Thanksgiving break. Time to take a break from the wringer that is b-school life. ©
Kellogg has broken for the thanks-giving break. We now get a week away from school distractions before getting back and looking forward to final exams for the quarter. I feel slight relief. But I know that this feeling won't last long. What seemed like an ocean of time to get lots of things done suddenly only looks like a puddle. Here is a preview of what I have to get through over the next 9 days.
Organising meetings with companies. I'm going to be in the Bay Area over the second and third weeks of December. I'm going to be on two Kellogg organised treks, visiting tech companies and VCs in the area. There is some downtime between these treks, so I'd like to use this time to meet further companies that are doing things related to what I plan to do in future. Organising these meetings means emails and phone calls over the coming week.
Getting the school newspaper ready. My one (or main) extracurricular activity while at Kellogg will be running the school newspaper - I'm the paper's Editor-In-Chief for the year 2010. I feel that the paper, The Merger, has been a little too infrequent and that quite a few improvements can be made to the way it looks and how we deliver it. All this requires more work, and importantly, more money. Figuring all this out will be another task over this thanksgiving.
Assignments. There are numerous assignments that are due the week after thanksgiving. Some of these are not worth too much, but others account for a significant portion of our grade. They are going to take some time to get completed.
The social scene continues. Yes, even though I will be in Evanston - the home of Kellogg - all through the break, while many students will be back at home, there are other students who are in the same predicament as me. We've already started planning at least one get together. The school also puts on a thanksgiving dinner on Thursday for anyone who is around, which will also be interesting.
Catching up with school work. I've fallen behind on a few subjects. I need to spend some time over the week catching up with some concepts that have just flown over my head in the last few weeks. This is especially so because final exams are shortly after.
Studying for a waiver exam. I've decided to sit for a waiver exam for the statistics course that most Kellogg students take during the second quarter. I have done some statistics in the past. Having repeated some probability material this quarter that I have done in the past, I feel I should at least attempt the exam so that I don't feel like I'm repeating material again next quarter. Of course, this means revising some statistics concepts that I've not seen in almost ten years. Oh well. We'll just have to see how things pan out.
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My individual 1-on-1 roleplay was probably best described as "a bit of a disaster". The roleplay centered around selling private wealth management services. I should have known a request for a for a "verbal pitch" actually meant powerpoint. The important lesson for me was that it is often better to give the illusion of over-preparedness, than to actually be over-prepared. The Group round, during which each school sold SAP to a potential customer, went slightly better.
The organisation of the event was quite impressive, and I was surprised to hear how strong MIT Sloan's offerings are in the sales space. Sales is not something most people would associate with the school, but their sales club is the second biggest on campus, they run a conference, offer training from external partners and off course run this competition. MIT Sloan certainly seems to be building a brand for sales.
Overall, it was a good event and I'm glad to have been lucky enough to participate. The logistics would have been a nightmare to organise, with entrants from almost a dozen schools, but the MIT students did a fantastic job getting the event together. Nevertheless, the Kellogg kids might not have won the sales competition, but I'm sure we've sold some of the Sloanies on the idea of on dropping out and applying for Kellogg class of '12 ;-p.
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The Knight News Challenge slogan: "You invent it. We fund it". ©
Although the application is very simple - less than 800 words in total - I've spent an inordinate amount of time on it over the last two months. Writing and redrafting, the process was similar to applying to business school. I believe tens of thousands of applications are made each year, from which a dozen to two dozen projects are eventually funded. The odds are not good, but I figure that it's worth a punt.
I debated whether to make my application under the "open" category, so people could view it and make comments on the Knight News Challenge website; ultimately I opted to apply under the "closed" category. Although seeding copy-cat competition is an issue, the main reason I've applied under the closed category is so I can manage my time. If I applied under the "open" category, I would need to undertake a large marketing effort to get it viewed by lots of people, rated highly and get good comments on it. I'm sure the Foundation will disagree, but social proof (or the lack of) is hard to not pay attention to. I feel my time is better invested actually looking for funding - this is after all why I am applying.
If I am successful in winning the funding that I am seeking, my project will be able to follow a utilitarian path - I will be able to concentrate on producing the best product possible, and it might just help improve the distribution of news in local areas. If I am unsuccessful, I will be relying on purely commercial funding and the focus of the product will likely have to focus on the distribution of news and marketing relating to commercial products.
Although it is a very small step, and potentially will not yield anything, I feel like I've taken my first step to starting a business out of business school. I can now concentrate on the next step.
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I entered the MIT Sales Competition as a way of learning something about sales - I'll need to develop this skill if I am to have any success with my entrepreneurial aspirations. I never expected that I could actually progress past the initial phase to the final round - but indeed I have. I head to Boston in two weeks.
The competition consists of two rounds. In the first round, entrants from thirteen different schools participated in a cold-call competition. Each participant cold-called a judge, who evaluated our performance. To this judge, we each attempted to sell supply chain management software; the actual scenario was based on a case we were given. From Kellogg, perhaps ten people participated. The top three scoring individuals from each school progress to the next round in Boston. I am fortunate to be among those three for Kellogg!
My strategy for the cold-call paid off: I spent most of the call asking questions and eliciting concerns so I could "pitch" what I was selling against those concerns. It was a bit clunky in places, but the judge responded favourably to my approach. I'm also sure the fact that I smile a lot (and that people say you can "hear" someone smiling) helped build rapport.
