DC “Networking Jackpot” – Big Idea CONNECTpreneur Fall Forum, September 13, Tysons Corner

LORE SYSTEMS is pleased to host our quarterly Big Idea CONNECTpreneur Forum, one of the most exciting angel and entrepreneurship networking forums in the DC Region on September 13, 2012 at the Tysons Corner Marriott.

InTheCapital called our June Forum “The Best Networking Event in DC.”

We also appreciate InTheCapital’s latest article on our upcoming Fall Forum: “Three Reasons Why You Should Attend the Big Idea CONNECTpreneur Forum.”

Please come out!  CLICK HERE to Register via the Eventbrite link.

The Big Idea CONNECTpreneur FALL Forum is a “NETWORKING MASHUP” of 210+ of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.  Most of the attendees are “INVITATION ONLY,” and we are limiting service provider participation in order to maximize the experience for our Attendees and Sponsors.

Presented by LORE Systems, this UNIQUE EVENT is like NONE OTHER in our region, due to the high quality of our attendees and participants, as well as our program and unprecedented networking.

Come see what happens when you put a group of “A List” business leaders and entrepreneurs in one room for a few hours!

Program Highlights:
  • Over 210 attendees, includng 120+ CEOs/Presidents and 40 angels/VCs
  • Conversation with CEO, VC Advisor, & Angel Investor Christopher M. Schroeder
  • Discussion with UBER Tech Entrepreneur David A. Steinberg
  • SHOWCASE of Emerging tech companies
  • NETWORKING sessions before, during, and after the event
The venue is the Tysons Corner MARRIOTT.  A plated breakfast and unlimited coffee are included.

FINAL AGENDA
7:00–8:00 am – ARRIVAL / NETWORKING
 
8:00 – 8:10 am – WELCOME
 
8:10 – 8:45 am – Conversation with Christopher Schroeder,
Renaissance Man, Entrepreneur, CEO, Advisor, Angel Investor, and Author
Author, Arab Inc(ubate)
Co-Founder and CEO, HealthCentral, formerly DrKoop.com (an InterActiveCorp company)
CEO, Washingtonpost.Newsweek Interactive
CEO, LEGI-SLATE
 
8:50 – 9:25 am  –  Conversation with David A. Steinberg,
UBER Tech and Marketing Entrepreneur
Chairman & CEO, CAIVIS Acquisition Corp.
Founder, Chairman & CEO, InPhonic / Simplexity (NASDAQ:INPC)
9:30 – 9:45 am – NETWORKING BREAK
9:50 – 11:15 am – COMPANY SHOWCASE
11:30 am – NETWORKING
CONFIRMED PARTICIPANTS (partial list):
Over 120 CEOs/Presidents, plus 40+ angel and VC investors including New Enterprise Associates, Novak Biddle, Core Capital, CIT, Blu Venture Investors, Blue Water Capital, Dingman Center Angels, Neuberger & Co. Ventures, Saratoga Investment Corp., Washington DC Archangels, Angel Venture Forum, Fortify.vc, Endeavor DC, Maryland Venture Fund, National Capital Companies, Enhanced Capital, White Hall Capital,  MTECH Ventures, Mosaic Capital, Opus8, VentureCross Partners, McLean Capital, Starise Ventures, Blue Heron Capital, Duncaster Investments, Private Capital Network, Next-Stage Development Group, Berman Enterprises, Grindstone Partners, Next Stage Development Group, Atlantic Capital Group, Lancaster Angel Network, Harrell Partners, Stanford Venture Advisors, MD Center for Entrepreneurship, Skada Capital, Great Falls Capital, Bayberry Capital, Hafezi Capital, Keiretsu Forum, and CADRE.
EVENT SPONSORS:  
 
LORE Systems
BDO
Wilson Sonsini
Deloitte.
Cooley LLP
Meltzer Group
AH&T Insurance
McBride Real Estate
Ryan & Wetmore
Washington, DC Archangels
Dingman Center for Entrepreneurship
Angel Venture Forum
Print 1 Printing

InvestMaryland Wins Big, Raises $84 million for VC program

Last week, the State of Maryland became the first state in the USA to use an online auction to raise funds for a venture capital program.  The auction yielded $84 million, a whopping 20% more than the original forecasted goal of $70 million.  On September 24, 2011, I wrote a brief summary of the InvestMaryland program.

