Harry Newton's In Search of The Perfect Investment
Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM EST Tuesday, April 11, 2006: Gave
a talk on entrepreneurship to a class at
MIT yesterday. Some points:
+ By owning a business, you get double rewards. Once, when you earn the
profits. Twice, when you sell the business and you get a multiple of profits
as the sale price.
+ Serious wealth creation is mindset. Training your mind is key. We all need
to develop our own framework / criteria for checking each opportunity as it
comes along. Sadly, we all miss more than we ever seize. We often let the best
+ In examining new ventures, logic is not key. Assumptions are key. Too
many bad businesses are started because the entrepreneur gets obsessed by the
intricacies and beauty of a complex Excel spreadsheet.
+ 80% of success is luck. 10% is showing up (being there). 10% is planning.
+ Most failed businesses die too slowly, too painfully and too expensively.
You should kill your bad ideas quickly and move on. Eventually you'll hit good
+ Partners are great. Few people have the entire gamut of skills necessary to
make a new business succeed. I certainly didn't.
+ There's always
a "gotcha" -- that one factor that comes out of left field. You might
be targeting the wrong customer. You might be naming your product wrongly. You
might be pricing it too low. You need to keep asking your customers.
+ You need to figure your Unique Selling Proposition and encapsulate
in a pitch that you can give in fewer than 25 seconds.
+ You must develop your own accounting system that reflects the fundamentals
of your business. That system is not accrual and it's not cash.
+ You'd better learn selling. Sadly, few schools teach it.
+ Learn enough finance, accounting, engineering and law to make yourself dangerous
when dealing with "experts" in these fields.
interesting question: "What happens if, on graduation, I don't have
an idea for a new business?"
My answer: Research
every exciting company you can find. Pick the five that excite you the most.
Go offer to work for them -- for free, if necessary. Salary is irrelevant. Once
there and once you make yourself indispensable, you'll get stock options and
equity. They're what counts. Imagine if you had worked at Google early on and
you'd received a few stock options. Imagine how much you'd be worth today.
Spring car cleaning: Go to
your local manual car wash. Take the high pressure hose and blast soap and then
clean water into your car's four disc brakes. You will be surprised at how much
crude emerges. You will also have extended the life of your brakes. The road
salt from this past winter can quickly rust and damage your brakes. It happened
to me. Cost of my stupidity: $900. My car was basically new, but not being driven
very much. The rust and crude had time to work their magic).
Gift From God
There was a preacher whose wife was expecting a baby,
so he went to the congregation and asked for a raise. After much consideration
and discussion, they passed a rule that whenever the preacher's family expanded,
so would his paycheck.
After 6 children,
this started to get expensive and the congregation decided to hold another meeting
to discuss the clergyman's salary. There was much yelling and bickering about
how much the clergyman's additional children were costing the church. Finally,
the Preacher got up and spoke to the crowd, "Children are a gift from God."
He said. Silence fell on the congregation.
In the back of
the room, a little old lady stood up and in her frail voice said, "Rain
is also a gift from God, but when we get too much, we wear rubbers."
And the congregation
Saint Peter was manning the Pearly Gates when forty
people from New Orleans showed up.
Never having seen anyone from the Big Easy at Heaven's door before, Saint Peter
said he would have to check with God. After hearing the news, God instructed
him to admit the ten most virtuous people from the group.
A few minutes later, Saint Peter returned to God breathless and said, "They're
of the New Orleans people are gone?" asked God.
"No!" replied Saint Peter. "The Pearly Gates!"
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
I make my daily column -- Monday through Friday -- freely available for three
reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
Investment." Third, I encourage my readers to send me their ideas,
concerns and experiences. That way we can all learn together. My email address
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