There are a great many curiosities that set up this current economic era, particularly as unsatisfying as it is to the vast majority that participate in it. It may not be a common topic of conversation to even those with a passing interest in economic affairs, but it is noteworthy in its own right that more than a few orthodox economists have taken to bashing the US dollar as an imposed burden upon these very United States.
Without detecting a hint of irony, these very same people detest the gold standard for its supposed restrictions on the flexibility, to use Ben Bernanke’s phrasing, of…

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Some influences on the stock market are casual, subtle or open to interpretation, but the catalyst behind the current stock market rally really shouldn’t be controversial. As far as stocks go, we have lived by QE. The only question now is, whether we will die without it. A larger version of this article appears in the fall edition of Euro Pacific Capital’s Global Investor newsletter. Since the financial crisis of 2008 stock prices have only risen when the Fed is either expanding its balance sheet, hinting that it is about to do so, or actively recycling assets to hold down long term interest…

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YC interview advice: 3. Have the calmness that comes from knowing you’ll succeed regardless.

— Paul Graham (@paulg) November 13, 2014

Reading this tweet from Paul Graham I immediately thought that this is great advice for multiple situations, not just YC interviews. Job interviews are one such other situation. Negotiations are another – knowing you will succeed whatever the outcome gives you the power to walk away.

Knowing you will succeed takes a special kind of confidence. That starts with self belief, which an entrepreneur needs in spades. I wrote a while back about the cognitive biases that an entrepreneur need, and personal exceptionalism is top of the list, you should believe that you are the top of your cohort and that your work is snowflake special. You know you will succeed because you know you are good enough to find a way. I’m not sure if you can cultivate this kind of confidence.

But self-confidence isn’t enough on its own. You also need a good plan. It might not be possible to do anything about your levels of self confidence, but you can make sure you have a good plan. The first thing you need is a good idea. That isn’t the same as the best idea you’ve had so far. It should be something that you have a great feeling about. Then you need to test it thoroughly. Look at it from every angle. One way we help entrepreneurs do that is to list out all the assumptions that are made and then examine each for reasonableness. Another good way is to talk to as many people as possible and listen carefully to any criticisms they have. Listen, process, and then figure out whether they are right. Don’t fall into the habit of dismissing a commonly heard objection. If you hear it a lot, think about it a lot.

By way of an example, here at Forward Partners the most common criticism of our business is that our returns won’t be good (enough) because we spend much more money than conventional VCs supporting our partner companies. The argument runs that we would be better off using that money to invest in a larger number of companies. Our belief is that the tools and services we offer make it a little easier for companies to achieve success which brings two important advantages. Firstly it gives us an edge in winning deals and secondly that our partner companies will do better as a result. We take the critique seriously and have modelled out how much that edge in winning deals needs to be worth and how much more success our companies need to achieve. The assumptions look reasonable and we continue to test them against reality as we do more deals and gather more data points.

Combining a good plan which has been thoroughly stress tested with a high level of self confidence puts you in a good place, but there’s one final ingredient you need before you know you will succeed, and that’s a back up plan. If you are founding a company there will be huge unknowns and associated risks. If you’ve done your planning well you will have confidence that they are all manageable, but you need to know that you will prevail even if you get unlucky. In our case we ran the analysis to see what happens if the extra money we spend supporting our partner companies makes no difference, and the conclusion is that the returns to investors will still be ok. Not where we hope to end up, but still ok.



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It has been over 6 months since we learned about the secret waiting list forcing thousands of veterans to wait months for their doctor’s appointments at the Phoenix Veterans Affairs health system. Since then, there has been a management shakeup at the VA and Congress enacted a $17 billion initiative to help reduce the backlog. The good news: waiting times seem to be down. The bad news: there is nothing to prevent delays and rationing from returning once public attention shifts elsewhere.
The VA has long had trouble providing veterans with adequate access to care, going as far back as…

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Difference between a product focus and a customer experience focus in a nutshell. Mark Turner @ibminteractive#MIICMOpic.twitter.com/PQTJwVUSot

— Mark Henry (@Mark_J_Henry) November 12, 2014

 

I love this tweet! It sums up the opportunity for new product and service development beautifully. Here at Forward Partners we often talk about backing companies building amazing products and brands that people will love, and when we’re talking with companies we always ask how they know customers will think their products are amazing. Good answers show an understanding of how people will use their products and how they think about the alternatives. In particular they show an understanding of the emotions surrounding their product category. A product is amazing when it evokes emotion.

The example above says that it’s better to ‘design a better way for people to enjoy flowers in the home’ than to ‘design a new vase’. Firstly I like the tightness of the definition – it’s not just a vase, it’s a vase for flowers, in the home. It’s better to start with an amazing product in a smaller market and then grow the market than start with an average product for a huge market and try to improve the product. Secondly, the purpose is clear – it’s to increase enjoyment. When you frame the problem in this way the importance of understanding how people currently enjoy flowers in the home become clear. If the challenge is described as ‘design a new vase’ then it’s too easy to focus on aesthetics and ignore the use cases. Too many product designers make this mistake, which is why our homes are filled with products we don’t use. It doesn’t have to be that way.



