Monetary Policy: The Federal Reserve’s annual Jackson Hole confab has turned into a grumbling session about the failure of the world economy to respond to central bank stimulus. But no one should be surprised.
Fed Chairwoman Janet Yellen’s speech Friday at the bankers’ yearly Wyoming get-together focused mainly on the labor market - her main preoccupation as an economist.
She worries that a decline in unemployment from 10% in 2009 to just above 6% now doesn’t reflect how bad the economy is. And she’s probably right.
While she suggested that the economy is getting “closer to Fed objectives,”…

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Behind in the polls, he’s rekindling class warfare against banks, corporations, and rich people.
The $16.65 billion settlement by Bank of America over financial-crisis-era mortgage securities “highlights a pattern of the government extorting the banks,” Dick Kovacevich said on CNBC this week. (Italics mine.) Kovacevich is the former Wells Fargo chairman and CEO. I’ve known him for years. He ran a great bank. He kept Wells Fargo clean during the credit meltdown. And unusual for a big-bank CEO, he strongly supports free-market principles.

Kovacevich went on to say, “It’s definitely politics….

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“Dude. Go the gym!” is what one of my partners told one of our founders recently. He was stressed out closing a funding round and had dropped his usual routine, but the extra time didn’t help. In fact not going to the gym made things worse.

It’s easy for founders to get immersed in their businesses and not look after themselves. I was close to one company where that happened earlier this year and it was terrible. Bad for the founder and bad for the company. Bad enough that we are thinking about how we can add life coaching to the package of support we offer to our portfolio companies.

A couple of days ago Steve Blank wrote about his personal experiences with burn out. He was working hard and doing well, and the praise made him work harder still. And then he crashed. Here are his lessons learned:

  • No one will tell you to work fewer hours
  • You need to be responsible for your own health and happiness
  • Burnout sneaks up on you
  • Burnout is self-induced. You created it and own it.
  • Recovery takes an awareness of what happened and…
  • A plan to change the situation that got you there

Great advice. That said, I think you can find people to tell you when you are frazzled and should slow down a little. Husbands and wives can do that if you bring them into your startup journey. Mentors can also be a great help.



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The history of the John Hancock Tower in Boston is quite colorful, to say the least. Begun in the 1970’s skyscraper boom, there were problems really from the start. In trying to lay the foundation, retaining walls meant to keep Back Bay’s unstable soil from intruding weren’t up to the task, creating damage throughout the local neighborhood. Even historic Trinity Church was impaired, as the transept part was nearly collapsed before the deficiency was discovered and repaired at some great expense for John Hancock. The building’s windows were overly prone to detaching and falling to the…

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Screen Shot 2014-08-20 at 17.44.29

As you can see from the chart above only 3% of mobile app developers are making more than $100k per month/$1.2m per year. Assuming the same power law applies as monthly revenues scale further it’s a fair guess that only 3% of that 3%, i.e. 0.1%, are making $1m+ per month or $12m+ per year. That’s one in a thousand making enough to be interesting as a VC backed startup. Not great odds.

And it’s getting worse. The latest news is that app downloads are decreasing. The average Brit has downloaded 1.8 apps to their phone, down from 2.3 a year ago and 31% of smartphone owners have no third party apps on their phone at all (up from 20% last year).

The trends show that developers are still increasingly favouring apps over web technologies, but I’m thinking that might change soon. Maybe it will become easier to make money on the mobile web than from apps. It doesn’t seem like that’s a high bar.

The chart above came from Vision Mobile State of Nation Q3 2014 which you can download for free here (registration required).

 

 



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My partner Dharmesh Raithatha wrote the post below on the Forward Partners blog earlier this week. I’m reproducing in full here because it’s a great explanation of our solo-founder hypothesis and how we work more generally.

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Are you a solo founder with an idea? We believe that we can help you create a successful e-commerce company better than anyone else. Here’s a case study of how we’ve helped Snaptrip.

HOW IT STARTED

Snaptrip started as an idea, an excel spreadsheet and a passionate founder called Matt. We met Matt for a casual coffee and the chat quickly turned into a follow up meeting and subsequent investment.

Matt was a second time entrepreneur who had a wealth of experience in the holiday lettings industry. His hypothesis was that consumers were moving towards last minute bookings and there was a gap in the market.

With no team and no technical expertise Matt was planning to find a team and build out some product before starting to raise some seed money. Our unique model allowed him to get started straight away.