The next round takes place in Boston, on Saturday 17th October. It will consist of a 1-on-1 selling role play, as well as a group selling exercise - where the participants from each school sell something as a group. I hadn't anticipated getting this far, so I'm continuing to view this whole thing as a learning experience. Hopefully my fellow Kelloggians and I do well in representing out school.
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Follwing pre-term, I'm a few weeks into life at Kellogg. Yet, it feels like a lot longer. It feels like we've all been here for several months. The coursework load has started to ramp up. Clubs are recruiting people for leadership positions. The social scene is still lively. I feel like I'm stretching my time as far out as possible and struggling to keep up. Perhaps the problem is simply self discipline - sticking to what I had planned to do and getting things done. By self discipline, what I really mean is motivation. Yet considerable thought and recent experiences have led me to a time-honored simpler answer.
I would once wake up in the morning and lie in bed for an extra hour. These days, that hour has chopped down to a few minutes. I think this is what is necessary to operate in the business school environment - greater and greater self control of your urges. I'm realising that this is one of the things I need to really master. There is probably just enough time to keep up with only the readings and coursework for classes. Adding clubs, career pursuits, socialising and everything else means there is less and less time for procrastination and distractions. Yet, I find it difficult to not let my mind drift to other things - especially while reading dense text that was probably designed to test your reading stamina. If I am to achieve everything I want in these two years - self discipline will surely be key.
Yet, self-discipline does not have to feel like self-discipline if there is motivation. The stronger the motivation, the quicker things happen and the less procrastination there is. I expect to finish writing this blog post within 30 minutes, for example, simply because I am motivated to keep writing and also motivated to get back to dealing with the rest of the stress of business school. Yet, when it comes to completing assignments for some classes - the motivation is not there: minutes become hours. Soon, I'm already behind and scrambling to keep myself interested to keep going. So beyond self-discipline, if I am to achieve everything I want to out of business school, I need to learn to motivate myself to do those really hard things - those things that are easy to put off. I need to be motivated enough to complete them quickly and move on.
For all this talk of self-control and motivation, I have to admit, though, that there is a simpler device that has been getting me through everything: coffee. I'd been off coffee for several years, but I've picked up the habit again. It seems like such an easy way to stretch out the day. Perhaps this is the simple answer to all my worries? Perhaps with a bit more coffee in my blood, I won't need self-discipline or motivation? Or perhaps I am delusional - I hear that happens when you're body is running only on...
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CIM Week, and pre-term with it, have finished. So in theory I've now got some more time to myself. In reality, it's the first day of class and I'm finding I'm still struggling to keep up with everything. Here is what we have going on at the moment...
Group work: The Leadership and Organisations course (aka MORS) that we had packed into pre-term has a group coursework outstanding. Each of us in our groups of six has to interview a top leader to ultimately produce an analysis of how these leaders use their social networks. I'm looking forward to getting some insights from these leaders. My only gripe is getting time with top leaders to talk to interview them about this. If we all can, this could be a really interesting project.
Social scene: The social scene at Kellogg is very active. Thus far, people seem to be hitting the bars quite regularly. Some people seem to be focused entirely on "networking" - I come across too often at every event I frequent. What I've also found interesting is how quickly stories spread across the student body. Any story of any kind of incident spreads like wild fire.
Reading: Pretty much all the courses have reading that they require. There is far more reading to do for courses than there is time to do them. Some of the reading is quite fascinating, while other parts of it are dry and put me to sleep. Not all the professors seem to use the readings to the same extent. At this stage, I'm still trying to figure out how to best go about tackling the readings.
Extra-curricular: All the clubs at Kellogg have started emailing the students about their events and kick-off meetings. They are keen to recruit first years to leadership positions. On an aside, I've signed up for the MIT Sales competition as a way of developing my sales skills.
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I felt myself gasping and clutching my seat. It was the first day of business school. The 2nd year leaders of our 72 person first year group had just uttered some words to unleash hell, "you need to come up with five cheerable chants among you; you guys can organise yourselves to do this". The sudden vacuum in leadership among 72 A-types opened the doors to a sudden gigantic wave of chaos. Rather than repeat Shobit's summary of CIM, Kellogg's orientation progam (official details here), I'll provide some anecdotes of my experiences.
Who could have thought that so many blatantly idiotic activities could inspire so much passion and energy? From a battle to produce the best chants, to treasure-hunt style races and "the name game", every 72-ish person "section" that the class of 2011 is broken down into competes during CIM to win various competitions. One girl called it genius - "we're forced to bond with each other super-quickly!"... Personally, I've been awed by how many people want to lead something - anything: even competitions as weird and meaningless as these. Perhaps more interesting is the joint realisation by everyone that chaos is a lose-lose situation for all. Eventually, people learned to rally around the people who spoke with the most common sense and enthusiasm. The cry of another person, "we can't all be leaders", captured the essence of the situation.
