Like every New Year since we started counting — we take stock of the past and start setting fresh goals for the future.
So, I’ve been looking around to spruce up my teams, my companies, and myself, for the New Year and beyond.
It’s a bit of a chore and yet I start first by tallying up the things that I am grateful for, and right up there, along with Health, Happiness, and great people around me, I’ve got to count returns on investment as a constant blessing too — only because it allows me to do the great things that I couldn’t otherwise do.
Things like my abundant philanthropy and the charitable giving that increasingly defines my happiness. These returns on invested capital also define what I’ve done over the last thirty years. And they also mark, what I’ve gained from the more than a thousand companies that I’ve either created as part of my Intensive StartUp Weekends, or have invested in as an Angel Investor — over three decades of Angel Capital Leadership practice.
Our ROI is great since most of these companies are StartUps that were born inside my Innovation Master Class, or inside my CEO StartUp Weekends, and CEO Intensive Weekend Class. Judging by the numbers that I’ve taught over the last twenty years, and at a rate of ten to fifteen of these Intensive Weekends per year, with an average creation rate of Ten companies per startup weekend — this brings the numbers of companies created to well above the two thousand mark. But with an attrition rate upwards of fifty percent — we have about a thousand of these organizations remaining alive and kicking around the globe, and we are still and always will be the perennial underdog…
This speaks wonders for my success rate in the industrial process of StartUp company creation. An industrial process, that normally sees a 90% – 98% attrition rate amongst the StartUps created — as described by all the serious incubator and accelerator shops. So it follows that our returns are far better than the industry standard — at least based on the livability of the companies we create. And by funding these very companies that are born out of the best human capital as found in good universities, and in good startup communities the world over — we have created a blockbuster method of company creation and funding.
That in a nutshell is our industrial method of company creation that when coupled with my dealflow and peopleflow strategy, becomes a rather potent force. Furthermore this is a successful ROI because we funnel and fund only the best from the companies that we create by following strategic initiatives. And we also happen to fund the companies that we deem absolute winners and most likely to survive based on flexibility and adaptability — all in a Darwinian playing field of the Startup Hunger games.
We call them “Hunger games” because they invariably run along the lines of fierce competition for the limited resources that we make available to our Startup cohorts. This is another litmus test for our Startups, as they are funneled through the gauntlet of survival where the fittest thrive and the others perish — in a diligent dealflow manner.
The overall investment strategy of our funds, is performing quite well also — all the way from my Seattle days and the Seattle Angels, to my Silicon Valley Angel days, via the vaunted Mill Valley Angels, and to my San Francisco Angel work. This journey was the best part of our fun run, as we run our Startups from the Russian Hill coop and the Potrero Hill coworking spaces, to Castro and Menlo park. And now where we have come full circle back in Seattle again — we are “killing it” with the American Angels and with the American Venture Company.
What can I say — we’ve got GAME.
Now I have always attached great importance to the theory of Investment and to tracking the returns if only for measuring the success rate and seeing how I compare to other investors. And although my Philanthropy and my charitable contributions are my greatest success measurement — the dealflow that arrives on my desk unsolicited and the people flow that similarly drops from the sky, are a great measurement of success also. And am saying this because every month I get upwards of a hundred people who want to work with me, sending me unsolicited resumes and another two to three hundred sending me Business plans and executive summaries ad infinitum. So Thank God I’ve got a giant problem of abundance — and I know how to deal with it, because it is far preferable to the opposite…
I pick and choose the best and the brightest and keep on going. That is my simple solution to this dilemma of abundance. It’s like when you have too many girlfriends — you get to choose. Nice if you can get it, and it creates wealth and prosperity, if you can choose carefully. Soon enough, friends with benefits abound, and you become the boon to the community. A cushy job for a hard worker…
And this is a giant advantage because today the Angel game has changed, and we are all becoming more like Venture Capitalists than Angel Investors — but we choose to maintain the same investment principles as the days of our earliest investments. Because that’s when we learned the craft and the art of investing. Habits die hard.
And yet this is also borne out of a good investment performance strategy, because based on our latest live performance reports — we show us having conquered the mountains of fear, and we even exhibited a positive performance through most of the dismal 2008 Great Recession and even through the current market turmoil that deflated all the Unicorns and all of the Unicorn wannabes.
