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A Babson MBA originally from China now living in California.
I was sitting in the monthly meeting of Boston Harbor Angels, a leading angel group at Boston area that hosts monthly meeting at Babson College. The meeting is invitation-only but they give guests invited by Babson or other members opportunity to audit the meeting twice. For those of you from Babson that wants to enter VC industry then remember the managing director of BHA is a Babson MBA alum, Aleksandar Mollov.
So during the meeting I had talked with couple of angels about the current status of angel investment in China and their take for investment opportunities there. Feedbacks are:
Candida Brush, Director of Blank Center for Entrepreneurship at Babson College
- Usually angels invest around $20K-$50K of this group, how much money you want to raise from agenl investors may bring a lot of investors to deal with
- Should talk to Professor
Jeffrey E. Sohlis Director of the Center for Venture Research and Professor of Entrepreneurship and Decision Sciences at the Whittemore School of Business at University of New Hamphsire - Resources: Angel Capital Association and Angel Capital Education Foundation Ben Littauer, Founder, President, and CTO of Baranof Software 1990 – 1997. Self-funded, profitable from year two. Sold to Tally Systems. - Angels want to be close with their portfolios to be actively involved so China is too far away - Angels want to leverage their knowledge/network for their portfolios but few angels have intl. experience - Regulation risks? For US foreigners invest in oversea and in China? - Your advisory board will be as attractive as the fund and GPs Others I'd talked to include: Ronald Murphy, VP of STDMED, rmurphy at stdmed com - We are raising a $50-$100M venture fund now with in-house research & development & manufacture capacity to fund ideas in the life science field Andrew Stern, astern911 at comcast net - "An agressive angel investor" Martin Lowenthal, martin.lowenthal yahoo com - the angel member with the most international experience and background Update of 2008 ACA Summit at San Diego, CA hosted by Angel Capital Association - Angel investors can only succeed with a portfolio including certain number of companies. less than 8 is very likely to loose money, 8-10 is reasonable return, for spectectular return need to be around 25 or more Conclusion? - Angel investors in the US may not be the right group to approach but US angels in China could be the best target |
Reading a nice HBS paper, "The Real Reason People Won't Change",The Real Reason People Won't Change", for my last Negotiation class with Prof. Landry. It's about the psychologic reason why people are not making changes that they committed to. I found out it's very interesting to read it would apply to any startup/entrepreneur very well. The article said:
"
But competing commitments should not be seen as
weaknesses. They represent some version of self-protection,
a perfectly natural and reasonable human impulse.
The question is, if competing commitments are a form of
self-protection, what are people protecting themselves
from? The answers usually lie in what we call their big
assumptions - deeply rooted beliefs about themselves and
the world around them. These assumptions put an order
to the world and at the same time suggest ways in which
the world can go out of order. Competing commitments
arise from these assumptions, driving behaviors unwittingly
designed to keep the picture intact.
People rarely realize they hold big assumptions because,
quite simply, they accept them as reality. Often formed long
ago and seldom, if ever, critically examined, big assumptions
are woven into the very fabric of people's existence.
"And that's why many times people are passing great opportunities for a startup. Because they accept the reality without thinking the possibility to chance it and the potential outcome that change may bring. Actually, this is also why people call successful startup "disruptive". It's not that disruptive in terms of business/service but disruptive because it changed many people's assumption: oh, I have to pay for expensive telephone service to make international phone call. Then with Skype, you do not.
This has the same meaning but just in a different way to explain my belief of "take nothing for granted". If you don't think this way, you may never be able to start a company.
Time flies and we will finish two-year MBA studyat Babson College this May. Well many first year MBAs will start worrying about intern, job and elective classes in second year, following are two-cents from myself and other 2ndyear classmate at Babson College:
- You can drop any class after taking the first one without any penalty.
I strongly encourage you to drop a class if your instinct tells you it sucks. The 1st class is also a chance for the professor to sell his/her course to you. If the professor shows no passion to have you on board, then drop it.
- You can audit many good classes for free
Depends on the professors, some classes you can audit for free though some will say No to you. Typically Adjunct professors are more willing to do so. People I know that allow you to audit are Dhebar(marketing guru), Caspe(adjunct professor, entrepreneur), Charm(finance expert)and Mulvaney(IB expert, formerly VP at CSFB).
