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Sun, 07 Feb 2010 10:04 GMT

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Back in Boston!

Fri, 05 Feb 2010 09:26 GMT

I am now back in Boston for spring semester. I am getting back in the swing of things - waking up early to go to class, seeing familiar faces, going to the food truck for lunch, etc. It has been great to see everybody and to catch up. It has only been over a month, but much has happened in the interim and everybody has done so many cool things over the winter.

As far as courses go, I have taken all of my spring classes now and am absolutely in love with all of them! This semester has a very different feel. It is quite unlike the first semester - with electives, classes are much more personalized and we are all more focused and more invested. It feels strange to not take classes with my ocean anymore and to have a mix of not only other first years, but also second years and Sloan fellows in the classes. I am meeting new people and learning about their experiences.

My favorites courses this semester will probably be New Enterprises and Finance Theory II. When I first entered my finance class, I was surprised to see a man lying on his side on a massage table with a big cushion in between his legs - turns out that this man was the famous Professor Asquith. Professor Asquith has a back problem and used to teach the class lying on the floor; now his condition has improved and he alternates between standing and lying on the massage table. I was fascinated by the way the class was run. The TA furiously wrote down everything on the blackboard while Professor Asquith lay on the massage table explaining to us all the concepts. Every now and then the professor would inquire "done?" and the TA would obligingly respond "yes, sir". The professor was really hard core and amazing. He's been teaching for longer than I've been alive, so the guy really knows his stuff. There's no doubt that this class is going to be awesome.

New Enterprises is another class I think is going to be great. It is taught by Howard Anderson, founder of the Yankee Group, and Bill Aulet. Howard Anderson is a great lecturer and a great entrepreneur who is assertive and likes to fire questions at the class. In our first class, we learned how to come up with viable business ideas. It was great because I thought of a few ideas I could work on through his lecture. Our first assignment is to submit a business idea to work on. By the end of the course, we're supposed to have created a business plan that will yield a company with a market capitalization of $50 million within three years of launch. The class is going to vote on the business ideas that everybody submits and we are going to form teams to work on a few of the business ideas. A lot of companies have actually been launched as a result of this class, so I'm very excited.

Business Law also seems like it will be a good class. The professor has a lot of experience and the class has a good mix of first- and second-year MBAs and Sloan fellows.

There are also a lot of events coming up. We had our first C-Function of the year last night - the Mardi Gras C-Function - with free beer and hurricanes, a full catered New Orleans' style dinner and a dance party. I am also participating in the 2010 ACG Cup Case Competition. The case was released yesterday and is due on Thursday. I'm also a panel manager for the 2010 MIT PE Symposium, which will take place in April, so I've been recruiting panelists for that. I'm also attending the HBS PE Symposium next weekend to get some ideas off of them.

This morning I also went to a guest speaker event at the MIT Center for Real Estate. The speaker was John Hynes, CEO and Managing Partner of Gale International. He opened the Boston office and led the Songdo project, which is a big project in Korea to build an entire city near the Inchon International Airport. It is a project that has been attracting a lot of media attention in Korea, so it was very interesting for me to hear about the project from his perspective - how he, as someone who had never owned a passport prior to working on the project, got involved in this huge project at a time when people were very much focused on the U.S. and how he went about creating the master plan for the project. It was also interesting to learn about the plan and how he tried to incorporate the best parts of Boston in the design of the city.

I have also been involved with some of the events held by the admissions office, such as the phone-a-thon, in which we called all the students admitted in round 1 to congratulate them and to answer their questions. If you're an adMIT or a prospective student, feel free to reach out to me with any questions!

Uncertain Innovations

Wed, 03 Feb 2010 11:57 GMT

What was interesting about the today's Managing Innovation and Entrepreneurship class with Prof. Scott Stern is that we went through a long list of very successful technology innovations that initially:

Didn't have clear applications or uses (Geolocation, nylon)
Depended on complimentary innovations (The automobile and roads. Interestingly, it was bicycle producers who first started to lobby for the construction of paved roads)
Were developed in the context of very narrow applications (Oil, originally used in the Middle Ages to make incineration weapons, before the combustion engine unleashed its true power)

What does this list say for the Technology Push vs. Market Pull distinction, as well as the for assertion frequently made by venture capitalists that entrepreneurs/innovators should not expect and rely on change in user behavior?