InvestMaryland will invest in the State’s promising start-up and early stage companies, as early as this summer.  The $84 million raised was generated through an online auction of premium tax credits to 11 insurance companies (including Hartford Insurance, New York Life, Chubb, GEICO, and Met Life) with operations in Maryland.  The inaugural round of investments will be made in innovative companies this summer through several private venture capital firms and the State’s successful Maryland Venture Fund (MVF),

Said Governor Martin O’Malley, “Our State is well-positioned to be a leader in the new economy as a global hub of innovation – a leader in science, security, health, discovery and information technology. That’s why last year, together with business leaders from across the State and the General Assembly, we chose to invest in our diverse and highly-educated workforce and the skills and talents of our people for the jobs and opportunity of tomorrow.”  

The InvestMaryland program is being implemented through the Maryland Venture Fund Authority, on which I am very proud to serve, as well as the Maryland Department of Business and Economic Development (DBED).

Earlier this year, the Authority selected Grant Street Group to prepare for and run the tax credit auction and also recently selected Altius Associates, a London-based firm, to oversee the selection of three to four private venture firms to invest the InvestMaryland funds. The private venture firms will be responsible for investing two-thirds of the funds, which will return 100 percent of the principal and 80 percent of the profits to the State’s general fund. The remaining 33 percent will be invested by 17-year-old Maryland Venture Fund (MVF).  The Maryland Small Business Development Financing Authority (MSBDFA) will also receive a portion of funds for investment. Returns on the funds invested through the MVF will be reinvested in the program.

InvestMaryland has the potential to create thousands of jobs in Innovation Economy sectors – life sciences and biotechnology, cyber security/IT and clean/green tech and attract billions of follow on capital.

Maryland has an outstanding infrastructure to support an Innovation Economy. The Milken Institute ranks Maryland #2 in the nation for technology and science assets. According to study results, while Maryland received high rankings in human capital investment, research and development inputs, technology and science workforce, and technology concentration and dynamism, it lagged behind other states in risk capital and entrepreneurial infrastructure, demonstrating the need for InvestMaryland and other programs.

How will Altius select the Venture Capital firms?  Altius will be evaluating venture capital funds based on management experience, firm experience, investment performance and criteria defined in the legislation.

When will the firms be selected?  Venture capital firms will be selected starting June/July 2012 for a projected18-month period and make first round of investments in summer 2012.

What is the investment return to the State? The selected venture firms will return 100 percent of the principal investment by the State before taking any distribution of profits and will then pay 80 percent of the profits to the State.  Any returns on investments made through the Maryland Venture Fund go back into the fund for an evergreen program.

What is the projected average investment with venture capital companies? Investment will likely range from as low as $250,000 upwards to $10M.

Is there investment funding available from MVF?   Maryland Venture Fund will continue to invest in early stage companies (tech, biotech, clean energy) from $50,000 to $500,000 as initial investments.

Maryland Venture Fund Authority (MVFA) will perform a monitoring role to ensure that  investments and reporting meet the legislative guidelines.

In summary, as a member of the MVFA, and as a resident and business owner in Maryland, I am very excited to see this InvestMaryland program being implemented:

  • This program brings great benefit for taxpayers.  It helps create the jobs and companies of tomorrow and builds an economic climate where the most promising ideas and innovations have a chance to mature.
  • This is a win-win for all constituencies within the State of Maryland. Through this initiative, we can:
    • Infuse much needed capital into our seed and early stage companies
    • Recapitalize the State’s successful Maryland Venture Fund
    • Ensure no up-front cost to taxpayers
    • Provide a tax benefit to insurance companies who bid today, who can begin claiming credits in 2015.

Thanks for reading.  I’d appreciate any Comments or feedback you may have on InvestMaryland.

Featured image courtesy of Anosmia via Creative Commons.

Big Idea CONNECTpreneur Spring Forum, March 7, Tysons Corner, VA

LORE SYSTEMS is pleased to host one of the most exciting angel and entrepreneurship networking forums in the DC Region on March 7, 2011 at the Tower Club in Tysons Corner, VA.

