Stanford GSB Sloan Study Notes, Week 2 (22), Winter quarter
I think we’re getting back in the rhythm here. Continuous flow of external guest speakers and occasional valuation models to be built are bringing more variety to just swallowing hundreds of pages of cases. I did drop my across-the-street strategy class to get back to 19 units and thanks to that even made it to a few BBLs and a GSB High Tech Club company visit to Box. There is a long weekend coming up. Life is good.
Covered in this issue:
- Finance: NPV and IRR, including pitfalls
- Entrepreneurial finance: unit economics in business models and real options
- Angel & VC finance (and a E-Club BBL): life of an angel investor
- Negotiating Term Sheets, especially on valuation
- Marketing and Mastery of Communications: more stories, including analysing viral videos & TED talks
- Guests: Sand Hill Angels, Tory Burch, Pattie Sellers, James Buckhouse, Gil Penchina, Jeff Erickson
Stanford GSB Sloan Study Notes, Week 1 (21), Winter quarter
The pace of the new year has been just mindblowing, and not just compared to the Christmas break down time but to almost any of the school weeks from previous quarters. I guess this is what happens when you can almost fully customize your class schedule. And you want to get out of GSB to “across the street” schools for a bit. And you get accepted to this year’s LOWKeynotes speaker series, with dozens of hours scheduled for prep-work and coaching before the big stage. And…
I’m saying “almost in control,” because I have had close to no time to spend with family, sleep over 6 hours or socialize these last five days. And I do intend to do those things this quarter too. Exhausted, happy, but realizing this kickoff pace will not be quite sustainable as is. Let’s see what next week brings with its reading volume and booting up several project groups.
Covered in this issue:
- Finance basics: free cash flow, annuities, perpetuities & NPV calculations
- Business planning: financial business modelling, life time value of customers, Dropbox freemium example
- Venture Capital: industry history and sizing, how VCs think, how they move money and get paid
- Marketing: stories, stories, stories – creating and delivering them (videos)
- Strategy: Grabber-Holder model explaining disruptive tech innovation via ultimate nothingness from Taosim and Yin-Yang cycle
- Space entrepreneurship: an inspiring event on synthetic life with the Student Space Flight club
- Guest speakers throughout the week: Vinod Khosla, Nancy Duarte, Craig Hanson and John Cumbers
Several entrepreneurship-related classes at Stanford refer to a simple conceptual framework developed by Professor William A. Sahlman of Harvard for planning and evaluating new ventures. In short he proposed looking at People, Opportunity, Context and Deal of a venture and analysing how they Fit with each other in this particular combination at hand. You can read all about the model from his article, Thoughts on Business Plans (on Google Books) which in turn comes from an essay collection Sahlman edited in the 90s.
What inspired me in this material was a systematic use of simple, but carefully targeted questions. I decided to extract a condensed reference of them below – still mostly Sahlman with minor revisions, but I’ve added a few more, and would be happy to keep the list living if anyone proposes more useful questions from their arsenal in comments.
As the Sloan year has passed the equator, I’ve signed up for the following classes kicking off next week. It is going to be quite intense, 22 units in total and Mondays going from 8am to 9pm…
- FINANCE 229 – Sloan: Finance (Ilya Strebulaev)
- MKTG 249 – Sloan: Re-Imaging Marketing: The Power of Stories (Jennifer Aaker; see also her Story Bank site)
Yes, just two this time, leaving more precious time for electives.
Electives: Read the rest of this entry »
I picked up The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup by Noam Wasserman after he spoke about it in the ETL speaker series at Stanford back in November (see my study notes of that week here). With all the regular school reading in parallel it took me 2 months and 2 vacation trips to dig through the material, but coming out on the other side it is a highly recommended read for anyone in the tech startup scene. Doesn’t matter if you’re just contemplating bootstrapping your first company or want to take a step-back look at the impact your term sheet demands as an investor can have on entrepreneurs on the receiving end.
Basically, what Noam has done is to take a whole sequence of inevitable dilemmas every founder has no way of escaping while building their startup, gone back to about 3k companies and 10k people and surveyed the hell out of them to quantify both the triggers as well as the indirect results down the road after they have made their choices on these issues so often just considered a “gut feeling thing”. Should I found a company now? Should I do it alone, with friends or strangers? What happens to my likely CEO tenure time if I take external money? What kind of side effects can different outcomes of horse trading over boards seats practically have? What are the hidden costs (and benefits) of hiring youth over experience, and vice versa?
