Month: October 2009

October Book Reviews

I only had time to read two books in October, but they were both interesting and well worth my time.  One was fiction and one was non-fiction.   Check out my reviews from past months here.

SuperFreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life InsuranceSteven Levitt and Steven Dubner.  SuperFreakonomics is a great follow up to the Stevens’ first effort, Freakonomics.  If you enjoyed Freakonomics, you will love SuperFreakonomics.  They tackle all sorts of problems with data, which you hardly ever see in most other walks of life.  Ever since I read Freakonomics, I’ve been fascinated with the way they look at problems and issues and I’ve been reading the Freakonomics blog in the New York Times daily.  In SuperFreakonomics, Levitt and Dubner tackle emergency room safety, the efficacy of child car seats, prostitution and most controversially, global warming.  They also present some amazing history about this history of vaccines, car seats and health care in their trademarked, data driven, but still humorous style.

I won’t ruin any more of the book for you, but there has been a huge outcry from the global warming establishment about SuperFreakonomics’ take on global warming.  Dubner and Levitt say that global warming has become a “new relgion complete with dogma and good and evil.”  They have been proven right because they were immediately criticized by the global warming establishment when the book was released.  I liked the way they tried to bring reason and science back to the global warming debate and move it away from political, religious debates that it has become, but was suprised that they advocated so hard for geo-engineering.

Levitt and Dubner (and I) love to point out that most of our problems come from unintended consequences of well meaning policy decision.  Many times, these unintended consequences could have been predicted ahead of time, but weren’t looked at for a variety of reasons.  They advocate geo-engineering the planet, but don’t take any time to talk about the potential unintended consequences.  There may not be many (but I doubt it), but I was expecting them to address the issue at least a little bit.  That said, SuperFreakonomics is entertaining, informative and well worth reading.

Absurdistan – Gary Shteyngart.  Not many books can make me laugh out loud.  I was on a flight to NYC, reading Absurdistan and trying not to laugh out loud and failed fairly miserably.  Absurdistan is the fictional story about a young, Jewish, fat, son of an oligarch, Russian immigrant to New York City and his trials and tribulations going between Russia, the US and Absurdistan, a fictional country located near Iran.  I read it on the advice of of someone who likes many of the same books I’ve read and wasn’t disappointed.

Shtyngart’s writing is really fun.  He mixes in hip hop references with geopolitical feelings musings that would only occur to a Russian who moved to the US.  One of my favorite parts is about how people in the 3rd world applaud whenever a pilot safely lands a plan “as if it were some kind of miracle”, whereas in the West, people complain about being late and rush to get off.  The section on a Holocaust Museum in Absurdistan is brilliant writing and worth reading on its own.  The books is a scathing critique of just about everything from Russian politics, American foreign policy, fat people and corporations.  While a little slow in places, each chapter has at least a gem worth finding.  I recommend reading this book if you like history, politics, different cultures and good writing.  As a bonus, after reading Absurdistan, Oscar Wao and The White Tiger, I now know how to say a certain part of the male anatomy in Russia, The Dominican Republic and India.

Paul Graham’s Newest Essay is a Must Read

I’ve never written a post solely telling readers to read someone else’s work, but Paul Graham‘s newest essay called “What Startups are Really Like” is so good I’ll break my rule.  Graham is the founder of Y Combinator, a company that funds startups and gives them guidance, money and a community for to help them start their startup.  Graham emailed all of the founders of the companies Y Combinator has funded asking them what was the most surprising thing about their experience:

I’m in the unusual position of being able to test the essays I write about startups. I hope the ones on other topics are right, but I have no way to test them. The ones on startups get tested by about 70 people every 6 months.

So I sent all the founders an email asking what surprised them about starting a startup. This amounts to asking what I got wrong, because if I’d explained things well enough, nothing should have surprised them.

He took the most interesting responses and wrote an essay reacting to it.  If you run a startup, are interesting in starting one or are just interested in what entrepreneurs go through to start a company, this article is a must read.  Pretty much everything he says rings true to my experiences and would be advice I would give, so I will just let it stand on its own.

