Brainstorming in Boulder, CO with a class of founders from TechStars, where I’ve been a mentor. After this particular trip, I ended up advising Graphic.ly. (Photo: Andrew Hyde)
Disclaimer: nothing on this site is legal advice, and I am not an investing expert.
This post is continued from Part I.
Part I explained how, instead of getting an MBA, I invested the tuition dollars into angel investing. To recap, my current stats for the two-year “Tim Ferriss Fund” look like this:
15 or so total investments
2 successful “exits”, or sales (including my own company)
If we look at the value of my remaining start-ups on paper, based on subsequent funding and valuations, the portfolio is probably up well over 4x. This means nothing (remember Webvan?), but it’s fun to look at the spreadsheet.
This post will look at how I’ve found deals, how I filter deals, and the rules I’ve set for myself. The latter can teach broader business lessons, even if angel investing never enters your life…
Before we get started: you almost always need to be an “accredited investor” to angel invest. If you aren’t comfortable lighting your money on fire, you shouldn’t invest in start-ups–period. That doesn’t mean, however, that you can’t learn a few things from the sidelines.
Before we get started – part deux: angel investing can be complicated. I’ll be using some fuzzy math and simple examples to get the point across. This is intended as a primer, not as a guide to the intricacies of investing.
Last but not least, I’ll use a gender-neutral “he” for the sake of simplicity instead of “he or she”, which is cumbersome. Both sexes can play well in this game (check out Esther Dyson), and both can screw it up equally badly.
For those who want some resources upfront, here are a few:
If you want to be an angel investor:
Read – How to Be an Angel Investor
Read – Is it Time for You to Earn or to Learn? by Mark Suster – this is a must-read reality-check that takes into account dilution and other nasties. Though written for people thinking of joining start-ups as employees, it applies to angels.
If you want to recruit/be an advisor:
Read – Everything you ever wanted to know about advisors, Part 1
Read – the above Suster piece if you think advising a few start-ups will make you rich. Run the numbers first.
If you want to find angel investors:
AngelList (go here to pitch me or anyone else in their roster)
Consider applying to a “seed accelerator” program that will cultivate you. For a complete list of such programs and upcoming application deadlines, visit Kaljundi’s site. Here are few well-known examples:
Y-Combinator (Mountain View, CA)
TechStars (Boulder, CO)
LaunchBox (Washington, DC)
LaunchPad (Los Angeles)
Capital Factory (Austin)
i/o Ventures (San Francisco)
Investors vs. Bootstrapping – Some Warnings
As exciting as I find the start-up game in Silicon Valley, it can also be depressing.
I see capable first-time entrepreneurs, full of piss and vinegar, run into fundraising and get their asses kicked by seasoned venture capitalists (often affectionately called “vulture capitalists”). Two or three years later, their start-up baby is either dead or their ownership has dwindled to the point where their enthusiasm is gone.
Here are some questions and warnings that might help avoid this:
1) Why do you need funding?
If you can bootstrap to profitability and one of your goals is to work for yourself, I’d suggest thinking twice. If you take a few million dollars, you will–on some level–be working for investors. If you make a mistake and allow investors to have board control, which can happen if you spend funding faster than expected, you no longer run your start-up. 🙁
2) Avoid angel investors with few or no prior start-up investments.
The family dentist wants to put in $50,000 and will give you whatever terms you want? Sounds great! Don’t do it. Ditto for the successful CEO who’s never done angel investing, as seductive as it will be.
One good friend just had her start-up implode (after millions of investment) because her primary investor, a former tech CEO, didn’t have the stomach for start-up investing. He panicked when things deviated from the business plan (um, welcome to start-up land), and began doling out funding in two-week increments and insisting on near-weekly board meetings. He became the micromanager from hell. No longer was the real start-up CEO able to make CEO decisions, and the company was doomed.
Only take investment from people who have invested in a few start-ups. Having run a start-up doesn’t qualify one as risk-tolerant enough for start-up investing.
3) Don’t take a ton of money just because the valuation is sexy, or because you give up less ownership.
This problem is more common with venture capital (VC), but it worth learning early: it’s a bad idea to take money from someone simply because they offer a high valuation. Let’s say two investors want to be your lead investor. Investor A thinks your start-up is worth $3 million and offers to buy 33% of the company for $1 million — to fund you with $1 million. Investor B thinks you’re worth $10 million and offers to also give you $1 million, but you’ll only give up 10% of the company!
Go with Investor B, right? Well, not so fast. If you come out of the gates with very little to show but a $10 million valuation, things can blow up in your face a few ways:
– Your exit options become fewer. If Investor B needs a 10x return for his portfolio and has the ability to block your sale for less, this means you have to sell for at least $100 million. If you’re a first-time founder, putting $1-2 million in your pocket with an early sale for $10 million could have changed your life forever and given you “f**k you” money to do anything you wanted. Now it’s home run or nothing.
– You run the real risk of a “down round”. If you don’t make it to profitability with that $1-million round, you’ll need to raise more money later. If you haven’t made a ton of progress, including a ton of new customers, the fundraising community will be skeptical and probably insist your $10-million valuation was too high, or that you’ve lost value since that round. Now you’ll need to do what’s called a “down round” (some examples here). In most cases, this spells the end for your start-up.
OK, with those warning out of my system, let’s look at some definitions and how I’ve done things so far.
Investor vs. Advisor, and Some Definitions
When dealing with tech start-ups, the following terms are important to understand. Below are some very general definitions, keeping in mind that almost everything is negotiated and on a case-by-case basis:
“Seed” or “Series-A” = two early rounds of financing common in the start-up world. “Seed” is first, and often either family and friends or $100,000-$1,000,000 from angels. “Series-A” might be around $1,000,000-$5,000,000 and comprise primarily angels and perhaps 1-2 venture capitalists from larger firms that could later participate in larger “Series-B” or “Series-C” rounds, if needed for profitability or to compete. These “B” or “C” rounds usually involve many millions of dollars, which few angels will put up as individuals.
“Dilution” = Having your percentage ownership lowered when new investors come in. If, for example, you own 1% of a start-up at seed stage, if there are any future rounds of financing, your portion of the pie will almost always shrink–you will be diluted. This is critical to keep in mind when calculating potential outcomes as an investor or advisor.
“Investor” = someone who writes checks in exchange for equity (a certain % ownership) in the start-up.
“Advisor” = someone who advises a start-up in exchange for equity over time. “Advising” can include key introductions (to customers, partners, important hires), “syndicating” financing (getting other investors on board), developing/improving the product, helping with PR/marketing/customer-acquisition, or anything else a start-up might need.