Please come out!  Here’s the Eventbrite link:  http://connectpreneur1.eventbrite.com

The Big Idea CONNECTpreneur Spring Forum is a 1/2 day “NETWORKING MASHUP” of the DC Region’s TOP Entrepreneurs, Business Leaders, CXOs, Angels, and VCs.

Come see what happens when you put a group of “A List” business leaders and entrepreneurs in one room for a few hours!

This UNIQUE EVENT is like NONE OTHER in our region, due to the high quality of our attendees and participants, as well as our programming and unprecedented networking.

The Big Idea CONNECTpreneur Forum is an exclusive “mashup” of 170+ of the DC Region’s top entrepreneurs, business leaders, CXOs, angels and VCs.
Most of the attendees are “INVITATION ONLY,” and we are limiting service provider participation in order to maximize the experience for our Attendees and Sponsors.
Program Highlights:
  • “Hypergrowth – Zero to $500 million in 8 years” discussion
  • “Entrepreneurs with a Higher Purpose” panel
  • 8 Emerging companies seeking funding will briefly tell their stories
  • “Disruption, Disintermediation, and Destruction” luncheon discussion
  • Networking sessions before, during, and after the event
The venue is the Tower Club in Tyson’s Corner, Northern Virginia’s premier private business club.  A plated brealkfast and plated lunch are included.
AGENDA7:00–8:00 am – ARRIVAL / BREAKFAST / NETWORKING

8:00 – 8:05 am – WELCOME

8:05 – 8:45 am –  “HYPERGROWTH – ZERO TO $500 MILLION IN 8 YEARS!” – a conversation with Tony Jimenez, Founder and CEO of MicroTech
8:45 – 9:30 am  –  “ENTREPRENEURSHIP WITH A HIGHER PURPOSE”
Jim Cheng, Secretary of Commerce, Commonwealth of VA; Founder and CEO, Computer Hi-Tech Mgt, “Entrepreneur Turned Public Servant”
Dr. John Holaday, CEO, QRx Pharma, an ex-Army officer, Professor, and serial entrepreneur who has founded and taken 3 companies public, “Entrepreneur Seeking a Cure for Cancer”
Seth Goldman, Founder and TeaEO, Honest Tea, beverage industry innovator, “Entrepreneur  leading the Green Movement”
9:30 – 9:45 am – NETWORKING BREAK
9:45 – 11:30 am – COMPANY PRESENTATIONS
Fresh Tax
Pixspan
11:30 – 11:45 am – NETWORKING BREAK
11:45 – 1:15 pm – LUNCHEON DISCUSSION – “DISRUPTION, DISINTERMEDIATION, AND DESTRUCTION”
Duke Chung, Founder of Parature, CRM industry pioneer
Mark Walsh, Founder and CEO, GeniusRocket;  Chairman, DIngman Center for Entrepreneurship;  Chairman of the Board of Trustees, Union College;  Founder and CEO, VerticalNet
John Backus, Managing Partner of New Atlantic Ventures, Founder of Draper Atlantic Venture Fund, former CEO, InteliData
1:15 pm – MORE NETWORKING AND DEALMAKING
CONFIRMED PARTICIPANTS (partial list):
Over 110 Entrepreneurs and CXOs, plus another 40+ angels and VCs including Core Capital, Novak Biddle, New Atlantic Ventures, CIT, Capital Source, NEA, Maryland Venture Fund, MAVA, MTECH Ventures, Maryland DBED, Ruxton Ventures, Opus8, VentureCross Partners, McLean Capital, National Capital, Starise Ventures, Dingman Center Angels, Blu Venture Partners, Blue Heron, Washingon DC Archangels, Fortify.vc, Endeavor DC, Private Capital Network, APPTEL, Stanford Venture Advisors, MD Center for Entrepreneurship, SunWalker Group, Skada Capital, Keiretsu Forum, CADRE.
EVENT SPONSORS:  


InvestMaryland, Winning by Fueling Innovation + Creating Jobs

The State of Maryland is creating a $70 million investment fund to deploy into venture capital funds to stimulate innovation, spur economic growth, and create jobs.

This initiative is called “InvestMaryland,” and I am proud to have been appointed by Governor Martin O’Malley as a Member of the Maryland Venture Fund Authority, which will provide guidance to and oversight of the program.

This is a groundbreaking effort by the State of Maryland, and I applaud all of the various business and political constituencies who made this happen.

