Paths to Startup Success

If you want to build a startup into a success, it seems to me that there are two basic plans you can follow:

  1. Develop a feasible business model, launch and market a desirable product, and collect the profits.
  2. Develop a business/technology/userbase/story that another firm believes can feature in its efforts to execute plan (1).

Least Resistance

There’s an old saying to the effect that “ideas have no value — it’s the execution that matters”. I think that this is sort-of-true. Raw ideas, indeed, have very little value, but often value is added not by execution that delivers success, but by execution that suggests that success is attainable.

I propose that while both of the plans listed above are difficult to put into practice, plan (2) may well be easier. I further cynically propose that plan (2) is not necessarily just an abbreviated version of plan (1); there may be a good deal of tension between the ideas and execution that yield a strong business, and the ideas and execution that yield a shiny acquisition target.

Valuation

So, when handicapping startups, it might be a good idea to ask not just whether they’ll succeed (in the massive VC-sating returns sense), but also whether they’ll offer that idea+proof-of-concept goodness that attracts acquirers.

Editorial note: In case you’re wondering, this post is more about me thinking out loud than offering actual advice. I’m frequently astounded by the startups that have big exits, and am trying to better understand the relevant patterns.

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FOTY 1975: Ali / Frazier III

This is an entry in an occasional series of posts looking back at the Ring Magazine Fights of the Year from 1970 to 2009.

In 1975, Muhammad Ali defended his unified (WBC & WBA) Heavyweight championship against Joe Frazier. This fight was billed and remains known as the “Thrilla in Manilla”, as Ali and Frazier completed their trilogy in the punishing heat and humidity of the Philippines. This is a fight that lives up to its hype and reputation: It was a great, all-action fight between two legendary fighters for a unified championship that capped off a trilogy in which each man had already claimed a victory.

Frazier had previously defeated Ali via a 15 round unanimous decision in a title defense, and lost a 12 round unanimous decision in a non-title (the NABF doesn’t count) rematch. In Manilla, Frazier would retire in his corner after the 14th round. Frazier’s career was essentially over after Manilla; only a 5th round TKO loss in a rematch with George Foreman and a single, ill-advised fight in 1981 would follow. Ali, unfortunately, fought on.

Overview

The character of this fight was, as with others we’ve seen, determined by Joe Frazier’s aggression and movement, and by his opponent’s reaction to them. Ali seemed to switch between 4 basic strategies:

  • Move away from Frazier and pot-shot his head.
  • Stand near/lay on the ropes and trade with Frazier.
  • Keep Frazier at bay with a left arm extended more-or-less permanently into his face.
  • The rope-a-dope. (Ugh.)

I don’t think any one of these strategies would have won the fight for Ali, but the movement between them seemed to disorient and annoy Frazier. The other major factor in the fight was the environment; the heat and humidity made this fight, more than most, a terrific contest of endurance, and Ali seemed to hold up better.

Reaction

This fight was never less than entertaining, and, for the first 10 rounds, it was quite thrilling. I had it 6-4 Ali after 10, and 3 of the rounds I scored for Ali could have gone either way. From the 11th on, however, the outcome became less and less in doubt, especially since a KO win for Frazier never looked particularly likely.

This truly is one of the sport’s great fights; the only minor knocks against it are that it wasn’t, in the end, that close-run or dramatic a thing, and that both fighters were in the twilight of their careers. It’s a cliche, but a truth nonetheless, that both Ali and Frazier ought to have retired after Manilla.

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Six Word Stories: Ouch

Hot and cold metal look identical.

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Examining Zero Hedge (Part 4)

Ok, yet more Zero Hedge (ZH). (See also: Parts one, two, and three.) Here’s today’s bit:

This can only go on so long as vol arbitrageurs will creep up the moneyness curve (to hedge the tail risk) and eventually impact the ATM. This happened in early 2010 and is happening again currently.

This is the heart-stopping passage that finally induces me to suggest that the author is a nincompoop.

