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jerryking : market_risk   6

Invest like a legend: Peter Thiel
Jan. 30 2014 | The Globe and Mail | Alec Scott.Special to The Globe and Mail.

Is tech investing different from other sorts of investing?

It’s incredibly hard to get people to adopt new tech solutions, and you only get adoption of something if it’s 10 times as good as the next best thing. Amazon had 10 times as many books. PayPal was at least 10 times as fast as cashing a cheque....How do your years of competitive chess-playing help you invest?

Chess champion José Raúl Capablanca said, “In order to improve your game, you must study the endgame before everything else.” Successful businesses have a very long arc. In 2001, we concluded that three-quarters of PayPal’s value would come from 2011 and beyond. The same thing applies to all the big tech companies currently—LinkedIn, Facebook, Twitter. Most of their value comes from the 2020s, 2030s and beyond. And so one of the critical questions is, what does the endgame look like, not how they will do in the next month.
Peter_Thiel  endgame  chess  Palantir  start_ups  long-term  market_risk  strategic_thinking  customer_adoption  personal_finance  orders-of-magnitude  Big_Tech  10x 
february 2014 by jerryking
Ten Commandments of Raising Money
(1) Assume the $ is available.
(2)Know you lending/investing options.
(3)Know your lends/investors.
(4) Make sure s/he knows you.
(5) Ask before you need the money.
(6) Follow the principles of salesmanship.
(7) Ask for more than you need.
(8) Business plan of course.
(9) Make his/her job easier.
(10) Maintain the relationship.

"It's really important to think about what risk you are trying to reduce when you raise money - is it product risk, team risk, market risk or something else? Investors really want to know what milestone you are trying to reach with the money. "
funding  financing  banks  pitches  business_planning  investors  risk-management  product_risk  team_risk  market_risk 
july 2012 by jerryking
Giving Great Advice
Janaury 2008 | HBR | Interview of Bruce Wasserstein by Tom Stewart and Gardiner More.

HBR’s editor, Thomas A. Stewart, and senior editor Gardiner Morse
spent many hours at Lazard and interviewed Wasserstein, setting out to understand how he creates value as a manager, as a deal maker, and as a counselor to CEOs. How does he attract and
manage talent, build and sustain knowledge businesses, size up companies and industries, and craft advice?

Wasserstein describes his approach as discovering whether a deal or strategy “makes sense.” Such sensemaking seems to underlie every move he makes, and it has paid off handsomely. Following is an edited presentation of HBR’s conversations with Wasserstein...first to execute deals really well and then to market that track record.

How do you develop individual talent? The idea is to create a hothouse where young talent is nourished by our culture and people are encouraged to think creatively, think deeply,
think about the long-term client relationship—but above all, think. I want them to reflect on what they are doing and why, and then wonder,“Can we do better?”

Talk about the advice business. What are CEOs looking for as you’re helping them understand the landscape? What do they
need that you’ve got? The point of advice is to create value. The
first thing in that effort is not to assume the banker knows more than the client. The second thing is to remind the CEO that corporations have to change in order to prosper and that inaction isn’t prudent—it’s radical. What we can do is help the CEO think through an array of options, partly by asking
the necessary questions, but also by inserting some very practical observations about the effects of specific decisions.
Good advice is at least as qualitative as it is quantitative....On the other hand, there’s the more qualitative part of the advice. This strikes me as being an underdeveloped side of most investment-banking relationships. Knowing the characteristics of the industry and possible consequences of a deal comes from having seen what’s happened in many companies and industries over time. So, for example, you might say, “Look, you need a very different mentality to manage this type of business than your other businesses. You have a process-oriented mentality, but you need a more market-oriented approach. Are you confident that you’re going to be able to keep the number two guy in the company you’re acquiring? Because the number-one guy will probably leave.”

Deals that make sense. Can you elaborate on that? Law school taught me to focus on dissecting premises. Anyone who’s a good logician can build an argument on just about any premises.
The argument may be taut, but the premises may be faulty. When we do deals, I always ask, “Are the premises sound? Is the risk exposure worth it for this particular company, and have
I protected my client’s back?” We proceed by identifying and evaluating qualitatively and quantitatively the key elements of risk in the transaction—overall economy risk, strategic
risk, operating business risk, financing risk, people risk. Similarly, you need to fully understand the upsides. What are the opportunities in cost cuts, synergies, internal development,
additional investments, or revenue enhancement? It’s useful to apply all the paraphernalia of mathematical science in an analysis, but focusing on the sense of things is a much better use of time. Part of determining the sense of a deal involves understanding the macroclimate, the broader context, which I think gets too little attention.

...We think of each deal in terms of a flow chart with a series of black boxes. Each box represents a facet of the deal—for example, valuation, financing structure, approach to the other party, negotiating tactics and deal process, taxes, legal structure, contracts, market reaction, and regulatory hurdles.
advice  argumentation  Bruce_Wasserstein  contracts  cost_of_inaction  dealmakers  deal-making  downside_risks  financial_advisors  financial_risk  howto  investment_banking  J.D.-M.B.A.  Lazard  logic_&_reasoning  M&A  market_risk  mergers_&_acquisitions  operating_risk  problem_solving  product_risk  risk-assessment  synergies  team_risk  upside 
july 2012 by jerryking
Bootstrap Finance: The Art of Start-ups
November-December 1992 | HBR | Amar Bhidé.

(1) get operational fast;
(2) look for quick break-even, cash-generating projects;
(3) offer high-value products or services that can sustain direct personal selling;
(4) don't try to hire the crack team;
(5) keep growth in check;
(6) focus on cash; and
(7) cultivate banks early.
HBR  bootstrapping  hustle  finance  funding  good_enough  start_ups  Amar_Bhidé  fast_followers  copycats  financing  entrepreneur  venture_capital  vc  execution  advice  capital_efficiency  team_risk  market_risk  technology_risk 
june 2012 by jerryking
Learning to Love Hedge Funds - WSJ.com
JUNE 12, 2010 | Wall Street Journal | By SEBASTIAN MALLABY.
Mr. Jones's hedge fund, like most later hedge funds, embraced four
features. To begin with, there was a performance fee. Mr. Jones's
second distinguishing feature was a conscious avoidance of regulation.
Thirdly, Mr. Jones embraced short selling. By insulating his fund from
market swings, Mr. Jones cleared the way for his fourth distinctive
practice, which was later to become the most controversial one. Because
he had hedged out market risk, he felt free to embrace more
stock-specific risk, and so he magnified, or "leveraged," his bets with
borrowed money.
hedge_funds  financial_history  scuttlebutt  short_selling  Wall_Street  market_risk 
june 2010 by jerryking
Create Your Own 'Big Bang' - WSJ.com
APRIL 6, 2004 | Wall Street Journal | By STEPHEN H. GOLDSTEIN.
How to spark and build a business ecosystem? following three approaches,
recently proven to be good starting points:

* Court a king. to win Wal-Mart over are standing at the head of the
line now.
* Advocate an ecosystem.
* Create a standard. In embryonic or fragmented markets, the way standards get set can be critical to the pace of market adoption and individual companies can usually play a role
in steering and setting standards.
growth  embryonic  start_ups  strategy  ecosystems  big_bang  measurements  standardization  technical_standards  jump-start  platforms  fragmented_markets  customer_adoption  market_risk  new_categories  howto  think_threes  category_killers  Play_Bigger 
january 2010 by jerryking

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