Posts from life lessons

September 11th

Today is a very meaningful day for all  New Yorkers. For me, the terrorist acts of September 11, 2001 came at an important time in my life. The Internet bubble had burst and my professional life was all about dealing with the ramifications of that. I had just turned 40, we had three kids, 10, 8, and 5. We had lived in NYC for almost 20 years and we were building a life in the greatest city in the world. That day changed everything and changed nothing at the same time. We stayed downtown, we raised our kids in the post 9/11 NYC, and we still live in NYC in much the same way we lived there before that day. But we were all impacted by the sights, sounds, and smells of that day and the days and weeks that followed and certainly still are.

I don’t think much about September 11th anymore but I do try to remember it every year on its anniversary.

We are in Barcelona today. September 11th means something very different here. It is the “national day of Catalonia” and a holiday.

To make things even more interesting the Catalan Separatist Movement is mounting a huge protest today in Barcelona and they are expecting 1.5 million people to fill the two main streets in town and create a V sign in an effort to pressure Spain to allow a vote for Catalonia to secede.

The streets are literally filled with people wearing the yellow and red colors. We walked around for a couple hours and observed the goings on.

There are separatist movements cropping up all over Europe right now. I imagine the weak economy and rampant unemployment is a factor but underneath it all these are tensions that have existed for centuries and it’s not really a new thing at all.

The hatred that fed the horrible acts of 9/11 isn’t a new thing either. The techniques are modern and so are some of the resentments that feed it but the underlying hatred goes back a long way.

So for me, today is a reminder that conflict and resentment and the hatred that can result is a permanent human condition. We can work to minimize it and we should do that tirelessly. But we are unlikely to eliminate it.

Band Aid Friction Block

Every once in a while I learn about a product that is truly a game changer for me. The most recent example of this is Band Aid Friction Block.

The Gotham Gal turned me onto this product last week when I was getting blisters on my feet from some new shoes she bought me.

You rub it onto the parts of your feet where you are likely to get blisters and then you put your shoes on and are good to go for the day.

For all I know this product has been on the market for years and I’m the last one to learn about it. But in case that’s not true and some of you are, like me, unaware of it, I feel compelled to tell the world about it.

There are very few times that a $6 product is life changing. This is one of them, at least for me it is.

Reblog: How To Calculate A Return On Investment

It turns out this is one of my most viewed posts of all time. I guess that’s a good thing. So I’m reblogging it today.
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The Gotham Gal and I make a fair number of non-tech angel investments. Things like media, food products, restaurants, music, local real estate, local businesses. In these investments we are usually backing an entrepreneur we’ve gotten to know who delivers products to the market that we use and love. The Gotham Gal runs this part of our investment portfolio with some involvement by me.

As I look over the business plans and projections that these entrepreneurs share with us, one thing I constantly see is a lack of sophistication in calculating the investor’s return.

Here’s the typical presentation I see:

Return calc

The entrepreneur needs $400k to start the business, believes he/she can return to the investors $100k per year, and therefore will generate a 25% return on investment. That is correct if the business lasts forever and produces $100k for the investors year after year after year.

But many businesses, probably most businesses, have a finite life. A restaurant may have a few good years but then lose its clientele and go out of business. A media product might do well for a decade but then lose its way and fold.

And most businesses are unlikely to produce exactly $100k every year to the investors. Some businesses will grow the profits year after year. Others might see the profits decline as the business matures and heads out of business.

So the proper way to calculate a return is using the “cash flow method”. Here’s how you do it.

1) Get a spreadsheet, excel will do, although increasingly I recommend google docs spreadsheet because it’s simpler to share with others.

2) Lay out along a single row a number of years. I would suggest ten years to start.

3) In the first year show the total investment required as a negative number (because the investors are sending their money to you).

4) In the first through tenth years, show the returns to the investors (after your share). This should be a positive number.

5) Then add those two rows together to get a “net cash flow” number.

6) Sum up the totals of all ten years to get total money in, total money back, and net profit.

7) Then calculate two numbers. The “multiple” is the total money back divided by the total money in. And then using the “IRR” function, calculate an annual return number.

Here’s what it should look like:

Cash flow sheet

Here’s a link to google docs where  I’ve posted this example. It is public so everyone can play around with it and see how the formulas work.

It’s worth looking for a minute at the theoretical example. The investors put in $400k, get $100k back for four years in a row (which gets them their money back), but then the business declines and eventually goes out of business in its seventh year. The annual rate of return on the $400k turns out to be 14% and the total multiple is 1.3x.

That’s not a bad outcome for a personal investment in a local business you want to support. It sure beats the returns you’ll get on a money market fund. But it is not a 25% return and should not be marketed as such.