And we’ve done this by both providing investors with a relatively safe haven in the topsy turvy world of early stage Startups and with a strong performance indicator in both the rising early stage technology companies, and in the more advanced M&A in the Unicorn-wannabes space, that are in a fast declining mood today. You’ve got to also unload fast the dead weight in the secondary markets and to sell off the ones gasping for breath. Acquihires never looked so good as they look today…
Our Angel-Venture capital strategy currently by comparison stands in valuation — well above the S&P 500. And it certainly puts all the VC funds to shame, along with most all the technology heavy hedge funds.
The highlights of our performance long term are as follows: We reach a 29% per annum Gross average annual return. This figure is based on a 30 year hypothetical back tested performance (1985-2015)
If we had to parse the numbers it would be a High Sharpe Ratio – 2.5 Strategy fully hedged, with long and short Low leverage. Max leverage 3.5x High Liquidity. The strategy invests in both early stage illiquid Startup equities and in early Unicorn type equities that are traded in highly liquid secondary markets. As an example: Uber and AirB&B shares today, are the hottest thing since sliced bread, and command great prices at the various secondary market exchanges.
And we also manage some capital for Friends and Family as we are always extra large with our generosity and thus offer these funds in an unofficial form, with No Lock-ins, lock-downs, or redemption penalties. Therefore all funds can be withdrawn by providing a simple 10 day notice prior to the end of month with a redemption date, and always without penalties for early withdraw of part or the whole of the investment. There is always a long line of F&F funds waiting for the chance to coinvest with me anyway, so I can always cover any shortfall in growth capital as needed.
I don’t know if we are going to be doing this same things, with our newest Venture Capital Fund in the Pacific Northwest — but since we’ve had 91% of our activity being in positive territory as defined by positive quarters in our past — we just might. Of the 120 Quarters in the back test we’ve run — there were only 16 negative. The average quarterly percentage return was 6.97%.
Not bad for an early stage Angel guy…
And today we are proud to announce that we have bolstered our management team with seven Startup industry veterans who have joined our venture capital practice in North America for the new American Venture Capital VC funds to be fleshed out in the early part of the new year 2016.
Dr Pano Kroko – The CEO with 30 years of excellent early stage venture capital expertise. Jessica Mardon – A leader with 20 years of systematic work at Barklays Bank. Trevor Cox – A veteran across the early stage capital structure and company building. Teddy Johnson – Deep experience in Supply Side StartUps and B2B plays. William Crampton – China Capital markets and EB-5 investor visa expertise. Virginia Wilson – Administrative and Technical Venture Capital Associate. Jessica Di Pietro – Venture Capital Associate and China specialist.
Together they constitute a brilliant team of individual talent that will bring forth the rain. And it all comes at an amazing time now that we are actively seeking fresh investors for our New Early Stage Pacific Northwest focused American Venture Capital VC Fund — because the investment strategy is performing rather well.
We are also proud to have bolstered our management team with three industry veterans who have recently joined our advisory board and we are bringing new additions to our Executive Board as well.
So please stay tuned for more…
But let us digress a little, and travel back for a few years…
At the proper age of 18, I built Satori Auctions and Software Inc, that became the first auction site on the Internet. And we also had the auction software to boot. This was the best internet auction software that we used and we also sold to all other auction companies that were budding on the Internet at the time. And this was well before Ebay was even a glimmer of hope in the eyes of Pierre Omidyar the founder of Ebay, who started messing up with beanie-babies and with pez-dispensers that his girlfriend was collecting at the time… Instead we were concentrating on selling high brow art and antiques and the rest is history. There is a good lesson here and I hope that you learn it because I’ve learned it and internalized it well enough.
Go for the plebs and focus on the plebian interests, when you are building a consumer business, because the largest possible user base will elevate a B2C internet play into the stratosphere of success.
So that pioneering instinct of my first big success on the world of technology and science led me to many other firsts since then. And it also reinforced my belief that being a pioneer is hard but many people want to follow on your footsteps.
