporate patronage.

  • Robert B. Cialdini: Influence: The Psychology of Persuasion (Collins Business Essentials)

    Robert B. Cialdini: Influence: The Psychology of Persuasion (Collins Business Essentials)
    One of my recurring interests is better understanding how to influence the actions of others. This book looks at the psychology and underlying trigger mechanisms, such as reciprocity, that drive people to act in the way that you want them to. Relevant to people in sales, marketers and pretty much anyone who wants to turn the gravity of persuasion to their advantage.

  • George Friedman: The Next 100 Years: A Forecast for the 21st Century

    George Friedman: The Next 100 Years: A Forecast for the 21st Century
    Provocative, enjoyable, compelling read that makes the somewhat counter-intuitive argument that the next 100 years is destined to be the American Age (US), replacing the European Age, which has been the locus of gravity for the past 500+ years, and that our emerging counter-challengers will be Turkey, Mexico, Japan and Poland - not China or India.

  • Jessica Livingston: Founders at Work: Stories of Startups' Early Days

    Jessica Livingston: Founders at Work: Stories of Startups' Early Days
    Not since I read Accidental Empires many years ago have I had so much joy and insight reading about the AHA moments, the blood, sweat and tears, the mistakes, the victories and the lessons learned in the birthing of tech startups like Apple, Lotus, Hotmail and a couple dozen other seminal companies. If you are an entrepreneur or want to know what being one feels like, this is a must read.

  • Ian Williams: Rum: A Social and Sociable History of the Real Spirit of 1776

    Ian Williams: Rum: A Social and Sociable History of the Real Spirit of 1776
    The history of rum, with the exotic spirit as a key character in the founding of the United States. Next book in my Chatopic group, and a fun read so far.

  • Pip Coburn: The Change Function: Why Some Technologies Take Off and Others Crash and Burn

    Pip Coburn: The Change Function: Why Some Technologies Take Off and Others Crash and Burn
    I have been ruminating a lot about the relationship between user experience and user adoption. Coburn is one of my favorite writers/analysts from back in the days of Red Herring, and this book focuses on the user experience/user-centered approach to solutions thinking. Personally, Inmates are Running the Asylum is a better book.

  • Lynn H. Nicholas: The Rape of Europa: The Fate of Europe's Treasures in the Third Reich and the Second World War

    Lynn H. Nicholas: The Rape of Europa: The Fate of Europe's Treasures in the Third Reich and the Second World War
    I actually just saw the DVD and blogged about it. Brilliant and compelling. Captures the shocking scale and systematic way that the Nazis sought to plunder the world's great art as part of their plan on world domination and re-making humanity, art and culture. Wow!

  • Alan Moore: Watchmen

    Alan Moore: Watchmen
    Just finished this graphic novel, written by same author of V for Vendetta, one of my favorite all time movies. Watchmen is being released as a major motion picture early 2009, and this novel is a classic to many, but to me it fell a bit short of the promised target. Why? Characters interesting but not compelling, story arcs came together in a bit uninspired fashion, and left with a bit of a EH sensation.

  • Chogyam Trungpa: Crazy Wisdom (Dharma ocean series)

    Chogyam Trungpa: Crazy Wisdom (Dharma ocean series)
    For serious Buddhist devotees, Trungpa is the late great master; a real gift. This series of books is derived from seminars he led, so beauty is that you get Trungpa's synopsis, then Q&A from audience and then of course your own interpretation; a great way to triangulate on complex topics. This is my second time reading, as this is a time for Crazy Wisdom (search for my post on the topic).

  • Barton Gellman: Angler: The Cheney Vice Presidency

    Barton Gellman: Angler: The Cheney Vice Presidency
    This is a classic, IMHO. Really gives a good sense of how government works and how Cheney drove executive branch to reclaim lost power (of that branch). Cheney's depth of detailed knowledge on everything - policy, law, protocol, people and process is pretty impressive. Raises all sorts of questions on the delineation between him and Bush, and how that defines culpability. Total behind the scenes on key events, not partisan or editorializing but very strong analysis and excellent narrative from many of the key players.

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Bubbles, backlash and grim reapers

Blue_grim_reaperThere is a truism that markets are discounters are all known information.  So, for example, when you are inundated by stories in the media and online that the economy is going to pot, markets are over-priced and the next plague is upon us (oh, I just wrote that post), that is actually a bullish indicator. 

