Entrepreneur Myths (45 page)

Stock Subscription Agreement
– an investment document provided to investors that outlines the equity of the investment and its terms.

Swarm Management
– to manage a business by allowing employees as a group to help make business decisions in a swarm-like manner.

Sweat Equity
– the contribution of the entrepreneur’s time, work effort and intellectual capital in a venture.

Term Sheet
– an investment offer memorandum of the deal structure offered by investors.

Voodoo Finance
– when an entrepreneur supports their financial numbers based on some bullshit metrics they pulled out of their ass. Usually the assumptions are flawed and outdated to back the financial model and its numbers.

Vulture Capitalist
– common term for venture capitalist most often used by inexperience entrepreneurs who don’t understand them. The new term is “cheetah.”

Toyota Productions System (TPS)
– also called Just-in-Time or lean manufacturing in America. Why the different name? Well, the American consultants had to name it something else to get the credit for the revolutionary idea and charge large consulting fees.  A manufacturing system developed by Taiichi Ohno and Shigeo Shingo.

Venture Fundable
  – refers to the capability or probability of a company being fundable by a venture capital fund due to meeting specific metrics like (1) venture operating in a large market, (2) experienced management team, (3) high potential sales growth, (4) high potential ROI, etc. A company may not be venture-fundable if it has too small a market, or is a lifestyle company where entrepreneurs can make a great living but the ROI of 10X is not there for a VC.

Whatever
– this phrase is a semi-polite way of saying “fuck you,” “fuck off” or “fuck that.” This meaning is dependent upon the context in the sentence and tone of voice. But you know its applied meaning the moment it is spoken to you.

Chapter
Notes

Entrepreneur
Myth 2:

¹
Peter Thiel was interviewed by Tech Crunch about the higher education bubble. It’s a must read for any entrepreneur. “Peter Thiel: We're in a Bubble and It's Not the Internet. It's Higher Education”, by Sarah Lacy, Tech Crunch, April 10, 2011.

Entrepreneur
Myth 7:

²
“The Groupon IPO, Who Owns What,” by Jason Kincaid, Tech Crunch

Entrepreneur
Myth 8:

³
Argentina National Soccer Team: one of my favorite teams to watch, besides Brazil, Serbia, Croatia, Spain and The Netherlands.

Entrepreneur
Myth 25:

⁴
You can play You Don’t Know
Jack online at http://youdontknowjack.com

Entrepreneur
Myth 30:

⁵
Entrepreneur Survival Guide
, by Client Success Group, Inc.

^{6 “}
SAI Chart of the day: Why it's hard being an early stage investor right now,” according to Fred Wilson, Business Insider, by Jay Yarrow, June 22, 2011.

Entrepreneur
Myth 45:

⁷
“Trump on Trump: Testimony Offers Glimpse of How He Values His Empire, by Alex Frangos, May 18, 2009, Wall Street Journal.

⁸
Disney acquired Pixar for $7.4 billion on January 24, 2006.  Disney value was $27.2 billion at the time. Using simple math, Mickey on its own was not as valuable as Toy Story and friends because Disney consists of substantial amount of properties.

⁹
It’s nearly impossible to predict sales. I know I’ve said that I discount all sales projections 50 to 75% in a startup, but I actually discount it to $0 unless you have previous sales history. So, I lied. I’m sorry.

¹⁰
In addition, the acceleration sales curve will indicate the multiple of the sales revenue of the venture. There is no formula, but the rule of thumb is 3X.

Entrepreneur
Myth 57:

¹¹
SAI Chart of the day: 'Why it's hard being an early stage investor right now,' according to Fred Wilson, Business Insider, by Jay Yarrow, June 22, 2011.