- Choose a strategy with focus
If you want to change career, I'd suggest you focus on one industry the whole semester. Then once you learned you don't like it, then you still have one semster to focus on another one. If you decided to go Finance, then better take all financial classes so to give yourself a better picture about how terrible the life is with numbers everyday (right, Jenny...:)
- Your last chance to be crazy
So you still have one wacky idea, now your last chance. If you have a startup dream or trying switch from engineering to consulting, do it in the first semester of 2nd year
- Skills vs. Industry
If you aren't sure what industry to go, best to learn some skills can be applied to anywhere such as data analysis/SPSS
- Job-oriented
Start reading job spec of positions you want to apply right now, then see what you are short of and focus on bridging the gap during 2nd year. A real example is someone wants to go video game from finance so did two independent research with professors on video gaming industry.
- Misc
Independent study is best if you take it as 1.5 credit so you can still enjoy 5 courses along the freedom to do something on your own. Then the key is to choose the right faculty advisor.
It's both good and bad sitting in the class with evening/part-time MBAs. Good for networking through group project. Bad for a poor class participation from those guys (imaging they drive to Babson after office hours..)
Most resources you can have by studying at Babson is OUTSIDE Babson. Harvard/MIT has many great events so never miss that.
If your career goal is difficult to come true, stick to it. Every human being appreciates persistence, courage and creativity. Be it American or Chinese, Faculty or recruiter.
For internship: Do not worry about internship too much ( I know that’s your current status). You can find one in second year very easily. So, maybe a reverse strategy, I mean take some classes in summer and do an internship in fall, is an idea you can consider.
2. For job hunting: lift your ass above chair. Go out and network with anyone who work in your target companies.
3. For study(finance role),
· hard skill is still more important than soft skill in entry and middle level. So, you have to fight with numbers.
· If you take more than 15 credits class in one semester, it’s tough to prepare CFA at the same time (except IB background).
There are a few questions to be clarified. Or, put in a more intuitive way, what's the definition of "$3M"? I will not take it as a "why $3M instead of happiness" question but how you can identify opportunity, build blocks and monetize it effectively?
First of all, the key question is how much are you willing to challenge your own comfortable zone. 99% of the time, your current comfortable zone is unlikely bring you $3M, be it an engineer or researcher or an ordinary office folks. Some suggestions here, like trading stocks, have slimiest chance IMHO because you are not leaving your comfortable zone enjoying today. Talk is always talk but walk is more difficult. Y!Combinator founders get it and so do those student entrepreneurs applying. Say you found an idea here to make $3M? So what? I challenge your courage to actually give it a try, human being!
Secondly, are you talking about $3M in cash or something equivalent else? For example, does publishing an article in Science worth $3M? Maybe that will land you a great job in an early life science venture. Does the fact you know Steve Jobs or Jintao Hu (China president) personally worth $3M? Does the fact you get into Stanford or Harvard CS/MBA program worth $3M? It all depends on how you can effectively monetize those resources. Ethically, if you will.
At last, I think there are many many ways to make $3M. The catch is most people just don't have enough patience to work for 5 years, assuming you have the courage to try it for 6 months. Oh, forget about 5 years, say 2 years. It's almost irrelevant about what your idea is and/or what industry are you win.
So let me give you some alternative way in 5 yrs:
- focus on helping highschool students implement their biz ideas for 2 years as a volunteer=>start investing some 2-grand-check for interesting ideas in 2 years and start following up=>see if can harvest in 5th year. (for those who believe balance of life/work is good and want social responsibilities...)
- writing blog to discuss opportunities about localizing Silicon Valley ideas in China context for 2 years=>start being invited to be panelist in some local or China conference as a domain expert in yr 3 and start writing your 1st book=>publish yr book in yr 5/being hired as VP/GM in China for SV companies (for those who cannot leave current job but still speak Chinese well. You can also copy this to other countries if u speak local language.)