USER RESEARCH

We help founders develop a deep understanding of the problem so that they don’t have to rely on gut alone.

We worked with Matt to design interview questionnaires and coached him on interviewing technique. More importantly, the team paired with Matt throughout this understanding phase to share the insight. Talking to customers doesn’t seem very difficult but learning how to intuitively ask open questions, deviate from a script and synthesise the information gathered takes practice.

Our neutrality also provides a nice counterweight to a founders confirmation bias.

THE PROCESS OF GOING OUT AND REALLY UNDERSTANDING THE USERS NEEDS AND PROBLEMS GAVE ME ABSOLUTE CONFIDENCE IN THE CONCEPT AND WAS INVALUABLE FOR THE SHAPING OF THE PRODUCT AND OFFERING. IF I MEET ANYBODY WHO IS STARTING A COMPANY NOW THAT IS NOT UNDERTAKING THE PROPER VALIDATION, I TELL THEM THEY’RE MAD, NO MATTER HOW GOOD THE IDEA IS! – MATT FOX

CONCIERGE MVP

The Concierge MVP means taking care of initial customers with the attention that a personal concierge would provide at a top hotel. It allows you to launch with a minimal product and provide an amazing service to your early customers while learning even more about their needs and wants.

Most of our early seed companies have used the Concierge MVP to accelerate insight which have led to better business and product decisions.

Matt really embraced this and we put his phone number at the top of the site and really encouraged customers to phone or use livechat to get in touch. Snaptrip is a weekend and evening business so the demands on your personal life can be quite high.

The beauty is that you get  real transactions with a minimal product and customers who are ecstatic with the service provided.

MATT AT SNAPTRIP DID AN AMAZING JOB TRYING TO FIND US SOME LAST MINUTE ACCOMMODATION IN NORTH DEVON. THE ACCOMMODATION LOOKS STUNNING, A PERFECT LOCATION OVERLOOKING WOOLACOMBE BEACH, LOOKING FORWARD TO A RELAXING 5 DAYS IN MY FAVOURITE PLACE. THANK YOU SO MUCH MATT, I WILL DEFINITELY BE USING YOU AGAIN AND WILL RECOMMEND TO MY FRIENDS. – TRUSTPILOT REVIEW.

THE DYNAMIC BETWEEN FOUNDER AND TEAM

With our investment studio model we are covering new ground so how we best work with founders is something that we think about everyday.

For example, will the founders rely on us too much and will it impact follow on investment for the companies?

So far we haven’t found this to be an issue. In the early phases the founders soak up as much as they can from the experts in the room and as the business grows they need less and less of our support.

The timing often depends on previous experience, key hires and the growth of the business. But it has happened in every single instance.

In the early phases Snaptrip would often have the whole team working on the company. Whereas as hires come on board and the product develops our involvement has scaled down to more of a mentoring role and for tactical projects.

FINDING A COFOUNDER

Our solo founder hypothesis doesn’t mean we don’t believe that having a strong founding team increases the chances of success. We definitely do, we just think that for solo founders our model leads to better outcomes and opens up a larger talent pool.

Our talent team was able to source a list of potential candidates and Matt approached them directly for a chat. At this stage Matt had funding (albeit tranched), a solid understanding of the problem, a product and early transactions.

This gives massive credibility and opens up a much wider list of interested candidates.

Matt interviewed a number of candidates and the ones he liked we also interviewed to give him a sanity check.

Matt now has a awesome technical co-founder in Dan who has relevant industry experience from 8 years at HomeAway and post IPO left to run his own holiday lettings startup.

When Dan joined as co-founder the dynamic definitely changed for the better. Snaptrip felt more solid as a team of founders who both had sector expertise. It also meant that some members of our team could pull away from the day to day startup work and move to giving strategic advice while we focussed on the newer companies.

Snaptrip works better with 2 founders, with both Matt and Dan fighting for each other 24 hours a day.

PREPARING FOR FOLLOW ON FUNDING

Snaptrip is nearing the end of its 12 months and our investment team is helping Matt prepare his deck and introducing him to potential investors.

We believe that Snaptrip has a really great future ahead of it and we are really excited that we could help Matt get his idea off the ground.



