The Big Winner

July 31st, 2008 by admin

Edward Lampert is a billionaire who set a record as the first Wall Street financial manager to exceed an income of $1 billion in a single year. Even more amazingly, he was once kidnapped (!) and talked his way out of it:
Lampert was convinced he was going to be killed, he says in his first public comments on the kidnapping case. “Your imagination goes absolutely wild. I was thinking about my mother and my son and my wife. What would their lives be like? Would it be painful when they shot me?” In the adjoining room, he recalls, the television was switched on to the news about the search for the body of Laci Peterson. But as the kidnappers became increasingly nervous, Lampert convinced them that if they let him go, he would pay them $40,000 a couple of days later, the source says. The hoodlums let him off on the side of a road in Greenwich early on that Sunday morning and were later arrested and convicted. Lampert arrived home to a house full of friends who had been camping out, waiting for news. “It was very much like going to your own funeral,” he says. He was soon back in Kmart negotiations.

I found a great post on the Street Capitalist blog featuring advice from Eddie Lampert gleaned from interviews with the successful investor. His value investing approach is very intriguing and possibly stems from his study of Warren Buffett’s moves. Some quotes:
* If I was looking at The Washington Post in 1973 or ‘74, could I have made the investment Buffett made? Can I understand what he saw?
* I liked the idea of buying something at $30 if it’s worth $60 as opposed to buying it at $59 to sell at $60.
* We have always invested on the basis that whatever we buy, if the stock market was shut down tomorrow, we’d be happy owning the position for the next five years.
* We basically ask one question: Is the price at which we are buying the business attractive relative to its long-term intrinsic value?
* The reality is that when I find something I really like, I don’t normally sell it. That said, there are three possible reasons to sell. One is if the facts have changed adversely — if the economics of the business have deteriorated, if the people running the business have left or are no longer doing a good job. Second is if the price just gets to a point that the valuation is so high we think it is unsupportable and exposes us to the risk of a permanent loss of capital. Third is if there is a better alternative investment, but the burden of proof is always on the new idea.

Source:
http://www.streetcapitalist.com/2007/10/16/learning-from-eddie-lampert/

July 30th, 2008 by admin

Time Magazine has a profile covering the leadership strategy of the legendary statesman Nelson Mandela. Even better, the article is written by managing editor Richard Stengel, an individual who rose to a position of power himself. Some of my favorite media pieces occur when successful people interview other successful people or analyze the roots of their success. The eight points are:

1. Courage is not the absence of fear — it’s inspiring others to move beyond it
2. Lead from the front — but don’t leave your base behind
3. Lead from the back — and let others believe they are in front
4. Know your enemy — and learn about his favorite sport
5. Keep your friends close — and your rivals even closer
6. Appearances matter — and remember to smile
7. Nothing is black or white
8. Quitting is leading too

Source: http://www.time.com/time/world/article/0,8599,1821467,00.html

July 29th, 2008 by admin

Mark Shuttleworth of Ubuntu Linux fame recently gave a presentation on creating an amazing software experience at the O’Reilly Open Source Convention.

Some of his major points were:
* Design and usability are incredibly important in terms of taking open source software to the next level.
* Everything should be crisp and clean.
* Selling services is one of the best ways to generate revenue for open source projects.
* Software provides incredible opportunities: “There have never been better opportunities to create wealth, better opportunities to change the world.”
* Predictable release cycles are significant in helping open source software gain greater prominence and usage.
* Software projects should develop innovation pipelines and use agile programming techniques.

Source:
http://www.thestandard.com/node/110409

July 28th, 2008 by admin

Rafat Ali recently sold his blog holding company ContentNext for $30 million.

VentureVoice did an interview with him, which covers some of the following topics:
* Teaching yourself about new topics while starting a company
* Using word of mouth advertising techniques
* Starting a company during a recession
* Financial management for entrepreneurs
* Generating revenue
* Attracting venture financing
* Developing structure
* Growing the business
* Dealing with competitors
* Exiting through an acquisition

Source:
http://www.venturevoice.com/2008/07/rafat-ali-paidcontent.html

July 27th, 2008 by admin

Mark Zuckerberg, the CEO of Facebook, recently gave a presentation on the future of the company and Alley Insider liveblogged the conference:
http://www.alleyinsider.com/2008/7/live-mark-zuckerberg-at-f8

I’m excerpting some of the major points that relate to setting strategy for an innovative company.

On enforcing standards for third party developers:
* Make decisions based on their track record rather than isolated incidents.

On copycat competitors:
* Sometimes it’s better to work with similar companies, but if it is a complete copy then it’s fine to go after them.