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Don’t Be Afraid of Competition

I just got back from a trip to New York.  While I was there, I met with a promising entrepreneur who has a great startup that has been pretty successful so far.  He is in the middle of expanding his business nationwide.  We came upon the topic of competition and how to deal with it.  I realized that many people have some misconceptions about competition.

My advice was “don’t be afraid of competiton.”  I learned this lesson when I was running ExchangeHut and talked about it at last year’s Entrepreneurial Deli event in Madison.  While we were running ExchangeHut’s trading platform for college students, our biggest fear was that Facebook would launch a marketplace that would crush our competitive advantage.  When we heard that Facebook was launching its marketplace, we changed big parts of our strategy to react to the new competition that had yet to launch.

Big mistake.  When marketplace first launched, it was fairly useless and was not a competitor to our business.  We had changed some of our bigger plans because we were afraid of competition and did not expand as quickly as we had planned because of it.  Our competition did not hurt us.  My point is that you never know if your competition will actually be successful.  If you have a great idea, don’t immediately change your plans if you hear about competition.  Execute on your ideas and let the chips fall where they may.  If your idea is good and you execute well, you will be successful.

Another point on competition:  Don’t be afraid to get in contact with your competition.  This isn’t t say that you should tell your competitors (or the world) every last detail of your plans to conquer the world, but you should be on good terms with the other people and companies in your space.  We found that it paid off to get to know the other startups that were in our market.  We talked to just about everyone in our market.

We even ended up being able to work out some great deals with competition because we were on good terms with them and they knew we existed.  There really is no downside to being on good terms with the others in your market.  You never know when a great opportunity will present itself to you or one of your competitors that will be beneficial to both of you.  Plus, if you plan to start another company, these contacts will be valuable later.  If we had been afraid of competition and not talked to them, we would have missed out.  Moral of the story: don’t be afraid of competition, get to know them, but don’t tell them everything!

Every Startup Needs a Mentor Team

Every startup that wants to succeed needs a mentor team.  These mentors don’t have to be a formal board of advisors, but they should be a diverse group of accomplished business people, lawyers and professors.  They don’t have to be experts in the area you are starting your company, but it would be useful to try to find one person who is.  You should be able to call or email them anytime you are stumped on a problem you are trying to deal with.  You should also be able to meet with them every 1-2 months to give progress reports and talk through your business.  Ideally your core team should consist of 3-5 people, but even 1 mentor is a huge help.

It’s important to have a mentor team for a bunch of reasons.  First, your mentors will be able to bring an outside perspective that isn’t as close to the business as you are as the founder.  Its amazing how many problems someone smart who is a little removed from your business can solve.  Second, having a mentor team builds credibility both with others in the business community like potential partners and customers and with potential investors.  When I look at startups, if the founder doesn’t have a mentor team, I start to wonder if their idea is any good or if the founder is totally committed.  Sort of like a partner, if the founder can’t find someone to like them and their idea enough to be a mentor, there might be something wrong with the idea or the team.  Third, mentor teams provide valuable insight into areas that founders many not have experience.  Whether its a tax question or how to approach investors or how to present to a partner company, people who are smart and have been successful before usually are able to help you out.

My mentor teams for my businesses have consisted of a lawyer, successful entrepreneurs, professors.  For my current company, my partner and I joined the MERLIN Mentors program here in Madison to add to our existing network of advisors and mentors.  If you are starting a company, see if there is a program like MERLIN in your area.  It is a great way to gain access to mentors who can help you succeed, especially if you don’t have an existing network.  If there isn’t a program, email interesting professors you find online or in your area.  Write a business plan and enter into a business plan competition.  Join LinkedIN and see if you have any connections who might be able to help you.  Ask your friends and family if they know anyone who might be interested in listening to your ideas.  Not only is it easier than you think to find a good mentor, it’s also one of the most important things a startup can do.  It doesn’t even cost any money!

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