Stanford GSB Sloan Study Notes, Week 8-10 (18-20), Autumn quarter
Not to worry, despite of the three week scope in title this is not a monster-length post. Between a lovely wedding, an unexpected funeral and Thanksgiving break in between my focus has temporarily shifted a bit away from school as this quarter concludes. Do enjoy the little there is to share below – and as special gift to reader A.M., yes there are more videos.
A notable off campus educational highlight last week ago was an event at A16Z where William Janeway (being interviewed by Marc Andreessen on the photo above) discussed his book Doing Capitalism in the Innovation Economy: Markets, Speculation and the State. Combining his 40 years in venture capital with a PhD in Economics, Bill has great insights into when, how and where governments should play any role financing tech innovation and where progress should be left for markets. And as a curious subtopic – the need for an occasional bubbles in the latter case.
Covered further in this issue:
- How to avoid small groups polarizing towards extremes in debate
- Kõrvalmärkusena Eesti lugejaile: jah, teadus teemal Reformierakond VS Väike Grupp!
- Centralization VS distribution of control in global organizations
- More history of Presidential candidates screwing up in public
- Financial ratios and common size reports in accounting
- Effective networking tips’n’tricks exchange with Sloan classmates
- How computing changes human bodies and the definitions of creativity
- How big internet players have changed hardware IP value chain
Stanford GSB Sloan Study Notes, Week 5-6 (15-16), Autumn quarter
This post consolidates my notes from two weeks instead of a normal one, yet will be a bit more concise than usual too, for a few reasons: I was down with flu for several days and had to miss a few classes and then the midterm exams in Financial Accounting and Organizational Behaviour changed the normal scheduling.
Also, the first session of the latest addition in our core timetable, STRAMGT 259: Generative Leadership by Dan Klein yesterday was too… experiential to take any notes, really. Basically, we did three hours of improv theatre. It was a lot of fun, but instead of getting into the theory here – get the book: Improv Wisdom: Don’t Prepare, Just Show Up by Patricia Madson. And say “yes” more to whatever life throws at you, go with the flow and see what happens.
For additional entertainment, here is an experiment shared by my classmate Marc who is lucky to take a Behavioral & Experimental Economics class by freshly Nobel-prized Al Roth: primatologist Frans de Waal showing how even monkeys reject unequal pay (see especially from 2nd minute).
And now on to the regular programming. Covered in this issue:
- Why people suck at predicting when they finish a task
- How overdiversification, and especially uncontrolled aquisitions lead to dysfunctional conglomerates
- Lemmings following lemmings, but not sheep
- Predicting future divorces
- Research from surveying 10,000 founders that quantifies the impact of common “gut decisions” like picking investors or sharing stock between co-founders
- Guest speakers explaining how they’ve used creative incentive schemes to get more out of porn site classification crowdsourcing and VAT payments in China
- The impact of investment lags on IP value creation in startups and established companies
Stanford GSB Sloan Study Notes, Week 4, Autumn quarter
Covered in this issue:
- How Confucius helps the Chinese to consume free MP3s
- How a CEO is stuck between the Board and his team in a complex matrix of conflicting loyalties
- How a side-effect of managing a few trillion dollars in your funds is the need to do a lot of board voting for your shares
- How high-profile VCs can keep your loans in the bank and close your hires
- How startups should tell their story the way seen in Shrek
- How to make the devil’s advocate a resident part of participatory decision making culture
- How citizens should break the government monopoly of environmental and pollution mapping
And here on to the full notes: Read the rest of this entry »
Pretty much exactly 12 months ago I made my first angel investment ever in a company that makes physical things. My entire entrepreneurial career and the businesses I’ve supported on the side have always evolved around outcome you can not really touch: would it be software or consulting and services.
On this backdrop, the magic of turning ideas into physical objects has a special appeal for me. Estelon‘s flagship speakers weigh 85kg a piece yet are delicate enough to ship with a pair of white gloves for handlers. Their distinct shape is driven as much from physics as from visual aesthetics. And when they actually perform their primary function of music delivery it is as close as it gets to engineering creating pure emotion. The kind which both justifies and makes you forget the fair value on the price tag at the same time.
Read the rest of this entry »