And I followed with first successes in other areas of technology. In the world of internet crowdsourced advertising with AD2BE, in the the world of cellular wireless communications with several well sold companies, in the world of wireless internet where I built several new companies and where I single handedly jump started the world of Wi-Fi, in the world of Internet in the sky with Teledesic, in the world of Green Finance where I invented Green Bonds and pushed forth the idea of Green Capital as a generator of the Green Economy via the lever of Green Banks, in the world of Angel Capital hedge funds, in the world of crowdsourced ventures, in the worlds of Medicine and biotechnology… and in so many other areas where being a Pioneer gives us the advantage to design the world we want to bring into existence.
And the thing is that when you are a pioneer in one thing — it is always easy to break new ground in other areas of technology and science, because you learn to see the cloud formations and the weather patterns, beyond the visible horizon. That’s how you cna predict where the rain is gonna fall.
That’s the whole trick…
Yet back when I had this company to lead at the ripe old age of 18 and 19, while still attending University — I realized that I was managing a motley crew of individualists. I led a diverse team of professionals who had no regard for anyone else but themselves. Gifted software programers are extreme that way. They were all great, but the next two years of my life, were a baptism of fire for a first time CEO having to jump into a really difficult management job. Am saying this because we had everything in the house. From the seriously disfunctional yet brilliant stoners wearing kilts and going naked at night smoking weed and coding till morning, to more serious drug and alcohol abusers, and highly functional alcoholics and even crack addicts. We had all the flowers in our garden, from the benevolent stoners, to the angry drunks, all the way to sex addicts, and heroin users. Cocaine and alcohol defined everything in between the software sheets back in those early days of Seattle’s software industry. It was skid row by any other name…
Mind You this was the 5th Avenue not the Pioneer Square of Seattle, but back then Belltown was very much the real skidrow. Pretty much the same was going on at Adobe and Microsoft and all the other software houses in Seattle and Redmond back in those days. The programers who could somehow stay coding overnight and over a week to finish a project were seen as Gods — and the only way to do that was with Drugs. So it’s not only that extreme drug culture was fashionable then, but the drug deals and the prostitution were going on outside our doors all day long in the Belltown alleyways. At night you would hardly think of walking alone in that neighborhood.
But we hacked it.
And hacked it well…
Still the fights amongst the employees on company floor — were legend, and people had taken to placing bets on who would win. Now to say that I was a babe in the woods at the time, it would have been an understatement. Yet every time one of these bombshells exploded — people would come running to my desk begging me to solve it.
Being wise beyond my years — when the fight was over, I would simply call the offending parties over and say that I was simply shocked by their behavior, and ask them to get over it quickly, and just keep going forward… and the software project’s fork would be decided on the toss of a coin…
So, the good news is that nothing really amazes me anymore, because I’ve seen it all — and yet I have lived to know that managing people is the hardest thing you have to do when you run a StartUp company. It always comes down to that. You’ve got to kiss a lot of frogs…
Yet I consider myself to be extra fortunate because I always end up having a great team. And although I’m sure it has nothing to do with me personally — the truth is that I’ve always just tried to build the type of company that I was looking for all my life. A place where no one could hold me back, and where we could all call it a Home of Innovation and Growth.
And we all know that boundless profits, and awesome growth, can only come from limitless ambition. The people who have that – invariably do well at my American Venture Companies…
And as always — am going after Big Hairy & Lofty Goals, and that really really helps…
Entrepreneurs – not all of us, but a lot of us — tend to assume that everyone is built like us. Optimistic, self-motivated, driven, hard-working, persistent, and deeply flawed individuals, who live in the future, who want perfection, and who are totally and utterly obsessed by it.
It came as a shock to me all the way through my twenties and thirties to realize that the world is not full of people like that, but rather full of folks who don’t have an over-arching mission to their life. People who don’t have neither a purpose nor a rhyme to their being. People who have No Passion for whatever they are doing.
What a pity…
Over the past 30-plus years of building Tech companies, of managing people, and leading financially secure growth companies into marvelous exits — I have come to understand that it all starts and ends with the team. Therefore I place extra attention to building a strong team and consequently take the interview process seriously, and am extremely careful to hire and fire fast and furiously. This doesn’t mean that I’ve made fewer mistakes, than other leaders — but it means that I have found some amazing people who have joined my thousand companies over time. Naturally the expression “You need to kiss a lot of frogs before you get to your princess” comes to mind, each and every time I meet someone new, who wants to work with me.
Am getting upwards of a hundred unsolicited resumes a month, from people who say that they really want to work with me, and yet I prefer the people that I randomly meet in my world.