So what percentage do advisors get? For someone who’s just doing a few intro’s, or whose name you’re using to get investors, it might be 0.10 – 0.25%. For someone who’s investing real time and helping to build the company, or someone whose involvement could make the difference between success and failure, it could be as high as 2%… or even more. There are start-ups who think giving more than 0.25% is ridiculous, and there are start-ups who find 2% a steal if they can get the right person.
Advisors generally receive their equity over a period of time, often 12-24 months.
This means that if an advisor signs an agreement for 1% that “vests” over 12 months, he would get 1/12 of one percent each month, and the start-up can cancel the deal at any time. If the start-up gets fed up with this advisor after six months, it means he gets the 0.5 percent that vested, but no more.
Different strokes for different folks, but all-star advisors generally = better investors, better investment terms, and faster outcomes. To me, that’s a legitimate no-brainer.
If I were to found a tech start-up and aim for the fences (IPO or sale), I would do what several successful tech CEOs I know are doing right now: give 3-5 bad-ass advisors 1-2% each, depending on time required, and self-fund until you hit break-even or profitability. Then, go out to raise $500-750,000 from key angels who can open doors to potential acquirers and help you get to “scale”. “Scale”, in this context, meaning the point at which you can go big, as in millions of users or nationwide, with the simple addition of money: the costs and revenues of your customer acquisition are predictable. Money in = more money out.
Last, you go to potential acquirers (often potential competitors) to see if they’d like to discuss “partnerships” or funding you; both approaches are used to start conversations that hopefully end with “why don’t we just buy you instead?” from their side.
If that doesn’t work, you get more funding, grow a lean monster, and eat their lunch.
The Start-Ups and Deal Flow
Here are the start-ups I’m involved with, whether as an investor or advisor, in no particular order:
[TIM UPDATE FROM 2013: OK, three years later, here is a more current list. Hilarious that Uber was called “UberCab” back in the day!]
Twitter (investor) – micro-blogging platform
Digg (investor) – see what’s most popular on the web
StumbleUpon (advisor) – Pandora for the coolest content on the web (this is how I find much of my most popular Twitter material)
Evernote (advisor) – capture anything in the world you want to remember
Posterous (investor, advisor) – the simplest blogging platform in the world
CrowdFlower (advisor) – crowd-source just about anything for pennies; 500,000 workers in 70+ countries.
SimpleGeo (investor) – on-demand geodata infrastructure
Graphic.ly (advisor) – the next (gorgeous) evolution of comic books
Foodzie (investor, advisor) – find and buy incredible artisinal food in the US (my favorite cookies in the world are here)
Shopify (advisor) – beautiful and easy e-commerce for selling anything
RescueTime (investor, advisor) – time and productivity tracking
ReputationDefender (investor) – monitor and repair your reputation online
TaskRabbit (advisor) – get any task done, from dry cleaning to research (use code “FERRISS10” for $10 off your first task)
UberCab (advisor) – Fully automated car dispatch with built-in reputation system – ride like a European diplomat.
Badongo, DocumentHosting.com (investor) – file and document hosting/sharing
DailyBurn (investor, advisor) – exercise and diet tracking
iMarket Services (advisor) – creating hubs for niche markets like stand-up comedy
Samasource (not-for-profit – advisor) – outsource your tasks to those most in need (refugees, etc.)
Donorschoose.org (not-for-profit – advisor) – eBay for helping public school children in need of basic supplies.
“Deal flow” refers to how you find the start-ups you invest in, or how they find you. All of the companies except DonorsChoose.org and iMarket Services (respectively: have known the CEO for ages, chance meeting at SuperBowl party) were found through:
– Referrals from friends who are angels and tech CEOs
– Y-Combinator (Posterous, RescueTime)
– TechStars (DailyBurn, Foodzie, Graphic.ly)
– Facebook Fund (fbFund) (TaskRabbit, Samasource)
– Twitter DMs from me to the founders (Evernote, Shopify)
What makes me interested in a start-up… or rules them out?
Let’s go through the bullet-points–general rules of thumb–first, some of which are borrowed from much more experienced folk like Mike Maples, Chris Sacca, Travis Kalanick, and others.
These are the considerations I run through when looking at start-ups, but it doesn’t mean that all of the companies in the portfolio passed all of the criteria.
In no particular order, and written as a stream of consciousness:
– If my readers won’t shut up about them, I listen (this led me to reach out to Evernote and Shopify)
– I generally look for these questions to be answered via email, but I now much prefer to have them answered through the AngelList form. If you don’t know the terms (“deck”, “traction”, etc.), you need to learn them before pitching Silicon Valley types.
– Does it offer the possibility of at least a 5x return? Good angel investors in Silicon Valley do not invest in lifestyle businesses or profit shares–they want to turn their $100,000 into millions. 5x return potential is just the entry point for working with decent angels at the seed or Series-A level. Many will be filtering for 20-30x potential, depending on the size of their fund.
– If it’s a single founder, the founder must be technical. Two technical co-founders are ideal.
– Have the founders ever had crappy service jobs, like waitering or bussing at restaurants? If so, they tend to stay grounded for longer. Less entitlement and megalomania usually means better decisions and better drinking company.
– I must be eager to use the product myself. This rules out many great companies, but I want a verified market I understand.
– I must understand their customers and be able to recruit, in military terms, HVTs–High Value Targets.
– Do the founders actually test some of what I’m recommending? My data is based on 15+ start-ups and more than $1M in direct response advertising–there are a few things I understand very well, sign-up conversion being one example. I will usually suggest 1-2 elements for testing in an initial meeting, well before investing, and if at least one element isn’t tested within a week, they’re out. If the product (usually a website) isn’t split tested or “iterated” fast enough, it usually foreshadows death for tech start-up. Speed is often the only competitive advantage smaller guys have.
– They need to understand the eco-system in which they play. What recent companies have sold for what amounts? Who are the most likely acquirers? Who are the most formidable competitors, and what types of funding (even investors) and resources do they anticipate needing to compete? It it a winner-takes-all market where only one company will reign supreme (e.g. businesses dependent on network effects), or can many large profitable companies co-exist?
– Founders must pass the “mall test”: if you were to see them in a mall, would you walk in a different direction, would you walk over to say “hi” and move on, or would you invite them to join you for coffee or whatever you’re doing next? If the founders don’t fall in the last group, don’t invest. This is a close cousin of the simpler “would you invite them out for beers just to catch up” test.
– Am I following my rules, but are other investors turning them down? These days, I take this as a positive sign. Mike Maples explained this to me: breaking your rules to co-invest with well-known investors is usually a bad idea, but following your rules when others reject a start-up can work out extremely well. DailyBurn, my only exit to date, was a mild example of this. They hit my checklist boxes, but the majority of the investors (but not all) I asked to participate declined. It thrills me that this start-up–from Alabama!–has so far outpaced most in Silicon Valley. Bravo.