Why? Because such thinking is collectively "priced" into the market once the information becomes known. 

Relative to stock markets, someone once said, that the time to buy is when you see Fortune running cover stories on "The Death of Equities."

Which brings us to the backlash and bubble questions around that nebulous bucket known as Web 2.0.

Over the past couple of weeks, I have noticed a major increase in the number of articles, blog posts, T-shirt spoofs and the like calling out that we are in a Web 2.0 bubble, that innovation is dead, that everything is me-too, a feature not a product, etc.

Just in the past day, I have read posts which assert that:

  1. Innovation is nowhere to be found in the Web 2.0 world: I have written a pretty detailed response in the comments section of this blog by Russell Beattie, if you scroll that post to the bottom.
  2. The blogosophere is comprised of a bunch of irresponsible hacks:  Again, when mainstream media feels compelled to attack, I would argue that it is a bullish indicator for the space.
  3. There is "proof of an emerging Web 2.0 bubble: The example cited is actually pretty funny, but I would counter that an example does not a fractal make.
  4. Attack the Flickr for Video wannabe's (and all Flickr for...derivatives for that matter).

First a disclaimer.  I agree with a lot of the underlying commentary, and actually if you read these posts, the positions are to their credit fully formed. I guess my counter is, "Do you have a thesis that drives your investing strategy?"  Hope and following the herd is not a strategy. 

So let's just say that like any evolutionary system, marketplaces gravitate to wherever the resources are, whether they be cheap-easy-free money, cheap-easy-free open source and mashable software or motivated (cheap-easy-free) people

Let's further say that the majority of these entities are bound to fail or be acquired for "undisclosed terms."  That's just survival of the fittest.  Hence, the grim reaper.

Finally, let's just say that the perspective of doom/gloom, discriminating analysis before investing or whatever you want to call it is now being priced into the market. 

This will and should effect what get's funded, valuations, where entrepreneurs invest their time and how survivors and thrivers think about strategy.

I guess the nut of it is, do you have a thesis about why what you are doing REALLY matters, how you will monetize it, what your unfair advantage is and how you will grow your venture? 

If so, codify that thesis, establish clear metrics of success for measuring how well you are doing, broadcast the indicators and trend lines and iterate as much as necessary.

Conversely, if you really don't have a thesis beyond, "We invest in big growing markets," the time is NOW to start baking one up.

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Comments

Excellent Post!

So what you're saying is that people should go out and build real companies.

How obscene.

I understand what you are saying, Mark, but you may or may not miss mentioning something very important.

A lot of these companies are being run by Programmer/Analysts and Engineers who simply do not care about making money. They care about making things cool. They care more about innovation. These are the kind of people who would rather work for Google to be surrounded by nerds (for lack of a better term) than to work for Google for the money and benefits.

Therefore, they don't "have a thesis that drives [their] investing strategy" mainly because the project is not seen as an investment in the typical sense.

Its the doppelgangers, the investors who believe they can simply copy an existing technology without differentiating themselves, who could use "a thesis that drives [their] investing strategy."

Just my humble opinion, of course.

Also, the reason for any "bubble" bursting is precisely because of investors who are unable to pay off debt. Stock prices collapsing has nothing to do with bubbles, bubbles are the result of people taking out loans to fund their investing. Then, when the stock price goes down, they have no way to liquify their assets to pay off their debt. It did not seem to me like any of those articles made that distinction, which is stupid.

Now it's time to watch football.

To be clear, and somewhat intersecting Daniel's and John's comments, I think that it is TOTALLY cool when techie types or even business-ey types build projects or ventures that don't specifically aspire to grow into a formal entity.

It is when hobbies become confused with venture-finance-able startups that the potential for money sinkholes, bad feelings and crash and burn outcomes magnifies.

Frankly, the tough part for investors is that entrepreneurs aren't always clear on the outcome that they are aspiring to since the premise of a sugar daddy just seems like a "DUH, why not?" That's where clear thesis and good due diligence (i.e., real underwriting) becomes key.

One of the leading questions I ask entrepreneurs that I work with is whether they would be thrilled with a $10M outcome if they were owning half the company. The key point I want them to understand is that if you take $4-6M from a VC, you are committing yourself to a different velocity.

As the post alludes, some of the best early innovations in this emerging wave will start in the hobby realm before growing into serious business.

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