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Every day, individuals make decisions — some of them little and unimportant, others hugely important and life changing. Over the course of their lives, people make countless decisions about careers, education, relationships, investments, and places to live. Many of these decisions involve an investment of time, money and effort, and some of them inevitably turn out to be mistakes that need to be undone.
It would be rational to evaluate the outcomes of all past decisions exclusively on their expected future payoffs and costs and not on the past, which should be irrelevant. Reality proves…

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At Forward Partners we have been thinking a lot recently about the qualities that we like to see in our people – our values if you like. One of those is to be “creative, adventurous and open-minded” and as we flesh out what that means we’ve been musing on how creativity works within our portfolio companies. We back great entrepreneurs with great ideas, so we’re not focused on the original eureka moment, but rather the way they find creative solutions to challenges as they arrive.

In western society we have this myth that creativity comes from lone geniuses, but in reality it’s hard being creative on your own. Some people are better than others, but most clever ideas these days come at the nexus of existing concepts and the genius is in bringing them together rather than dreaming up something out of nothing.

When creative solutions are required to solve day to day problems that arrive in startups (do I know what my customers want?, where can I find my first 50 customers?, why aren’t my leads converting?, what should my brand be? etc.) the best solutions come when the following elements are present:

  • A framework that helps us understand the problem
  • People who can bring insight from solving similar problems elsewhere
  • A process for teasing out solutions

And, of course some smart people.

 



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Anyone trying to harm the governor of one of the most successful states in America might take guidance from one of Saul Alinsky’s Rules for Radicals. One of the rules was “Pick the target, freeze it, personalize it, polarize it.” Go after people, not institutions. Alinsky may be the best explanation for the indictment of Texas Governor Rick Perry. Why go after Rick Perry? Perry, governor since 2000, might run for president in 2016, and Texas has been one of the most economically successful states. As a laboratory for democracy, Texas has created every liberal’s worst nightmare: a prosperous…

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Achieving a secure retirement is a complex endeavor. Working-age households are charged with saving the right amount to enable a similar standard of living in retirement as that enjoyed during their working years. Upon retirement, households are faced with another daunting challenge-turning their accumulated wealth into security and spending down their wealth in a way that allows them to deal with a host of risks such as uncertain health costs, the risk of outliving assets, and variable returns to both financial assets and housing. Ultimately, a sound retirement means adept choices about…

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Chris Dixon crowdsourced this list of future platforms for innovation:

  • Virtual reality
  • Internet of things
  • Wearable computers
  • Cryptocurrencies / blockchain
  • Self-driving cars
  • Drones
  • Brain-computer interfaces
  • 3d printing
  • Augmented reality
  • Open data
  • Synthetic biology
  • Satellites
  • Injectibles
  • Nanotech

Platform may not be an appropriate descriptor for everything on the list, but it’s a good list none-the-less. At Forward Partners we are laser focused on early stage ecommerce for now, but that will run out and at some point we will change to a new area and it may well be one of these. Timing will, of course, be key. Being too early to a trend is as bad as being too late.



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What we are witnessing in the spreading turmoil around the world - in Iraq, in Ukraine, in Gaza - is the silent rejection of a central tenet of U.S. post-World War II foreign policy: that global prosperity would foster peace and stability. Countries would rather trade than fight. Promoting economic growth would suppress the divisive forces of nationalism, ideology, religion and culture. So we thought.
It’s an idea with a long pedigree in American thinking, going back to at least Thomas Jefferson. The purpose of free trade, he and his followers believed, “was not merely to promote commercial…

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In the U.S. labor market today a battle is being waged over the purpose of a job. One might think the point of a job is that the employer needs tasks completed and is willing to pay someone to perform said tasks. However, a fierce challenge is being mounted to such an idea and the outcome is currently uncertain.
According to Obamacare, jobs are supposed to be a vehicle for providing health insurance. According to a push for paid sick leave around the country, jobs also exist to help support workers even when they do not work. According to those pushing for a living wage, or at least a higher…

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Failed Keynesian policies have blocked growth.
John F. Kennedy campaigned for president in 1960 by belittling Dwight Eisenhower’s three recessions and declaring, “We can do bettah.” He was right. In the 1960s, after the Kennedy tax cuts were implemented, prosperity returned, the economy grew by almost 4 percent annually, unemployment sank to record lows, and a gold-linked dollar held down inflation.
But today many leading economists are throwing up their arms in frustration and assuring us that 2 percent growth is really the best we can do.
Barack Obama’s former chief economist Larry Summers…

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Picasso bull

Apple apparently shows this picture to employees at the secretive Apple University. It’s a great illustration of working to make something simple. The first panel is a bull with horns, hoofs and texture, the last is an abstraction, but sill a bull. That’s what Apple is about and what a lot of good design is about.

 



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