Investing vs. Entrepreneurship

One of the questions I’ve thought a lot about over the past year is whether I consider myself more of an investor or an entrepreneur. At most tech or startup meetings that I go to, I’m usually required to identify myself as one or the other.  During the weekdays, I view myself as an investor since I work at a private equity firm where I invest in mostly growth-stage healthcare, consumer and technology companies. At nights and on the weekends, I enjoy working with early-stage healthcare startups helping out Co-Founders in any capacity that I can, which is typically focused on finance, business development and strategy given my prior work experience.

However, it wasn’t until I recently read Mastering the VC Game that I came across a good way to differentiate how I viewed these two roles. I love the following quote in the book, which nicely summarizes why I view VC and investing as a better long-term career fit for myself:

“I have found that being a VC entails a very different kind of excitement than entrepreneurship does. It offers intellectual adventure, exposure to amazing people with brilliant new ideas, and the chance to make a positive impact on the world. I have found far fewer ups and downs as a VC as compared to being an entrepreneur. As an entrepreneur, the emotional roller-coaster is such that the highs are very high and the lows are very low. For the VC, there’s greater emotional detachment. I don’t get to personally create products or companies or lead teams. The VC is the backer of a movie in which he never starts, but he prefers it that way. As a VC he would rather be the enabler and facilitator than the builder or onstage performer. The best VCs are people who tend to get bored working on one business at a time in an in-depth fashion. They are notorious BlackBerry addicts and because of their hyperactive minds and love for rapid, varied stimulation, have the attention span of someone suffering from attention deficit disorder.”

Becoming an Expert on Any Topic

Like most people, I find that I develop new interests every year.  Topics that I am currently exploring or have explored in the past include: design, programming, product management, investing, finance, venture capital, new languages, entrepreneurship, healthcare, startups, web development, photography, painting, cooking, traveling, wine tasting, running marathons, financial modeling, user experience, nutrition, and quantified self.  Through the process of exploring these new interests, I have come up with a series of steps and resources that I use to completely immerse myself in a new topic in order to understand everything I can about it as quickly as possible.

I know it may seem silly, but I actually still start out learning about a new topic the old fashioned way - by checking out every relevant book I can get a hold of from the library. A quick Google search often helps me narrow down the best books to check out on a topic and I start placing holds on each of the top books. I also search on Hulu and Netflix for any relevant documentaries because these are often just as informative as books and quicker to get through. I then subscribe to new blogs and podcasts (which are great for commutes to work) on the topic and begin following relevant questions on Q&A sites like Quora and Stack Exchange. These often help me get a sense of the main companies and thought leaders in the space and then I begin to follow those people and companies on social media sites including Twitter, LinkedIn, Facebook and AngelList.  I’ve also found that several of the free online education resources like Coursera and iTunesU have great courses on new areas that I’ve been trying to learn more about. The final step I take is to put myself out there and talk to people in the industry who already have a significant amount of experience in the topic I’m interested in. I try to set up a few informational interviews through my network, LinkedIn and websites like OHours and I make sure to keep a look out for local conferences, events or Meetup groups on the new topics.

It's pretty amazing how with all the technology and resources that we have available today, I can go from being a complete beginner to an almost expert in just about any topic I’m interested in. However, I think the one downside to all this information overload and free educational resources is that with the opportunity to learn about so many different topics, it becomes more difficult to become an expert in any single subject because I keep discovering more and more areas that I’m interested in learning more about. Next thing I need help learning – how to focus!

Kickstarter for People Instead of Projects?

I've always been fascinated by the idea of investing in people. On more than one occasion, I've met a person that I've been truly impressed by and have thought about how amazing it would be to invest in them, their ideas and their career. This is also one of the reasons why I'm excited about investing in passionate entrepreneurs by learning more about angel investing and venture capital.

Recently I discovered a new website that takes this idea of investing in people and makes it into a business. Similar to Kickstarter and MedStartr (basically Kickstarter just for healthcare companies), there is now a company called Upstart, where "the startup is you" and others can invest in your career or ideas if you are a recent undergrad or graduate student. In fact, I was talking to a Stanford GSB alum who recently received the seed funding for his startup through Upstart, which fascinated me because it was such a unique new way to raise money that I hadn't heard of yet.