Because it seems these hundreds of people don’t have the light in their heart to find a way to a personal recommendation and connection and instead want to become an extra weight on my own back…
Or they simply want some of my own light, that I have no problem sharing — because sharing my light does not at all diminish the light of my candle. But in many cases these unsolicited folks proceed wanting to diminish my strength, my work, and my team — by tooting their own self importance.
Who knows why?
Maybe they are scorpions driven to bite their host, or just cancerous individuals — or what I generally call “toxic babies” Since only toxic babies think that trash talking others makes them better in any way. And for me when I hear anyone I interview talking negatively about their previous bosses — I know right then and there that they will not be a good fit for me as well.
You know who you are… You know what You do. And you might as well know that we know you for what you are too. Toxic tar baby…
Therefore I am driven to write this post, because I need to cut down on the inflow of unsolicited emails with CVs and Resumes of toxic idiots, who don’t bather to use LinkedIn or even FB to find a common thread and an individual to make a personal introduction to me but instead want to ride on other’s coattails. And I also write this because I want to quantify and advertise the good qualities I look for, in Great Individuals who have leadership skills — because I want people like that to show up and thus get the many stellar candidates I seek to come work for our companies, and for myself…
To solve the first problem – I change my email address quite often. And to solve the second problem I hereby declare that I only want positive, abundance driven, entrepreneurial leaders, to come work with me. I want self starters, not toxic pussies. I want rule breakers — not rule followers. I want thinking folks — not machines.
So since I’ve changed my email address again for this new quarter – this is what I look for in the people I allow to work with me:
I’ll speak from experience, because I’ve had the best luck with people who are outsiders but are not insecure. These are the people who can do different things well. I want people who are not part of the establishment and who buy into our vision of building a new world. I want people who are not Banker-Wankers, and who understand that being negative and worried all the time — makes them toxic. These fearful bitches best stay home under the duvet because the world outside can be a tricky, risky, and scary place. And being a leach is not part of the job remit ever in my companies either…
I want people who can be creating the New Rules while breaking the old ones. I want revolutionaries before I want followers. These folks are naturally hungry to learn, eager to establish themselves, comfortable in building new structures, and aren’t looking for someone to treat them like employees. They are self-motivated typically and looking for ways of standing out not fitting in.
The second attribute that I look for are Non-Zero Sum People. The world breaks down into those who believe in abundance, and those who live by scarcity. AVC Capital operates in a world where technology is a layer driving growth in all businesses. The world is no longer about linear growth, but network-driven growth and exponential growth. This is one of the core tenets of our businesses. We invest in exponential growth whether fueled by Moore’s Law or by driving the establishment of consumer data as an asset. We are always looking for the next wave. And if it’s not the rise of the individual cloud — maybe it is the rise of granting real property rights to individuals’ data inside of the perimeter of the Cloud.
Is it the Internet of Things? Or is it the Biocybernetics? Or maybe it is the rise of proteins?
Whatever the opportunity and whatever the process — we are ready to pursue because fundamentally we believe that the opportunities for new assets, new GDP growth in the American economy, and new-found abundance in business and society — is right there, waiting to be seized.
This is the real economy which is driven by entrepreneurs. This is the one where opportunities are clearly limitless, and our capacity to create new jobs, new services, and renewed prosperity, is based in repeatable reality. We place our success not on new assets, and not on resources, but on new technologies and new science. We are focused on growth and expansion and that defines our drive to develop sustainable economics as well…
This is what I call Ecosystem Economics and it starts with the Green Capital, leading to Green Banks, and to the Green Economy.
The study of Cybernetics allows us to see what I truly mean by this…
And now MIT offers many open courses on Cybernetics: http://search.mit.edu/search?site=ocw&client=mit&getfields=*&output=xml_no_dtd&proxystylesheet=http%3A%2F%2Focw.mit.edu%2Fsearch%2Fgoogle-ocw.xsl&requiredfields=WT%252Ecg_s%3ACourse+Home%7CWT%252Ecg_s%3AResource+Home§ionlimit=WT%252Ecg_s%3ACourse+Home%7CWT%252Ecg_s%3AResource+Home&as_dt=i&oe=utf-8&departmentName=web&filter=0&courseName=&q=Cybernetics+&btnG.x=0&btnG.y=0
Yet before you go out there to study Cybernetics to have an intelligent conversation with me — hoping to hire you — please solve this riddle: How can you tell if someone [prospective employee] is a person fully believing in abundance, or a zero sum game bitch?
