And finally, let's give thanks. Iam not proud of it, but I am still addicted to reading the Sunday NewYork Times. And what a tale of woe it is. And while I know the #1 ruleof modern media - "if it bleeds, it leads," please just stop.
Betweenthe dire talk of global warming, global terrorism, and global finance,if you don't catch yourself you can't help but feel sorry for not justyou, but for all of humanity.
It is 99% bunk. The world has NEVER offered more opportunities for a larger percentage of us tolive affluent lives, to do self-expressive, remunerative work, and tobe amazed daily by the wonders of modern technology and entertainment than it does right now.Be grateful for all that and more.
Happy Thanksgiving to all. May your holiday be blessed withthe rewards of hard work, of breaking bread with family and friends newand old, and with an attitude of gratitude for the bounties the futurewill most definitely hold.
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.
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.
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."
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.
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:
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!
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"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.
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."