Upstart is a community of "Upstarts" and "Backers," where the "Upstarts" are able to raise a certain amount of money (they need to reach at least $10,000) for a small amount of their future income (the max being 7% of their income over 10 years). Based on a statistical model the company uses, it says that the average "Backer" tends to receive an annual 6-8% return on their investment, which of course also depends on the "Upstart" they pick by browsing through their profiles, but this is still a very decent return given the state of the public markets today.

I think this is a nice option for raising funds for recent graduates who have a cool startup idea, but are unable to raise funding through the traditional method of angel investors and VCs.  It's also interesting that most of the "Backers" on the site right now are actually angel investors or VCs who want to invest directly in very promising individuals and their ideas. At the end of the day, I truly believe that early-stage investing comes down to investing in the right people and teams and Upstart is a unique new way for people to invest in passionate and creative young adults.

Chicago Health 2.0’s Hacking Healthcare Event

I often find that some of the best ways to discover new ideas for startups is through attending local meetup events around the specific industry that you're interested in learning more about.

Last week I had the opportunity to attend Chicago Health 2.0's Hacking Healthcare Series, which was centered around the topic of Accountable Care Organizations (ACOs) and the new opportunities it would open up for healthcare startups.

It was interesting to hear that over 10% of the population is already covered by ACOs and there are ~350 ACOs in the U.S. today with the largest one located in Chicago. The basic idea of the ACO model is that there will now be quality metrics that will drive how physicians and providers get paid (instead of being paid by patient volumes) and we will now have healthcare managers that work with you and your physician to not only improve your care, but also reduce unnecessary spending and over-treating of patients with repeat procedures, scans and unnecessary tests. The savings generated through this new model will then be divided between the payer and the provider, so initially it seems that the patient and employer does not save much money on the reduced healthcare costs, but they will hopefully benefit through better quality of care.

The most interesting part of the conversation was when the discussion turned to advice for startups. The two tips for healthcare startups were summarized as: 1) Follow the Money and 2) Don't screw with the money. 

The idea of "Follow the Money" is to make sure that as a startup working with healthcare companies, you need to make sure to understand that these companies are not only working for improved patient care, but they are also following the monetary incentives that the government is creating to help reduce costs and improve healthcare quality (i.e. government incentives to implement electronic health records).

The second tip, "Don't Screw with the Money," basically means that as a healthcare startup you need to make sure that your business model does not hinder the transition from Fee-for-Service to the ACO model of paying for quality, since this is most likely the future direction that the healthcare industry is moving towards.

Specific ideas for healthcare startups that follow these two pieces of advice include discovering a new method using the combination of programming and statistics to help insurers determine which patients can become high risk under this ACO model to help diagnose them early on before implementing a treatment plan. This could theoretically be done by looking through 2-3 years of historical claims data on patients to identify those with high healthcare costs.

Another idea for healthcare startups is to figure out a way for EMRs (electronic medical records) within a system and outside of a system to be able to communicate with each other. We will need to discover a way to add a layer over traditional EMRs to help implement a way for various healthcare systems to transfer information to each other electronically. 

Overall, we will see healthcare moving towards personalized medicine at a faster rate with improved treatment plans that are tailored for specific individuals. Also, it's clear that our healthcare system is at least 10 years behind the banking system because we need a similar platform or model as online banking, but for our healthcare industry. I think within the next 5 years, we will have a mint.com for healthcare which includes charts and graphs to help us track and analyze our health and share this information with our doctors. I personally cannot wait until this is developed because I believe it will help give consumers more transparency into their personalized healthcare and also motivate them to take better care of themselves by exercising more and eating better as they are able to see the benefits of small changes in their behavior showing up in the trends they are tracking online. 

New Year, New Habits

I’m usually not a big fan of coming up with New Year resolutions. However, I've recently become more methodical about putting together a list of goals for the new year and reviewing how the past year went across various aspects of my life from career, health, friends, family, community, personal, financial etc.

I think along with reviewing your goals, at the start of each year, it's also important for me to think about the things that I am most thankful for. Every year this list seems to get longer as each year ends up being better than the year before (it's a well known fact that we get happier as we age up to a certain point). And while this year I'm thankful for many things, one of the areas that have really helped me improve and that I'm looking forward to taking advantage of again this year is all the technology that makes my life simpler and helps me focus on self-improvement. Many of my New Year resolutions this year involved creating new habits to work toward personal development goals. A lot of these resolutions came about through all the self-reflection that I had to go through for business school applications. They have also been inspired by the numerous articles and blog posts that have been written about how to use new technology to help keep your New Years resolutions (TechCrunch and BBC).