The State plans to raise at least $70 million by auctioning off tax credits to insurance companies.  About 2/3 of these proceeds will be invested into private venture capital funds, and 1/3 will be given to the Maryland Venture Fund, which will in turn invest in emerging companies in industried such as information technology, clean energy, and life sciences, among others.

Maryland is not the first state to employ this idea.  Eleven other states already have programs similar to InvestMaryland.  The expected benefit from InvestMaryland, according to some, is the creation of 2000+ new jobs while supporting at least 200 businesses.

Here is the the link to Gazette.net’s article in February, 2011 which covers the announcement of the program.

I am encouraged by these kinds of initiatives and would love to see more states embrace these kinds of public-private efforts to stimulate capital formation, and help create jobs and nurture new technologies and emerging companies.

Thank you for reading.  Let me know your thoughts about the InvestMaryland program or other ways in which technologies and small businesses can be supported.  And please sign up for my Blog!

Featured image courtesy of sidewalk flying licensed via creative commons.

More Business Advice from Warren Buffett

Two weeks ago, I had the good fortune of having my Blog post on Warren Buffett featured on WordPress.com’s home page.  Out of over 400,000 blog posts per day, WordPress features only 10 in its Freshly Pressed section.  I have no idea how my post was selected, but I bet it had to do with Mr Buffett’s popularity, especially in light of the recent turbulence in the stock market.

Needless to say, my Blog site was visited by thousands of Warren Buffett fans, so I thought I’d do another post on the Oracle of Omaha’s advice.  I found a nice article on about.com by Joshua Kennon, a private investor who authored The Complete Idiot’s Guide to Personal Investing, 3rd Edition.  The piece summarized some of Mr. Buffett’s best investment advice.  I chose seven of these nuggets, which I thought could also be very applicable to running and growing a business.

1.  Risk can be greatly reduced by concentrating on only a few holdings.  Business application: FOCUS!  Every company has limited human and capital resources, so concentrate your efforts on a few key areas rather than trying to “boil the ocean.”

2.  Stop trying to predict the direction of the stock market, the economy, interest rates, or elections.  Business application:  STAY THE COURSE.  Once you have made a business decision to go in a particular direction, stay focused on that direction and tune out the inappropriate noise.  If you are sure in your decision and it has been made rationally with good information, then eventually it will pay off.

3.  Be fearful when others are greedy and greedy only when others are fearful. Business application:  BE CONTRARIAN.  More money can be made in business by NOT following the “conventional wisdom.”  Trends move from one end of the pendulum to the other, so when the crowds are strongly of one opinion, then it could be time to make money by taking the opposing view.  For example, just 5 years ago, the “experts” thought the datacenter industry was stagnant.  There was a glut in capacity, and pessimism all around.  The smart contrarian entrepreneur who could see the tidal wave of virtualization and cloud computing was coming, made money by investing heavily in datacenters.

4.  The ability to say “no” is a tremendous advantage for an investor. Business application:  Concentrate, focus, and don’t get distracted.  The ability to say “no” is also a tremendous advantage for a business person.  Steve Jobs, for one, has always prided himself on saying “no” to things that did not fit his vision for Apple.  It is natural for opportunistic business people and entrepreneurs to want to look at EVERY opportunity, but by saying yes to too many projects, you dilute your resources and your company’s energy.

5.  An investor should act as though he had a lifetime decision card with just twenty punches on it.  Business application: BE SUPER SELECTIVE!  Imagine running your business knowing that you will only have 20 truly awesome ideas to bet on in your career!  That’s only one every two years.  Applying this advice means you must do your homework, be very diligent, and choose your projects very judiciously.

6.  Always invest for the long term.  Business application:  Your goal is to create long term shareholder value, so plan and operate your business in a way to achieve this goal. Note that Mr. Buffett uses the word “always,” which is a very strong word.  For me this is real wisdom.  I see far too many business leaders make short term and medium term decisions which appear to make sense, but really do not.  I agree with Mr. Buffett because, ultimately, all that really matters is the value created in the long term.

7.  It is not necessary to do extraordinary things to get extraordinary results. Business application:  You don’t always have to be the best.  You can win big even if you are a little better than your competition.  This is an excellent concept.  Too many companies spend too much time and money trying to be perfect, when all they really need is to stand above their competitors.  CyberRep operated in an industry with “C” players, and I always told our team that we would be successful if we were merely “B+” players.  It worked.