Between the chaotic team bonding, first year Kellogg students also partake in a pre-term class: Leadership in Organisations. Each class is a massive learning itself, requiring a lot of reflection to really appreciate. For example, a recent class broke up into small teams of 3 that paired up with other teams of 3 to negotiate. One of the teams got completely whitewashed! Perhaps most amazing was that the team that got whitewashed thought that they had a good deal until they came back to the classroom and found the options each of the teams really had to negotiate with. One of the negotiators on the rival team was revealed to be an expert: start negotiating from a really ambitious target price: the wider the gap between your target price and your "reserve price" (your lowest price), the more room you have to negotiate with. The professor summed it up: what matters is how much negotiation you do - the more the other party feels like they've had to work for it, the better they will feel - even if really they got a bad deal (.... because they don't know it - they think they've done great because they worked so hard for it). This also means that if someone offers you a really great initial price, you should not accept it - if you do, they'll think "damn, I could have got a better price". Instead, making them work for an even better deal makes them feel they got a good deal and you get an even better deal.
The last component of CIM, beyond crazy competitions and classes, is the socialising. There are Kellogg people out every night, though only the hard-core are out every single night. In a town in which everyone lives four blocks from each other, the same five or six bars become the places that everyone is at. Socialising becomes very easy. Doing so in wacky costumes makes socialising even easier. I was out one night, when my glittering green wig caught the attention of not only every passer-by, but also the locals in one of the bars that Kellogg students frequent. After much banter, it materialised that one of the old gentleman at the bar, a little removed from the social chatter elsewhere among Kellogg students, was a the owner of a chain of restaurants around Chicago. Who'd have thought networking could be this easy?
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As a way to introduce international students to Americanisms, we were shown this video by some of the students.
I've been in Evanston for two weeks now. Already the American culture is slightly tiring me. So, yesterday's inspiring opening welcome to international students by the Interim Dean, Prof Sunil Chopra, could not have come at a better time. It's a shame the general opening welcome to all students today was not as eye opening.
While I spent my first week in Evanston setting my apartment up, I did manage to get out on some of the evenings to meet some fellow students. One of my 2011 classmates organised two events for people to meet before the official school activities began; I attended the second of these events - staged in a strange bar based within a cinema theatre complex. Several hundred students attended and I was not prepared for my first impressions:
In hindsight, I was naive to not be more prepared for these things - to be more prepared for the way things are in American business schools.
The last point on "what do you do? where are you from?" was addressed in a unique way during my second week at Kellogg. KWEST is a week long trip that students in groups of 25 go on around the world: a sort of a team bonding activity. On these trips, everyone is instructed not to reveal anything about themselves to others on the trip until the near the end - when there is a "big reveal". The idea of this game is to enable people to get to know each other beyond the stero-types that people perceive of others. In this environment, I noticed that
The trip was great, the people were fantastic, but I personally feel that I did not engage as well as I could have done - again I misjudged the culture of American business school students.
For me, the welcome to international students by Interim Dean, Prof Sunil Chopra, came at the right time. He spoke about research done at Kellogg showing that the most successful people are those who can connect different "small worlds". People live in "small worlds" of people they are connected to - people who know each other. This could be the community of industry experts in a field or students from a similar country at school. Those who are successful are those who can reach beyond these small worlds. Coming to a different country, as international students are, it can be intimidating and easy to crawl back into the circle of friends and culture we already know. However, we should challenge ourselves to become connectors - to become people who can inhabit several of these different small worlds. If we are able to do this, we will find that we are able to do more - innovation, for example, comes most easily when different small worlds connect.
While Prof Sunil Chopra's speech to international students yesterday seemed to emphasise the connections that we made as being the most important asset of business school, the proceedings today, the first proper day of school, were the expected dull welcome introductions to the academics.
Someone needs to tell the grocery stores that 60201 is not comparable to the area surrounding Buckingham Palace. ©
I arrived in Evanston, Kellogg's home, on Sunday night. Thus far, my entire attention has been on getting myself set up on in the US. In some ways, it has been easier than I expected. Some frustrations remain, nevertheless.
60201 – Evanston – is a quaint little university town. Thankfully, this means some of the numerous amenities around the town know exactly what my requirements as an international student are. The bank made it almost effortless to get an account, even sorting out proof of residence for me through their knowledge of the university intranet and contacts at the university. The cell phone shop automatically game me my student discount for my monthly phone bill – without asking for any form of student ID. While I stood at the front of my apartment, waiting to direct them, the removal people already knew how to find my apartment block’s rear loading entrance and had started moving furniture in.
However, what frustrates me is that there seems to be few grocery stores in my part of Evanston that provide genuinely student prices. Living in Park Evanston, Whole Foods is next door and extremely convenient. However, the cheapest priced bread (for example) is $4. This is still over twice the cost of what even the premier groceries in London would charge. In fact, that kind of price could only be found in London if you lived next door to the Queen. The Northwestern campus is nice, but it’s not Buckingham Palace. To save on the weekly trip to Jewel-Osco, I’m thinking of using an online grocery service. This would also help me plan my meals upfront – a sure way to control those notorious US calories.
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The micoeconomics preparatory course used a real life example that all students will be familiar with. © Kellogg.
I'm running out of time. On Sunday I fly out from London to Evanston. The to-do list has shrunk - partly as a result of pruning out some of the more ambitious items (e.g. learning speed reading and touch typing), but I've managed to get quite a bit done, though there are still a few things left to do.