Now the rules that require a little explanation:
1. Don’t do it solely for the money, but know your minimums.
Investing in start-ups has to be, on some level, a labor love. You need to love helping entrepreneurs. That said, don’t actively waste your money and life by failing to do basic math.
Set a minimum threshold for each start-up investment. The minimums could be what a success should cover, or a minimum dollar amount. For example:
A. Each start-up, if it exits at 5x its current valuation, should be able to cover 2/3 of your total fund.
Most entrepreneurs think their start-up will be the next Google, but you can’t base your investment strategy on the assumption that each company has the potential to exit for a billion dollars. Look at comparables (similar companies) that have sold, and their average purchase prices. If you want to keep it simple, you might use 5x at Series A round as your assumed “success” multiple.
What this means:
Let’s say a company is raising $500,000 in a Series A. Investors decide it is currently worth $1,000,000, so–after receiving the $500,000 infusion–it will have a $1,500,000 “post-money” valuation. (For sake of simplicity, we assume that Investors don’t require an option pool for new employees to be set aside in the pre-money valuation. For more on that, read this) Let’s also say that you put in $15,000, so you “own” 1% of the company post-money.
Remember the rule of the header: “Each start-up, if it exits at 5x its current valuation, should be able to cover 2/3 of your portfolio.”
Most of your start-ups will fail, so the successes need to make up for losses.
If we’re using the “2/3” rule, and your fund (like mine from 2007-2009) is $120,000, you shouldn’t invest $15,000 in this start-up, as 15K x 5 = $75,000. 2/3 of $120,000 is $80,000, so you’d either have to invest slightly more, lower the valuation, or add in advising and get more equity in return. This isn’t even accounting for dilution, which is likely in most cases.
B. Each start-up, if it exits at 3x its current valuation, should allow you to walk away with $300,000.
This is one of my preferred methods for qualifying or disqualifying a start-up.
As much as I might love them, I’m not going to take another part-time job for 1-3 years for a $50,000 pay-off. This is where first-time entrepreneurs who refuse to give advisors more than 0.25% often lose the forest for the trees.
Let’s say a start-up ends up with a 3-million (3M) post-money valuation. If I help them more than triple the value of their company to 10M, how much do I walk away with if there are no more rounds of funding? If they offer me 0.5%, I walk away with $50,000. If, considering the time invested, I could earn 5x that doing other things, it makes no sense to do the deal if this is my rule.
Woe is the angel who bases his or her decisions on all start-ups having the potential for a billion-dollar exit. Rule #1 in angel investing is, as far as I’m concerned, the same as Warren Buffett’s first two rules of investing:
Rule #1: Don’t lose money.
Rule #2: Don’t forget Rule #1.
2. Move from investor –> investor/advisor –> advisor
Let’s assume you have committed to spending $60,000 per year on angel investments, just as I did. This means two things:
– You aren’t going to be able to satisfy the above rule of “2/3” or the $200,000 minimum for many companies. At best, you’ll have 1-3 investments.
– 1-3 investments doesn’t work in angel investing, where most pros would agree that 9 out of 10 (on a good day) will fail.
– It’s therefore impossible for you to get a good statistical spread with $60,000 per year. The math just doesn’t work.
The math especially doesn’t work if you f*ck it up like I did (see Part I) by getting over-excited and dropping $50,000 on your first investment. Oops!
Here’s how I dealt with this problem:
First, I invested very small amounts in a few select start-ups, ideally those in close-knit “seed accelerator” (formerly called “incubator”) networks like Y-Combinator and TechStars. Then I did my best to deliver above and beyond the value of my investment. In other words, I wanted the founders to ask themselves “Why the hell is this guy helping us so much for a ridiculously small number of options?” This was critical for establishing a reputation as a major value-add, someone who helped a lot for very little.
Second, leaning on this burgeoning reputation, I began negotiating blended agreements with start-ups involving some investment, but additional advisory equity as a requirement.
Third and last, I made the jump to pure advising. Since the end of the first year of the “Tim Ferriss Fund,” more than 70% of my start-up “investments” have been with time rather than cash. In the last 6 months, I have written only one check for a start-up. The goal is still the same as in the first phase: deliver above and beyond the current value of my potential equity (if fully vested) as quickly as possible. The next post this week will give an example of this.
Comment from a proofreader and experienced angel, Naval Ravikant, who was also a co-founder at Genoa Corp (acquired by Finisar), Epinions.com (IPO via Shopping.com), and Vast.com (largest white-label classifieds marketplace):
One thought – if someone really wants to invest $200K as an angel investor, you’re right in that they can’t spread it across enough companies to diversify it or have it be worth their time. In that case, they could do advisory work as you suggest – or they could fork it over to a super-angel fund. They’d end up paying a 15% in management fees and 20%+ of the profits in carry, but most of the super-angels have pretty good returns and they would get startup exposure for basically a $30K + 20% of the profits cost, and their time is surely worth more than that…
Moving gradually from pure investing to pure advising allowed me to reduce the total amount of capital invested, increase equity percentages, and make the $120,000 work, despite my early slip-ups. This also, I believe, produced better results for the start-ups.
The reason for the better results is related to a common objection.
Some counsel against pure advisors, the belief being that pure advisors have no “skin in the game.” To address this, start-ups might insist on an investment before advising can be discussed. The logic isn’t bad–that an advisor will do more if they have something to lose–but this argument has never compelled me, and I don’t know many good advisors who are compelled by it.
I feel more compelled to help companies that I have pure advising relationships with for two reasons.
First, if I’ve given a start-up capital, I’ve already given some value. If it’s pure advising, I need to prove my value within the small world of start-up investing or my reputation goes downhill. Second, because my reputation is at stake, I do more due diligence than with pure investments to ensure an excellent fit (their needs + my capabilities) before signing up. Just as important: before offering real equity for advising, a start-up will do likewise, and our marriage–if we get to that point–ends up better as a result.
The start-ups that aren’t great fits, those who haven’t mapped my strengths and weaknesses to their own, look at me, laugh, and ask themselves: “Tim Ferriss wants what?!?”
They’re right, I’m not a good fit. If their desire for me as an advisor is contingent upon an investment, they probably haven’t thought enough about how I’d be able to help (or not help). Either I really can’t help much, in which case I shouldn’t be offered advisor equity at all, or I can really help, in which case they should get me on board with a compelling arrangement for everyone. Start-ups often forgot that the advisor equity vests monthly–advisors still have to earn it or they can be fired.
It’s a hell of a lot of fun advising start-ups with good product and personality fit, even if the companies don’t become the next Google.
But, I do miss a lot of great opportunities by focusing on advising and tight fit. This doesn’t bother me. I haven’t yet lost any money. Rule #1.