From User To Manufacturer

Wed, 03 Feb 2010 11:24 GMT

In the today's How to Develop Breakthrough Products and Services class Prof. Eric von Hippel introduced an interesting conceptual distinction: user-innovation vs. manufacturer-innovation. The former is driven by people who experience a particular problem and, not finding an acceptable solution, proceed to solve it by creating a new product or service. The latter is driven by existing producers who innovate on existing products or create new ones within constraints imposed by their internal and external business environment.

Why does this conceptual distinction matter for entrepreneurship?

In essence, it matters because user-innovators expect to benefit from using the products they create. Meanwhile, manufacturer-innovators expect to benefit from selling the products they produce. Perhaps, the trick for entrepreneurs is to start as user-innovators, create products that solves real problems, and then shift gears and begin wearing a manufacturer-innovator's hat for successful selling.

Big vs. Small

Wed, 03 Feb 2010 10:32 GMT

The fear that some big company would arrive on the scene, steal their idea and eat their hard-earned lunch can't but cross the minds of aspiring entrepreneurs. But when a startup does break through and disrupts a powerful incumbent, people wonder how the incumbent with all its vast resources could allow that to happen.

Frequently, that's attributed to the incumbent's slowness, foolishness, or general incompetence. But the best answer I've heard so far was given by Prof. Eric von Hippel in the How to Develop Breakthrough Products and Services class today. Put simply, everything new starts out small. New products don't have established or proven markets, which is where established producers are able to harness their advantage of scale. So they often pass on new opportunities and so make room for upstart competition.

Does this mean that a secret to starting and building a successful company is growing while holding off for as long as possible the incumbents' advantages of scale?

Imagining Imaging Ventures

Tue, 02 Feb 2010 14:52 GMT

The MIT MediaLab course Imaging Ventures inspires with possibilities. Wouldn't it be neat if you could produce Avatar-like movies in your home? To do that today you would need Hollywood-level imaging sensors costing hundreds of thousands of dollars. But tomorrow you will be able to pick them up at BestBuy. All thanks to continuing advances in the field of imaging research. Wouldn't you want to star in a Avatar-like movie produced by and crowdsourced from thousands, or even millions, of people across the globe who are abstracting their motions in the comfort of their homes and superimposing on them computer graphics. That's imagination made infinite. Even tremendous is not the world to describe the exciting implications for movies, gaming, and virtual/augmented reality, as well as society and entertainment at large. The world really will be different.

By the way, that was just one of the many examples in the class!

Advice From Our Board

Mon, 01 Feb 2010 15:42 GMT

This afternoon the MIT Entrepreneurship Review editorial bootcamp featured talks from members of our Board of Advisors. We've had Michael Hopkins, Editor-in-Chief of the MIT Sloan Management Review, and Bob Buderi, Founder and Editor-in-Chief of Xconomy, talk to us about what we need to think about as we look to build a successful and impactful publication. Professor Scott Stern also joined us and gave a talk with a fitting title of "Entrepreneurial Writing and Editing on Entrepreneurship."

Michael Hopkins gave a boost to our confidence in what we are doing with a thought that entrepreneurship content continues to be a proliferating field, driven by rapid proliferation of entrepreneurship - particularly innovation-based entrepreneurship - worldwide. This powerful trend will be putting the wind in the sails of the MIT Entrepreneurship Review.

Bob Buderi shared with us many valuable, even counterintuitive, nuggets of insight. Here are some of them:

Article length doesn't really matter for an online audience - be it a 300-words brief or a 3000-words feature. A good story is a good story.
Tight editorial process, even for a student-run publication, is essential. It gives your freedom to be creative.
There's no need to despair when some stories don't get traffic. Some topics inherently tend to be more or less popular. Good stories, no matter their traffic, bear fruits longterm in many different ways, not least through traffic from search engines.