A lot of people talk a fat game about abundance but very few ever live up to it.
So I put them through their paces…
Sure it can be hard to determine whether someone is Zero Sum until you get to know them. But You have to be quite clever to really uncover the way they view the world, and their role in it. So we resort to trying them out…
Am very careful about that because my biggest mistakes in hiring have always been when bringing into the AVC team those Zero Sum individuals, who proceed to become soul suckers and death wagers.
So I avoid them like the plague and when I find them I uproot them and throw them out like a good gardner does with the evil and toxic weeds.
And when they try to pretend that they belong in the Team Abundance — I quickly drive them through their paces and expose them for what they are and show them to the exit swiftly.
I do this religiously because I don’t have time to waste on their sorry ass, since the suck up management time like babies and the good people who need my attention, go unattended.
My team motto at AVC is this simple little ditty: ‘Lead, follow or get out of the way’ This is the way to live at AVC and if you cant’ handle ti — well you know how to follow the green signs. This has been working well for me.
Yet people keep asking me this:
“Can you have a team made up of All Leaders?”
Well it comes down to definitions.
Leaders are people who in the words of Colin Powell, the US Secretary of State, create the conditions of trust so that great things can happen. Leaders are not just generals. I believe it is essential that everyone is a leader in their domain, in their life, and in the pursuit of their professional goals. I want everyone to be a leader at AVC.
My way of provoking that is to set clear goals, but allow people to rise to the challenge themselves rather than putting them under our collective American Venture Company thumb.
Because what you find when you hire for leadership potential, and assume strength, assume success, and assume drive, is not that you always get it. But the system, the company and the team sort out and reject those who can’t keep up, or who run on another operating system – that of win/lose, or people who are arguing for their limitations.
Self-policing mechanisms are the best.
I’ll never forget when I went into the deal team room last year and spoke with one of our firm’s best employees about someone who had just left under a cloud. I said, ‘hey I know it’s not great when someone leaves but….’ He interrupted me and said, ‘Doctor — we want people like that to go to our competitors.’
When I set up American Venture Company on the 4th of July of 2013, the first thing I did was to think and reflect on what I wanted to accomplish:
This is what led me to commit to writing what defines “The American Venture Company Way”
This is my manifesto, because it still defines what makes this firm tick, and what gives us the potential to succeed and prosper, and also dictate the trajectory path forward for us and for our companies.
A path that we have been following to this day is made up of these few little axioms and trite generalizations that work like mantras and memorable quotes for all of us:
Make things happen
Challenge the Status Quo
Be open and honest
Do something that scares you everyday
Always be selling
Believe in yourself
Make tough decision and stick to them
Have the courage to say no
Be an agent of change
Sell yourself first
Push your limits
Evaluate yourself regularly by how well you develop and maximize talent in others, and how easily you give credit for success to those others, even when you deserve all of it…
Clarify your role in organizational life
Eliminate any perks and special privileges that you might think you deserve
Never abdicate your responsibilities
Push authority and decision-making to people closest to the action
Begin everything by asking: “What do you think we should do?”
Learn and leverage coaching skills
Manage by wandering around (MBWA)
Say, “Thank you” and “Please” everywhere you go
Always seek feedback
Ask specific and active questions
Own your mistakes and failures
Share your learnings
Maintain personal integrity
Never compromise quality, not even for a deadline
Treat people the way that you want to be treated
Take intelligent risks
Be a team player
Be a tightrope walker
Keep others informed
Take an active role in the industry
Connect the dots that others don’t see
Be a Lover, not a hater
Be a Builder, not a destroyer
Be the Change You want to see in the world
Make shit happen
Bring the Rain
Better yet — Be the Rainman
That’s what I want..
Rule Followers Need Not Apply.
And if there are any CEOs out there that have an early stage company and they are convinced that we are going to harvest 100 times the current valuation — if were to invest today — I’ll take your call right away.
Email me soonest…
May we all be healthy and happy and hope that the New Year will bring us Peace, Prosperity and Harmony — and all the rest will get sorted.