The most tiresome to-do item has been the prepartory online courses that Kellogg was "pleased" to provide incoming students with. It was tiresome because they required quite a bit of time, and I'm sure a good chunk of the material is already covered in the GMAT and CFA Level 1 (both of which I've had some exposure to). Nevertheless, I appreciated the effort that was put into making the course material applicable for real business situations. Scenarios ranged from a startup's accounting practises to Pepsi's pricing strategies. I think I could really get into some of these courses when they kick off properly in the Fall. However, if a paradoy of those courses is what you're looking for, this video is it.
Among other things, the apartment and living situation is sorted out, and my money is the US - in time for the first tuition (and health care) bill to arrive: over £17,000 for the first quarter - getting that was like getting a punch in the face. I'm also mostly packed up: extraordinarily, it seems that I may just be able to fit my who life into two suitcases, a carry-on and laptop bag... I wouldn't have thought it, but it seems possible.
So what's left on my to-do list? I need to revisit my LinkedIn page and CV. The latter of these has to be put into "Kellogg format", which seems to be just Kellogg's way of standardizing CVs into a standard format for easy perusing by employers. Beyond that, the most important things are those related to my entreprenurial ambitions. I've got a rough prototype. I will soon need to start putting together a list of target companies to approach to see if they'll be first customers. This will be a learning experience in itself. Finally, I also want to make some subtle changes to this blog.
The mania continues. Will it ever stop?
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How simple and compelling is your startup's pitch?
The romanticized view of entrepreneurship is of creating something world beating. This is still the view of many VC firms, I'm sure. Yet - in the the VC firm where I've been working - this is not necessarily true. This may be because this particular VC firm is moving later stage with its investments, which may be true of many European VCs comparative to Americans. In any case, the experience of intern'ing at a London based VC firm has coloured some of my thinking on start-ups. Here are some of my take-aways.
You doesn't necessarily have to have something market leading. You just need something that gains market traction and generates revenue. If it makes enough of an impression on the market, it'll be acquired and generate a payout for the entrepreneur and the investors involved. It is not necessary to build a new way to brush teeth; a better way to brush teeth is fine.
There are lots and lots of startups everywhere. It is amazing how many there are. They are flies circling VC firms. The VC will say that only thing that ultimately differentiates one against another is revenue, profitability and the opportunity for growth.
It's not necessarily about creating a good business as much as creating a good exit. Having mentioned how important revenues are... on the flipside, if you can sell the hype that a service with millions of people using it, yet no revenue, will in some future generate large revenue returns - so be it! The classic example of this is Google's purchase of YouTube.
Entreprenuers fumble about a lot before hitting the jackpot. There are a number of examples of companies that are successful now, but which weren't originally as successful. As they started investigating a problem, they stumbled on something which was the real money making opportunity. A recent British example of this is Skimbits, which eventually found a neat way to monetize links and created Skimlinks.
Some entrepreneurs are more impressive than others. Some of the most impressive entrepreneurs have a long track record in the field they operate in, with deep industry knowledge, know-how of the market and what users want from the product. They also have lots of connections within the industry and experience of the technology or innovation involved. One entrepreneur I've come across has such a reputation in his industry, a firm he was interested in acquiring dropped their asking price from £1M+ to ~£150k for a 50% stake in their business: they believed he could dramatically increase their revenue.
Presentation and clear articulation are important. Many companies will approach a VC firm in many different ways. Some companies can be overlooked quickly merely because the concept is not clear. This is particularly true if the financials are not particularly impressive. The clarity of the message is important. How well the entrepreneur communicates this can reflect on him/her positively or negatively. Realism with a slick, carefully thought out presentation can go a long way. The first presentation everyone (including a VC) will look at is the company's website.
There are signals for good and bad. A company seeking investment for international expansion is attractive. A company seeking investment to expand by going into a new market (which it may not have direct experience), is much more risky. If the company has a foot in the door (e.g. a pilot) for the next growth opportunity that they promise, this is a good sign. If the company needs lots of physical assets to operate, it can be difficult to scale it.
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A personal brand is another way to differentiate oneself in the crowd ©
August is here. For many of us starting our MBAs, there are at least two turning points fast approaching us. The first is the thought of having yourself plucked out of everyday reality and crammed in with hundreds of other people from all parts of the world and all walks of life - restarting student life in quite a different place to where-ever we are now. Whatever gradual path we've been taking thus far will soon be batted into the stratosphere. The second turning point will come approximately 22 months later. At that point, our paths will again be smacked out to other parts of the stratosphere - in different directions. With the career goals essays that the schools mandate, I feel like I've been thinking about these turning points and my future life path for several years. Recently, with the first of these turning points fast approaching, I've been inspired to think about them in three specific ways.
Be the best at three things, not one. Scott Adams, the creator of Dilbert, suggests that to become to the very best at one thing, such as a NBA basketball player, is very difficult. Instead, he recommends picking three things that work in synergy to define your own niche. For me, I think this is media, entrepreneurship and technology. I've always been interested in media - from starting a school newspaper when I was 14 (a newspaper that never saw past issue 1, such is youth) to launching a online student new site (which I can't take full credit for, I admit). Entrepreneurship has come relatively easy in spits and spats - building torture devices (starting a public speaking club) and once running a hobby company organising embarrassing events (yes, speed dating). Technology was my undergrad education and has been the major part of my career to date. Maybe, just maybe, the MBA will give me the opportunity to properly fuse these together.
