Growthink Blog

Bono and Fritz Henderson ARE Entrepreneurs


Categories:

 

At Growthink, our mission is "to serve the world's entrepreneurs."  When I share this with folks, they often come back to me with "Who are these entrepreneurs that are your mission to serve?"  Touché. 

So who is and who isn't an entrepreneur?

I like Professor Arthur O'Sullivan's definition, from "Economics: Principles in Action" the best - "An entrepreneur is a person who has possession of an new enterprise, venture or idea, and assumes significant accountability for the inherent risks and the outcome. He or she is an ambitious leader who combines land, labor, and capital to often create and market new goods or services."

Wow, this is good.  Let's list out individuals that obviously fit this description.  Then, let's dig deeper and talk about those who may not label themselves (nor may society) as entrepreneurs but by golly per Professor O'Sullivan's definition above they certainly are:

First, the "obvious" entrepreneurs:

Individuals STARTING New Companies.  New companies, startups of all shapes and forms, across all industries, all around the world.  The classic "man (or woman) with a plan" entrepreneur. 

In the U.S. alone, this represents the more than 6 million new businesses started every year, and the many, many millions more contemplated. The figure worldwide is a BIG multiple of this. 

Thank heavens for all of them - according to a famous M.I.T study new business starts account for more than 2/3 of all net new job creation.  Especially as by far the biggest economic issue facing America (and the world, for that matter) is job creation, these entrepreneurs truly hold the key to our nation's and the world's long-term prosperity more than any other group.

Individuals LEADING Small Companies.   Per that M.I.T study, the other 1/3 of net new job creation comes from the so-called "gazelles," - rapidly growing, emerging companies.  The most common statistical definition of these are the 641,000 U.S. firms with between 20 to 1,000 employees. They, along with startups, account for more than 62% of all private sector employment.

Anyone that has spent even a day at a gazelle can literally breathe the entrepreneurship in the air.  The best of them are led by deeply ambitious men and women walking the talk of American business.  The President, in his inaugural speech, described them best:

"Rather, it has been the risk-takers, the doers, the makers of things - some celebrated, but more often, men and women obscure in their labour, who have carried us up the long, rugged path towards prosperity and freedom."

Let us hope he and our Washington leaders think often of these inspirationally hard-working folks when crafting governmental policy in the months and years to come.

Now very importantly, not all small business people are entrepreneurs.  The key phrase in Professor O'Sullivan's definition when evaluating whether one is, or is not, is ambitious leader

All of us know small business men and women - that while certainly possessing of many wonderful attributes - for whom it would be a big stretch to describe them as "ambitious leaders." 

To best illustrate, I suggest you attend a meeting of your local chamber of commerce and hear how much of the debate is focused on problems and grievances versus vision and possibility. Sad, but true.

The "Non-obvious" Entrepreneurs

I find the startup and small business entrepreneurs worthy of great praise and respect.  In some ways, I am even MORE impressed with those that demonstrate strong, ambitious, principled entrepreneurial leadership in the contexts of bureaucracy, politics, and vexing social challenges. 

Here are a few:

Individuals that are Accountable for Change and Growth at BIG companies. Into this category falls Executives like General Motor's Interim CEO Fritz Henderson.  Now I know that GM maybe the last company that comes to mind when one thinks of entrepreneurship.  But given the beyond monumental challenges of making that elephant dance, Mr. Henderson certainly meets the criteria (whether he will make the grade only time will tell).  He is certainly an ambitious leader with very, very significant accountability for risks and outcomes - huge taxpayer subsidies, tens of thousands of manufacturing jobs, American pride, etc.  And his success will depend on his ability to lead GM to "combine labor, and capital to create and market new goods and services."  Yes, if Mr. Henderson is to succeed at GM, he will only do so by walking, talking, and quacking like an entrepreneur. 

Individuals With Leadership and Change Responsibility in Organizations of All Types.  The challenges of leadership and accountability exist in ANY organization taking on meaningful and challenging objectives. 