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Quickly following on the heels of the November 4th elections, a select few policy issues made it to the top of Congress’ priority list. Mitch McConnell (R-KY), Senate Minority Leader and presumed majority leader for the 114th Congress, has indicated that the medical device tax is a key target, inspiring confidence within the medical device industry that a repeal is, in fact, possible. Below is a basic primer about the tax, its contentious history and how it may fare in the 114th Congress.
1. What is the medical device tax?
Included in the Affordable Care Act (ACA) and launched in 2013, the…

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When an American president goes to China, topics of conversation are rarely in short supply. President Obama’s current visit is no different: Security issues bubbling in the South China Sea, charges of cyber-hacking flying both ways, and stultifying engagement on the challenges and realities of climate change; laid before him is a bona fide Thanksgiving dinner of geopolitical indigestion.
But what should cause a real peptic ulcer for the president is the state of our two countries’ deeper economic relationship, which, from the American point of view, has grown nothing short of…

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Singles Day has just started in China. It’s a day where single people celebrate, and was selected because of the number of ‘1s’ in the date – it’s 11/11. It’s also the largest online shopping day in China and the news this morning is that Alibaba racked up $1bn of sales in the first 17mins 58s, and $2bn in the first hour.

In comparison, sales for the whole of Cyber Monday in the US last year were $2.3bn.

Back to Alibaba – $1bn of sales in 18mins is just phenomenal. Very few companies ever get to do that in a year. For further comparison, Amazon did $20bn in the three months to September 3o.

And, investors love Alibaba. The company went public in September in the largest ever tech company IPO and the share price has risen 28% since then giving the company a market cap of $296bn. That compares with Amazon’s market cap of $141bn and Google’s of $375bn. The business was founded in 1999.

At heart this is mostly a story about the size of China, but it also talks to the power of the internet as a platform for building large scale enterprises.



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The Affordable Care Act’s legal troubles are far from over. The Supreme Court’s announcement that it will review King v. Burwell, the case challenging health insurance premium subsidies for those who buy their insurance on the 36 federal exchanges, increases the priority of reforming the most destructive aspects of the Act. This announcement comes just over a year after Judge James R. Spencer of the U.S. District Court for the Eastern District of Virginia agreed to rule in the case, then called King v. Sebelius.Last year, few had heard of King v. Sebelius or its parallel case, Halbig v….

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“But I don’t think of you.” - Howard Roark, The Fountainhead
Without minimizing the countless human rights abuses that Cuban dictator Fidel Castro visited on his own people, Cato Institute senior fellow Bandow has long argued that neither Castro nor Cuba ever represented a military threat to the United States. Yet in constantly demonizing the Cuban dictator, top American foreign policy officials needlessly elevated an individual who would have quickly slipped into irrelevancy had the American political and foreign policy establishment simply ignored him.
Castro’s highly valuable global…

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There’s a new report out on the impact of high growth small businesses on the UK economy. Last week I wrote about some new research showing that nearly all job creation in the US comes from young companies and concluded by saying it would be great to see some similar research in the UK. And now we have some already. With this publication and the upcoming Scale Up report I hope it will be very clear that high growth startups are the engine of growth for employment and the UK economy more generally.

That’s important for two reasons. Firstly we should all feel good about the work we are doing within the startup ecosystem – the work we do is the difference between growth and stagnation, and secondly it will encourage government to continue and extend their support for our work, particularly with policies to improve access to finance and the depth of the talent pool. The Startup Manifesto is a good read if you want to bone up on what government should do for startups here in the UK.

The research was conducted by Centre for Economics and Business Research and commissioned by Octopus Investments (thank you) and took the form of a survey of 400 high growth small businesses (defined as companies with £1-20m turnover and 20% growth per year over three years). There are 30,000 businesses like this in total in the UK. The key findings are that high growth small businesses:

  • generated 256,000 new jobs 2012-13, which was 68% of the total. That’s huge, particularly given that theses companies only accounted for 3.4% of the economy, and
  • accounted for 36% of the increase in GVA in 2013. GVA, or Gross Value Add, is a measure of economic output similar to GDP.

As with the American study, note that the growth comes from small high growth companies, not all small companies.

What would be interesting to see now is a breakdown of which companies within the 30,000 high growth small businesses in the UK are responsible for most of the employment growth. Just as we have learned that if growth is our objective we should focus our support on the portion of small businesses which are growing fast, it may be that we can make a further refinement to a particular industry or sector.



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The Federal Reserve has ended its roughly $3.7 trillion program of bond buying, leaving in its wake a host of hard questions. Did it strengthen the economic recovery? If so, by how much? What are the long-run effects? Should it be used again? We don’t have good answers.
We need a dispassionate accounting of its successes and shortcomings, because the bond buying represents the most significant economic-policy innovation to emerge from the 2008-2009 financial crisis. Instead, the subject is defined by a patchwork of disconnected studies and much bewildering jargon. The bond buying itself is…

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As reported by the Bureau of Labor Statistics (BLS) on Friday, October was a good month for jobs. Full-time-equivalent (FTE)* employment increased by 617,000. This was the sixth-highest monthly total seen during the economic recovery that began in July 2009, and it was far above the 122,000 average over the 64 months since then.
Meanwhile, labor force participation, the unprecedented fall in which has been the big ongoing story of the Obama economic recovery, actually increased slightly during October. This meant that the reported decline in the unemployment rate to 5.8%, from 5.9% in…

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Americans underestimate the actual levels of income and wealth inequality and believe the ideal income and wealth distributions are even more equal than what they imagine reality to be, according to research by Harvard’s Michael Norton (read Jordan Weissmann’s write-up of the research here). This, not particularly surprising result tells us very little as I suspect that most Americans would also underestimate the value of benefits provided to the poor in this country, the number of polar bears living in the Arctic, and many other facts that may or may not be of importance. The more…

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Jobs: Businesses hired 214,000 net new workers in October, and the unemployment rate fell to its lowest since the financial crisis. All in all, not a bad employment report. So why are Americans so disgruntled?
What economists call the headline numbers - payroll jobs and unemployment - are both headed in the right direction for the first time since the 2008-09 financial crisis.
At 5.8%, the jobless rate is the lowest since June 2008. The broader U-6 measure, which includes discouraged workers and part-time workers who want full-time work, has fallen to 11.5%, also the lowest since 2008.
But…

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