Only entrepreneurs have real dreams!

Another low day

Sun, 04 Mar 2012 08:48:49 -0500

Having a partner who can understand you is utterly important when you have event or quick turns in life! Wish I can say this to myself! All she cares is money and nothing else! It never occurs to her that taking someone else’s money and silently putting into her own pocket is a shame!

I’ve noticed this long time ago but thought time could change her! How wrong I was!

A basic asymmetry between own assessment and other

Sun, 26 Feb 2012 09:15:26 -0500

The basic asymmetry is that others care only about your final outcomes, and only you know how you are moving along the way. In writing papers I know how the editors’ real concerns are: they would not accept things not full of math and I know I can do that. But to others, all they know is that my paper has been rejected.

Vita can be a lousy reflection on a true person

Sun, 26 Feb 2012 09:10:58 -0500

All a vita does is to serve as a name card to other parties. It shows past employment history and achievements but those do not necessarily reflect how one will perform in the future. A good example is the former executive at Goldman Sachs who failed a fund miserably.

The fundamental difficulties derive from vita being a static summary.

The lowest point in my life today

Sat, 25 Feb 2012 09:24:34 -0500

Losing my fixed income, being rejected as potential teacher and consultant in Thailand, and wife is selfish and money hungry. All these come together at the same time!

Depressed? Yes! Discouraged? Not yet!

Journal of Social Economics is calling for paper for its special issue on culture and economy. This fits perfectly on one of my papers! Will work on to get it out before the deadline of March 1st for sure.

Two points learnt from these events. Teaching does not have a big scaling factor: you have to prove yourself everywhere you go. Coming to Thailand turns out to be my worst experience for teaching, as I was most under appreciated by people here and all my expertise, knowledge, motivation get wasted. No wonder why scholars pay little attention to teaching and all attention to publishing.

Two, you cannot betray your own accumulated preference. I wish I had stronger desire for money, which would drive me to start my own business. However, I care far more about new ideas and models than money alone! This I cannot do much about it!

My personal milestone today

Fri, 18 Nov 2011 09:17:39 -0500

Finished my draft tonight close to 8PM and sent it out to Review of Economic Studies online!

How to balance short and long term goals for startups

Wed, 05 Oct 2011 06:35:51 -0400

When training entrepreneurs it is easy to fall to the trap of “result dominance”. We have seen them all: teachers pretend to be investors and ask for how many customers, how much is the revenue, how many website visitors.

Doing this is OK if the students are already self motivated but not when they are consumed by fears. Because startup teams can only get short term results from the MBA programs, emphasizing too much on those results encourages them to think of the end goals only and not the processes.

The right approach is not only asking for results but also how the team did it. After all, learning the entrepreneurial way of doing business is the idea for training MBA.

Why startups must use different discount rates for DCF

Mon, 12 Sep 2011 08:44:39 -0400

One key to see if a business plan is serious, whether the entrepreneurs know what they talk about, and whether the discounted cash flow analysis is a good one, is to see whether their DCF in a business plan includes different discount rates.

Why should one use different rates over a period of five years? Because discount rate reflects three things: time value of money, risk level and opportunity costs. Therefore, when a startup has no revenue, its risk level is very high. Therefore, their discount rate should be high (in the range of 50-100%). In their second year when they have revenue, their risk significantly reduced and as a result, their discount rate will be and should be lower.

Why It Is Still Good to Have A Buzz Plan

Fri, 09 Sep 2011 08:37:51 -0400

Some VCs think that the business plan idea is obsolete. Not so for entrepreneurs! It is always nice to sit down to put your thoughts in writing and work out some financial figures. It may well be the best time spent on your new business.

Do not listen to all the VCs! Do that for yourself!

What's in the discount rate for Discounted Cash Flow Analysis

Tue, 06 Sep 2011 09:44:00 -0400

There are three things in the discount rate: time value of money, risk level and opportunity cost. Most just notice the first two but it really should reflect all three.

One confusing point: some believe discount rate reflects minimum payoff for equity investment. Yes or no. “Yes” because the risk level partly reflect risk premium, which is the required payoff rate for one to buy equity instead of bond. “No” because return to equity ROE is a better way to measure return to owners, which is related to operating income rather than general cash flow.

