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August 23, 2008

A good psychological blog

Filed under: Readings — Fei @ 11:52 am

I found a good psychological blog. It’s very interesting reading all those factors that affect human thinking… Maybe we can utilize them in everyday life 🙂

I recommend the following articles:

10 Practical Uses For Psychological Research in Everyday Life

Detecting Lies: Top 3 Myths, Top 5 Proven Factors

A Slow Smile Attracts

Loudest Voice = Majority Opinion

Communicating Persuasively: Email or Face-to-Face?

Getting Closer: The Art of Self-Disclosure

Nobel Prize-Winning Research on Risky Decision Making

August 20, 2008

Understanding

Filed under: Business — Fei @ 12:25 am

Today I had an intense discussion with a friend on business. I don’t want to go into details here. I just feel that many people know nothing about the business world, living in their idealistic “dream” world. A lot of people, especially technical people, emphasize well too much on the product, instead of the marketing and sales. I don’t have any experience myself, but from what I hear, from what I read, the opposite is correct. That is, marketing and sales are well more important than the actual product. The “best seller” has nothing to do with the “best quality”. I’ve seen so many people in entrepreneur email lists complaining that their products do not “sell”; their start ups fail; and their ideas not accepted…. Sad it is, they get to know the reality via hard and bitter experience.

It is so hard for people in one category to understand people in another. Just like what Robert said in “Cashflow Quadrants”. I idealistically wished to get to know the other side’s opinion and find the difference, and based on that, make the other side understand my position. It was a pure hope…. even though I did find out the difference, I could not convince the other side to think from another angle. Other people did not go through what I had gone through, did not read the books I read. How could I convince people in such a short period of time?

Some thoughts are fundamental. If the person does not wish to change, there is no way to change it.

And so be it.

p.s. I don’t plan to de-emphasize the importance of products, especially for start ups. It is another discussion, which I won’t go into details here.

August 19, 2008

Business related books

Filed under: Business,Readings — Fei @ 4:25 pm

Since the beginning of this year, I read quite a few interesting business books. Here I just share with you my thoughts. What I like the books, and what I don’t like them.

– “Cashflow quadrants: rich dad’s guide to financial freedom”. It’s the best seller of New York Times. The author, Robert Kiyosaki, wrote dozens of books on achieving financial freedom. Among his books, I like “Cashflow quadrants” best. It categorizes people into four groups: Employee, Self employed, Business owner, and Investor. People in different groups have very different mindsets and they cannot understand each other. This book describes the value system of the people in each group, and their relations to financial freedom. I don’t endorse all Robert’s idea however (see his wikipage for detail). Most of his books are motivational without any detailed plan to achieve success. But still, you can only achieve what you can imagine (remember the law of attraction?). After all, the most difficult thing is to start. For this, I like a quote from the book: Many people will not head down the street until all the lights are green. That’s why they don’t go anywhere.

– “Secrets of the millionaire mind: mastering the inner game of wealth”. The author, Harv Eker, is the founder of Peak Potentials Training, a personal development company. Many people may have already heard about the company. Similar to the books by Robert Kiyosaki, this book is also focused on changing the “inside”. It describes 17 mindsets that successful business owner possess.

– “E-myth mastery: the seven essential disciplines for building a world class company”. It’s author, Michael E Gerber, is the founder of E-myth worldwide, a small-business development company. Frankly, he is a so so writer. If it is not highly recommended by a successful business person, I wouldn’t finish the first part. But yes, it is a great book. According to that business person, it is a business bible. It provides step by step illustration on the seven most important aspects of company building. It is a cook book for small businesses. To me, it provides some real contents, which is very different from the previous two books. But still, the book focuses the entire first part (which is also the not so well written part) on changing mindset… I like two notions from the book: work on your business, not in it. business is building a system.

– “Four hour work week”. My opinion on the book changed a lot while I listened to it (I read the audio book, which I don’t think a good source). When I listened to the middle of the book, I thought,hmm … he doesn’t know how to do business. After all, he is in his 20s when he writes the book. He’s very lucky to be successful in the very beginning. He views business as hard rigid guidelines, but in fact business composes another very important aspect: social. Business is also very social, so relations are very important. But later, as I listened more and more, I found I liked the book a lot better. The book gives very detailed instructions on dealing with different situations, achieving the goal of maximizing profitability. Even though I still think he’s very rigid in doing business, I like all the other points he wants to make.

If we say the first two books are motivational, the last two books provide detailed methods in doing business.

And I have another book to recommend. it is:
– “The millionaire next door: the surprising secrets of americas wealthy”. The authors, Thomas J. Stanley and William D. Danko, spent twenty years studying the affluents of the Americans. In the book, they used a lot of statistics, numbers, and examples to show who the millionaires are. If you don’t know what makes millionaires, or if you “think” you know what makes millionaires, just read the book. It will surprise you. In a very short summary, most millionaires are frugal, well planned, and disciplined. They are PAWs (Prodigious Accumulator of Wealth).