Bono, arguably the world's best known philanthropic celebrity, is an entrepreneur on two fronts.  First, via his commitment to world-class creative output as the leader of the mega-rock band U2.  And he is an entrepreneur, via his unique effectiveness as an activist and spokesperson and doer of big projects for causes close to his heart - human rights, third world debt relief, and AIDS and African development issues. If you think it is tough to get a city business permit, try getting governments of affluent nations to work together to solve global social challenges that barely garner a back-page sentence or two in the "it bleeds, it leads media" that voters back home call news.

In this vein, entrepreneurs exist in a wide host of non-profit and governmental institutions.  Gary McDougal, former Partner at McKinsey and Company, who later in his life re-engineered the broken Illinois welfare system and made it a model nation-wide.  Certainly an entrepreneur. 

Whatever you think about his politics, while governor of Massachusetts Mitt Romney's re-structuring of the state's health care system, absolutely required a "think outside the box" entrepreneurial approach.  Gail McGovern as President of the American The Red Cross, working to expand the branding of the organization beyond disaster relief, works entrepreneurially everyday to effect this transformation. 

Global Entrepreneurs.  Now more than ever ambitious individuals worldwide strive to not just be entrepreneurs per the American way, but to take the best of what we do and how we think and add to it and candidly, then to crush us.  And I say more power to them.

Because entrepreneurship as its essence is about creation, and the success of one entrepreneur ANYWHERE results in a better life for everyone EVERYWHERE.

I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.

 


Kim Kardashian, James Cameron's $500 Million Avatar, and Private Equity - A Parable


Categories:

Two pieces of startling news to consider when thinking about how money is really made in our brand-driven 21st century economy:

1. James Cameron's 3-D beyond blockbuster "Avatar" - reported by the New York Times' Michael Cieply to have a total budget - production and marketing - in excess of $500 million!

Director Cameron, of Titanic, is blowing away ALL movie cost records here. To give a feel of the size of the bet that Cameron, Fox, and private equity partners Dune Entertainment and Ingenious  Media, are taking on the film, Avatar may have to become one of the top-twenty grossing movies of ALL time just to break-even!

2. Ms. Kim Kardashian, kindly described by Wikipedia as "an American celebutante, socialite, model, actress, businesswoman, and television personality" is the 8th most followed person on Twitter. She trails only Ashton Kutcher, Britney Spears, Ellen Degeneres, Oprah Winfrey, and oh yes, the President of the United States.

This is relevant only because, whatever you think about the quality/lines of work and political leanings of others on the list, at least they have actually DONE SOMETHING to become famous.

Ms. Kardashian, for all of her obvious charms, is that particular modern phenomenon of seemingly being famous because she is, well, famous.

 

11-16 Blog Images


So You Say - So What?

Well, as any regular followers of mine can attest, at the core of my belief system and the Growthink investment strategy is the The Black Swan.

Popularized by the great Lebanese thinker and writer Nicholas Taleb in his New York Times bestseller of the same name, the idea of the black swan comes from the Enlightenment in Europe to describe a logical fallacy. In the 17th century, Europeans assumed that 'All swans must be white," because they had never seen a Black Swan. In the 18th Century, black swans were discovered in Australia. 

 

The logicians of the time - most prominently John Stuart Mill- associated the term "Black Swan" to the concept that a "previously perceived impossibility may actually come to pass."

Taleb describes it best:

"What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

Taleb continues, "I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives."

Bringing it to November 2009, man who would have thought that a) a movie featuring a love story between 2 ten-foot tall blue aliens and b) a 29-year old actress with no major film or television credits or awards would have far more brand and marketing dollars and reach behind them than every single technology startup in the United States combined?

The answer: Nobody. And more importantly, the phenomenons of Avatar and Ms. Khardashian CANNOT - I repeat CANNOT - be retroactively analyzed for guidance as to what the next new thing will be. As Kim might say - "just don't go there."

So the true Black Swan acolyte does not look for guidance from past, outlier events, he or she does seek lessons. Here are three:


1) Everybody loves to place on a pedestal (and I put myself in this category for sure) the "pure" paths to entrepreneurial riches.  It goes like this: Have a great idea, start a company, have venture capitalists back you, build the business with blood, sweat, tears, and brilliance, go IPO, be featured on the cover of Fortune, and everyone lives happily  ever after.

