Tipping Points

The 4 Secrets To Netflix Founder Reed Hastings' Success (NFLX)

The 4 Secrets To Netflix Founder Reed Hastings' Success (NFLX):

1.  Target a specific niche. 
2.  Stay flexible.
3.  Never underestimate the competition.
4.  There are no shortcuts.

Talent managers may finally be able to enforce their contracts

I'm going to be really brief here.  My dear friend and outstanding talent manager Rick Siegel has been pursuing a case called Marathon Entertainment vs. Rosa Blasi through the California courts at tremendous financial and personal cost to him and his extraordinary wife.  Rick finally won a landmark ruling from the Court of Appeals that even if there was a violation of the procurement provisions of the California Talent Agents Act, that the remainder of a manager's contract may still be valid.  Today Rick learned that the California State Supreme Court will  hear the case, scheduled to begin on November 6. 

Feature, Function, Application or Business?

In the bad old Web 1.0 days, VCs in New York uttered this truism when looking at new companies with the krishna-like reverence: Is it a feature, function, application or business?  Google apparently showed that knowing what the business is doesn't matter.  But has the not-so-old saying bit the dust - or does it still mean something?  The lucky few will reach Web 2.0 nirvana with a healthy cash buyout, but for the less lucky, does that mean that giving up is the solution?  Or does it mean that most online businesses need to address whether it's a feature, function, application or business?

"Why to Not Not Start a Startup" and other gems

One of my favorite questions to ask first-time entrepreneurs is "What are you reading?"  It always surprises me when the answer is a puzzled look, then a mental reach for CNN.com, or the New York Times. 

About a year ago, my friend Chris Muscarella encouraged me to start reading Paul Graham's blog.  I had never heard of Paul or his investment vehicle, Y Combinator.  But Chris was so passionate about it that I took the time to find Paul's blog and haven't stopped reading since.

Among my favorite essays are Why to Not Not Start a Startup for doubtful entrepreneurs and Hackers Guide to Investors for techies thinking about raising capital. 

Now when asked, "What are you reading?", you can now say "I'm reading Paul Graham."

You Can Do Anything, Proves Markus Frind

I previously wrote about Markus as the first in a series of posts about Markus and his website, Plentyoffish.com.  This is the second in the series. 

Consider the stats behind Plentyoffish:

• Over 400,000 logins per day
• Over 10 million unique visitors per month
• About 1 billion pages served per month
• Averaging about $10,000 in revenues per day, nearly $1 million per month
• #1 Google Adsense partner outside the major sites
• Probably only growing dating website of the majors
• Started in 2003
• No. of employees: 1 - Markus

The key to Markus's  success is buried in his first blog posting (emphasis mine):

I spent every waking minute when I wasn't at my day job reading, studying, and learning.  I picked out "enemies" and did everything I could to defeat them which meant being bigger then them.   I refused to accept defeat of any kind, and I constantly forced myself to test new things.  I never tried to perfect anything it didn't matter if things didn't work 100% as long as it was good enough I would move onto the next thing.  In 2003 the dating market was growing 80% a year unlike the -10% in 2006 so growth was a LOT easier.  When 2004 rolled around and word of mouth REALLY kicked in and as they say the rest is history. 

I look back now at how ill prepared I was,  I didn't know anything about SEO, Advertising, community and  I didn't even know what Venture Capital was.  Just goes to show you anyone can do anything. 

Nothing more to say, Markus.  Couldn't be a better description of what we look for in picking our clients.

 

A New Era of Nuclear Productivity?

Forget disruption.  Think industry-wrecking.

I had the privilege of having Markus Frind on a panel I moderated at the Wharton Technology Conference.  I think I saw the future.  It's simply, well, nuclear in its potential.   Pure productivity increase, with the resulting potential for an unbounded economic payout. 

(If economics bore/terrify you, skip to [A] below.)

Years ago, as a first year MBA student, I took a marvelous Macroeconomics course from Charlie Himmelberg.  I learned from Charlie two important lessons.  First, you should figure out  the one thing you want to remember from each course, a memory that you would want to stick for the rest of your life.  The rest didn't matter (great relief to me but not to my grades).  Second, (all real economists, please forgive any errors in my rusty memory), this is the one thing he wanted us to remember from Macro:

GDP = f (A x N^0.7 x K^0.3 x G^?)

In plain English, GDP is a function of A (Productivity), N (Labor), K (Capital) and G (Government), where labor is less important than productivity, and capital is less important than labor.  If one takes the first derivative of this equation,  change in GDP is a result of the change in productivity, labor, capital and government, where changes in productivity, labor,  and capital have decreasing importance.

I have found this concept useful in thinking about all economic systems, ranging from large entities to small companies and even my individual economic existence.  Thanks, Charlie.

[A].  Pure productivity.  Imagine a system that requires no additional labor, no additional capital, is free from government assistance/regulation. 

Impossible, one might say.  Productivity doesn't exist in a vacuum. 

But nearly unbounded productivity can result from technologies inventively combined by one entrepreneur/programmer/marketer, who can be a one-person company, global in scale, with literally millions of customers and millions of dollars of revenues.  See Plentyoffish.c0m. 

Happy Year of the Pig

Happy Year of the Pig!  According to Korean folklore, this is the Year of the Red Pig, a particularly auspicious year that happens every 60 years, bringing booming businesses and families.  Juicy Pig Year factoids abound, including Chinese muslims, celebrations in Korea and Thailand, Oscar predictions, Justin and Cameron, Jennifer Aniston and Anna Kournikova.

People born in Pig Years fare well.  Wikipedia says, "people of the Boar Type are most admired by others", honest, supportive, trustworthy, widely popular but cautious in relationships.   

