Later on in the afternoon at yesterday’s Startup Empire conference, Howard Lindzon took the stage. Howard manages a hedge fund and is the creator of the finance news humour site Wallstrip, which he sold to CBS in May 2007. He also has a very popular financial blog at HowardLindzon.com.
I shot some video asking Howard about his idea of “social leverage”; I’ll post it a litter later on. In the meantime, here are my notes from his presentation, Why Now is a Great Time to Start Your Startup.
The Current Situation
- Capital, which was so plentiful, is now gone
- Reminiscent of the real estate bubble in Phoenix (where I live half the time)
- Really important right now to shut out the noise
- From 2002 – 2006, it was fun to read Valleywag, TechCrunch and make "me too" products. You can’t do that anymore
- It’s also a bad time to base products on:
- Freemium
- Eyeballs
- Advertising
- Sometimes you have to shelf your ideas for when the times are more suitable for them
- The headlines are all doom and gloom these days:
- "Financial Ice Age" – BusinessWeek
- Startup Depression – Calacanis (I’m not a fan)
- You must remember that even during good times, 80 to 90% of businesses fail
- The VC model isn’t broken
Social Leverage
- Financial leverage has come home to roost
- We’re in a period of deleveraging: there is no bottom, because we don’t know what everyone owns
- P/E ratios — it’s all about expectation, people expect less
- You can’t get what you got six months ago
- Expectations are in "this ratchet-down mode"
- I also think that "we’re going into a depression" is crazy talk
- I’m anti-financial leverage
- Social leverage is all-powerful
- Nothing you do in social leverage will haunt you
- It’s a gift from the likes of Facebook, LinkedIn, Twitter
- Perhaps you shouldn’t start building social leverage with a blog unless your passion is for writing
- Start small: work with people
- Be mindful of the etiquette of social networking tools
- The time to ask people for something is when they’re least expecting it
Too Small to Fail
- Wall Street was all about "too big to fail"
- I’m not seeing signs from the presidents about being small – they seem too concerned with conglomerations and unwilling to bust up things
- Bailouts just prolong the process
- This is not a headline, it’s a state of being
- It’s a great time to start a web-based business
- If you’ve ever played the board game “Risk”, you know:
- If you’re starting all your armies in Europe, you’re screwed
- Start off in New Guinea
- Consider one of my projects, Stocktwits.com
- I like to stay in businesses I know
- Started in Twitter — thought it was dumb in the beginning
- Guys, this should be about ideas
- Wrote post about how there should be a message board for stocks using the reputation model in Twitter
- Twitter allows you some sort of reputation — everything you say is there for people to see
- Stocktwits — one employee, $30K to start
- Twitter offers possibilities: dating, betting — supports an ecosytem
- Be careful in whom you trust
- Embrace social leverage
- Be too small to fail: do the one thing you do very well
- Take as little money as you need; things will get better
- Ignore the people saying that this is “a new Ice Age” – they’re idiots
Fear
- Zig while others zag
- Take a look at this graph, in which the pink line is the Vicks index and the blue is RRSPs:
- From 2003 – 2005:
- Fear level low
- Calacanis’s company, TechCrunch and other stupid tech businesses wree founded when fear was low
- It’s always a good time to start a web business
- The truth is that it’s never a good time to start any business
- Successful business can be started anytime
- 80 – 90% of businesses fail anytime
Why businesses fail
- It’s important to have structure right from the beginning
- Mistakes made at start can come back to haunt you
- Sometimes partners fight, so rules and agreements at made at the the start are valuable
- The keys: Structure, funding and realistic valuation
- When it comes to spreadsheets and plans, keep in mind that it’s important to do one thing, do it well and get that customer – this is far more important than the spreadsheets
- Make sure you’re fishing where the fish are
- “Swim near the shark”
- Be around certain ecosystems
My Advice
- Social leverage: good
- Financial leverage: bad
- Be an expert at something
- For good or bad: mine is finance
- "I don’t really like the people in my industry"
- Applications of my expertise:
- Wallstrip: Its purpose was to lay humour on Wall Street
- MyTrade: sold to Investools
- and, as mentioned earlier, StockTwits
Q & A
How do you balance your day?
- StockTwits is the only thing I run
- Knightsbridge pays me to be on the road
- I’m usually up at 5am
- Private equity: long hours, long weekends
How do you make use of social leverage?
- One example: Fred Wilson
- Two months invested in reading his blog
- I found out that Fred was a basketball fan and took him to a Phoenix Suns game
- We talked business
- Fred just happened to be friends with Jim Cramer
- Through Fred, I met everybody else — I counts it as my “real day 1 “
- “You make your own luck”
What are you looking for with companies?
- I’m more of an angel and a scrapper
- I want to to be early
- I want to see a finished product
4 replies on “Howard Lindzon at Startup Empire: Why Now is a Good Time to Start Your Startup”
Phenomenal note-taking! You don’t by any chance sell a clone of yourself that will follow me around everywhere, do you?
[…] a final note, here’s a more extensive write-up on Howard’s […]
wow – thanks so much for capturing my thoughts on paper for me to improve upon. much appreciated
[…] scene expand. In November 2008 (the end of the world), he invited me to speak at a conference ‘Startup Empire’ with my topic ‘Why Now is a Good Time to Start a […]