It is what getting rich in America SHOULD be about. But the statistics tell a far different story. 

Think about the size of Avatar's reach - a $300 million production budget? $200 million for marketing? There probably aren't 10 technology startups in the whole world with these kinds of numbers behind them.

And the nice thing about a movie versus a startup is that you can usually find out in real-time if you have something. Don't you think the VC's with their full portfolios of "waking dead" startups would like to find out as Fox will with Avatar, in like 2 weeks, if they have something?

2) "Vanilla" investment in business models, in corporations, LLCs and the like, are almost passing into the realm of quaintness. I come back to my good friend Rafe Furst and his brilliant idea of the personal investment contract.

Investing in any one of Ms. Kardashian's various companies (perfume, clothing, DVD projects) is highly risky and on the surface, not all that attractive. But being able to invest in the Kim Khardasian personality brand  itself - with her top 1,000 website and 2.8 million Twitter followers (put this in perspective - Jim Kramer's Mad  Money gets about 300,000 viewers/day) - is a sure-fire moneymaker.

3) Bet on the Unexpected. Check your ego firmly at the door when evaluating business models and investment strategies. Accept that you (and everyone) for that matter KNOWS NOTHING about what the future will hold other than the fact that we don't know what the future will hold.

That is philosophy - here is money-making: The big, big outlier events - the 1,000 to 1 shots and beyond - are always, always, always, UNDER-PRICED in the marketplace. 

Bet on them. 


I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.


November 9, 1989 - The Proper End of History


Categories:

Passing with surprisingly little fanfare, today is the 20th anniversary of the fall of the Berlin Wall.

One of my most enduring memories of my college days (I was an International Relations Major at Stanford, Class of 1990) was a class that I took from an extremely engaging and charismatic young professor on Soviet Foreign Policy.

One statement that my professor made stayed with me - that probably none of us in our lifetimes would see the Berlin Wall fall.

Her reasons:

a) The inevitable brain and talent drain that an opening of the wall would bring about

b) The more that people in the old Soviet republics and in Eastern Europe were allowed to see with their own eyes the freedom and prosperity that liberal capitalism creates, the more likely they would be to rebel against their masters.

Thus, the Soviet leadership, out of pure and obvious self-interest, would never allow it to happen.

Well, the rest is history.  Six months after this perhaps off-hand classroom statement, the Berlin Wall came down. And 15 years later, my young and charismatic professor - Condoleezza Rice - was named the 66th United States Secretary of State.

I am not exaggerating when I say that of all of my college experiences and memories (at least the ones I can remember..:), that that day and that class and Professor Rice's statement stayed with me.  Why?
1. It inculcated in me at a very early age that the future is very, very uncertain, and that there is often little correlation between the depth of one's understanding of a topic and the ability to PREDICT about it.  

Professor Rice KNEW the Soviet Union - even then she was considered one of the nation's most knowledgeable and versed thinkers and commentators on topic.  And yet she, like so many others, was wildly wrong here.

2. While I could not put it into words until last year when my good friend and perhaps best thinker on "systems of prediction" I know - Rafe Furst - introduced me to Nicholas Taleb's masterpiece "The Black Swan," I and many others intuitively felt that something VERY, VERY, VERY outside of the realm of prediction took place the day the wall fell.

3. And more deeply, BECAUSE it fell outside the realm of prediction, it MATTERED.  The "smell test" on these kinds of moments are simple - they are the ones we remember where we were when we first heard about them.

For my generation - The Space Shuttle Disaster (and Reagan's incredible speech that night), The 1987 Stock Market Crash, the fall of the Berlin Wall, Clinton's impeachment, September 11th, the capture of Saddam, and the fall of Lehman (for those of more business/financially-minded) fall into this category.

My friend Rafe and Taleb tie this core life insight to business and investing.

How? By only wagering on the unpredictable. Raynor in the Strategy Paradox makes the same point.  BIG success and BIG money are only made on the BIG outliers - everything else is just transom.