Thanks for reading.  Please comment below and let me know which concept resonates with you…and please sign up for my Blog too.  You can find the signup box in the right column of my Blog’s Home Page.

Featured image courtesy of trackrecord licensed via creative commons.

12 Most Critical Questions for Raising Capital for Your Startup – 12most.com Guest Post

Stack of 100s at 12most.com

This was my August 16, 2011 Guest Post on 12most.com.

Right now – RIGHT now – is the BEST TIME to start a business, and there’s never been a better time to start raising capital. I firmly believe this. Why?  Because tough economic times cause tremendous dislocation in almost every market. Established companies are playing defense, trying to figure out where the economy is heading, laying off people, cutting costs, and trying to protect their turf. Fear is in the air.

Fear spells opportunity for new startups that can compete because they are small, nimble and agile.  Using creativity and resourcefulness, entrepreneurial startups can improve the way things have been done in the past, or attack brand new markets with new technology.  Startups are not encumbered by the baggage of their larger competitors.

However, raising money in tough economic times is, well, tough!  Angels and VCs seek to cherry pick the very best ideas, those that are most likely to succeed.  Money is still available for the best ideas and teams, but you have to be tuned in to what these investors need in order to make an investment in your startup.

Based on my experience as an entrepreneur, mentor, angel, VC fund LP, and board member, here are the 12 most important questions you need to answer when raising capital for your startup:

1. Money

How much do you need and what is the use of funds?

Investors want to know that you have thought through your capital requirements and where the money will be put to use.  Is it for product development, marketing, building out your sales team, etc.?  You must be ready to justify this request, and talk about how this gets you to the next stage in your startup’s development, as well as how much more money you may need in the future.  Know what kind of deal structure (preferred stock, convertible debenture, common stock, etc.) and valuation you are proposing to your investors.

2. Pain – What pain are you fixing?

Your product or solution must fix somebody’s pain, whether it’s making life easier, saving money, or making a customer more efficient.  Talk about the severity of the pain you are addressing, as well as how much money your customer will pay for it.  Show some basic market research, ROI analyses, and, ideally some 3rd party customers who are already happily using your product or service.

3. Raising Capital for Your Solution: What is it, exactly?

Exactly what product or service are you offering and how does it work?  Too many times, I have seen wishy washy descriptions of the solution because the idea is being matured, or in Alpha mode.  I have seen many super smart engineers with grand plans that are completely unfocused trying to be everything to everybody. Few have been funded.   Investors want to see certainty and simplicity in your proposed solution to the above-mentioned pain.

4. Customers – Who, exactly, is your customer?

You need to know WHO will be buying from you.  Are you selling B2B, B2C, B2G, all of the above?  Are your targets Fortune 500 companies, SMBs, NGOs, the Federal government, etc.  At what level are you selling (CEO, CFO, VP of Marketing, etc.)?  What kinds of situations will they need to be in to absolutely must buy from you?  The more precise the better.  And bring some testimonials or anecdotal evidence from these targets.

5. Execution Plan – What’s your plan for selling and delivering?

One of the biggest questions and concerns investors have is HOW you plan to win customers.  What’s your strategy, who’s leading the sales effort, and so on. Be prepared to discuss not only your marketing & sales plans and customer acquisition strategy, but also your customer retention strategy.

The Angel on Your Shoulder

6. Raising Capital, as a Team – Who are the players and what are their backgrounds?

Angel investors are not only investing in an idea or a market space.  We are investing in a team of people with, preferably, a strong and experienced founder.  Talk about your key executives and your advisors too (lawyers, accountants, Advisory Board members), anyone who is adding considerable value to your venture.

7. Culture – What kind of culture are you building?

Culture is the DNA of every organization, and good culture is a requirement for success.  Culture can even be a differentiator against your competition.  The best investors know this.  Talk about your culture, your approach and philosophy towards business operations, leadership development, hiring, customer care, product development, and other key parts of your business.