Let’s be clear on one point: if you don’t deliver real results for your start-ups, you do not deserve to be an advisor. If you can’t point to a track record of some sort, you haven’t earned the right to ask for advising equity. Pull out the checkbook and pay your dues.
Picking Warren Buffett’s Brain: Notes from a Novice
Rethinking Investing: Common-Sense Advice for Uncommon Times
The Tim Ferriss Show is one of the most popular podcasts in the world with more than 900 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.
Comment Rules: Remember what Fonzie was like? Cool. That’s how we’re gonna be — cool. Critical is fine, but if you’re rude, we’ll delete your stuff. Please do not put your URL in the comment text and please use your PERSONAL name or initials and not your business name, as the latter comes off like spam. Have fun and thanks for adding to the conversation! (Thanks to Brian Oberkirch for the inspiration.)
176 Replies to “How to Create Your Own Real-World MBA – II”
Thanks for the post Tim.
Judging by all the start ups your in your a busy man.
Great stuff as usual! Now time to execute…
That’s all true. This is the new ballgame of MBA-ing.
Will follow these bro. Thanks for the tips!
I had a funny thought that once I complete all of the things listed in these two posts I’m going to print out a certificate and mail it to you to sign as Dean of the Tim Ferriss School of Management.
That got me to thinking about how real experience is far more important than a slip of paper saying you’re ready for experience, which I believe is one of your points.
Is there a space through which ‘advisors’ can be found??
Angel investment and venture capital are huge industries, thus making it easy to at least know where to look.
Advisors are not easy to find at all. I’d argue that GOOD advisors are much more difficult still. Advice (from as many quality advisors as possible) at the start is far more valuable than investment, as you power yourself up with a broadened perspective before looking for investment (meaning you can combat arguments/problems that you may not otherwise have forseen).
To round out your list of seed accelerators don’t forget Sam Yagan’s (OkCupid) Excelerate Labs in Chicago
Thanks for sharing this info Tim, I’ve been interested in Angel investing ever since reading your book. This will help me get started. Time for me to get to work on this!
Great post, Tim. Thanks for all the tips – I’m enjoying this little “MBA series.”
Hi Tim, I enjoy your blog, writing and thinking, and enjoyed this topic as I’m interested in VC and start-ups generally.
I would love to hear you talk more about your non-profit activity, and perhaps make more reference to social enterprise, social innovation, and social entrepreneurship. While tech developments and investments are often facilitating transformative social change (netbooks and cell phones may do more to help the poor in developing countries than decades of aid did) innovative business models are required to harness these tools to really change the world. It seems the tech community is generally still more interested in making money entertaining wealthy consumers than empowering those for whom technology itself remains beyond their reach. There are reasons for this, but investment pioneers are moving beyond these constraints — as with SOCAP10 in San Francisco.
Given the general priorities you’ve specified for your life through your writing, it seems these issues are of interest to you as well, and I think there is an audience for more of your thoughts on these subjects. Social enterprise, impact investment (vc and private equity designed to optimize social returns as well as financial), and related ideas are emerging trends that aren’t getting as much coverage as they deserve.
Thanks for the great writing!
Wow, another great article. Puts more doubts in my mind about the value of staying in university though :S
You forgot to mention http://www.venturehacks.com/ there is real community of angel venture capital investors and entrepreneurs.
They’re outstanding. Many of the links in this post are to them, and I linked to them in Part I. Naval and Nivi are great.
After last week, I had been wondering how you were making it through all of these angel investing opportunities without losing a good bit of money (i.e. 9 out of 10 you mention above). So, I appreciate you defining the advisor role in this week’s post. It actually sounds more exciting to be an advisor. You are brought in to get results or you get out; kinda like an Old West “hired gun”. Excellent and informative Part II tonight; I’m learning a lot in these posts.
Like the disclaimer.
I really like this series, and I just started your book, finally got around to it (been sitting on my table for months).
But, I have to ask, why focus this series around angel investing when, if I read the terms of being an “accredited investor” correctly, the majority of people will never be able to do any angel investing?
It certainly is interesting though! Thanks
Being an investor isn’t something that can be learned at school !
Thanks for sharing it,
As some one who is in the process of planning/brainstorming my new venture(even though its primarily offline), the advise regarding investors/advisors/VC’s are good and very useful!
You make Angel Investing sound fun – thanks for the post Tim. You’re blazing a trail and simplifying for those who follow, which is always appreciated.
I am begining to evolve my advisory portfolio into a blended advisory/angel investment portfolio; and the thoughts and the math/numbers really helped me check/verify some of my own assumptions and calculations on this subject.
On the subject of Super-Angels… what are your thoughts on them and would you be part of one? Would you even consider setting one up (I’d be interested!)
Thanks for the comment!
I don’t yet believe I know what I’m doing. Perhaps once I have several more exits, and if I maintain a good lose:win ratio, I’d consider it, but probably not. As for the super-angel funds, I would just say this: be very careful! Never forget what you’re dealing with (as I know you don’t): highly speculative start-ups. No matter how you roll them up or rename them, that’s the underlying asset (or liability, as the case often is).
The other issue is that most of them are invite-only, so it’s usually impossible to sign up as an LP if you aren’t known to the angels. For the learning process, I’ll be focused on making my own mistakes for a bit longer. The rest of money effectively goes in the mattress 🙂
All the best,
Tim – that’s an impressive list of “Start-ups”; there are even some I’ve heard of! 😉
Also love the idea of investing time, in conjunction or parallel with money – enables you to contribute and show your interest, rather that just throw money and walk away.
I really like the fact that you are shedding light on alternative means of educating oneself.
I personally believe that spending money on bootstrapping your own business(es) is a much more worthwhile endeavor as it surely leads to more value and productivity than participating in a game as [relatively] mutually disadvantageous as professional angel investing.
Nonetheless, on the whole, I’m a big fan of this 2-part post for questioning traditional education and promoting real word education.
“I have never let schooling interfere with my education.”
– Mark Twain
Tim, very sorry to ask you this invasive bureaucratic technicality, but I am curious about how is the legal structure of it all in your case?
I mean, have you created a legal entity (You Inc.) company that you own 100% and THIS company will own the equity of all the startups and eventually bill for some advices (as a service provider) or is it actually you, Mr. Ferris, who becomes a minor partner of each single company?
Jus wondering here about tax planning and legal organisation of it all…
Best and thanks for the clearest explanation I have read so far about real life investments!
Most are personal, and a few are through a C-corp. Since it’s not a “fund” with limited partners, it–based on my counsel–doesn’t matter as much.
Be sure to get your own acccounting and legal counsel!
Thanks Tim. A really great article. I appreciate how much time it must have taken to write, well done. As an entrepreneur I was always interested in moving into angel investing, and your blog post will help me do that. I suspect I’ll refer back to it over and over. Thanks again and God bless.
Excellent work. This is the real Tim.