Professor Scott Stern's talk, first of all, convinced us all that his passionate and super vibrant intellectual interest in entrepreneurship makes his class Managing Innovation and Entrepreneurship a must-take. Here are some thoughts and advice that he inspired us with:

Getting everything right is not nearly as important as developing a voice as a straight shooter. This is exactly how new media has been such an effective reprieve to old media.
Ninety-nine percent of the questions in entrepreneurship and innovation are open for debate. This makes it a unique ground for stimulating content.
Write for someone in particular, even some specific person. That gives you voice and makes you a more effective writer.

A part of our formula for success at the MIT Entrepreneurship Review is that we want it to be, first and foremost, a unique learning experience for our team. Because we then can transform it into a unique learning experience for our readers. The bootcamp today delivered on this front in full.

Team, Vision, Process

Mon, 01 Feb 2010 14:22 GMT

These past three days were a seminal event for the MIT Entrepreneurship Review. We have strengthened our team, sharpened our vision, and designed our process. Saturday was for fun and we came together as a team; Sunday was for post-fun visioning and planning, and today was for working out our editorial process during an intense full-day bootcamp with professional journalists and editors, faculty, and founders of leading business publications.

This morning our editors ran an exercise where they studied a scientific paper that addressed a narrow academic audience and detailed a very complex, almost arcane, technology. They then distilled that paper into an engaging article that discussed and drew an educated layman's attention to that technology's broader relevance and applications. As that was happening I caught myself thinking how amazing it was that we had an editorial board that could grasp complex science so quickly and then relay that science for a broader audience. We will be building on this strength as we seek to install ourselves as a valuable player in the global entrepreneurship media.

Highlight Of The Weekend

Sun, 31 Jan 2010 15:48 GMT

This weekend the MIT Entrepreneurship Review retreated to a forest house in New Hampshire, generously provided by our faculty advisor, for team-building with our editorial team. We spent weeks planning the event and everything was going smoothly. Yet nevertheless on Saturday morning we felt somewhat apprehensive. Would our editors enjoy the event as we had hoped they would? Would they connect as a team? Would they feel enthusiastic about our planned activities? With so much energy invested, perhaps it was just natural to feel that way.

We had agreed to all meet at 9am sharp. Needing to load our cars with supplies, we - the organizers - ended up running late. Although not by a lot, just five minutes, it still deepened the apprehension. I arrived, however, to find all our editors standing in one big group around heaps of backpacks and sleeping bags, all ready to go, chipper, chatting, sipping coffee. I asked, "How are you guys?" and the way they answered, smiling and excited, just popped the apprehension out.

The whole event turned out to be legendary, but that split second was my highlight of the weekend. Makes you feel excited and confident to do other things like that.

Almost Done with Core (reposted from Dec)

Sat, 30 Jan 2010 11:52 GMT

In two weeks the core will be over. :) Looking back over the past four months I can't believe how much I have learned. A lot of that learning took place inside the classroom, but especially in the case of finance, much of that learning took place outside the classroom. I am in the process of recruiting for finance, which is pretty intense, but through the process I have learned more about finance in a few months than I could have learned in a classroom. I have always followed the market but at a big picture level.

Four months ago I had no idea what a naked credit default swap was (If you don't know it's pretty much analogous to you purchasing insurance on your neighbors car because you think he's a bad driver.) I also now know that Mortgage Backed Securities display negative convexity due to changes in duration from prepayments which are a function of rates among other factors. As opposed to a classroom, I learned all this through 2nd years, Wikipedia, the Economist, the Wall Street Journal, Dewey Library, and visits to multiple trading floors in NYC.

My point is at Sloan you have so many resources at your disposal. It's about finding what you are passionate about and then pursuing it.

Have a little fun with it....Interview Prep

Sat, 30 Jan 2010 08:56 GMT

Interview prep can be an especially draining process, not to mention the stress of waiting to hear back from companies. In preparing for finance interviews I have also been working on trades ideas, should I be asked for one in an interview. It's also just generally a good idea to have a view on aspects of the market. I decided to have a little fun with it and composed my trade ideas as a rap, minus the music (I can work on that later). I now present my answer to the interview question of "Where would you invest in the market?"