If you want to shine, put in 10,000 hours. Malcom Gladwell has written a book on this thought, and the gist of it can be found in many places. It makes a lot of sense that overnight success actually took several years of hidden effort. It also makes sense that perhaps the reason people never realise their true potential is because they give up before they reach those 10,000 hours. If media, entrepreneurship and technology are to be "my thing", I wonder - how many hours have I put in to date? Perhaps it is 10,000 hours that are required to start a business?... in which case, I'd still have lots more hours left to put in. The difference between success and failure is perhaps persistance. Do I have what it takes to put those 10,000 hours in? Because I spent a long time deriving my "three things", I think I do. Time will unravel if I will be right.
Personal Branding in the age of Google. Seth Godin points out that it's difficult to not have some kind of personal branding out there, on the Internet. He himself has built an unshakeable brand on the Internet. His three things are probably "hip marketing, author/blogger, thought leader/professional speaker". He has certainly put in at least 10,000 hours into this over at least the last 10 years - probably more. The culmination has been a personal brand that attracts for him the resources and opportunities he needs to be even more successful. Thus far, I've not proactively managed my personal brand on the Internet; a search for my name produces random things. There is barely any association to my three things - "media, entrepreneurship and technology" in what comes up. I'm now thinking about the kind of brand that I might be able to build for myself over the next two years, either side of the turning points, as well as beyond.
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VCs are jacks of all trades. ©
In the few weeks that I've been interning at a London based venture capital firm, already one thing is clear: a venture capitalist needs to be a jack of all trades, i.e. competent in many skills. Further, to be a really good VC - it is necessary to be master of a lot of these skills. Whereas a career in consulting might be a full time mostly soft-skills based career, or career in banking might be a full-time mostly quantitative-skills based career, a career in venture capital is a mixture of many things.
To illustrate, here are a few of the skills called upon:
- People management: For each portfolio company that a venture capitalist manages, there is a relationship with the entreprenuers of the company that needs to be nurtured and tended to. The entreprenuers might want to build the best product in the world, whereas the venture capitalist will want to just generate 5x returns of his/her investment within 3 years. These expectations need to be managed and a relationship of trust built so that everyone is pulling in the same direction. If things don't work out, the VC will need to be prepared to change the CEO and/or other members of the management team.
- Business acumen: A VC's main management control of a company is via their seat on the company board. To this meeting will be escalated any issues the company might be having. The age old classic with internet startups is the problem of monetization, but it could be issues related to market traction or even the startup's team composition. The VC will need to be quickly add value to these discussions based on the shallow knowledge he/she has of the company and industry.
- Quantitative: Some of the deal terms that are discussed in the process of funding a startup can get very complicated. In fact, some people say these complications have only become possible as Excel, over the last 20 years or so, has become capable of modelling them. To illustrate, there may be several investors investing in a company. One investor may have liquidation preference. This means that in a future sale, that investor can specify to have returned a multiple of the shares of other shareholders. This multiple can be dependent on the sale value, e.g. "2x shares if sale value is $50M+, 1.5x if $75M+ and 1x if $100M". In addition to this, the investor can also stipulate anti-dilution, which means that if the future value of the company is lower than when investment was made, that investor gets their returns at said multiple while all other shareholders are squeezed. This is all for just one round of funding. Over several rounds, with several more variations of stipulations added by several different VCs, it quickly becomes possible for the model to run wild.
- Networking, Sales and Negotiation: Building a reputation in the industry and "attracting deal flow" is a virtuous circle. For the industry that a VC is investing in, the VC will need to build contacts - with the big conglemerates as well as budding entrepreneurs. The conglemerates may become future customers of a portfolio company. The entrepreneur could be a future star the VC they'll want to invest in later. The VC will also need to build relationships with Limited Partners ("LPs"): insurance firms, pension funds and others providing the funding for a VC's investments. The sales element of all this comes in when convincing an LP to provide funding or a startup to take your investment. An attractive startup may get the attention of several VCs, in which case it becomes important to negotiate well and project a strong impression in the competitive process between VCs. At other times, it will be necessary for a VC to bring in another VC to spread the risk and the investment. It's a murky soft skills world.
- Entrepreneurial Skills: There are not many people within any VC firm, and little or no direction is provided. It will be down to the VC to "make things happen": bring in investment, attract deals and manage companies. In much the same way that entreprenuers do, to make all this happen, a VC will need to attract and gain access to resources that are beyond their immediate control. They might do this through networking, running mini programs with incubators or other means. The VC will have to take the initiative; it is pretty much like running a little firm - except done in a partnership.
- And there is more... VCs need to quantify the value of companies not listed on any stock markets, which is a skill in itself, and conduct due-diligence on companies targeted for investment. VCs need to keep abreast of deals that are being made in the market and new technical developments of major companies. They also need to have strategic foresight to guide their thinking of the types of firms they think will be successful.
Is this a thing of the past? ©
BusinessWeek is up for sale. The loss-making business has become "a continuing distraction" for publisher McGraw-Hill. I don't think the current operating model for online newspapers and magazines, such as BusinessWeek, will survive much deeper into the 21st century. For my business startup, I'm exploring what kind of new operating models might work better for online publications.