I hope this helps. You don’t need to get a finance MBA to be able to do this kind of thing. It’s actually not that hard once you do it a few times.

The Personal Blog

There’s a bit of a renaissance of real personal blogging here in NYC. Two of the original NYC bloggers have, after years of writing professionally and editing others, returned to their own blogs.

It started with Lockhart Steele, the founder of Curbed, Racked, and Eater, who started that media business on his personal blog.

Then the next day, Elizabeth Spiers, the founding editor/blogger at Gawker, dusted off her blog and started writing on it again.

It feels so good to link to both of them.

There was a comment on Elizabeth’s kickoff post that suggested she go to Medium. She replied:

I already write for (and on) Medium. My most recent piece is here. But I don’t think it’s quite the same thing as maintaining a personal blog, where you control all of the visual elements and maintain a custom URL.

I wanted to reply to that comment, but could not for the life of me, log into WordPress to leave it. So I’ll blog about it instead.

There is something about the personal blog, yourname.com, where you control everything and get to do whatever the hell pleases you. There is something about linking to one of those blogs and then saying something. It’s like having a conversation in public with each other. This is how blogging was in the early days. And this is how blogging is today, if you want it to be.

When I started blogging here at AVC, I would write about everything and anything. Then, slowly but surely, it became all about tech and startups and VC. It is still pretty much that way, but I feel like I’m heading back a bit to the personal blog where I can talk about anything that I care about.

Today, that thing is the fact that the Gotham Gal and I are taking our youngest child, Josh, to college. As my friend Bob told me over email last week about sending his son off:

I am surprisingly emotional at least to me ……….. Sending Josh off as your last must be something.

Yeah, it is something. I’ll miss him a lot.

Opting Out For The Kids

Our daughter Emily is working on a senior thesis this coming year. She’s studying the choices women make to balance their careers and families. This is a subject Emily has some personal experience with having watched The Gotham Gal quit her job when our son Josh was born and make a number of other career sacrifices so she could care for our young family.

Emily wants to capture real stories from real women and has built a website she calls Opting Out For The Kids where women can share their stories with her and the world.

It’s a pretty basic website. Anyone can read the stories and upvote them. But you need to log in with Facebook if you want to post a story. Once you log in, you will see a link that says POST and that’s how you write a post to tell your story.

Emily alpha launched this website at the start of the summer but it had some quirks and she recently fixed them and is now re-launching it.

If you are a woman who has an “opting out for the kids” story to tell, please go here, login with Facebook, and tell it.  And if you have followers on Twitter or Facebook who might be women with these kinds of stories, please post a link to Opting Out For The Kids so that other women can find this website and tell their stories.

And, as I mentioned, anyone can read and upvote these stories and I would encourage everyone to do that.

Emily will appreciate it and so will I. And I will ask Emily if I can post the results of her research here next spring when it’s completed.

Do You Unplug

I’m working on unplugging during my six weeks off. I’m doing a decent job but I am not totally unplugged and it is possible that I won’t totally unplug.

I saw this chart in the WSJ (via Twitter) this morning:

unlug

So almost half of us don’t ever unplug.

Do you, and if so, how often?

An Extended Vacation

Starting tomorrow and for the next six weeks, the Gotham Gal and I will be on an extended vacation.

Every year I take the last two weeks of the summer at the beach with my family to celebrate my birthday and take advantage of the last days of the summer. I will be doing that starting tomorrow.

Then in late August, we drop our youngest child, Josh, off at college. That moment will mark the end of a very important part of our lives, the active in-person parenting phase, and the start of another phase where it will be mostly the two of us living together without our children at home.

Neither of us wanted to just drop Josh off at college and go back to work like nothing changed. We want to acknowledge this new phase and kick it off with an event of some kind. So we are going to spend most of September traveling together, just the two of  us, in southern Europe. We will be back in late September, with a new living situation, and hopefully refreshed and energized for this new phase of our lives.

We will refrain from working on this extended vacation unless something very important comes up. I will turn on an out of office responder at some point in the next 24 hours and when you email me you will get a reply saying that I’m away until the end of September and, unless its urgent, please contact me then.

I do plan to have something new up here at AVC every day during this period. That may be reblogging the Gotham Gal who plans to blog our trip in Europe, it may be reblogging some old posts that should get the light shined on them again (like I did earlier this week), it may be more videos (like saturdays), or it may be new posts if I am inspired to write something new and original. It will probably be a mix of all of that.

I’m super excited to be taking this time off. It was eleven years ago that Brad and I started USV and twenty four years ago that the Gotham Gal and I started our family. Both have been incredible and successful efforts, but they have required a lot of work. It’s time to take a break and smell the roses, together. And that is what we intend to do.