It would seem that angel investing is a lower stress, higher return way to put your capital to work, and that it can absorb quite a bit of capital without overstretching the investor.
I suppose as you start working with larger sums you will need to move towards VC?
Before I read this article, I figured it made more sense for me to stay focused on my own companies throughout my career. To continue working in my area of expertise and passion, and invest surplus capital in something like real estate that could be handled by competent people working for me.
Now that I’ve seen second-hand yet in great detail how angel investing can continue leveraging one’s passion and expertise while also putting one’s capital to work, I’m much more open to a hybrid approach.
I see Tim’s substitute-MBA odyssey less as a one-off education and more as a reasonable next step from the muse phase. After this article, the continuum from muse entrepreneur to Warren Buffet isn’t as obscured by imaginative failure.
Well done, this goes into what I wanted to learn! Though I had heard yet that CEOs of big companies are often not the most skilled advisors… I know a startup which has two of this kind on their board, but not invested in equity.
A note on MBA part I – I consider my postgraduate study in finance also as something I could have taught myself (with respect to the content), but the social network any MBA study at Wharton/Stern/HBS etc. can provide you with (if you engage with the people), is almost priceless. This comes close to what you mentioned about your location in the valley, which gives you a lot of private information. The same applies for an MBA, the question at this point is of course why someone decides to study for an MBA. Anyway, good post – keep up the good work!
music to my ears
As someone interested in finding these “3-5 bad-ass advisors” to fit in with my startup, it’s easy to rule possible advisors out based on lack of previous start-up experience but what I want to know is……
When does an advisor have TOO much on their plate to be of use? When involved with 20, 30, 100 start-ups? While it may be a perfect fit, how can we be sure we aren’t taking on a serial-advisor, who has diluted their time beyond usefulness. Sure, they can be fired a few months down the line but then you’re back to square one.
Same with investors, while they may invest what WE think is a good amount into the pot, we might be a teeny fraction of their total investments. How do we stay on their radar and get the help, intros and possible benefits that may come with their help.
Basically, how do we ensure we are the kick-ass start-up that folks want to ‘invite for beers’?
@Michael Banfield – My thoughts exactly… I’m pretty sure I would have skipped university all together knowing a lot of the stuff I know now
But all this *advisory* work seems like, with everything else, it would push us beyond 4 hours per week, no?
Most definitely, but keep in mind: the goal of 4HWW was never idleness, and I make this clear in “Filling the Void.” I’m spending my time on exactly what I want to spend my time on, and having a blast. That’s what I want to encourage people to strive for.
Thanks for the comment,
Great explanation of the whole process Tim. Makes me think twice about all the cash I’ve dropped on business education. One point though – not sure if I agree with Naval’s tip (given the point of the article). If you hand over your cash to a super-angel fund you’re not gonna get the educational benefit (in my opinion).
Thanks for awesome insight on angel investing ….
I also liked the idea of Naval Ravikant … can you tell us more about “super-angel fund” or ask Naval to write about it.
Also where do I find these super-angel funds? or which are the most reputed super-angel funds?
As much as I think this series of posts is valuable and interesting, calling this process a “Real-World MBA” is a mischaracterization. While there should be lots of study, discussion, and work on entrepreneurship and investing in an MBA program, that is only a small part of it in my experience. I fear that this series of posts gives your readers (at least those that are not familiar with the ins and outs of MBAs) the impression that this is what most programs are all about.
Enjoying this little series and your financial experiments. I think your onto something with a startup around thats lets comic book lovers read their favorite issues online. Thanks for the play by play of how your breaking it down and redesigning the MBA world of investing.
Great post Tim, solidified my opinion that when starting/creating a business for a monetary reward (as well as for lifestyle, love and all the other reasons), there are two options, build it up slowly, using your own or family/friends investment with a view to either create a dependable income slowly, or to sell with high ownership. The other option being hitting for the fences and creating a business who’s end goal is sell/IPO with a much smaller ownership but the reward of a huge payoff in a much shorter time period if all goes according to plan. The second requiring a track record of successful start ups and technical knowledge of the market you’re entering into.
*A question though, as a young student (21) / entrepreneur what options are there for start ups that have a good chance of a 4x return on investment within 3 years, but the investment needed being relatively small, say £80,000 overall. Is angel investing still an option? With a business of this size I wouldn’t want to give up a huge portion of it (especially as it’s a partnership) but family/friend investing really isn’t an option either.*
@Justin Popovic: As a student myself I think the lessons learned/contacts made while in university are worth the investment, there’s nothing stopping you from starting a business while you’re still learning there and worst comes to worst you have a credible degree to fall back on if your first start ups don’t succeeed.
P.s. Where is the collab article with Alwyn Cosgrove? Was looking forward to that!
This is a great series. The important thing to remember about real universities though, is that most of what you learn happens at the bar, on the couch, or in the men’s room. The quality of students is more a determining factor in your education than the quality of the professors. There’s few substitutes for being jammed in a series of rooms with similarly minded people 24/7. Is it worth 60k? Depends on the people you meet.
As a real estate investor, it’s interesting to take a gander at the other parts of the investing world. I find that at it’s core, investing is investing and investors are investors, regardless of what you choose to invest in. They have the same key questions: What’s the investment, what’s the perceived value of what I’m investing in, how did you arrive at this value, how much control do I have and how soon do I get my money back? Also, every investor has their own particular standards in conjunction with industry standards. For example, most professional rehabbers will not take on a project unless they make at least $30k on the deal. That isn’t an absolute rule, but it’s pretty standard, especially when you’re dealing with seasoned professionals.
You spoke about being careful not to take money from unqualified investors (what would we would call unqualified lenders). I see it in my own business constantly. We work with individuals who want to fund deals or who want to buy our real estate deals, but mentally and/or financially, are not ready. Most times, it’s a matter of mentality, lack of risk tolerance and the understanding that as an investment, there’s risk involved and it’s not a guarantee. As a result, they want us to give them the investing education they themselves should already have. Their lack of knowledge and confidence can lead to a mental breakdown out of their fear of losing their money. I have wasted precious time working with individuals like the “dentist” you spoke about, trying to put deals together, not realizing that I was not dealing with a professional who understood the game as well as the potential rewards and risks.
Recruiting like-minded individuals with valuable expertise is huge too. Only bring on additional people when they bring something of GREAT value to the table. Don’t recruit partners or investors just for the sake of having them and thinking that it’s an inherent part of the start-up process. These guys MUST bring quality knowledge, legwork or money. Otherwise, they’re taking up space and slowing you down.