Many people have many ideas as to what shape publications will take in the future. I've speculated on this myself. Even BusinessWeek has speculated on possible new models for its own future. Yet, as soon as you start executing the idea - the dreams and aspirations meet the dirt and grind of the floor.
I spent quite a bit of time and effort over the last few months trying to find software developers to help me build a prototype for my startup. I've been thoroughly unsuccessful. Lots of people seem to get excited and want a piece of the action. Yet when it comes to actually doing something (in return for equity), there is nothing. "I just don't have the time", one of them moaned - and he was the one who'd been made redundant following the financial crisis. Another is too distracted by women. Yet another does not think I'm committed enough(!)
So two weeks ago, with time running out, I started going about building the prototype myself. I started my career as a software developer, after all, and my undergrad was in Computing. However, having not done any software development in almost four years, I thought I would struggle - particularly since the programming language is new to me - Python. Yet, it has been less of a struggle than I anticipated. What is a challenge, however, is pulling together something that will be sizeable for anything other than demo purposes. Yet this might be enough. My plan is to spend the Fall quarter at Kellogg pursuing potential customers who may give me enough money to develop a fuller software solution over the summer internship period.
The dirt and the grind may not be too pretty, but hopefully there will be enough before school starts to get others to buy into the vision and dream. The prototype just needs to be suggestive enough to let the minds of potential customers go wild. If it can capture the hearts of Northwestern's software developer type students, who might then help develop it further, that'll be even better. As to what to call this prototype / business / idea... I wonder if I could get a student loan package to cover the debt associated with BusinessWeek brand? Probably not.
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I don't think I'm going to see a to-do list like this for the next few years :'-( ©
I seem to be surrounded by to-do lists. Everywhere where I look, there is another list of things that I need to do. I fly out to Evanston on the 16th August, i.e. exactly a month today. I still have a lot to do. The to-do lists remind me of this constantly.
Kellogg's to do list. Kellogg provides a nice list of things to check off. It sits on the welcome site for admitted students. It's very useful. My only fustration with it has been that you can only cross off some things later, because who-ever it is that organises those things has not released the necessary information yet to complete them. Initially we had to wait for the online courses. More recently, it has been the applications to waive courses. However, things have changed recenty: now pretty much everything is available for completing. Now the problem is finding the time to do all that I have left.
My personal to-do list. This to-do list includes things such as cancelling my phone contract and buying suitcases. I also need to figure out which items I'm going to pack for Evanston, which items I'm going to chuck away and which I'll leave with my parents. I also want to get back in touch with a number of people I've not seen in a while, before I leave the UK. It's been 8 years since I've seen some people from my undergrad; better to get in touch now, rather than after 10 years (post-MBA) or later, I reckon.
Am I getting the most I can out of my venture capital internship? I've not started on this to-do list, but I'm keen to get as much out of my internship as possible. I've learned a few things about how companies are selected and gained a great view of the politics of deal making, but there is still plenty more I could get out of this experience. Perhaps meeting potential future partners and investors?
Starting the business. The items on this to-do list include: Building the prototype, finishing the business plan and finding contacts in Evanston to help with sales and building the product. Soon to be added will be that I also need to start thinking about potential target customers and funding sources. If I am going to fund working on the startup over the 2010 internship period, all of this will be important.
Emails to reply to. There are a whole stack of people that I've been in touch with one and off. It plays on my mind that I still need to reply to some of them. The problem with replying immediately is that it encourages them to reply immediatly, meaning I have to take more time to write another email sooner rather than later. Delaying replies to save time is an awkward and embarassing time management strategy... but it kind of works.
Things to do once there. Unpacking, setting up the apartment, setting up bank accounts, utilities etc and even buying a bathrobe are all on this list. I keep thinking that there must be a lot that I've not thought about, because this list is not particularly long. Perhaps this is because I've bought all of the furniture off a leaving international student? Or perhaps I've not quite immersed myself in the reality yet.
There's a lot to be done before school starts. I better get back to getting on with it.
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Many VCs, at least in London, are unlikely to have a structured program for accepting interns. Consequently, it may all come down to what they currently have going on - i.e. being at the right place at the right time.
To gain some exposure to assessing start-ups from an investment perspective, I sourced an internship at a venture capital firm. I was inspired by readers' comments to my plans for the summer, and Orlando's own pre-MBA internship hunt. Based on my experience, here are my tips.
- Put together a list of VC firms in the geographical area you are targetting. I got this list together mainly through looking at the nominees at European entrepreneurial investment awards, workshops and sites such as Crunchbase or a directory.
- Determine the specific areas where you can contribute something, based on your background and expertise. Is it digital media? Life sciences? Clean tech?
- Look at the websites of the VC firms you are targetting. You will need to filter out some of the companies to find those with a fit for your background. Look at the portfolio companies and the backgrounds of the partners.
- Know something about venture capital. Read the gossip on TechCrunch, the news on VentureWire or WSJ, the thoughts of actual VCs and learn about how vc works.
- Network with people. I initially tried to do this through entreprenuerial events, but I did not meet many VCs there. I did meet other kinds of people: lawyers, brokers for VC, recruitment specialists for VCs. I found some people accidentally, e.g. someone who worked at portfolio companies through a public speaking club I frequent etc. They all had interesting advice and continue to help shape my CV.