If I ask a hundred people what business is, I will get a hundred different answers. Just drop me a message. I will tell you what I think. Maybe we can learn from each other 🙂

August 18, 2008

Lessons learnt by doing a startup in financial industry

Filed under: Business,Readings — Fei @ 5:41 pm

Fei: copied from an email from SVCEF

=== What we wanted to do

1. Build Vertical Search Engines For Financial Industry.
2. To give money managers edge against competitors.
3. To let money managers gain deep insight of market.
4. To help money managers to improve their investment return.

=== Targeted Customers
1. It is for Enterprise Customers
2. Potential customers are hedge funds, investment banks, financial institutions, fund managers, and other money manager.

=== The reasons why we started this effort
1. This business is close to money (and lots of money in the financial industry). We assume that people are willing to pay to gain edge. Because the cost of our product and services is negligible comparing to the potential extra investment return they will get.
2. Founders have been interested in finance and investment activities.
3. We had implemented vertical search engines for other industries.

=== Reasons caused our failure:
1. Personally, we did not know many people in the financial industry, therefore, we cannot get early customers. We know how to build vertical search engines, but we do not know the market well.
2. We were not well known in the industry before we started this business. Marketing is expensive and there were no easy and low cost way to get our name out. (Low cost methods, SEO and Google Adwords, Adsense did not work).
3. We did not have a sale channel to sell our products and services. So we had do direct sales. Founders took lot of time to do direct sales.
4. The market is smaller than we expected. For example, there are total 8000+ hedge funds. However, only these engaged in quantitative and short term trading are interested in our services, these solely rely on fundamental analysis are not interested in our services. The accessible market is a much smaller market (and we do not know people in the fields to help us accessible the market).
5. We can show potential customers that we have a better search engine, but we cannot prove this will increase their investment return.
6. We are not in New York City, instead in Silicon Valley.
7. Lots of money managers has some kind of in-house development.
8. The “rule of thumb” in the investment community is that, if something works (which can increase your investment return), you will keep secrete for yourself; If you are selling it, very likely it does not work.
9. Financial industry is a very old, very matured industry. It is highly competitive. Anything under the Sun had been tried before. (Just thinking about how many technical indicators have been created and how many finance related websites on this world). Other vendors had approached our potential customers with  something similar to ours in the past. Our potential customers were really skeptics about the value of our services.
10. Some potential customers asked exclusive right of our products. One requirement they imposed before they were willing to pay for our services was that we can not sell the products to other customers in next 6 months or 12 months. Theyed claimed that if everyone uses this, it became useless.
11. We could not get outside investment. We tried to grow this business organically. Without funding make it hard to hire good sales people and to do marketing promotion.
12. The technical entry barrier of our business was low. Anyone from Google or Yahoo can build similar search engines. It is hard to differentiate us technically, which further proves the importance of marketing and sales channels.
13. Founders did not have sales experience in the past.
14. We could not leverage our previous experience and connections.

=== What we have got right
1. We build a vertical search engine in very short time, collect more than 10 Tera-Bytes text data. Our crawler is powerful and faster.

August 15, 2008

The Venture Capital Aptitude Test (VCAT)

Filed under: Business,Readings — Fei @ 12:28 am

The Venture Capital Aptitude Test (VCAT)

Another good article by Guy Kawasaki…. love it. It’s interesting to know that MBA, management consulting, IBD, accounting are not got for entrepreneurs… hmm… need to seriously think about it…

August 14, 2008

In Mystery Cotton-Price Spike, Traders Hit by Swirling Forces

Filed under: Economics,Readings — Fei @ 11:56 am

In yesterday’s WSJ, an article is about cotton option (future) price spike earlier in the year: In Mystery Cotton-Price Spike, Traders Hit by Swirling Forces

I don’t want to go into the details. What I want to say is that besides the housing crunch, this is yet another indication of the failing market.

A regularity oversight caused huge margin calls? What a market! It is too fragile, too unstable.

The financial system is getting too complicated… commodities, derivatives, derivatives of derivatives etc. Traders “hedge” their positions… it seemly can correct itself when something goes wrong… yah, to some extent…. the small fluctuations can be hidden… but the underling forces are still there. they don’t lose strength… it’s just the time is not there yet.

When traders utilize complicated tools, they actually hide the real problem, delay the break-out of the problem. And when the issues cannot be hidden or delayed any further… the aftermath gets too severe and devastating….

That’s what happens in the current capitalism world….

Well, the good news is that capitalism is actually evolving into socialism….

The 1929 crash indicates the death of free market. All economies after that are carefully regulated…. to now… because the market is more efficient, the financial tools are more powerful… even a slight oversight can trigger snowball effect… It is obvious the trend is more regulations and less freedom… and you can imagine where it will end up to…

well, aren’t you happy? what do you think?

August 13, 2008

Hindsights

Filed under: Readings — Fei @ 12:43 am

Came up with a blog: Hindsights, loved it. It’s from Guy Kawasaki….