Get Lucky

I’ve always thought of myself as a lucky person. I’ve had a tremendous amount of good fortune in my life; a happy marriage, great kids, a fantastic job, several great partnerships, and lots of financial success.

So it was with interest that I read this post about some research a psychologist named Richard Wiseman did on lucky and unlucky people. Wiseman concludes that luck (and unluck) is a function of state of mind (positive vs negative), being open minded, and trusting your gut.

Here’s the money quote from the post:

My research revealed that lucky people generate good fortune via four basic principles. They are skilled at creating and noticing chance opportunities, make lucky decisions by listening to their intuition, create self-fulfilling prophesies via positive expectations, and adopt a resilient attitude that transforms bad luck into good.

I have heard similar things over the years and these findings certainly resonate with me. I can’t stress enough the importance of the last point – “a resilient attitude that transforms bad luck into good.” If you always look on the bright side of life, to quote Monty Python, you will have much greater success.

And, of course, it turns out you can learn to be lucky. Wiseman ran a “luck school” and less than a month he turned unlucky people into lucky people. So if you aren’t feeling it, get lucky. You can do it.

Checking Your Work

I don’t recall who drove it into me when I was young, but I have always been obsessive about checking my work. Whenever I do a math problem, I take my answer and do a reverse check to make sure the answer makes sense. I do this even when adding a tip to a bill at the end of a dinner. It drives the Gotham Gal crazy to see me take so much time to do a simple math problem. It’s not even a conscious thing for me. It’s just how my mind works.

I tell all of you this because it relates to writing. I was talking to an educator that I respect greatly last night and I asked her what is the most effective technique for teaching kids to write. I expected her to say one on one editing sessions with a mentor, coach, or teacher was the most effective way to teach writing. But she told me that forcing kids to rewrite their work, solo, was the most effective technique to improve their writing.

When I write a blog post, I tend to write it as the idea forms in my brain. I write the whole thing out. And then I rewrite it. I go over every line and make sure the spelling and grammar are correct, I look at the phrasing. I consider the flow. I read it start to finish at least three or four times. I think about the whole and then each part. And I’ll cut out paragraphs, move things, rewrite parts, and mess with it for almost as long as it took me to write it in the first place. And I’ll do that even after I’ve posted it. I actually get some extra benefit from editing while the post is live. I am not sure why that is, but often times the best edits come to me after the post is live.

And so it turns out, if my educator friend is right and I would imagine she is, that this kind of obsessive self editing is the best way to become a better writer. I don’t consider myself a great writer by any means, but I have improved immensely over the years I’ve been blogging. Some of that, for certain, comes from writing every day. According to WordPress, I have written over 6,500 posts here at AVC. That’s a lot of writing. But you don’t learn as much from the process of putting words on paper (or online). You learn most from the process of perfecting the piece.

Based on the countless hours I have worked with my kids over the years, getting students to spend time on a project after they feel like they have finished it is really hard. They get annoyed. “It’s done, it’s right, why are you making me do this?” is a common refrain. But if you want your kids or students to learn and improve, you have to force them to do that. Like someone did for me when I was young. It’s a gift that pays dividends for me every day.

Twenty Seven Years Ago

On June 20, 1987, the Gotham Gal and I got married. A lot has transpired since then. We raised three kids who are now young adults, we built a wonderful life in NYC, and we made a fortune, lost it all, and made it back. It’s been a fantastic ride and I could not have picked a better partner to take it with me.

Last tuesday night, I was hanging out with my friends Jordy and Paul on Jordy’s balcony looking out at the Hudson River. I told them a story about the Gotham Gal and me. When we got out of college in 1983, I had no idea what I wanted to do or what to do. Joanne was completely different. She wanted to move to NYC, work at Macy’s and become a store manager. She knew what she wanted in life and how to get it.

So I followed her to NYC. She pushed me to get a job in NYC. I did. She then pushed me to go to business school. I did. She pushed me to get a job over the summer in VC (because I told her I thought it was interesting). I did. She pushed me to ask the partners to hire me out of business school. I did. She pushed me to ask for a raise. I did. Eventually she pushed me to ask to be made a partner. I did. And finally she pushed me to leave and start my own firm. I did.

Flatiron, the firm I started along with Jerry Colonna, was the end of me finding my way with gentle (and not so gentle) pushes from the Gotham Gal. At the age of 35, I was the co-founder of a VC firm, the commercial Internet had arrived, and I was on my way.

There is a saying that behind every successful man, there’s a strong woman who helped make them so. I am not sure that is true in every situation. But it certainly was true in mine.