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Reading Notes

Lucky or Smart by Bo Peabody — “Smart Enough to Realize I Was Getting Lucky”

I’m smack in the middle of a personal challenge to read at least one book every week. The erudition section of this blog is my attempt to chronicle my challenge and galvanize a lifetime of curiosity and learning. If you have read any of these books before, or happen to pick one up and find it interesting, I’d love to hear your thoughts too.


Lucky or Smart by Bo Peabody

Remember Tripod.com? You know, back in the dinosaur age of the internets, when only the über-smart and curious intellectuals (read: nerds) were the ones who ventured into the land of dial-up? Yeah, I was there, and I’m pretty sure I had a “homepage” on Tripod.

Well the guy behind Tripod, it turns out, was a kid—Bo Peabody. After nursing Tripod as a pet project through college, he hired hippie programmers to wrangle the code that he himself didn’t know how to write. Supervised by his economics professor, Tripod.com began as a how-to site for-and-by college students. As soon as he unleashed the code monkeys, however, they transformed it into a publishing platform, allowing anyone with an Internet connection to create their own personal homepage.

Fast forward six years. Peabody sells his company to Lycos for a reported $58 million in stock. Rock on.

Categories
Reading Notes

The Millionaire Fastlane by MJ DeMarco — See the Process Behind the Product

I’m smack in the middle of a personal challenge to read at least one book every week. The erudition section of this blog is my attempt to chronicle my challenge and galvanize a lifetime of curiosity and learning. If you have read any of these books before, or happen to pick one up and find it interesting, I’d love to hear your thoughts too.


The Millionaire Fastlane by MJ DeMarco

First, the bad: MJ DeMarco isn’t an elegant writer, nor is he particularly scholarly in the way some business-minded people are. Just take a look at his blog where he posts videos of himself sitting poolside in his mansion, wearing a backwards ball cap, and seriously discussing the parallels of a supermarket conveyor belt and business strategies.

DeMarco also seems to be a lucky dot-com millionaire. He started and sold a limousine chartering website for both limo rental companies and individuals looking for limos. Now that’s a pretty good gig, considering how most people looking for limos are also either looking to spend a bunch of money on a special occasion, or have a bunch of money to spend regardless.

Categories
Thought

Entrepreneurship Risk

From Summation by Auren Hoffman:

Entrepreneurs tend to be street-smarter than strategy consultants. Entrepreneurs are more practical, more focused on the bottom line, and more attuned to real-world contingencies.

A typical strategy consultant job interview might go something like this:

“I toss a coin. Heads you win $10,000. Tails you lose $6,000. Do you play this game? Why?”

And a typical strategy consultant answer would go something like this:

50% chance I win, 50% chance I lose. So my decision calculation goes something like:

Winnings: (0.5) * $10,000 = $5,000

Loses: (0.5) * $6,000 = $3,000

My net value of this game is $2,000

Therefore, even if I am very risk averse, I’ll still play this game, because I can afford to lose $6K when the payoff is so much higher.

A typical entrepreneur would look at this game totally differently and would ask a series of questions:

1. How do I know the coin is fair? Maybe tails is much more likely to come up. Can I test the coin by flipping it 500 times to see if it is consistent? Do I really want to waste my time performing and recording 500 coin tosses?

2. How do taxes affect my wins and losses? Is Uncle Sam going to take a huge chunk of my winnings but not recognize my losses? Can I only apply my losses to gambling gains? How are state and city taxes affected?

3. Do I have to pay in cash if I lose and do I get cash if I win? If that is the case, are we going to show up at the location with all the money? Will I be secure? Can I pay by credit card to get frequent flyer miles?

4. How can I be sure I will collect from you? Are we going to hold the money in a third-party escrow? How much will that cost?

Auren Hoffman, Summation

It’s interesting to note that Nassim Taleb gives a similar example of the coin toss scenario when discussing the thought processes of The Nerd and the street-smart common-sensical Epistemocrat.

Here, however, Auren Hoffman is describing the typical entrepreneur. I’m sure Taleb (and most entrepreneurs) would agree that, despite the typical risk associated with entrepreneurship, creating your own business and liberating your finances—that is, putting your wealth in your own hands—changes the nature of the question so that you have ultimate control over the amount of risk that you choose to take on. Otherwise, your entire stream of income would be dependent on the decisions of the establishment that hired you.

Picture entrepreneurship like a pyramid, a large base and a fine point on the top; the large base represents multiple opportunities for streams of income. A typical job, however, would look like an inverted pyramid, in which you only have one source of income—the point of the pyramid. If that one source fails, the entire pyramid would collapse on you.