To cash in big you'll want to be equipped,

With some agency MBS P/O strips,

QE's ending, mortgage rates heading higher,

Means low-refis and an absence of buyers,

Despite the MBS negative convexity,

Being agency backed is the necessity,

Chalk up defaults as prepayments on these,

That's the beauty of GSEs charging those fees,

With unemployment high and moral duty eroding,

The streets will be filled with lots of foreclosin'

Principle is coming in quick, returns are rising,

With more to be made, on to the next trade I'm advisin'

China's monetary policy is looking a little lax,

Time to scoop up some Yuan NDF contracts,

Based on the 6.62 level I see,

Market's pricing an appreciation of 2-3,

With exports and imports rising so quick,

I'm thinking more in the range of 5-6,

Tightening lending and raising bank reserves,

Still won’t let the 6.83 peg be preserved,

With inflation and GDP growth soaring away,

“Why not let the Yuan rise PBOC?” is all I can say,

The third trade idea I'll leave you with today,

Has the growth of Kaplan U but as a pure-play,

With tuition high and industry employment trends turnin,

Nothing's better than some ITT Tech online learnin'

With a price to earnings ratio right around 13,

Compared to the 24 of the industry, it looks like a dream,

With projected EPS growth of 17 and ROE of 40 percent,

A few student loan defaults won't make a dent,

ESI’s fundamentals all look solid to me,

I'd put the one year target price at 133.

To wrap this all up, I’ll end with my short pitch,

For a company that’s clearly filling the wrong niche,

With both existing and new homes sales continuing to fall,

Shorting luxury builder Toll Brother’s a pretty easy call,

With “Move-up Buyers” core purchasers of new TB homes,

There’s few to be found since they can’t sell their own,

TOL’s trading at a price to sales ratio of 1.74,

With an industry average of .65, need I say more?

In addition, TOL has 27,000 lots in their vice,

Which unfortunately are quickly depreciating in price,

If QE’s end causes an increase in Jumbo mortgage rates,

Combining with its high SG&A expenses will seal TOL’s fate,

While owning a home may be the American dream,

With this economic climate, one-year target is a drop to 13.

Bury Your Career

Fri, 29 Jan 2010 12:35 GMT

The Distributed Leadership IAP seminar last week featured an interesting (and famous) exercise. It was of the often-sorely-needed Let's-Close-Our-Eyes kind. We sat back and painted in our minds the picture of our own ... funeral. It was a relaxing exercise - we were overlooking Boston's relaxing afternoon skyline from the broad windows of the MIT faculty club. Moreover, Prof. Tom Malone's voice is positively hypnotic - you have to experience it for yourself.

The point of the exercise is to help you understand and envisage what matters to you the most. After the exercise we shared our impressions with the group. Many of us said that work and career, unlike family, didn't feature in our funeral images, which pushed the group discussion in the direction of the "Family matters, not work" conclusion.

This is an understandable conclusion. But it's probably not the best way to look at life. What about going for, "I love family and I want to be great at it and inspire others to have family. And I love what I do for work and I want to be so good at it that I want to inspire others to follow suit. I am happy at home and this adds to my work. I am happy at work and this brings energy and perspective to my family." It's a virtuous circle.

Why not?

"What I did on my January Vacation"

Thu, 28 Jan 2010 12:56 GMT

Every January, MIT students embark on IAP (Independent Activities Period). This is an entire month off of traditional schooling designed to be a time to learn about new things, take classes or seminars around the Institute, or work at one month (or even one week) "externships" with participating companies or alumni.

January is also the time for interviews on campus at MIT Sloan. Before I came to Sloan I decided that the traditional MBA recruiting process, and in fact, traditional MBA jobs (consulting, banking, finance, etc.) were not for me. Instead I came here to learn how to start companies, learn how to grow companies, and meet people that could help me do that, or that I could help do that. Therefore, I chose to use IAP as a time to pursue that goal. Instead of case interview prep and mock interviewing with my classmates, I took an externship in San Francisco working for a company I had never heard of called NBT Ventures.