Ten hindsights? what do I learn from them?

#10: Live off your parents as long as possible.

Yah, it’s perfectly correct…. I delayed entering job market as long as possible… but I missed my chance to do more 🙁 (crying)… now when I meet anyone who’s in school… I advise him/her the same thing… :p looks like I’ve experienced a lot..

#9: Pursue joy, not happiness.

Heh? what does it mean? Do what you like… that’s most important… I won’t accept any boredom in life (borrowed from 4 hour work week)…

#8: Challenge the known and embrace the unknown.

Yah, I feel the same way… people are often so into what they are doing and lose the big picture… am I doing the same? hmm… I don’t know… maybe I’m also too into it… so…. I need a second opinion… and I rely on YOU to give me one…

#7: Learn to speak a foreign language, play a musical instrument, and play non-contact sports.

One foreign language.. done… though not quite good… music.. oh man… even though I’d love to learn…. I didn’t think so at age 4…. learning is HARD…. and consider the conditions in china at that time? …. sports… a…. I miss the good old days…

#6: Continue to learn.

No need to say anything… learning is quite enjoyable… can’t waste time…. no matter what… (it’s easy said than done).

#5: Learn to like yourself or change yourself until you can like yourself.

yup… yup…. like myself is important… be myself is equally important… and I need to work on it…

#4: Don’t get married too soon.

ha… seems I do it quite well…. I agree with what Guy said… knowing myself…. and accept the other person as is…. hmm… but I have my issues….

#3: Play to win and win to play.

don’t quite get what it means… but if I’m determined to play…. I’m into it… that’s what I feel…. but failure is also precious…. just hope it’s not too much…. and I expect to get up again…

#2: Obey the absolutes.

yah.. relative is an indication of being OLD….

#1: Enjoy your family and friends before they are gone.

oh man… there’s only one thing in the world cannot be bought…. it’s time…. how to make use of it? I wish I could do more… I wish I could enjoy more… I wish….

August 12, 2008

Readings

Filed under: Readings — Fei @ 11:33 pm

I sometimes read articles here and there. Just use this category to record the interesting ones, mostly putting a link to the article. Also,  if I have an opinion, I will draw a few words here… so don’t expect it to be very organized..

August 1, 2008

Stock market

Filed under: Economics — Fei @ 7:18 pm

It’s mid-year time, and I’d like to have a mid-year review of the direction of the stock market. I made some predictions at the end of January. It seems I’m quite lucky that they are more or less in-line with what really happened.

The stocks reached new lows in the middle of July, which was close to the far end of my prediction. I didn’t expect the rebound so strong after the March dip, however. In January, the market was not sure how serious the sub-prime mortgage issue was, stock dropped. In March, the market was shaken by the collapse of Bear Stearns, thus, retreated. The continuous write-downs of the financial institutions dampened their future prospect, which resulted the July retreat. I totally oversaw the impact of credit tightening, however.

Starting June to middle of July, the stocks decline steadily. It may be due to several factors: 1) Public has lost confidence of financial institutions (as I mentioned above). 2) The security tightening strategy has spread outside the realm of mortgage and banks. and 3) Higher oil and food price drive up inflation. We’ve only seen a small portion of it, however.

My prediction for the future economy direction is as follows:

Even though we still see new records of foreclosures, the sub-prime mortgage crisis is largely over.  We’ve also seen the worst of bank write-downs. The financial industry has bottomed (or almost) in July. However, the economy is at a critical point now. The crisis is at the verge of spreading outside the financial industry. It really depends whether it can be contained. The key indicators are consumer confidence index and jobless rate.

The consumer confidence index slide to the lowest point in 16 years in June, and held steady in July. To me, it is a good sign that the economy has bottomed. It is mainly because consumer is the end of the “economic” chain. The index usually reacts to crisis several quarters after the real cause. When consumers feel the pressure, the market has already digested the crisis and absorbed most of the pain. Thus, it’s a good time to get into the market.

The jobless rate, however, is not very optimistic. In today’s news (08/01/08), the jobless rate climbed to a four-year high. Not a good sign. It may mean the consumer confidence index staying at the low end for some time. The economy is not due for a rebound anytime soon.

Looking at the market, however, I don’t see any real reason people should worry about further retreat. In my opinion, market panic on the mortgage and credit is over reacted. The panic keeps the stock from
rebounding, but it won’t hold for long. The real enemy, is still the inflation. In January, I predicted that we would see the impact of inflation around this time. I was mistaken. The bulk impact has not arrived yet (It takes longer time for inflation to accumulate strength). On the good side, however, the inflation may not be as serious as I originally thought. The recent retreat of oil price is a good sign. I don’t see any support for such high oil prices. However, Bernanke is in a tough job fighting inflation. He cannot simply raise overnight interest rate because of its adverse impact on financial industry. What other weapon can he utilize?

In my opinion, the stocks will walk sideways till the end of the year. 2009 will be a good year for stocks and I’m looking forward to that.

Well, I will see how wrong I am in half a year.

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