A few of the new applications that I plan to use this year to help tackle some of my goals include:

·         100Plus: to help develop new and healthier habits. I especially like this app compared to a few of the other digital health applications that focus on improving health because it starts out by asking you a few questions and then calculates your hypothetical life expectancy. From there it uses gamification techniques to motivate you to do new tasks and pick up new health habits to add to your life expectancy score. I'm currently at a life expectancy of 88 years, 5 months, 3 weeks and 1 day and given the fact that I've had a few relatives live past 100 years, I'm hoping that I can get that number to grow to a few additional years by completing 100Plus daily "Hopps"

·         iPad: to motivate me to cook more. I just read 4 Hour Chef and I want to try and learn how to cook at least one new meal a month

·         Podcasts and Wikipedia to brush up on languages starting with Turkish, French and Spanish. Here I'm taking another tip from Tim Ferris by focusing on the 1,000 most frequently used words in each language

·         Learn to code (Python and Ruby) using all the free resources I can get my hands on - Khan Academy, Coursera, Udacity, Codecademy and this site

·         Basis: I'm still waiting for my Basis to finally ship so I can use it to track heart rate, stress, sleep, exercise, etc. I currently use the FitBit and really enjoy it, but based on everything I've read, I'm looking forward to trying this new device out to see if it's worth all the hype

·         Project 365: to help my get back into photography by reminding me to take a picture every day with my iPhone

·         Continue to read a book each week. I have a very long reading list that I keep through both Google Docs and Goodreads and with my library card, I always seem to have the maximum number of holds on both physical books and ebooks. Keep a look out for a new startup called Oyster which will be like a Netflix or Spotify for books.

·         23andMe: to learn more about my health through my DNA. I've gone back and forth about whether or not I would want to know if I'm predisposed for certain conditions and I've finally decided that I think it's better to know in the event that there is anything you can do to help improve your health.

·         Sleep101: I'm getting rid of my old alarm and now focusing on not only tracking my sleep but also making sure I wake up around the right time in my sleep cycle.

·         Buster: to help write more regularly each day. I used to just use pen and paper but I wouldn't do it everyday and I would forget. Buster is a great motivator because I become disappointed if I miss a day since I'll see a mark on the website showing which days I've missed. I also really enjoy how it analyzes my writing to tell me how I'm feeling based on the words I'm using and what I've written the most about and whether I'm feeling more introverted or extroverted based on my writing.

·         iPhone Timer: to help time myself during meditation. It's amazing how many books I read last year that all mentioned the benefits of meditation (clear head, reduce stress, visualize the future, gain energy, improve optimism, etc.). While I tried last year to make this a daily habit, I failed miserably because my mind would wander constantly and I would often sneak a peek at the clock to see how much time passed. Now I just set my iPhone timer to two minutes and hopefully by the end of the year I can ease myself into longer 10 or 15 minute sessions.

I know this seems like a long list of new habits I’m trying to pick up, especially since many people recommend picking one new habit each month and focusing on just that one until you've maintained it for 30 days. We all have a finite amount of willpower, but since I've never been the type to wait, so I'm just going to challenge myself and go after them all at the same time. I have a feeling that not all of these new habits will stick throughout the year (which is why I'm not referring to them as New Years Resolutions), but if I can benefit from even a few of these new technologies listed above, I will consider 2013 to be an overall success!

First Quantified Self Meeting

Last night I had the opportunity to attend my first Quantified Self meeting in 1871. The group has existed in Chicago for over a year, but has recently started up again by two new members and will hopefully have more regular meetings every two months in the coming year. I learned about the Quantified Self movement late last year and I've now been tracking a few different aspects of my sleep, mood and health through gadgets like the FitBit and Zeo. I also recently ordered the Basis and I'm hoping it will be shipped out early next year since it's supposed to be one of the best self-tracking devices on the market today. 