- Working hard at current job (assuming many are at good high-tech companies in California), always asking yourself does your work worth the paycheck you got, proactively making extra contribution for the company (extra mile is always appreciated, esp. when it's free for the benefactor, a.k.a, your employer/boss) for 1 years=> as many people just live in a 9-5 life, you should be able to stand out now and being promoted to lead something and your reputation is start circling around in year 2/3=> you become a star employee and new start up start knocking at your door to have you on bard as the No3 employee in year 4=> choose the right one, well-funded or most promising. Regardless your stock option, the fact you are VP at a top VC funded startup may already bring $3M.--
On Wed, Apr 16, 2008 at 12:38 PM, ieeestd802 <ieeestd802@yahoo.com> wrote:__._,_.___I would like to kick a serious discussion.
For an average (smart and hardworking) person, what are some
practical ways to make 3 Million$ in 5 years ?
For practical, I means, with probability > 10%
The following are some of ways I can think of, please add your lists:
1. Start a company, hopefully, it will have a good exit in 5 years
2. Join the ¡°next Google¡± either as an early employee
3. Switch career to investment banking industry, make money on Wall
Street
4. Become a senior VP or CEO of some companies (not every one is
qualified for this, but I listed it here anyway).
5. Go back to China and get into its real estate business (not sure if it
is too later)
This is for a serious discussion. I am sure many people are thinking
about the same question (how to reach financial freedom in reasonable
time frame). We can discuss different options, and pick the best routes
suitable for ourselves.
Please, add your comments.
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__,_._,___
Li Hong
MBA Class of 2008 Candidate
Babson College
http://www.linkedin.com/in/lihong
http://hong-in-babson.blogspot.com/
http://www.fabricegrinda.com/?p=358
Greg Galant at Venture Voice just started a new series where he asks former show guests a question. You can find my answer to his first question below and on Venture Voice.
The first time I had to raise money was for Aucland, a copy of eBay for Southern Europe which was my first Internet startup. I was lucky not to have to raise seed money. While in college at Princeton, I built a company exporting high end computer equipment to Europe (motherboards, memory, CPUs, hard drives, etc.). Given its profits, I left Princeton in June 1996 with $50,000 in cash.
When I joined the McKinsey New York office as a consultant in September 1996, I ran a sophisticated real estate rent versus buy model. The model and my rule of thumb analysis (see Rent … unless you want to buy) were screaming BUY! I bought a large 1 bedroom apartment on 54th and 2nd for $115,000, putting $25,000 down.
With the other $25,000, I bought 4 stocks: Yahoo, Microsoft, Amazon and Intel. When I decided to create Aucland in July 1998, I sold the 1 bedroom apartment for $185,000. I sold all the stock I owned. After taxes, I was left with around $300,000 in cash. I invested 100% of it in Aucland.
The seed money was used to assemble the core team, build the product, launch the site and start marketing the product. During that entire process, I was aware that given our ambitions and the competitive market we were in we would need a lot more capital. The problem was that I knew nothing of raising money. I knew what VCs were – I had read about them in Forbes and Fortune, but that was about it. I searched online and most sites suggested writing a business plan and provided a few samples. Being an over-achieving former consultant, I promptly put together an 80 page business plan with an extremely sophisticated financial model. I dug out the phone number and email addresses of numerous VCs and started emailing them the business plan and calling to get meetings.
I did not get a single reply to my emails. Finally, a French VC took my call. We had a great rapport. He loved the idea and seemed to love the team, but was distraught by the size of our ambitions. He had never heard of a French entrepreneur wanting to raise $9 million. I knew American VCs did $5-15 million series A rounds. This VC (and the French VCs I met afterwards) did not want to invest more than $1 million. They wanted us to focus on the French market and the valuation they offered was ridiculously low.
As I had met all the major French VCs at that point and was getting nowhere, I decided to focus on execution. Our competitors were mostly run by tech people who did not have a clear sales and marketing strategy. I duplicated eBay's organization structure creating category managers for the main categories who convinced stamp dealers, wine collectors, etc. to list their items on Aucland. As a result we launched with more items on auction than all of our competitors.