Also know what YOU bring to the table, whether you’re an investor, advisor or founder. Knowing your strengths and track record and believing in your ability to see results gives you added negotiating power/leverage when you sit down to hammer out the contracts. I once had a realtor tell me to go pound salt when I presented a short sale offer to him. At the time, I was new to the business and didn’t know as much, so I didn’t realize the realtor HAD to present the offer. But, I knew he would ask me why I thought I could handle such a deal. I had my pitch ready to go, knowing what I was good at and what he needed to hear. After my 30 second pitch, he was more than happy to work with me. My confidence and knowledge earned me respect and the right to play.
Good luck to my fellow investors! It’s a great world to play in.
However, a decent MBA covers more then “just” investing and entrepreneurship : finance, accounting, logistics, hrm, ict, law, ethics…
Not interesting for you? Well, it all depends.. who do you want to be? A multinational CEO? CFO? CIO? An angel investor? An advisor? The next president?
I’m sure that there are 1001 ways to reach the top (whatever that might be for you), with or without an MBA. Just do your own thinking, dare to be different, connect with the right people, take action, be confident etc.
By the way, in your previous post you based your opinion about a business school on one students vision. Maybe you should have talked to someone else too, instead of just that hot girl 🙂
Anyhow, thanks for the post. And good luck Tim.
Many of the better classes and speakers out there are available publicly. One of my favorites is http://ecorner.stanford.edu/podcasts.html (Interviews with venture capitalists as well as founders). Many classes from the bigger tech oriented schools are available for free on the web as well. You can watch most anything from MIT http://ocw.mit.edu
Tim, when you invest in a startup, can you sell your interest to another investor, if you want to cash out or need the money?
I see some potential in some of those websites that you invested in. But for taskrabbit – I see that very difficult to execute.
I wish you would had wrote this about 5 years ago. My oops cost me over 500K.
Great last couple of posts on schooling. You made me rethink a goal of mine to pursue more knowledge through school-based education. I already have the plans set to reinvest that money in real-life education that will be much more gratifying and cost-effective.
I’m so jealous about you working with Graphic.ly. I have to ask, are free comics one of the perks?
Excellent info, as always, Tim.
I was checking out some of the companies you are involved with.
iMarket Services link does not actually go to the company, and a google search yields in the number one spot a website that is a one page summary.
Is that the right company? http://imarketservices.com
What do you think is the best way to calculate a valuation of an early-stage company that is experiencing accelerated month to month growth (in sales and/or profits)?
It seems that Foodzie is the only company you’re investing/advising in that engages in re-selling physical products. How did this fact play out in your decision to get involved with them? Are you concerned by the Deck Template’s quesiton #10? http://venturehacks.com/articles/deck (Describe any competitive advantages that remain after the competition decides to copy you exactly.) Why or why not?
Thanks for your insight.
Awesome post guys. I have a traditional MBA from a major university and I can honestly say the real-world thing is just as important (and a lot cheaper…).
Also, being an investor was also never even mentioned in my MBA.
Been following you for a little while now. I have a great idea on a needed online service that is not currently being offered. Any advice on who I can bounce this idea off of? Not looking for investors or money, just feedback on whether I should scrap the idea or not.
Thanks tim, after my next venture (which im not talking about) goes public this is something i’ve been looking into doing so any help will do.
Very powerful stuff here Tim. You certainly know how to get a group fired up about your latest interests. I can’t imagine a better way to stay on your game and continue to grow, than working with 10-20 startups.
But my question is, on the othe side of Helen’s, how do you have time to add meaningful value to that list of 19+ startups, especially while still enjoying mini retirements and seeing the world? There must be a point of diminishing returns on your time and enjoyment at some point.
What’s your 80/20 for startup advising/investing?
Excellent post. Keep em coming!
Thanks again for great content. The offer stands from part one, but I just had a huge (personal) revelation after reading this one and comments…I don’t want to be an angel investor! I am totally certain that I don’t have the skills or the investment stomach for it right now! Craziest feeling ever for me as i’m usually the, “Go for it!” type. Wild…Love it.
Excellent and inspiring stuff. Please keep posting more 🙂
Awesome post. I am part of a “revolution disguised as a University” and we focus on lifestyle design in a big way.
We are primarily focusing on empowering people to become world changers to seed ecological and social regeneration. To do that in today’s world, they need to be business minded and self actualized.
We are also quite focused on generating funding options for start up ventures (albeit ventures that often times have fairly low financial ROI)…so your advice here is a great window into the world that many of us have shied away from.
I am curious to hear your thinking about applying this kind of business acumen to ecological and social ventures.
Co-Founder Financial Permaculture
As alternative of MBA, I would definitely prefer angel investing.
And I want to “grow up” to be an angel investor (perhaps more for women business). It is the best way to keep learning & investing (from what I read your blog). And I even like it more than other types of investments. Sounds more responsible .. and fun.
Now, I am still in incubator for more business & life experience. Would love to get help from angel investors.
Can’t wait to be one soon!
This is really informative stuff and a great follow-up to the first post.
Three quick questions if you have the time!:
1. You mentioned you look for technical founders … do you mean they’re coder/engineer types (with a tech-y product) or just tech-savvy?
2. You’ve stated previously that you really only wanted to invest in opps in the SF area…it seems like that has changed with your investment in DailyBurn. Why so?
3. For those of us operating companies outside the Valley, where might you suggest finding advisors, not investors? Do these folks naturally evolve from volunteer board positions, or should we look specifically for such characters.
(Off-topic comment!) I think we need to buy some of your books for the local PA libraries where I now live. I’ve had your revised edition on ILL request for (no-kidding) three months! I’ve already read half in Barnes and Noble. I own the first one. 😉
You mentioned angel super funds…what are some of the better known/trusted ones out there for smaller investors to get into the game. Thanks for the great post Tim!
Thanks for part II, I was looking forward to more. Would you agree that it is a bit easier to get involved with this circle of people once you have a best selling book? I’d be interested in a case study of someone who doesn’t have a network like yourself yet.
Thanks Tim – very timely, once again.That’s all 🙂
Where do I find angel investors?
Anyone please feel free to answer this.
Tim great post! I have invested in two companies to date. A barbershop chain and a financial services company. I could have used some of this 2 years ago. 🙂
2 questions. I love your litmus test that you give for so many reasons. Recommending that they test something, and if they wont or dont you cut them or the investment. I am just curious could you give some examples of that for Tech related start ups and non tech start ups, lets say a barbershop. I would love to know what those are in more detail.
Also after funding and being a part of two start ups myself one thing I am curious on is, exiting before buy out. In one of our companies we are currently getting ready to break apart because the owners could not get a long. Before you get into a deal do you look for a way out before buy out? What if you decide half way through you dont like somebody? Do you see that in current agreements. I know you can always buy out shares but have you seen a clean way to do that.
Thanks for what you do.