In a strange way, the fall of the Berlin Wall was a seminal event in my youth that pointed me to my life's work. It affirmed by belief in liberal capitalism and in the "way of the West" as the  right and proper end of history.
And in business, it led me to entrepreneurship and to private equity.

Why?  Because it is in the aspirations of the entrepreneur and of their backers  that the power of the unpredictable is made most real in business.

Those that grasp it - the Bezos, the Brins, the Pages, the Josh James of Omniture, the Aaron Patzers of Mint.com, the Kevin Planks of Under Armour, MAKE history. 
And hopefully take the rest of us along for the ride.

I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.

Google. Omniture. Mint.com - What Do They Have in Common?


Categories:

 

 


Google. Omniture. Mint.com. All massive private company investing success stories and all shared some critical characteristics:

1. They all took a while to blossom. In the case of Omniture, it was 13 long years from company founding to exit last week via sale to Adobe for $1.8 billion.

2. Those that made the most money by far were those that got in early. Sure, it would have been great to have owned Google at its 2004 IPO price of $85/share, but some of the FIRST investors in Google in 1998 bought their shares - on a split-adjusted basis - at eight CENTS/share.

3. All had/have great leaders. Josh James, founder and CEO of Omniture, has led his company through a failed acquisition, through having to lay off 3/4 of the company's employees a week before Christmas, an IPO, and attracting the best software talent far from Silicon Valley (in Omniture's case, suburban Utah).

4. Lady luck smiled on them. In the case of Mint.com, Intuit's inability to move their key personal financial software apps to the "cloud" (in spite of having 100 x more software developers working on it than Mint) was the key stroke of luck that led to Intuit buying them in September for $170 million.

The key question with luck, always, is how we can make it work for us. And the stories of Google's, Omniture's, and Mint.com's success point the way.

I look forward to your attendance and feedback.

Jay Turo
CEO
Growthink, Inc.


Where Will We All Be in 2019?


Categories:

Below is the transcript of my talk – “Where Will We All Be in 2019,” delivered at Growthink’s 10-Year Anniversary Celebration on Thursday, October 22nd at the Sheraton Gateway Hotel in Los Angeles.  

You can view the video of my talk, along with Growthink co-Founder David Lavinsky’s remarks, via following this link:

http://www.growthink.com/content/dave-and-jay-speeches-growthink-10-year-event

Also please register for my Thursday webinar,where I review private company investing trends and opportunities.

Click here for more info and to register.

I look forward to your feedback, to connecting and to another 10 great years!


Jay Turo
CEO
Growthink, Inc.

Follow me on Twitter
Join my network on LinkedIn

"Dave, thank you very much for your review of lessons learned these past 10 years and thanks to everyone for attending tonight and sharing this milestone accomplishment with us. Particularly want to thank Rocio Melgar and Melissa Welch for all of their hard work and energy in putting this event together.

Before I dive into my “Where Will be in 2019 predictions, I would like to share a couple of stories with you. First one about a very, very famous and successful entrepreneur and angel investor and secondly, the story of how I got involved with Growthink.

As many of you know, Jeff Bezos was one of the early investors in Google. Yes, that Jeff Bezos. Founder of Amazon.com. #33 on last year’s Forbes’ 400 with a net worth of over $8.7 billion.

Here is the backdrop:

In 1998 when Google’s offices were a Menlo Park, California garage - Bezos invested $250,000 of personal funds into the fledgling search engine.

When Google went public in 2004, that $250,000 investment translated into 3.3 million shares of Google stock. And a stock share position worth over $280 million!

While he does not disclose how many of those shares he still holds, at the current price of Google stock they would represent an investment position of over $1.5 billion.

So why did Bezos invest in Google? In his words, “…There was no business plan…They had a vision. It was a customer-focused point of view.” And he adds, “I just fell in love with Larry and Sergey.”

So, now my story. Before business school and before Growthink I owned an ice cream business on Cape Cod in Massachusetts. It was a very nice life. I worked 4-5 months out of the year, lived in a beautiful place (Cape Cod), and did work that was heck a lot of fun. At age 30, I was all set. I had a business, a car, a house, and a girlfriend.