- Contact the venture capital firms on your target list. More specifically, do some research on the people on the VC team. Try and show how you can add value; this will likely be in deal sourcing / screening. Step two of this article might shed some light on some dynamics. I contacted the partners directly and attempted to follow up by phone.
- If the partner is interested, they will respond to your email or delegate to an associate. A phone call or meeting might follow. If the partner does not respond to your email, it is unlikely you will be able to get through to any partners of the firm by phone. I was able to get through to secretaries and PAs, who were usually aware of what is going on and can often speak for them or at least advise how things work at the firm.
- Be persistant, keep following up with anyone that shows interest and stay determined.
Ladies and gentlemen, I introduce you to my "roomies" - Snap, Crackle and Pop. ©
Friday was my last day of work. Well... sort of. It's my last day of work in my current job. On Thursday, I start an internship at a venture capital firm. It's going to be a busy summer leading to Kellogg.
I feel like I've been counting down to these final days leading to Kellogg since I was admitted to Kellogg in December. Over the past few months, I slowly told people at work about my plans to leave. The reactions were mixed. I came up with a standard set of canned responses to common comments and questions. Here are some of them:
- What do you want to go back to school for? It's true. You got to admire Rodney for sitting in that same job for the last 20 years, waiting for his pension.
- So you've got a big change ahead of you? You mean American girls who dig British accents?
- Kellogg? Why does that sound familiar? Because they make cornflakes?
- What is the course content? 35% women. Average age: around 27.
- HR: Do you think you'll come back here after you've finished? Yes, yes... please just give me a "career break".
- Everyone else: Do you think you'll come back here after you've finished? Err...
- Have you sorted out a place to live yet? Yup. I'm living with Snap, Crackle and Pop.
In the middle of next week I start a pre-MBA internship with a venture capital firm. It took significant effort to source the internship, but I'm hoping it will be worth it. The experience may give me some insight into how these folks evaluate and work with companies similar to the one I want to start. Beyond the internship, I also have a hell of a lot of pre-MBA prep still to do: the online courses, the 360 assessment, sorting out medicals etc etc. Here comes the summer...
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This could be me writing my business plan, looking about as alive and healthy as I usually do. ©
I plan to start a business while at business school. I'm writing a business plan. I've previously published an outline. At the moment, I'm on version 11 of the document. Each version has required hours and days of sweat and toil. Yet, it's still very far from any way near something that is presentable. The narrative is jolted and does not quite flow from problem to solution to route to market. Adding realism to financials requires revisiting all the assumptions that make up the rest of the plan. Taking consideration of potential competitive threats makes me wonder if the problem and solution are thought out enough. Writing the business plan is like putting together a 100,000 piece jigsaw puzzle where fitting in a new piece disrupts the other pieces that have fitted before it.
The first version started with a fantastic aspiration. The idea was simple. There were some monetization possibilities. No figures. No project plan. Just the germ of an idea. Then I started to flesh it out. I sought evidence for my problem hypothesis. Sites such as the Pew Internet & American Life organisation and even Northwestern's own Media Management Center are full of data and information that are absolutely fascinating. There is only one problem – none of it quite says what I want to say. The focus is always slightly off from what I'm looking at. This means the solution does not quite follow from the problem. Maybe I need to do my own market research? If that's the case, I might be better off waiting to do that in the relevant Marketing Research class at business school.
The solution is a software platform. There is so much open source software out there, yet none of it does precisely what I want it to. In fact, none of it does even 5% of what I need it to. So it'll be built in three stages, reworking existing open source solutions where they exist. The first stage is to build a prototype. I'll try and get this done before business school starts. The second is something that will be developed over the summer internship period between first and second year. The third is for after business school. The prototype can be built in a few days, I'm sure of it. The problem is getting motivated people to help me build the thing in return for promises of receiving something great at some unspecified future date. I'm still working on this.
I initially thought I was working on a consumer facing solution. I'd get it out there and try and grow it organically. The problem with consumer facing solutions is that any monetary transaction from a consumer will be relatively small. You need to amass a large number of small transactions to generate revenue. Would I really be able to get the business growing quickly and fast enough to fund several members of staff and overheads? I figure that I need $60,000 to fund software developers (and me) over the summer period between first and second year of the MBA – the period when stage two of the software platform will be developed. I think this is too challenging to raise from small monetary transactions against a prototype. I'm now thinking of generating three large sales of $20,000 each from three companies. For this money, these companies would get a white label solution they can brand for their own purposes.
Competition is a problem. As a consumer facing service, the threat is Google, Yahoo and a myriad of other companies. A professor from my undergrad would often say, "if Canon enters your market – then it's time to leave". I'm not trying to build something in an established market, but it is adjacent to so many other markets that it would be easy for others to shift their emphasis and copy what I'm trying to do. Yet competition has also made me focus. Digg is doing X, which is different to what I'm doing because of Y. Google Wave is amazing – it does piece N of what I was thinking of doing, but in a much better than what I was already thinking. Every product announcement by every corporation, usually covered in detail by TechCrunch, makes me rethink and revisit that 100,000 piece jigsaw puzzle. What does it mean for what I want to do? Do I need to do anything differently?