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Charlie Sheen

So, I guess that Charlie Sheen is having some career difficulties? Or something? Anyway, I think he should get a plenary PR indulgence for any offenses, past, present, or future, real or imagined, simply for appearing in one of my favorite self-referential movie gags:

Strangely, I don’t think that the same courtesy should be extended to Martin Sheen. Hun.

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Examining Zero Hedge (Part 3)

Let’s continue with our analysis of a Zero Hedge (ZH) post. (You can read the first two parts here and here.) Today’s sentence (with a chart!) is:

The chart below shows this quite clearly as VIX (At-the-money vol) ebbs away (red arrows) as the day-to-day vol of more ‘normal’ mark-to-market movements is culled thanks to the liquidity fueled effervescence, the rise in out of the money (or crisis/event risk) vol has risen dramatically (white arrows).

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Six Word Stories: Marketing

“Paranoia Quarterly’s” home-delivery service floundered.

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Examining Zero Hedge (Part 2)

Let’s continue with our analysis of a Zero Hedge (ZH) post. (You can read the introduction to this little exegesis here.) Today’s sentence (yes, we’re really going that slowly) is:

With so much attention paid to the VIX (the anachronsitic FEAR index) and especially its dropping over the last few months, investors are led to believe that risk is reducing but lo and behold, as many Pros know, the cost of protecting against a much more serious drop (or tail event) has increased quite notably with out-of-the-money options vols rising notably.

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FOTY 1974: Foreman / Ali

This is an entry in an occasional series of posts looking back at the Ring Magazine Fights of the Year from 1970 to 2009.

In 1974, George Foreman defended his unified (WBC & WBA) Heavyweight championship against Muhammad Ali in Kinshasa, Zaire. This might be the most famous fight in history, and its story is well-known: After lying on the ropes for most of the fight (the “rope-a-dope” strategy) Ali won by knocking out an exhausted Foreman in the 8th round.

Overview

The basic pattern of this fight was that Foreman pursued while Ali retreated and counterpunched. The “rope-a-dope” wasn’t as prominent in the fight as you might imagine; although there were long stretches when Ali did lay on the ropes and let Foreman hit him like a heavy bag, there was also a lot of clinching, wrestling, and mutual parrying.

The overall balance of the fight began in Foreman’s favor, and then tilted towards Ali. (I scored the 2nd, 3rd, and 5th for Foreman, and the others for Ali.) Foreman’s attack was initially more well-rounded (albeit wilder), featuring good body work, while Ali was almost exclusively a head-hunter. Foreman’s effectiveness, power, and body attack all seemed to fade at the same time.

Reaction

I hate to say it, but: I believe that this was rigged. The whole show feels phony. The only things that ring at all true are that first-career George Foreman didn’t have a lot of endurance, and that Muhammad Ali could take an enormous amount of punishment … too much for his own good, as it would sadly unfold. But the whole package on display here is simply, in the literal sense, unbelievable.

To briefly defend this view: While the “common-opponent” game is of limited utility, it’s not completely meaningless. Ali and Foreman had several common opponents.

  • Ken Norton. Ali fought Norton three times, winning once by 15 round UD, and splitting a pair of 12 round split decisions. Foreman fought Norton once, winning by TKO2 after knocking him down 3 times.
  • Joe Frazier. Ali fought Frazier three times, splitting a pair of unanimous decisions, and winning via TKO14. Foreman fought Frazier twice, winning by TKO2 and TKO5, knocking him down a total of 8 times.
  • George Chuvalo. Ali fought Chuvalo twice, winning a pair of unanimous decisions. Foreman fought him once, winning via TKO3.

(To be fair, there was also Jimmy Young: Ali took a unanimous decision over Young, while Foreman lost one in the last fight of his first career.)

After the Zaire fight, Ali said that “Foreman couldn’t punch”. I don’t see how any honest fight could produce that conclusion. Something was crooked in Zaire. That’s just how I see it.

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Six Word Stories: Depreciation

A politician’s soul fetched only $23.

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