On finding a company purpose:
* It can be important to travel and go to new surroundings in order to clear your mind (the destination was Istanbul, in Zuckerberg’s case).

On creating compelling content:
* By empowering other people to share, you enhance the capabilities of your site.

On feeds:
* News feeds and friend feeds lead to a virtuous cycle of sharing.

On nurturing developers:
* It’s a step in the right direction to make your ecosystem available to developers, but you really need to provide additional support to truly make your platform a major player.

On decentralization:
* Decentralizing applications and allowing individuals to share them on other sites leads to powerful rates of growth.

On creating great applications (from Ben Ling, Director of Platform Program Management)
* Great applications should be”
Meaningful (social, useful, expressive, engaging)
Trustworthy (secure, respectful, transparent)
Well designed (clean, fast, robust)

July 26th, 2008 by admin

Xobni is an email software startup that raised millions of dollars and was rumored to be an acquisition target for Microsoft. Led by former Yahoo VP Jeff Bonforte, it’s one of the hottest companies in the world right now. Gabor Cselle, the VP of engineering recently left. From many accounts, it seems like an amiable departure.

The CEO posted a great comment on TechCrunch that provides some great insight into managing top employees:
http://www.techcrunch.com/2008/07/23/a-xobni-executive-leaves-the-red-hot-startup-but-why/#comment-2418072

Here’s a couple great quotes from Bonforte:
* When Gabor came to me, I gave him the same advice I would give everyone that has worked for or with me, “Your work is a choice not an obligation. Do what makes you happy. If the company can do something to make you happier here, great, lets do it, but if not then that is ok too. We will all survive.”
* We can all second guess if someone would have stayed somewhere they might have made more money or not, but in the end, we should all do what we want to do in life.

July 25th, 2008 by admin

CNBC’s Julia Boorstin recently interviewed Facebook CEO Mark Zuckerberg and the following site has an embedded video of the interview (it’s at the bottom of the page):

http://www.cnbc.com/id/25830866

Some interesting points from the interview:
* The new site design allows to display more recent activity with friends.
* The site is focusing on sharing and pushing content towards others more efficiently.
* Facebook is trying to reward developers that build applications that help users share information.
* The company constantly tests ads to find the best placement.
* Facebook Connect is also focused on sharing. I’m detecting a theme here : )
* Facebook is not necessarily designed to generate revenue at all costs. It is more focused on growing the ecosystem and developing the customer experience first and foremost.
* Since the company is privately owned, it is insulated from certain pressures.
* Everyone in the world is a potential customer who can get value from the service.

July 24th, 2008 by admin

I’ve made the point on this blog before that the best of the best think big. They think big in business and they think big in philanthropy. They do what no one else has done in business and they go on to tackle the largest problems in philanthropy. They also know the power of forming alliances with one another to increase their capabilities by a massive order of magnitude.

“Gates, Bloomberg pool riches to fight smoking”
http://www.boston.com/news/nation/articles/2008/07/23/gates_bloomberg_pool_riches_to_fight_smoking/

Aside from the discovery of penicillin, this is probably one of the biggest accomplishments in the history of health.

July 23rd, 2008 by admin

The following email from Microsoft CEO Steve Ballmer has an interesting perspective on how business leaders think about strategy:

http://kara.allthingsd.com/20080723/microsoft-ceo-steve-ballmers-full-memo-to-the-troops-about-new-reorg/

Naturally, Ballmer probably isn’t revealing all his cards since this is only an all-employees email rather than a close meeting with his closest advisers. It is still an intriguing message from the leader of one of the largest companies in the world.

His priorities are:
1. Invest in the right opportunities;
2. Expand our presence with Windows, Office, and developers;
3. Drive end user excitement for our products;
4. Embrace software plus services; and
5. Focus on employee excellence.

It’s fairly straightforward stuff, though he does go into greater detail on each of these points.

July 22nd, 2008 by admin

JotSpot was a software company that is now part of Google after an acquisition by the legendary firm. Formerly the president of the large search company Excite, he later started the enterprise Wiki maker JotSpot.

Here’s an interview that I found from 2006:
http://susanitsa.wordpress.com/2006/11/08/the-joe-kraus-qa-better-late/

Interesting points:
* Large technology revolutions start as do-it-yourself movements.
* Potentially huge markets exist that involve taking something technical and making it accessible to nontechnical individuals.
* Your company has won when its products are an invisible and seamless part of customers’ everyday experience.
* Your business model should be under development, like a software beta.
* Instead of building a company with the intention of selling it, focus on building a company that can survive as a sustainable enterprise. Be open to an acquisition. Just don’t make it your primary focus.