I've heard that some MBA entrepreneurs write a new business plan each week, just for kicks. I wonder what exactly they were doing. I've written business cases for my employer before, but I'm finding this to be an entirely different game. Perhaps it's because I've more "skin" in this game. The shear information overload from how much detail that I could write for each section of the business plan overwhelms me. At first I thought I needed to capture it all in the business plan. Then I started moving it all to appendices. I soon realised that keeping the appendices up to date (and even finishing each one) was a mammoth task. I'm soon starting version 12 of the business plan. This time I'm simplifying everything – the appendix is now just a spreadsheet with a different sheet for each piece of information. The business plan is just highlights. Perhaps I'll be able to finish writing this version.
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I'm going to join the 10%'ers in Park Evanston. If you're considering doing the same, drop me an email and we'll split the referral fee. Blatant commerialisim. You've gotta love it. © DAK/Kellogg.
Uncertainty creates huge amounts of work. All parties involved spend time and energy to gain mutual trust and clarity. Yet it can be allusive, because none of the parties involved want to end up with a bad deal. I have found this particularly true for me in my accommodation hunt
I was not lucky in the McManus (Kellogg halls of residence) lottery. In fact, I don't know anyone who has been lucky. So consequently, I've spent some time weighing up options - trying to reach certainty in what I wanted to do. What's most important to me? Proximity to campus? Proximity to the bars? Amenities, such as an onsite gym? Style of apartment? Whether I'd share with a another person? In the end I've probably ended up with what could be considered the safest possible option: an apartment in Park Evanston - the block with the second highest concentration of Kellogg students. Can so many Kellogg students be wrong? Surely I can trust the heard? To keep costs down, I'm sharing a 2 bed 2 bath with a fellow Brit. Again, sharing with a Brit will reduce some of the cultural shock and increase my certainty as to what the other guy will be like.
With the stress and time of finding an apartment has eased, the uncertainty now is whether we can get the lease sorted out smoothly. As we're not in the country, there are questions as to whether legally we need a Notary Public. They are a rare breed in the UK and cost a fortune, whereas in the US I understand (from Wikipedia) that it is as easy to become a Notary Public as applying for a library card. When I get to the States, I might apply. If we can get the apartment management to just trust us that we're not going to disappear off the face of the Earth, then the time and effort of this process will squish to nothing. Hopefully we'll get there soon.
In the meanwhile, I'm buying a whole stack off furniture off an international student who is graduating from Kellogg and heading back home. I just could not bare the thought of trying to set up an apartment piece by piece. Trips to and fro from Ikea over the week before school starts might be a fine Kellogg tradition, but not one I'm keen to partake in. The uncertainty I have with the furniture I've bought is around figuring out how to get all the furniture to the new apartment. Perhaps I can just put it into storage until I get there? Will it survive in one piece? Can I trust these shipping people when they say they'll take good care of it?
Despite all this, there is one thing I can say with certainty - I got my first choice KWEST trip. I can't reveal much more than that, as a tradition of these trips is The Big Reveal - that the participants don't reveal personal details about themselves until the end of the trip. However, it is interesting that there is already a rumor floating around. Allegedly one of the participants in one of the South American trips worked in the "adult entertainment" industry, if you know what I mean. Is it true? Would Kellogg admit such a student? Why would such a student need an MBA? Oh, the uncertainty!
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Starting up at in the bedroom could be chaotic ©
Bedroom entrepreneurs may be better off doing their thing at business school. A good B-School can provide all kinds of amenities to help your venture that your bedroom can't. Here are five of them.
(1) As a student, you can make all kinds of requests to companies that might otherwise get rejected. When Akamai started out of MIT, they called up Internet Service Providers and companies such as Yahoo. Because they were MIT, people were willing to talk to them. Because they were students, these companies didn't think these kids were trying to sell them anything. Tom Leighton's talk has the full story on Akamai; the company formation stuff gets interesting from 26mins.
(2) With an MBA from a top B-School, you get the credibility to do all kinds of stuff that might be more difficult to do otherwise. For your startup to get the attention of investors, such as VCs, some people moan that you need an MBA from some elite school with 20 board members who know Jack Welch personally, with an extremely complicated idea that has never been built. Alternatively, you might want to buy a company. Yes, really.
(3) You get something to show for those 2 years in the bedroom. I have several friends working on building businesses. The most successful among them have got a customer or two and can make a living. Others are still prospecting for their first customer, two years after they started (yep, not good). Those guys might have been a little bit better off doing an MBA in the meantime.
(4) You can structure your effort. Starting a business can be an unstructured effort that can seem to go nowhere and everywhere at the same time. Discipline can be difficult, with self-imposed deadlines swooshing by as time drags on. Some business schools provide a structured process for starting a business, providing stage gates and support for building a business. This brings some certainty and enforced momentum to the process. Wharton's VIP is one such process. Northwestern (Kellogg's parent institution) has the interdisciplinary Nuvention program.
(5) You'll meet all sorts of people who could help. Activities such as finding initial customers and getting funding could be made a little bit easier through a referral from an appropriate school professor, a class-mate who has worked at a company you are targeting or any number of other people. Some of these "people who can help" are prolific; just take the example of Stanford computer-science professor David R. Cheriton.
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