But then, in the summer of 1999, my MBA classmate Dave Lavinsky called me with this idea for a company at the height of the Internet boom.  If I just worked with him for a few short months, we would be able to aggregate positions in a bunch of rocket ship gazelle companies – soon to be know as “the next Googles.”

Seemed like a great deal, So, I sold the business, the car, the house, broke up with the girlfriend, packed my bags and headed, Jed Clampett-style – not to Beverly Hills, but to Venice to start Growthink with Dave.

And here I am, 10 years later. With an amazing wife and 2 beautiful children!

And timeless truths remain:

First of All, Think Long Term. Even though Google has been the fastest growth company in the history of capitalism, it was still SIX YEARS from Bezo’s original investment in the company to liquidity. Overnight entrepreneurial successes simply do not exist. While certainly all of us would have liked to have had a Google in our lives by now, as Saint Augustine once said, Patience is the companion of wisdom.

Secondly, Get in Early
. Sure, it would have been great to get into Google in 2004 at its IPO price of $85/share, as the shares are up over 500% since then. But Bezos, after adjusting for stock splits, got in at EIGHT CENTS PER SHARE!

The beauty and the allure of entrepreneurship is the opportunity to be a part of something VERY, VERY big very, very early. This is how great fortunes are made.

Third, Invest in People. At the time of Bezo’s investment, there were a large number of very well-funded and successful search engines already on the market. Remember this was 1998 not 1994. Yahoo, Alta Vista, Lycos, Excite, Infoseek to name just a few.

But Bezos was attracted to Page and Brin as people, as technologists, as leaders.

Lesson – we overcomplicate business. Great, talented leaders drive and build businesses. Everything else is secondary.

Fourth, Take Your Shot. For every Jeff Bezos who invested in Google, there are stories of dozens that were presented with the opportunity that did not.
This of course does not mean that the probability of having a Google-like success is anything but very low, but it does mean that it is far greater than the ZERO percent likelihood of success of those that don’t swing the bat.

And Finally, Get Lucky. As hard as it is for many to accept, having fantastic, great luck is a key variable in success.

Success IS assured with thoughtful, disciplined, day-in, day-out hard work. And with hard work as the given, magical success sometimes blooms.

And in the spirit of great luck, let me make my 2019 predictions:

PROBABILITY of 100% - On October 22nd, 2019, if Jay Turo is still of this earth and of animate form, he will be 51 years old.

His 2 sons, Jay Jay and Teddy, now 3 and 2, will be entering their teenage years. Dave Lavinsky’s son Max, whose conception at that particular time and place in 1999 was the magically unpredictable act that led to the founding of Growthink, will be entering his senior year in college.

Growthinker Tristan Sigerson, who started as an intern from UCLA and whose youthful cheer and spirit lifts us daily, will be 36.

Growthinker Jeff Jones, our VP of Business Development, who loves to flaunt his youth and athleticism at us 40-somethings, will be 40 himself.

Only my mother, who traveled here from West Boylston, Massachusetts to be with us tonight, will fight this trend, as she will still be celebrating, as she has for as long as I can remember, her 39th birthday.

Let’s all take a short pause here and reflect on how old YOU will be in 10 years. Does it impart you with a sense of urgency? Of dread? Of disbelief?

PROBABILITY of 90% - The NASDAQ and Dow will be trading at, respectively, above 10,000 and above 30,000.

Why – really quite simple – even getting to those levels will mean a return of less than 5% annually from 1999 to 2019. It points to how poorly the investment markets have performed in the last 10 years.  The NASDAQ in particular has performed terribly, down almost 50% from where it was 10 years ago.

In short, all of us in the worlds of technology and entrepreneurship must have a deep and abiding FAITH that in the next 10 years all of the amazing technological progress we have seen and are sure to see more of will result in investment return.

PROBABILITY of 90% - The Fear of the Rise of China Will Be a Thing of the Past – America Will Still Lead the World.