Damir’s Recommended
Book List

Out of Control: The New Biology of Machines, Social Systems, & the Economic World
by Kevin Kelly

This book will change your way of looking at the world. And yes, you are not in control no matter what you think.

http://astore.amazon.com/entrepreneurdex-20/detail/0201483408

Bionomics: Economy as Ecosystem
by Michael Rothschild

Every entrepreneur needs to read this book. It's genius. You'll be humbled by its brilliance. It will change you forever.

http://astore.amazon.com/entrepreneurdex-20/detail/0805019790

Natural Capitalism: Creating the Next Industrial Revolution
by Paul Hawken

This is the Bible for Green Business. A revolutionary book even today.

http://astore.amazon.com/entrepreneurdex-20/detail/0316353000

The Tipping Point: How Little Things Can Make a Big Difference
by Malcolm Gladwell

This is the bible when it comes to understanding anything viral.

http://astore.amazon.com/entrepreneurdex-20/detail/0316346624

The Web of Life: A New Scientific Understanding of Living Systems
by Fritjof Capra

I've read this book twice and still want to read it again.

http://astore.amazon.com/entrepreneurdex-20/detail/0385476760

Complexity: The Emerging Science at the Edge of Order and Chaos
by M. Mitchell Waldrop

Running a company is chaotic. You can learn much about management from this book.

http://astore.amazon.com/entrepreneurdex-20/detail/0671872346

Toyota Production System: Beyond Large-Scale Production
by Taiichi Ohno

Forget Henry Ford. The real genius behind manufacturing and operations is Taiichi Ohno. Must read for operations of any business.

http://astore.amazon.com/entrepreneurdex-20/detail/0915299143

A Study of the Toyota Production System: From an Industrial Engineering Viewpoint (Produce What is Needed, When it’s Needed)
by Shigeo Shingo

Shigeo Shingo and Taiichi Ohno are absolutely brilliant. They have changed business forever.

http://astore.amazon.com/entrepreneurdex-20/detail/0915299178

Six Thinking Hats
by Edward de Bono

Re-wire your brain and use your six thinking hats to become a better entrepreneur. Most seminal book on how to use your brain.

http://astore.amazon.com/entrepreneurdex-20/detail/0316178314

Developing Products in Half the Time: New Rules, New Tools
by Preston G. Smith and Donald Reinertsen

Must read for any entrepreneur. If you haven't read it, you're losing money and market share.

http://astore.amazon.com/entrepreneurdex-20/detail/0471292524

The Entrepreneur's Master Planning Guide : How to Launch a Successful Business
by John A. Welsh and Jerry White.

The book that started me on becoming a member of Entrepreneurholics Anonymous. I took their class when I was a newbie entrepreneur.

http://astore.amazon.com/entrepreneurdex-20/detail/0132828065

Eco-Economy: Building an Economy for the Earth
by Lester R. Brown

This book will inspire you, depress you and make you want to change the world by becoming green.

http://astore.amazon.com/entrepreneurdex-20/detail/0393321932
Crossing the Chasm
by Geoffrey A. Moore

If you don't read this book, you're not an entrepreneur. This is a classic.

http://astore.amazon.com/entrepreneurdex-20/detail/0060517123

The Machine That Changed the World: The Story of Lean Production
by James P. Womack

One of the most exciting books to read if you're a serious entrepreneur.

http://astore.amazon.com/entrepreneurdex-20/detail/0743299795

Hidden Order: How Adaptation Builds Complexity
by John Holland

Must read for entrepreneurs who manage people. You can learn much from nature.

http://astore.amazon.com/entrepreneurdex-20/detail/0201442302

Cradle to Cradle: Remaking the Way We Make Things
by Michael Braungart

Revolutionary book on changing the way everyone does business. You'll go green afterward.

http://astore.amazon.com/entrepreneurdex-20/detail/0865475873

Positioning: The Battle for Your Mind
by Al Ries

I read it in college. Still one of the best marketing books ever written. Must read.

http://astore.amazon.com/entrepreneurdex-20/detail/0071359168

Wizard: The Life and Times of Nikola Tesla: Biography of a Genius
by Marc Seifer

One of the three greatest scientists and inventors of all time.

http://astore.amazon.com/entrepreneurdex-20/detail/0806519606

Biomimicry: Innovation Inspired by Nature
by Janine M. Benyus