My Own Startup Ideas

Thu, 01 Sep 2011 00:09:00 -0400

I have been thinking about entrepreneurship and coming up with a few startup ideas. Partners are what I need to get them off ground.

1. Turn laptops and mobile devices into stand alone projectors to facilitate course discussions, meetings, brainstorm sessions and exchanges.

The key advantages: No more need for two or three people cranking their necks trying to get a peek over your tiny PC, laptop, iPad or smartphone to get a sense what you have to offer. Whatever on your screen will be projected over the wall, white board. Turn every personal device into shared ones.

Feasibility: with cloud computing all personal computing devices can be made with unlimited capability: cutting off the DVD /CD driver, cutting down the hard driver size, to give more space for communication.

The barriers: need to talk to PC designers on how to get there. One way would be to do a one button transition from computer to projector. Use projected clock as a prototype.

2. Digital shareholders meetings made easy

Key advantages: Annual meetings of stockholders have high costs and the turnout rate is low. Solution: offer video Skype chatting function to stockholders. Live broadcast of managerial and candidate speeches and Q&A sessions.

Feasibility: should be doable with today’s technology. Just need to set up a website for that purpose, acting as the service provider to rent out meeting hours to various firms.

3. Open manufacturing: RFID plus Skype site monitoring

Key points: Using Skype, smartphone applications and RFID tech to remotely monitor authenticity of the inputs, manufacturing, output, personnel, and output.

The business model is to create a third party monitoring agency for US/EU firms and charge them for the service. Target market would be high value added items or orders.
Feasibility: High, doable with current tech. Especially useful in China as the trust level is low and cheating is everywhere.
4. Interactive Wikipedia:
Create an interactive version of Wikipedia by links with audio/video, and by user chatting, commenting, instant responses, updating, voting, quizzing, feedback, grading.
These are primitive, more initial thoughts than finished ideas. But they should be OK as the beginning platforms to work on.

Training vs. Investing Entrepreneurs: Three Differences

Wed, 31 Aug 2011 10:13:00 -0400

At IMBA of Thammasat, we are wearing two hats at the same time: We pretend to be investors like VCs and Angels when we evaluate students work, and obviously we are the educators or trainers for the same students. Question is, how do we separate the two roles?

Of course, this question only has conceptual importance. In reality, we constantly blend the two. It is simply too difficult to stay watchful for when to do what. Perhaps the most clear time for investing in entrepreneurs is when we act as judges for their business plans. For the rest of time, we act as trainers.

Still, it does not hurt to ask ourselves the above question as in the title. It is more significant than it may look at first. We must know when to put on which hat, otherwise we confuse ourselves and the students.

The first difference is this: Investing entrepreneurs basically does selection while training them means education.

The second difference is that investors only need to come to meet the startup teams as a one shot experience, at the end point, while training is a long process. To that extent, investors have an easy job compared to trainers.

Here is the catch: Sometimes trainers forgot they are in it for long time, so they shoot for short target. When I suggest that we set up routine meeting with VCs, other faculty members believe that we should wait until we have a few star teams good enough to present to VCs. But that’s not the way it should be: we are in the business of training entrepreneurs. That means we should let students get familiar with what investors are like, how they think, how to pick and how they argue. This process itself is more important than the end result.

The final difference is that investors judge mostly on the ideas and its market potential, while trainers have to worry about perspiration, determination, ideation, confidence, motivation and implementation. All those soft aspects are trainers responsibility to work on.

Why It Is Wrong to Jump from Executive Summary to Financial Plan

Wed, 31 Aug 2011 08:47:00 -0400

I have often heard the story that some VCs only look at the sartup business plan for two parts: the executive summary and the financial plan. This is not a smart move. Here is why.

An executive summary only highlights the whole plan. Ideally, the team can do a good job preparing the pitch in one page. But the problem is, Exec Summ is one of the weakest part of the plan for most teams: they just don’t know how to cram the contents of 30 pages into a single page. One hint: write it last AFTER you have done everything. Most teams would be deceived by the fact that Exec Summ always locates before everything else.

So here is the problem: without getting much info from the executive summary, which often reads like an introduction, judges and VCs cannot really tell what the team is planning on doing what and how to do it. By jumping into the financial plan, the numbers there lost meaning or contents. There would be no business heart and soul in those figures.