Simultaneously, we started promoting Aucland in the press. Our press launch was poorly attended. No one wanted to hear an inexperienced 24 year old speak about an Internet company. Many doubted the Internet would ever take off in France given the prevalence of the Minitel. However, I was convinced we had a great story to tell. I called dozens of journalists, none of whom wanted to meet me. I told them I just wanted 5 minutes of their time and that I would go to their office. This was relatively unheard of in France where journalists were usually not treated well by companies. As I suspected, the story of a young Frenchman going to the US to pursue his education and learn the ropes of business only to come back to France to bring entrepreneurship and the Internet was extremely compelling. Each 5 minute interview became a 1 hour interview which in turn led to a glowing article in the press. Each time a journalist sent me a question about the auction market, I would send them an entire article back within minutes. Because of the word of mouth effect in the journalistic markets, I rapidly became the go to entrepreneur for questions on the Internet auction market at first and then for the Internet market as a whole.
As we started getting traction on the site and attracting amazing buzz and PR, the Internet bubble suddenly inflated in the French market. In the spring of 1999, we started being approached by American VCs and newly created French venture funds. I had a fantastic rapport with one of the American VCs. I liked them, they understood our business and I was leaning towards closing a deal with them. At that point, in June 1999, I received a call from Bernard Arnault, the richest man in France, on my cell phone who invited visit him at the LVHM office.
As I sat down in his office he told me: "Mr. Grinda: You have a unique opportunity to create the eBay of the rest of the world. We will give you the human, financial and industrial resources to guarantee your success. In order to show you our commitment to your project, we will offer you twice the valuation and twice the investment that you have received to date. However, to show to the world that this is a strategic project for us we want 51% of your company."
I had already met his team from Europ@Web, the venture fund he had created, and I had hated them. I actually really liked Arnault, but hated his minions. They struck me as petty and jealous with no fundamental understanding of the Web or of the business we were in. For a few days, I thought long and hard whether to choose the American VC or Arnault. My instinct told me to go with the Americans. Logic seemed to dictate to go with Arnault given that he offered much more money and that had resources in Europe to help us.
In the end, I chose to raise $18 million from Europ@Web, a decision that was eventually our undoing, especially when combined with all the mistakes we made as first time entrepreneurs. At the time, it was the largest raise in the history of French venture capital.
The times were very different from the way they are today. Things had become so crazy that around the time of the closing we started receiving unsolicited term sheets by fax from VCs I had never even talked to! Today, I know that VCs don't read 80 page business plans, they just don't have the time, and that a 10-15 page Powerpoint is the norm (see Fund Raising 101). I also realize that the Europ@Web model of taking 51% of the companies they invested in makes no sense. It creates too many conflicts of interests between the investors and the entrepreneurs. Today, if anyone wants the majority of my company, I have the good sense of cashing out a part of my shares and making sure there are clearly defined scenarios for an exit.
Despite the eventual outcome, all in all, it was a fantastic experience. I am extremely grateful to have been at the right time, at the place with the right skills to have been able to live through it all – the ups, the downs and all their lessons!
At last, Forrester recommend you:
Make registration optional. Shoppers may not want to establish an ongoing relationship with every company they buy from on the first visit. By requiring registration, firms will drive these customers off the site and into the hands of competitors. Making registration optional allows firms to close as many sales as possible online but still offer incentives and a streamlined ordering process to customers who are ready to step up their level of engagement with the firm.
Explain the benefits of site registration upfront. To persuade customers to register, firms should describe in detail the benefits that come with an online account. Conduct primary research with target user groups to align registered-user features with the things those specific customers find most valuable. For example, NikePlus.com lets visitors know that if they register, they'll be able to join virtual running challenges, visualize their runs, and track their progress toward long-term running goals.
Reassure customers that their data is safe. Customers want to know — before they provide personal information — that the data will be protected.(see endnote 1) Firms should include a short description of both their privacy and security policies at each step of the registration process that asks for personally identifiable information.(see endnote 2)The Center for Information Management Studies (CIMS) at Babson College cordially invites you to our next workshop on
Thursday, May 8, 2008, entitled Emerging Technologies – Follow the Money.
More details can be found at the following link or copy and paste the URL into your browser:
http://cmweb.babson.edu/execed/pdf/CIMS050808flyer.pdf
To register, please call the CIMS office at 781-239-4531, or email
We are online at www.babson.edu/cims
We look forward to seeing you!
Cathy Schaus, Administrative Assistant
Center for Information Management Studies (CIMS)
Babson College, Babson Park, MA 02457-0310
phone-781-239-4716 fax- 781-239-6416
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Thank you again for your kind support!
Rilik Research Team
Li, Eason, Tina, Ying.
Babson College