Are you as tired of me as hearing about how China will catch the United States and then surpass it? There is very, very little chance that a society with no free press, with a monolithic educational system, with a totalitarian government, will EVER lead the modern world.

Lest we forget – we live in the information age. This is the age of software. All GREAT software companies – have you noticed – are AMERICAN companies? This is not by accident. Our freedom-loving, creative society is BUILT to birth great technology and great idea companies. Sure, America has problems, but compared to the problems and limitations of every other country and society in the world, we are still by far the most likely place for the companies and ideas that will shape the 21st century to be born and to grow.

PROBABILITY of 90% - The Cloud, The Cloud, The Cloud

Following up on the above, cloud computing will transition from not just being a business model or a business sector, but will become business itself. Even today there really isn’t such a thing as a technology company and a non-technology company – it is a 20th century legacy misnomer. Everything is technology and soon all of it will be run on the ether.

And we will interact with it with via devices and implants and virtual reality machines that today we can only imagine.

PROBABILITY of 100% - Growthink will be a publicly traded company and will have a market capitalization of greater than $1 billion.*

Let me put this bravado in perspective – as a grizzled consultant, as an MBA, as a risk-taker that has been well-trained to see sell all sides of the story, I am very much aware of the challenges and the probabilities.

But as a CEO, as an entrepreneur, I know the power of faith and commitment, that positive momentum is simply force positively applied. Quite simply, by sticking to our original principles – thinking long term, getting in early with charismatic and dynamic entrepreneurs, taking a LOT of shots, and being open to magic in our lives and our professional endeavors, success is assured.

Thank you, enjoy the rest of your evening, and see you in 2019!"

*Do note that as much as all of us would like it to be this is not an investment guarantee. It is, however, a statement of great confidence in the Growthink business model, in our team, and in our growth prospects.


The Most Interesting Company You Have Never Heard Of


Categories:

Tired of reading about the same over-shopped, over-hyped, over-followed technology companies? Intel. Cisco. Dell. Microsoft. Even Google, Amazon, and Apple.

All great companies for sure but the under-reported truth is that the real money has already been made on them. They are already big and famous and have lots and lots of smart people following and trading them. As investment opportunities, they are yesterday's news.

Hot Technologies of the Next 10 Years

Now, if you want to make real returns, you need to identify the growth stories of the next 10 years. Companies that are early in their lifecycle. Ones that have protected positions in fast growing market niches.

And you need to invest in them BEFORE everyone and their Uncle knows about them.

How To Do It

It is really as simple as 1 - 2 - 3.

First, find a dynamic growth industry. Second, identify a company within it that is well-positioned to grow as the industry does - the proverbial "boat lifted by the rising tide." And finally, investigate the company's guts - its technology, its historical and projected financials, and most importantly, the quality and determination of its management.

Solid State Drives - A Classic Next Generation Technology Play

Let's take a look at the solid state drive (SSDs) business. Solid state drives, based on computer memory rather than a rotating disk, are replacing traditional hard disk drives at an increasingly rapid clip.

This is a technology transition not unlike when we moved from cassette tapes and LP records to compact discs, or from compact discs to MP3 players. The basic idea is accomplish the same functionality - in this case electronic data storage - and to do so faster, more reliably, and with lower power consumption.

Well this transition is happening in the SSD industry big time. The industry as a whole is growing at a rate of over 80%/year (IDC).

IDC further estimates that the market for SSD devices will grow from $932 million in 2009 to $5.6 billion in 2012. Other industry analysts take a similar view, with some foreseeing over 100% annual market growth for a number of years as the technology transition heats up.

Ok This Makes Sense - Now What Do We Do?

Now let's find a company uniquely well-positioned within this industry. It would be even better if this company was one that not a lot of people know about, yet already has GREAT products that consumers love.

And even better - suppose this company was not a dreamy-eyed startup but one with a 7-year history of going from startup in 2002 to over $150 million in revenues last year?

Finally, dig a little below the surface and get a sense of their plan for growth. Are they thoughtful in all their business aspects - technological, marketing, operations? Is management both intense and mature? Can they protect their place in their market niche from the big boys? And most importantly, can they grow as the industry around them grows?