...the Pig type is usually an honest, straightforward and patient person. They are a modest, shy character who prefers to work quietly behind the scenes. When others despair, they are often there to offer support. This type of person is reserved with those they do not know too well, but as time passes and they gain confidence, those around them may discover a lively and warm-hearted person behind that mask of aloofness. Despite those born in the year of pig having a wide circle of friends and acquaintances, they have few close friends who understand them and share their inner thoughts and feelings. It is easy to put trust in pig type; they won't let you down and will never even attempt to do so.

In this Chinese New Year, the Year of Trustworthy People, I want to give a tribute to Cogentia Group, my partners in Hong Kong, and their three principals Vernée Ho, Christina Poon and Bernard Teh.  Together, we've looked at deals in music, television, film, online games, real estate, theme parks, sanitary products, search, and mobile information services.  It is my New Year wish that you can enjoy business and personal relationships like the one I enjoy with Cogentia.

I believe that if it's on the web, it's instantly global.  Any business that succeeds in engaging large, growing audiences in the U.S. needs to consider China as a part of their early-stage growth plan.  Because of the particulars of business in China, the primary reason I can do this is through my relationship with Cogentia.  Cogentia's principals have over 50 years of collective experience in East Asia markets with leadership positions in companies like Donaldson Lufkin Jenrette, Sara Lee, Dickson Holdings and Pepsi International.  They have multiple business, economic and engineering degrees from Brown, MIT and Stanford and are fluidly multi-lingual.   

Just as I was starting TPP in early 2005, my friend and trustworthy colleague Marc Jacobson recommended me as a financial advisor to a group that was contemplating a diversified set of investments in China.  This kicked off a flurry of emails and calls that resulted in our first assignment, advising investors in the largest Western joint venture with the Chinese national music recording agency, CRC Jianian; a proposed joint venture in television production and distribution with the civilian arm of the Chinese satellite agency and Zhuhai TV; a proposed entertainment theme park on Hengqin Island near Macao; and a couple of other entertainment- and media-based real estate development projects.   This took us on memorable trips criss-crossing China: Beijing, Guangzhou and Zhuhai. 

I believe that a central premise of our partnership is that we share the same values: authenticity, fairness, mutual care and respect, transparency and protecting our clients from the innumerable financial, legal and cultural risks in a new world.

Cogentia's capabilities have been equally applicable on Western projects.   Bernie and I sweated through many a conference call connecting Hong Kong, New York, and Berlin for IGA Worldwide, which ultimately lay the foundation for the successful placement of IGA's $12MM Series A raise with Easton Capital and Morgenthaler.

In addition to getting the work and executing it well, Vernée, Christina and Bernie have all been empathetic and helpful advisors on the development of my business.

We are currently working on an exploratory strategic project for a leading Chinese mobile search provider DZD Data Corporation. We are also pursuing endeavors in clean technology with a focused China market strategy. 

I am looking forward to this year's July gathering in the Colorado Rockies with Vernée and Bernie and a long and prosperous future relationship with them. 

I wish you the same in this auspicious Year of the Red Pig.

"Are Smart People Overrated?"

"Are Smart People Overrated?", asks Malcolm Gladwell, specifically referring to Michael Wolf's former employer, McKinsey & Co.    Download talent myth.pdf

Corporate mash-ups - Corporate crash-ups

"When Companies Do The Mash"  ponders BusinessWeek, software development is done more quickly and cheaply using off-the-shelf components, but many companies aren't doing it.  As BusinessWeek describes it, mash-ups could be viewed as replacements for offshoring of tech dev.

"Mash-ups as product" make sense to me, that is, products to be purchased shrink-wrapped or custom-ordered by corporations from vendors.

But mash-up products are the result of mash-up processes.  Those processes are something few corporations can do.  It's a cultural thing.   

Companies  also result from mash-ups.  The process of creating a start-up is often a mash-up in which technology is but one component, where prototypes of businesses are quickly assembled, disassembled, smashed, tweaked, and smushed together in an improvisational collage whose ingredients can include economic unit analysis, human capital, money, customer needs, infrastructure and entrepreneurial passion.   

This flies in the face of corporate hierarchy, tradition and education. 

The whole idea of  synergy is related to mash-ups.  Putting magazines, cable, Internet and Hollywood together is a great idea IF a culture were designed to support creatively-oriented accidents that could eventually result in an entirely new corporate model obsessively focused on addressing known and unknown customer needs.  But I guess it might not then be a Corporation.  It would be a mash-up.

It is also at the heart of capitalism.  One of its flavors was known as Creative Destruction. 

Mash-ups.  It's how we do what we do.

What Does Tipping Point Partners Do?

I’ve struggled mightily with this question. 

Conventional classifications don’t quite fit: investment banking, venture capital, consulting. 

Merchant banking comes the closest.  We are like the early merchant bankers who provided capital and advice for high-risk trade expeditions searching for gold, spices, and valuable commodities in the New World. 

Except that we actually go on the expeditions as our form of risk capital.  Does that make us mercenaries?  Or maybe samurai.  Co-venturers.  Co-founders. 

Please humor a flight of imagination:

"We arm, outfit and guide expeditions to help insurgent tribal chieftains seize under- and un-exploited lands in the guerilla-infested battlegrounds where the kingdoms of media, entertainment and technology continue to wage war.  Our weapons include Ruby, Rails, SMS, J2ME, VXML, Ajax, BREW, SIP, IVR wielded by a scraggly-haired, demin- and black-garbed guerilla band that eschews uniforms for native garb and listens to different beats at the same time.   Although we’re small, we can assemble a powerful force quickly when we use our large network of old allies to assemble new alliances and partnerships on the fly.  Most importantly, we create growing and sustainable encampments.  We use our administrative expertise to design and build fortifications and infrastructure, commence trade, install a financial system, put in place social services and engender a culture."