8. Competitors – Who are they and how will you compete?

Competition is one of the most important questions to answer.  I have met with countless entrepreneurs who claim that they have “no competition.”  This is a particular pet peeve of mine, because every company has competitors, and all customers have choice.  Believing that you don’t have competitors is not only naive, it is a recipe for disaster.  So talk about all your competitors, both direct and indirect, and show how you are better and how you will beat them.

9. “Moats” – How are you special and what are your differentiators?

Warren Buffett likes to invest in companies with high barriers to entry, or “moats,” as he calls them.  Startups are risky enough for investors, and they want to invest in ventures which have a higher probability of success.  Moats include IP, patents, unique skills or knowledge, proprietary methods, unique brands, unique culture, etc.

10. Raising Capital for Pivotability – What will you do if your Plan “A” fails?

One thing is absolutely certain in a startup: your original plan will not happen the way you initially envisioned it.  Investors want a team that’s resourceful, agile, and creative enough to pivot, if necessary.  A sailboat in a regatta does not go from Point A to Point B in a straight line.  It gets there by “tacking, ” or making a series of rapid and opportunistic turns in order to maximize the wind in its sails.  Startups have to do the same thing, and investors want to see that you have thought through your contingency plans.

11. Commitment – How much money did you personally invest? Is this a full time job for you?

The best investors take a “partner” approach to investing, and they want to invest alongside their entrepreneurs.  I’m not so much looking for huge sums of cash invested, but rather whether the amount invested is a “significant” percentage of the entrepreneur’s net worth.  If a founder has put a good chuck of her net worth into the company, or taken out a second mortgage on her home, the investor will feel more comfortable about the founder’s putting her money where her mouth is.  As for working “full time,” this is essential.  I have never seen a startup succeed that didn’t have full time (80 hours a week) commitment from its founding team.  Be ready to field questions about how much your team is willing to sacrifice in order to win.

12. Exit – How are you going to make your investors money?

Investors are not looking to put their money in forever.  You have to paint the picture of how they will get their money and profits out within their expected timeframe (generally 4-7 years).  Be ready to talk about how you’re going to exit (for example via IPO, sale, recap, or refi).  How is the market for your proposed exit options?  Talk about recent deals in your space and get some data from the experts (M&A specialists, deal lawyers, etc.).

I hope this helps you as you think through your approach to pitching angels and VCs.  If you believe in your startup, then be persistent. Don’t give up!  If you can’t get funded initially, then prove out your business model by getting traction, i.e. happy customers, and figuring out other creative ways to raise the capital you need, whether it’s by getting equipment leases, vendor financing, customer deposits, or even money from “FF&F” (friends, family and fools).

Good luck out there!  It’s a great time to pursue your dreams!

Photo courtesy of amagill. Some rights reserved; used under creative commons license.

Warren Buffett’s Ten Rules for Winning

While enjoying a nice lunch with my Son at a Minneapolis Jimmy John’s sub shop this weekend, I saw this “WARREN BUFFETT’S TEN RULES” sign tacked to the wall.

Unfortunately, I wasn’t able to take a glare-free or hi-res photo, so let me list out these Rules below (with my comments in bold Italics):

No. 1:  REINVEST YOUR PROFITS – When you first make money, you may be tempted to spend it.  Don’t.  Instead, reinvest the profits.  Buffett learned this early on. In high school, he and a pal bought a pinball machine to put in a barbershop. With the money they earned, they bought more machines until they had eight in different shops. When the friends sold the venture, Buffett used the proceeds to buy stocks and to start another business. No surprise that this is Rule #1.  He is the greatest investor of our time and one of the reasons is because he followed his own advice here.

No. 2:  BE WILLING TO BE DIFFERENT – Don’t base your decisions upon what everyone is saying or doing. When Buffett began managing money in 1956 with $100,000 cobbled together from a handful of investors, he was dubbed an oddball. He worked in Omaha, not on Wall Street, and he refused to tell his partners where he was putting their money. People predicted that he’d fall, but when he closed his partnership 14 years later, it was worth more than $100 million.  In short:  Don’t be afraid to be contrarian.  Time and time again, we see tremendously successful investors, businessmen, entrepreneurs take a contrarian approach.  Wasn’t it John D. Rockefeller who said the best time to buy is when there’s “blood in the streets”?