If you can find a company that has this kind of 1 - 2 - 3 logic, and if you can get in on it at the right price, you have something special.

How To Find a Company Like This?

Well guess what, we are right now connected with a company like this. One on the verge of having its shares publicly traded, and one that is looking to connect with a select group of investors to fuel its growth.

Best regards, and look forward to your attendance.

Jay Turo
CEO
Growthink, Inc.

Follow me on Twitter
Join my network on LinkedIn

Growthink Honors Christopher Columbus and His Spirit of Entrepreneurship By Staying Open On Monday


Categories:

Los Angeles, CA. October 9th, 2009. For Immediate Release. Jay Turo, CEO and co-Founder of Growthink, today announced that it honor of Columbus Day on Monday, that Growthink offices will be open for business.

"Being of proud Italian heritage, I have always admired the spirit of entrepreneurship, initiative, and good old-fashioned going for it that Christoforo showed on his great trip," Turo said. "And those of in the capital-raising business (especially as Columbus Day falls right in the middle of capital-raising season) can all learn a LOT from the strategic, angel investing round he raised from Queen Isabella to finance the trip. And he put his presentation together, I understand, without the latest versions of Powerpoint and Excel."

"In honor of his achievements and his spirit, Growthink, unlike the yesterday's news post office and the bailed out banks, is excited to be working and serving the world's entrepreneurs this Monday."


Luis Villalobos, Founder of Tech Coast Angels, Dead at 70


Categories:

Very, very sad news today that Luis Villalobos, Founder of the Tech Coast Angels and angel investor in 57 early-stage ventures, died suddenly yesterday at the age of 70.

I had the extremely good fortune to have Luis be one of the first clients of Growthink back in 1999. Luis hired us to do a lot of the "blocking and tackling" work in assembling a business plan for a fund/incubation concept - Gazelle Labs - that he and a number of the other principals of TCA had established. Truth be told, we should have paid Luis to work on the project. 
First of all, because even at that time, he had forgotten more about entrepreneurship and early-stage investing strategy than most of us will ever know. And because of his attention to detail and intellectual rigor, he set a standard and an expectation of work product that we have tried to carry through with here at Growthink in the last 10 years. Wisdom worth many, many, many times the fees we earned on the engagement.

I have fondly reflected on my experience of working with Luis over the years.  He embodied the best qualities of the American entrepreneur and angel investor - hard-headed and brutally realistic, challenging AND extremely giving of his time and energy in support of aspiring entrepreneurs.

He will be missed. May America produce more of his kind.

The Story of Jeff Bezos’ $250,000 Investment into Google in 1998


Categories:

To be filed firmly in the categories of the rich get richer and it does usually make sense to be both lucky and good, this week’s New Yorker notes that Jeff Bezos was one of the early investors in Google.

Yes, that Jeff Bezos. Founder of Amazon.com. #33 on last year’s Forbes’ 400 with a net worth of over $8.7 billion.

The story is this - in 1998 when Larry Page’s and Sergey Brin’s Google offices were a Menlo Park, California garage - Bezos invested $250,000 of personal funds into the fledgling search engine in a $1 million follow-on investment round.

When Google went public in 2004, that $250,000 investment translated into 3.3 million shares of Google stock. At Google’s IPO that represented a  stock share position worth over $280 million!

While Bezos does not disclose how many of those shares he still holds, at the current price of Google stock they would represent an investment position of over $1.5 billion.

Why did Bezos invest in Google? In his words, “…There was no business plan…They had a vision. It was a customer-focused point of view.” And more tellingly he adds, “I just fell in love with Larry and Sergey.”

In addition to being a tale to which the normal reaction is to just say “wow,” Bezos’ Google investment offers a number of great lessons for aspiring, private company investors:

1.    He Thought Long Term. Even though Google has been the fastest rocket ship growth company in the history of capitalism, it was still SIX YEARS from Bezo’s investment in the company to liquidity. Private equity overnight successes simply do not exist.