The correct approach is to read the introduction, where the problems are listed and discussed and then the marketing plan part of the business plan, and then proceed to the financial.

What I am looking for in a startup buzz plan -2: Signs that they are serious

Wed, 31 Aug 2011 07:56:00 -0400

While some startup teams just play game for their projects, others are more serious. As a teacher or judge of the startup business plans, how do you know who is better than others? Below is a list of signs I would pay attention to. Notice this can never be a complete list, because the teams change from year to year, their business plans deal with different things, and teachers/judges have sometimes slight, other times dramatically different tastes. Clearly, what follows are things only work for me.

The first sign is the topic selected. For the most time, it is not hard to tell if one topic is just for the show while another for real. One thing to ask is where the team got their ideas from. The worst one usually came from teacher assignment: here there is literally nothing from the students. I have had one team getting the topic from one of the teachers: The product and the connections were all suggested by the teacher.

The best topics are usually from two sources: solving a problem in one’s life, or solving a problem for others. However, they both have to be solutions for real problems on the streets rather than from the books. I always treasure the time when I hear a topic attacking a problem that is so real, so obvious once the team started to talk, that I almost want to yell “Oh, yeah! That’s it!”

Why is real life based topic better? Because it tells you more than what the topic itself is but something about the team. Good entrepreneurs are excellent observers. They feel the market pain earlier than others and are brave enough to tackle the pain. Another advantage is that street based problems tend to be the one worth working on. They are there for sure and real.

Depending on students’ age and experiences, they may better work on personal solution if they are young; for more mature students working on solution for other people’s problem is perhaps better. The latter is basically a consulting project. The nice thing about working for others is that it is easier to think abstract, which allows more room for creativity.

The second sign is closely related to the first: the solution as part of the topic. This is only another sign in theory. In practice, the problems and the solutions are so tightly intertwined that you cannot really separate them apart. In other words, if the problem is real but the solution is not so, then the team is only done half the job. They may spend much time on identifying the problems but did not really do the homework to bring a viable solution to it.

The third sign is whether there is a business soundbite that is thoughtful and unique. Soundbite is roughly the same as the shortest elevator pitch. Every team can have a soundbite but many of them just make something up quickly and cheaply. A typical bad example would be “We are the different xxxx!” or “We are the best xxxx!” Watch out for those empty words like “best”, “different” or “unique.” They do not mean anything! A good soundbite would fill up those words with clear and meaningful contents. Thus for example, instead of claiming to be the best backup power system, the team would say “We bring the first green backup power to Thailand!”

To be continued next time. So long for now.

What I am looking for in a startup buzz plan - Introduction

Wed, 24 Aug 2011 23:44:00 -0400

Here at the International MBA or IMBA, we just finished the second round of Independent Study (IS) defenses for the batch of this year. Having sit through only three teams/projects, I certainly don’t claim knowing them all for the common patterns and average performance. However, it won’t hurt to offer my takes from this moderately interesting experience for two reasons. First is personal: I have been blogging through Wordpress but have been only clipping up online articles with a few words added at the end. That of course is not real blogging. Second is public: Discussion like this adds transparency to the IS defense process so students know what teachers or judges criteria are ahead of time. What follows is my personal opinions and does not represent what IMBA wants.

There are places on the web giving valuable suggestions/ advice /opinions on what a generic business plan should contain. The number of authors decreases fast when it comes to buzz plans for startups. A search through Google using “Startup Business Plan” returned 17 millions entries, which is dominated by “how to” stuff devoid of the entrepreneurial spirit or “why to”.

This will be the first of a brand new series on this topic. To mark up from the rest on WordPress, I set up a new account on Tumblr this morning and find it quit user friendly.

IMBA TU

Wed, 24 Aug 2011 22:24:52 -0400

IMBA TU

June 2011, Shanghai Buzz Trip; inside a Thai restaurant at Tai...

Wed, 24 Aug 2011 21:58:00 -0400

June 2011, Shanghai Buzz Trip; inside a Thai restaurant at Tai Kang road, the typical venue for white collars that mixes fashion and foods, both loved by people in Shanghai.