Overall, it was great to meet a few other quantified self enthusiasts here in Chicago who have been tracking their daily tasks, exercises and happiness throughout the past couple months. There were five speakers at the meeting who talked about everything from logging their activities (and analyzing it similar to Mint.com to see how they spent their day) to tracking emotions and time through the Pomodoro technique.

One of the speakers was very interested in tracking his happiness and since I’ve read a lot of books about positive psychology in the past year, I referred the group to a website that I’ve used to help track happiness as well called TrackYourHappiness.org. Over the course of the past year, the speaker had been sending himself a text message at 2pm everyday (using http://askmeevery.com/ ) to rate himself on a scale of 1-10 about how happy he was. He quickly realized that there was a bias to this self-experiment not only because it was at the same time each day, but also because after a while he started to get bored with the experiment and would just flat-line at a level 5. 

I’ve found that TrackYourHappiness.org actually helps solve both of these issues because it sends you random emails throughout the day asking you to rate your happiness on a sliding scale on your phone and it follows up with other questions to find out where you are, how well you slept the previous night and if you’re interacting with other people. After collecting 50 samples over the course of two weeks, it will produce a Happiness Report to analyze your responses. This way you’ll be able to collect samples both during the day as well as during the night time and you don’t actually get bored with the experiment because it doesn't last longer than a month. Six months later, the experiment will begin again and collect another 50 samples from you so that you can track your happiness over a longer period of time as well. I've already gone through two iterations of the experiment and after the second time, I received a Happiness Report with a few charts displaying how happy I was throughout the week and the correlation of my happiness with how focused I was, how well I slept and who I was interacting with.

Overall, I found that I tend to be in the 80-90% happiness range very consistently and I'm generally happier when I’m more focused on a task which makes sense given all the research around how people are happiest when they are in a state of “flow.” The week this experiment took place, I was traveling a lot for work so I happened to be in a hotel/plane very frequently but did not mind it at all since I often enjoy traveling for work since it occurs less often.

The other great takeaway from the meeting for me was how to use the Pomodoro Technique. I had briefly heard of this before, but I had never really tried it before, so I was convinced to read through the free e-book online and give it a try. The Pomodoro technique is a way to keep track of time and enhance productivity during the day by focusing on one task only for 25 minutes (called a “pomodoro”) and then taking a 3-5 minute break when you’re done. I’m on my second pomodoro of the day but, unfortunately, I’ve already been disrupted during this one by two unexpected phone calls. I’m sure with more practice the Pomodoro can become a time management technique that I’m able to incorporate at least partially into my schedule at work.

Female Executives at Startups

Dow Jones recently published a paper called “Women at the Wheel: Do Female Executives Drive Start-up Success?” which has some great statistics about the success rates for VC-backed companies with and without female executives, board members and founders. 

The study analyzed over 20,000 companies that received equity financing between 1997 and 2011 and the sample size consisted of 167,556 executives (11,193 were female). Key facts that summarize the paper are listed below:

·         1.3% of the private companies have a female founder, 6.5% have a female CEO and 20%+ have a female executive (C-level)

·         Median percentage of female executives at successful companies (defined as completing an exit in the form of M&A or IPO or consistently profitable) is 7.1% vs. 3.1% at unsuccessful companies (went bankrupt, no longer exist, or currently stalled)

o   One point to note here is that it seems startups tend to hire more females as they advance further along, so I believe this is part of the reason you see that more successful companies have more than double the proportion of women than unsuccessful startups (i.e. 83% of startups have no females but 60% of companies have females on the team by the time they reach product development stage)

·         The most common positions for female executives were in Sales & Marketing and Finance and the industries with the most female executives are consumer and healthcare

 

I found this study very relevant with all the press about women in startups and tech. Just last week Bloomberg TV also aired a new segment called “Women to Watch” where they interviewed four women (a startup founder, a venture capitalist, a VP of Engineering, and CMO of Facebook) who were all helping change the culture of tech and startups in Silicon Valley. Many of the points they mentioned to help increase the number of women at VC-backed companies included getting younger women interested in tech and programming at a younger age, but also creating a strong support and mentorship network that help open up new opportunities for young women looking to enter these industries. I also think that as female executives are getting more attention in the media (i.e. Marissa Mayer and Sheryl Sandberg), it will help inspire other women to take more risks and have the courage to step up to more senior positions within startups and the tech industry.