MBA is more than investing:)
Since it appears difficult for the majority of people to become an “accredited investor,” I was wondering if you had any alternative methods for acquiring the necessary education to angel invest. In particular, I’m thinking of what jobs – part-time or otherwise – might help one to acquire this knowledge, without the risking of capital (which for many people, at any rate, is initially beyond reach).
Tim, you are a very good writer, and are generous with your knowledge.
But man, cumbersome to write he/she? Are you that effing lazy? That argument is sooo 1980s. Please grow a set and make your fingers type the additional three characters so that you can avoid coming off like the arse of a horse.
As I’m sure you know, an MBA is much more than learning what to invest in, how to create a successful start up, how to find investors, etc. I guess what I’m struggling with here is your title of the article has nothing to do with what an MBA teaches you. You’re sharing fantastic information. But it’s not real world MBA information.
@beatty I think he meant that it makes the prose cumbersome.
Although this is a ridiculous linguistic dilemma. Why haven’t we come up with a gender-neutral pronoun yet?
Yeah, I am wondering the same thing. 😉
Anyway, thanks for a great piece Tim. You are the man who inspires people to achieve success. 😉
Tim, reading about these giant amounts of money being thrown around is pure inspiration. It only makes my goals seem smaller and more reachable! My side businesses are, by comparison, tiny but bring me closer to total freedom. Automated, passive income has become my #1 focus. It took several reads of your book to get the lighting-bolt-to-the-forehead wake up call I needed. All of my time and energy is now directed at creating and maintaining ‘multiple streams of income’, which also happens to be the title of the first book written on the subject.
Tim –You should think about doing an alternative MBA program in the future like Seth Godin did. I think it would be pretty sick…
Another fascinating post and a real insight into not just your world but the wider sphere of angel investing.
Reading through the post and the comments above though, what strikes me above everything else, is that at the heart of so many of these businesses is a core group of passionate, like-minded individuals who don’t just have a clear vision but perhaps most importantly, understand how to communicate it.
For the technology sector in particular, this has been a real barrier in the past, where the focus has been on the product or service, as opposed to the problem it solves. Smart angel investors often pick up on this early on and address it.
Where does communications advice fit for your investments, Tim? The lessons learnt promoting 4HWW must be pretty sought after, right?
PS – thanks for all the advice in 4HWW. The blueprint is being rolled out!
It’s key. If they can’t sell me in 5 minutes or 5 paragraphs in email, they won’t be able to sell to customers, investors, or partners. Clarity and conciseness are paramount.
Oh man, this is great information! I’ve pitched some ideas before, and through this and the first real life MBA post some questions (that I didn’t even realized I had) were answered. Awesome.
Hey Tim, my name is Mohamed and I’m a huge fan of your book and I’m halfway through and already implementing your methods. I work a flexible commission job that’s netting me roughly $25 to the hour plus other incentives. I’m also getting expertise in some other areas. Recently I took time off from college, I’m 20 years old and I was undecided on majors since last semester, but I will go back in January to do something I value. This time off has allowed me to read up on your book and cultivate myself through your ideas and lessons and I’ve started weight-lifting, now I do it 7 days/week. I’ve accomplished more personally in a few weeks of my off-time than 20 years of traditional schooling and lifestyle patterns. I’m well on my way to creating my own call center or a technical business of that type. I’m also taking a 30-day challenge that I’m working towards now, and one of the steps is to find a mentor. I would love nothing more than to go under your wings. My email is mentioned on this comment, you shall find me if you need me. Thank you for your time.
Congratulations on your growth, Mohamed! As you might guess from my advising list, I’m at capacity for mentoring, but there are thousands of impressive entrepreneurs at your finger tips. You’ll find one.
Best of luck,
This sounds like some excellent advice, and I think its great that you readily admit to deferring to the people who already have a proven track record. It seems in most anything, its best to get a solid base in what’s already out there, and then apply your unique skills to innovate as an individual.
Awesome article! I think its great that you readily defer to those who have a proven track record in the industry. It seems with most things, its best to get a stable base in what’s out there, then apply your unique skills to innovate in that industry.
I own several successful businesses and you just painted the way on what to do with them. My partner & I are the forces behind the biz.
Thanks @Tim for a excellent post.
lol, it’s interesting how you added “zero deaths” to your margin of error.
Tim, in your earlier writings you mentioned that you learned Mandarin. was this for school, business, or fun? Would you suggest a university to learn this language or a place like Language Door (off site language center)? or perhaps Primsleur or Rosetta? I just picked up your book today “4hr work week” and can’t wait to start. thanks
As Cameron Herold said at TED: “Our MBA programs don’t teach kids to be entrepreneurs. They teach them to go work in corporations.”
The homepage for thelaughbutton.com (http://www.thelaughbutton.com) is not loading. You can get to subpages of the site (http://thelaughbutton.com/watch, etc.) if you know the URL of the subpages.
Just thought you’d want to get the word over to iMarket.
Thanks, Michael! I”ll let them know…
The homepage for The Laugh Button is not loading. You can still get to the subpages (/watch) if you know the URLS. Just figured you’d want to pass word along to iMarket.
Long time lurker/reader, first time poster.
I swear I saw a guy who looked exactly like you pulling out of a gas station on 148th on Wednesday.
Then I saw the license plate and thought it might actually be you 🙂
If you’re in town much longer I’d love to get my book signed and buy you a glass of wine.
Have fun on your travels.
You mentioned under your rules that ‘If it’s a single founder, the founder must be technical. Two technical co-founders are ideal.’
By ‘technical’ do you mean they’ve written the initial site code themselves?
I’m curious if the founders of companies you look at have to write the initial code themselves or if you are okay with founders who are semi-technical and have outsourced the heavy lifting and focused on marketing?
Strong Post. Thx
Semi-technical is OK as long as they bring something valuable to the table (like major client relationships, etc.). Someone who says “I have a great idea and just need someone to build it, and I want 50% of the company stock as a co-founder” is in for a world of disappointment unless they have established skills to bring, OR if they have a technical friend with little interest in fighting over equity (Steve Wozniak comes to mind as such an example). But how many Steve Jobs are there among “business” people? Not many.
In the end, I think you need to understand the building process and be a super salesman if you’ll be asking for “co-founder” status with an engineer, even if it’s your idea.
Make sense? Keep in mind also: I can’t code, so I’m a “business guy” by the looks of it.
That’s an impressive list of startups Tim!
At first glance one would think Twitter is currently highly profitable, but I’ve heard much to the contrary. It seems like only recently has it been more apparent that they are attempting to make money (with things like “promoted” trends and such) Any insight there?
I can’t think of another company that has experienced such whirlwind popularity but not been “profitable” at the same time. But then again, I’m definitely no expert.
Speaking of the 4 hour work week, did I miss something or did you sell your muse?