No. 3:  NEVER SUCK YOUR THUMB – Gather in advance any information you need to make a decision, and ask a friend or relative to make sure that you stick to a deadline. Buffett prides himself on swiftly making up his mind and acting on it. He calls any unnecessary sitting and thinking “thumb-sucking.”  Buffett invested $5 Billion in Goldman Sachs during the worst moments of the 2008 financial crisis when Wall Street appeared to be melting down.  He committed this money in a 15 minute (no thumb sucking here) phone call with Goldman CEO Lloyd Blankfein.  Result?  A $10 Billion profit in 30 months.

No. 4:  SPELL OUT THE DEAL BEFORE YOU START – Your bargaining leverage is always greatest before you begin a job – that’s when you have something to offer that the other party wants. Buffett learned this lesson the hard way as a kid, when his grandfather Earnest hired him and a friend to dig out the family grocery store after a blizzard. The boys spent five hours shoveling until they could barely straighten their frozen hands. Afterward, his grandfather gave the pair less that 90 cents to split.  This advice holds not only for jobs, but also for any kind of negotiation, investments, partnerships, JVs, etc.

No. 5:  WATCH SMALL EXPENSES – Buffett invests in business run by managers who obsess over the tiniest costs. He once acquired a company whose owner counted the sheets in rolls of 500-sheet toilet paper to see if he was being cheated (he was). He also admired a friend who painted only the side of his office building that faced the road.  I think the lesson is also that the devil’s in the details, and that little things mean a lot. The best organizations have a handle on all of the nuances and details of their operations.

No. 6:  LIMIT WHAT YOU BORROW – Buffett has never borrowed a significant amount – not to invest, not for a mortgage. He has gotten many heartrending letters from people who thought their borrowing was manageable but became overwhelmed by debt. His advice: Negotiate with creditors to pay what you can. Then, when you’re debt-free, work on saving some money that you can invest.  If our country had followed this advice, we wouldn’t be in the financial pickle we’re in now, that’s for sure.  Seems like Buffett is not only saying to limit what you borrow, but also very simply to be disciplined, and that’s a key success driver

No. 7:  BE PERSISTENT – With tenacity and ingenuity, you can win against a more established competitor. Buffett acquired the Nebraska Furniture Mart in 1983 because he liked the way its founder, Rose Blumkin, did business. A Russian immigrant, she built the mart from a pawnshop into the largest furniture store in North America. Her strategy was to undersell the big shots, and she was a merciless negotiator.  This is my favorite of the Buffett Rules.

No. 8:  KNOW WHEN TO QUIT – Once, when Buffett was a teen, he went to the racetrack. He bet on a race and lost. To recoup his funds, he bet on another race. He lost again, leaving him with close to nothing. He felt sick – he had squandered nearly a week’s earnings. Buffett never repeated that mistake.  The only one making money at the racetrack is the owner.  I bet he’s happy he learned this lesson at a young age.

No. 9:  ASSESS THE RISKS – In 1995, the employer of Buffett’s son, Howie, was accused by the FBI of price-fixing. Buffett advised Howie to imagine the worst- and best-case scenarios if he stayed with the company. His son quickly realized the risks of staying far outweighed any potential gains, and he quit the next day.  Continually assess current and future risks and mitigate those you can to help shape and control your future.

No. 10:  KNOW WHAT SUCCESS REALLY MEANS – Despite his wealth, Buffett does not measure success by dollars. In 2006, he pledged to give away almost his entire fortune to charities, primarily the Bill and Melinda Gates Foundation. He’s adamant about not funding monuments to himself – no Warren Buffett buildings or halls. “When you get to my age, you’ll measure your success in life by how many of the people you want to have love you actually do love you. That’s the ultimate test of how you lived your life.”  What a great definition of “success.”  After all the effort, the blood, sweat and tears, and the battle scars from the business and investment world, the Master defines his success so simply and elegantly.

I can’t help but think that the world would be a better place, and the economy would be in much better shape if we all followed Warren Buffett’s Rules.

Hopefully, President Obama will continue to seek Mr. Buffett’s sage counsel and (I know this is a stretch) convince him to become our next Treasury Secretary when Tim Geithner (my Mandarin language TA at Dartmouth) retires.

Thanks for reading, and please leave a Comment below.  Which Buffett Rule is your favorite one? What kinds of things do you think Mr. Buffett would do if he were Treasury Secretary?

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