Broken heart v Broken back

A colleague has embarked upon a new property start up over the past 3 years. During this time he has been incredibly successful. Starting and completing many small projects, to deliver what he believed to be a massive profit. In fact, at least double what he could have earned in his previous paid employment (which was at the executive level).

The projects were complete, chickens hatched and it was time to count them. Turns out the numbers didn’t stack up quite that well. Yes it was profitable, at least as profitable as his previous job was. But in truth the sweat and toil was much greater. The net result for him was a broken heart. So much effort, for no real financial upside.

It was time for a sense check. Was it all worth it?

Yes.

His heart may have been broken, but his back is not. The profits did exist, and the learnings were even greater. The mistakes are known and the upside from here is very significant. All too often we let a broken heart beat us, when in truth the only real thing that should stop us is a broken back. We choose the hard road because it is worth it. The toil and truth is part of the profit. And real profits are far beyond anything financial.

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What to spend our money on

The common question we hear is: Are you a spender or a saver? It’s the wrong question. Any smart person needs to be both. A more relevant question is what is worth spending our money on, and what things should we resist the temptation to spend on. Given that any good entrepreneur needs to have an live a lean life, not just in their startups but in their life, I thought I’d throw together a top10 list of what to spend on So here it is:

Top 10 things to spend money on:

  1. Books & newspapers
  2. Education
  3. Annual vacation
  4. Gifts (non lavish) for family & close friends
  5. Sports & exercise
  6. Fruit & vegetables
  7. Comfortable accommodation
  8. Public transport tickets
  9. Internet access
  10. Insurance

These are the things that we shouldn’t even think twice about spending on. They add value to our lives and make us better people. In the long run they pay for themselves.

Things which don’t appear on this list, and things we should make what I call our ‘Considered purchases’.

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Revenue Compression

When chasing new business in startup land or any business for that matter, the time to revenue is more important than the amount or revenue.

It’s easy to believe that a big $500,000 project is better than a little $5000 project.  Maybe the big one takes a year. Maybe the small one takes a week or two.

I say the small projects rule! But before I choose, the questions I usually ask myself include:

  • How long will it take to get the revenue?
  • What is the potential for expensive mistakes?
  • What is the probability that the project will go over the time estimate?
  • Are we paid in time put in or final completion of said project?
  • What level of resources need to go into pitching & winning the project?
  • Will we get more smaller projects after successful completion of the first?

When we answer these we usually find that the $5000 project that takes a week is a far better option than the $500K project that takes a year. And the reason that they are better is that the revenue is compressed.

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If money didn't exist

If money didn’t exist what would we do differently? Let me first remind us what this would mean.

In this imaginary moneyless it would mean: That we all had enough to eat. That we all had a place to live. That we all have equal access to healthcare and education. That we wouldn’t get paid for our work. That no-one gets paid for the work they do, in dollars at least.

It means that we do in during the day has an entirely different perspective. In this imaginary world it make sense that we choose our line of work carefully. The work itself, becomes the thing that matters.

It turns out that this is also the best approach for a world that does actually have money.

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Bees can't fly

A popular story in science folklore is that the aerodynamics of bees suggest that they should not be able to fly. It was hotly debated in at a time when human flight via aircraft was being mastered (around the 1930’s). Because physicists and aerodynamic specialists had started to develop theory of ‘predictable flight’ with machinery, they believed their knowledge applied to all forms of flight.

(Hand drawn by Sarah Cameron)

Of course bees do fly. A bee is very small. And, at that size, air acts as a much more viscous fluid than it does for airplanes and helicopters. So the laws of aerodynamics are quite different for bees and other insects. But it took some time before this was understood and that new theoretical models were developed relative to the size of the thing of flight.

The point for entrepreneurs is important, especially at a time when technology is challenging existing business models. So the next time someone tries to put the kybosh on your new idea or startup remember that based on yesterdays knowledge, bees can’t fly.

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10 years in Tech

A short review of some of the changes in technology in the past 10 years. Who has arrived on the seen, what’s different and new and how Moore’s law is still rapidly changing the world. Enjoy!

10 years in Tech[gigya width=”425″ height=”355″ src=”http://static.slidesharecdn.com/swf/ssplayer2.swf?doc=10yearsintechss-110420214017-phpapp01&stripped_title=10-years-in-tech-7691089&userName=sammartino” quality=”high” flashvars=”gig_lt=1303547808162&gig_pt=1303548077935&gig_g=1&gig_n=wordpress” wmode=”tranparent” allowfullscreen=”true” ]
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Top 10 financial hacks

There is no point being a successful entrepreneur, or selling a startup if we have no idea how to handle the money we get. So here is my top 10 financial life hacks.

  1. Spend less than you earn, no matter what that amount is. The net result is happiness.
  2. Allocate cash to savings & investments before anything the day you get your profits, pay or dividends.
  3. Never go into debt for anything which does not appreciate in value.
  4. The real definition of an Asset: Anything that puts money in your pocket. The accounting definition of an asset is flawed.
  5. Do not trade stocks. Trading makes the broker and tax man rich and you poor.
  6. The greatest financial instrument is ‘compounding’. It only happens when we hold assets, not by trading them.
  7. If you can’t afford a consumer product in cash, you can’t afford it.
  8. There is no such thing as ‘financial engineering’. It was invented by Wall street to trick you.
  9. The best type of share investment is an Index Fund. They are investments in civilization. If that fails, we have bigger worries than our money.
  10. Invest more in education than entertainment & ‘things’ and you will outdo society financially.

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