2.    He Got In Early. Sure, it would have been great to get into Google at its IPO price of $85/share, especially as the shares are up over 535% since then. But Bezos got in, after adjusting for stock splits, at EIGHT CENTS PER SHARE!

Talk about leverage. That translates to a 112,000 percent increase from investment to IPO, and then if he held onto the shares to another 535% on top of that.

3.    He Invested in People. At the time of Bezo’s investment, there were a large number of very well-funded and far more successful search engines already on the market. Remember this was 1998 not 1994. Yahoo. Alta Vista. Lycos. Excite. Looksmart. Webcrawler. Infoseek. Inktomi and GoTo to name just a few.

But Bezos was attracted to Page and Brin as people, as technologists, as leaders. And obviously their customer-centric focus really tracked the way that Bezos looks at the world and is embodied in the Amazon customer service experience.

So while a business opportunity, in its abstract is great, evaluating the people leading a business is a FAR MORE RELEVANT investing best practice.

4.    He Took a Shot. For every Jeff Bezos who invested in Google, there are stories of literally dozens of investors that were presented with the opportunity and did not.

This of course does not mean that the probability of any early stage private company investor having a Google-like success in their portfolio is anything but very low, but it does mean that it is far greater than the ZERO percent likelihood of success of those who did not invest.

As they say, you can’t win if you don’t play.

5.    He Got Lucky. As hard as it is for many to accept, luck is a key, and sometimes the key, variable in successful investing.

As opposed to fighting or getting philosophical re this reality, a far better question to ask is “How can I improve my likelihood of, for lack of a better turn of phrase, getting lucky?
 
Best regards, and look forward to connecting.

--
Jay Turo
CEO
Growthink, Inc

Follow me on Twitter
Join my network on LinkedIn

The Greatest Stock Market Rally in History


Categories:

Did you know that the current stock market rally, which has seen the S&P 500 rise over 54% from its low of 676 on March 9th, is the greatest in history

Lazlo Birinyi, founder of Birinyi Associates, notes that since March the S & P has risen 0.31%/day on average.

This is three times faster than the previous fastest recovery in 1982, which averaged an increase of 0.12% per day.

He calls it the "Usain Bolt of markets. We just blew through the records."

Tracking the uptick in the market has been rising consumer and economic confidence.

The Conference Board Consumer Confidence Index was up in August to its highest level since December 2007.

And the Discover Business Watch Small Business Confidence measure jumped last month to its highest level since February 2008.  

 

How to Take Advantage?

The problem is, of course, first determining if you've missed the rally, and then how to translate this improving business sentiment into opportunity for you.

For those of us that aren't Washington politicians or C-level executives of Fortune 500 companies, the best pathway to do so is via entrepreneurship and via involvement in private companies

But, and it is a very key but, you have to know what you're doing.  As the famous saying goes, "A little knowledge is a dangerous thing." 

Quite simply, when it comes to investing in private companies you must "do it right or don't do it at all." 

 

Best regards, and look forward to connecting.
--
Jay Turo
CEO
Growthink, Inc

Follow me on Twitter
Join my network on LinkedIn

  P.S. There are 50% and more rallies every year in various private equity sectors. You just need to know where to look.

And before you start looking, you need to know what to look for.


 


Syndicate content

Most Popular
New Videos

"Business Plan
SHORT-CUT"

If you want to raise capital, then you need a professional business plan. This video shows you how to finish your business plan in 1 day.

CLICK HERE
to watch the video.

"The TRUTH About
Venture Capital"

Most entrepreneurs fail to raise venture capital because they make a really BIG mistake when approaching investors. And on the other hand, the entrepreneurs who get funding all have one thing in common. What makes the difference?

CLICK HERE
to watch the video.

"Brand NEW
Money Source?"

The Internet has created great opportunities for entrepreneurs. Most recently, a new online funding phenomenon allows you to quickly raise money to start your business.

CLICK HERE
to watch the video.

"Old-School Leadership
is DEAD"

"Barking orders" and other forms of intimidating followers to get things done just doesn't work any more. So how do you lead your company to success in the 21st century?

CLICK HERE
to watch the video.

Blog Authors

Jay Turo

Dave Lavinsky