Well, it turns out that NBT is the brainchild of a very cool and interesting MIT PhD, Robert Poor. Rob is the co-founder of Ember Networks, a developer of Zigbee wireless networking technology (the communication language of the "smart" grid... simply put, way devices "talk" to each other). He has been a great resource and educator, as well as fun to work with.

NBT is an extremely early stage venture. Rob's vision is to change the way people and small businesses think about energy efficiency (or, just get them to start thinking about energy efficiency) by using advanced data analytics presented in a super simple and intuitive manner. Basically, make it easy, and even fun, to save energy and money.

I worked with Rob, and another really cool MIT extern from the applied math department, Sara, to answer questions like: what exactly will the product be? who will we target? and why are we special? In addition, I worked to define the current market in energy efficiency, and establish our strategy going forward.

It was a great experience, and nice to learn from a great resource like Rob. He taught me a few things that I want to share, since I think they are relevant to any entrepreneur:

There is a difference between value created and value captured. Understand the difference. A great entrepreneur does both. But first and foremost, always try to create value. It is more gratifying long term.
An entrepreneur needs to be able to take the resources available and apply them to those projects that best increase the company's probability of success.
Fundamentally, the founder is a storyteller. He or she should be able to articulate the story of the company to customers, employees, and investors, in such away that makes them want to follow.

NBT stands for "next big thing". Let's hope Rob is right.

Finally, I realized that my blog has been extremely visually boring so here is a picture of my occasional mode of transportation to work. It is great to be back here in San Francisco (where I was living before Sloan). What an amazing city...

Of Nuts And Bolts And Cowboy Hats

Tue, 26 Jan 2010 18:51 GMT

Quite an entertaining and insightful "Nuts and Bolts of Business Plans" seminar today. First off:

Above is a picture of an elevator pitch delivered by a fellow student to Shawn Broderick (TechStars) and Amir Nashat (Polaris Ventures). This is a really neat educational feature of the seminar that you can pitch an idea to experienced VCs and gain confidence and receive feedback in the process. There were brave student "pitchers" last time, today, and I hope there will be tomorrow.

On how to successfully raise venture money, Shawn Broderick suggested that you need to work with a VC that's at the right spot in their fund. This means, for example, that if a venture firm comprised of 1o general partners raised a five-year fund worth 1 billion, then each partner will on average invest 20 million per year. Your startup's financing arithmetic will have to go well with that plan. So when you're talking to VCs ask them such questions as When did you raise your fund? How much was it for? Over what period of time? And don't be afraid to ask VCs, Shawn Broderick also noted, if they've returned their current fund yet. If they have, they'd be pretty excited to talk about it. This means that they've been pretty successful.

Amir Nashat shared an interesting observation that, contrary to what one could expect, Polaris Ventures' seed stage investments increased as it raised larger funds. When you have a 1 billion fund, you can afford to make a 3 million bet. If the bet fails, it's a drop in the bucket; but if it succeeds, you have enough reserves in your fund to carry this bet through to success.

Joe Hadzima, discussing legal matters, cautioned that you should incorporate your startup and divide shares early. There could be serious tax implications if you don't. In a hypothetical example, if you raise 2 million in return for fifty percent of your company, you own the remaining half at 2 million. Now, according to the IRS, if you get property (i.e. stock) in return for providing a service (i.e. working on your startup), that property is treated as taxable income. So at the point of raising that 2 million, you could be liable for 2 million * tax rate in taxes to the government.

A terrific seminar that gets into the nitty-gritty of all things entrepreneurship.

Show Me The Money

Sun, 24 Jan 2010 07:56 GMT

One thing that the "Nuts and Bolts of Business Plans" seminar at MIT brought home last week was that, if your main goal is money, don't do entrepreneurship. Or at least venture-backed entrepreneurship. Turns out, after an angel round plus A and B rounds the founder on average retains only 7.3% of the company. So if your company exits at $100M, you as a founder earn only 7.3M pretax. Now divide that by however many years it took and you get a much more nuanced picture than headlines of sensational exits can ever offer. Something to think about.