“A Primer on Angel Investing” should have been the name of the post. Absolutely fantastic, intriguing, and educational post – BUT, your correlation to an MBA is off, imo;)
1) Not many people have $100K ‘to burn’ as an alternative to their likely student-loan funded post-graduate education.
2) Not many people have the credibility (of Tim Ferriss) to obtain investor/advisor roles @ start-ups.
Again, great post with a ton of valuable information. Thanks for sharing!
Maybe you’d like it for your angel life
Hint: It has to do with Pareto
All that advising sounds like considerably more than four hours.
Hey Tim, love the content in this series.
Just started working with a startup here in Durham, NC, a burgeoning startup incubator area here on the east coast.
Would love for you to stop by and visit us sometime here at http://www.shoeboxed.com, always looking for great advisers!
Are you familiar with a lot of the small business service focused startup’s like outright.com and freshbooks.com?
If I had the money I would invest in addition to working for one!
Army Veteran with the GI bill here for a free college education. I have always hated school and dropped out of the university after freshman year to join the service. Now it’s time to go back, my parents say I’m crazy for not wanting to go (free college!) but I hate the fact that my life will soon become a downward spiral of commuting to the cubicle and back.
I have always wanted something more. It’s always easy to have freedom when you have money, but when you don’t have money it isn’t as easy as just generating monthly automated cash-flow. That takes brains many do not possess.
I’m at a stage in my life where I want to travel and grow as a person (22 years old) but see only college and the pressure of my parents to do the normal thing behind me.
I read this book once, called “The 48 Laws of Power”, in which the author states that when the pressure is on and survival is held in the balance, humans can do incredible things. I have considered throwing everything I know and starting the nomadic life outside the U.S. (and possibly in Europe). I want that pressure feeling so I can have the desire to do well. Life is docile at the moment. My parent’s think I’m crazy (for travel and giving up an education) but I want to attack the fear of “not making it” head on and see what happens. Life is too short to abide by the rules of others, but in the meantime I do not have enough experience to know if this is the right choice, or if finishing school is the right thing to do.
I realize this wasn’t the best place for this message, so I am asking for forgiveness after posting this here, in the midst of intelligence from others.
Please share your insight,
For someone who’s just starting a website selling a product or a service (like TaskRabbit for example) what are the questions that need to be answered? What do you recommend to make it so the message is clear and the solution/service is conveyed in the best way? Other than the books you recommend in the 4HWW, what else do you recommend for this sort of thing?
Thank you, Tim 🙂
P.S. Are you ever going to write non-fiction? I like your writing in some of your posts and in the 4HWW, I’d be pumped to read it, considering you’ve done so many things, I bet you can get in the zone and write the most intriguing stories.
Oops, I meant “are you ever going to write FICTION”
I was reading this post and my head is still spinning. It’s tough for us lower life forms. I’m going to digg this post for now and once my neurons start firing again, I re-read the post until I understand it all. 🙂
You mentioned that being able to make a effective 5 minute or 5 paragrah pitch in any industry is important. It is always a challenge to communicate effectively and efficiently when I am pitching real estate deals to private investors. I imagine it takes far more sohpisticate communications skills when pitching for angel investment. Some Level stuff. Again, I bow at your brilliance, Overlord. 😛
Unfortunately, I haven’t heard much of most your start-ups. which one to try first ? I have to say thank you for ruining my schedule for the next couple days as I try out some your start-ups. yes, following you like lemmings. 😛 I’m just a guy who makes silly videos with animoto for my real estate biz and call it “marketing”. Pretty low on man’s intellectual evolutionary chain I am. 🙂
Back to making “marketing” videos,
Wow, Tim! While you are often generous with your knowledge and experience, particularly in your book, this post is a gem of information. I also find value in many of the comments, and some like Lauryn’s are bang on and provide advice between the lines to ‘newbie’ investors – get educated BEFORE you invest, whatever the arena.
Thanks, as always, for the valuable info. that most of us wouldn’t stand a chance of gaining on our own. Someone asked if you would post more about social contribution (my words) and I’d say this fulfills that in a big way, all by itself. There is much to learn and ponder here.
Great post. Education has its place but make sure you know that it will help you before you pay thousands and thousands of dollars for university.
Hi Tim, I love your work!!! I did get an MFA in Creative Writing and subsequently published a memoir and a novel. Let me know if you are interested in a guest post/ideas on how your blog readers can create an MFA equivalent without paying, akin to your MBA equivalency idea. Is this going to be a section in your next book? Also, there are MFA programs that are not exorbitant — UC Irvine’s, I believe, is not expensive, because it’s in the UC system, and Cornell, where I went, is fully-funded, plus you get paid to teach.
I just started reading your book after it was highly recommended to me by a friend… I think it’s awesome since I have already been applying some of the principles that you talk about in the book.
I came out to Vietnam on holiday and ended up staying… since there was more opportunity here and I can travel around the region on the cheap, and with skype, all of my clients back in the states wouldn’t really know I was away.
Then when I started doing a business out here… I figured no MBA school can teach you live experience of doing business in a emerging market. And I was willing to to ‘take a lost’ on my first 2 years since it would be cheaper than grad school. I ended up getting VC funding 6 months into ‘the project’; and while I maybe no longer working ‘4 hrs a week’… but it’s been a great learning experience (i also blog about applied lessons learned).
So I would also recommend… looking at starting or seeding businesses overseas (assuming they have the stomach for it).
Just curious. What are the chances of you investing in a CEO who you’ve met for the first time?
Hey Tim, I’m really glad to have found your blog. I am set right now to attend the Air Force Academy and become a pilot for the U.S. Air Force. While I would absolutely love to fly a plane, I am also very passionate about traveling and going out for wild, crazy, and fun party nights and really just enjoying life and living for the moment.
I am only 16 so I have not yet got a clear picture of everything I want to do, but I have been self- actualizing and improving my self a lot. I have bought your book but haven’t read yet, however, I have an idea of a life of passion and excitement every day like you and not just working all the time. Do you think the Air Force would be a good way to do that? They do pay for both college degrees( MBA and doctorate), but for the second question: to live the ideal life- are those degrees even necessary?
Thanks for all the advice Tim. I love your transparency and honesty.
Great advice and insight Tim, as always. I’m not sure if I’m in the angel investing stage of my career yet – but this has been bookmarked for future reference! 🙂
I feel a bit sorry for the guys waiting on the exit that never comes and are not diversified (unlike you). IE. either an angel who has all of his or her money tied up in one investment or even more so the entrepreneur who has spent the last few years endlessly working on his “baby” for the exit that never comes… that has to be devastating. That’s why I’m much more a fan of cash flow emphasized in the here and now (ie. your supp company) that can still be sold later (exit)
Thanks for answering the coder vs. tech-inclined question @Joe and I asked, Tim. I kept logging in each looking for the answer! 🙂