Please enable JavaScript.
Coggle requires JavaScript to display documents.
My Children Will be Born Rich - Coggle Diagram
My Children Will be Born Rich
4 Levels of Financial Freedom
Level 2
Social Net - Welfare - Passive Income
Level 3
You can afford luxury and investments. Invest in character and rent beauty. - Active Income
Level 1
Time For Money - Active Income
Level 4
Passive Income which allows for luxury goods, peace of mind etc. - The Rich. Maximize Income rather than focus on downside protection.
There are two ways to be rich - To have a lot and to need a little - The best is when you can achieve both.
Be the captain of your beliefs, not the passenger of your thoughts.
When did you decide on who you are?
4 Types of Risk
Product Risk
Implementation > Idea - Sales Forgive a lot of Sins.
Financing Risk
Team Risk
Market Risk
Do market research by interviewing suppliers and customers. What are the price points? KPIs? What are the standard practices?
Do 90 Days of Market Research.
4 Types of Knowledge
Identified Uncertainty
Untapped Knowledge
Identified Knowledge
Unindetified Uncertainty
6 Traits of Successful Entrepreneurs
Circle
Surrender Yourself with people that help you grow. Get rid of everyone toxic, get mentors, soak up information from experienced people.
Positivity
Skills
Accumulate Business Skills - Balance Sheets, P&L, Cashflow etc.
Reputation
Protect it With your Life.
Action
Take a decision and act on it, don't just exist. No one will care about what you almost did.
Standard of Excellence
Match high performance with the right moment, but if your performance is always high the chances of catching the right moment rise exponentially.
How to make big decisions.
Find someone who disagrees for a new perspective, otherwise if everyone agrees, the decision is not big.
Ask someone whose perspective is totally different than yours, different culture, gender, age etc.
Analyze Data
Be fast, but sleep on it. - Cool off, take a shower.
The Idea
Things to keep in mind megatrends are good to follow and macroeconomic disruptions, like law changes etc.
Set Goals - SMART Goals.
No matter the outcome, challenging established structures is the best way to identify great business opportunities or generally improve the world we live in.
Adapt to new humans which create a new world. - What weird thing are you doing right now that will be considered normal in 5 years?
Speed is a competitive advantage, use it.
Read Startup Blogs & Join Communities, see if there are Geo-Arbitrage Opportunities.
Choose a mega industry, read about it, there is a lot that you can learn in 6 months about it.
Also Contextual Entrepreneurship.
Idea Viability Metrics
Monetization Strength?
How easy is it to scale on a per unit basis? How much can you spend to acquire a new customer and remain profitable, is it doable at scale? What is the length of accounts receivable?
Passionate?
Find your passion in the value creation mechanism, rather than in the product itself.
Profitably scalable?
It is easier to enter a fragmented market, than a concentrated one, aim to own 1% to 5% of the total market.
What the required volume for profitability? To breakeven? Has anyone done this before? Are you supply chains in any way dependent on the competitors?
Defend your market position - Network effects, economies of scale, trusted brand, high switching costs for customers, exclusive data & piles of cash ;)
Regulatory Showstoppers
Is your business legal, what are the laws surrounding it etc, is there corruption in the market? If yes, avoid it.
Solving a problem?
Right timing?
Too early or too late to the market? - Have you planned well & done analysis? Are you expanding too early?
Business Plan
Numbers are worth a thousand words.
Assumptions Overview
Cost Plan
Equipment & Ops etc.
Staff Plan
Staff Plan = Salaries add 5% Buffer for training, insurance etc.
P&L
CM1 = Revenue - COGS, CM2 = CM1 - Marketing Costs
CM2 - Total Costs = EBITDA
EBIT = Net Profit
6 Parts of P&L
CM2 = CM1 - Marketing Costs
Total Cost = Equipment + Staff Plan
CM1 = Revenue - COGS
EBIT = CM2 - Total Costs, without Deprication & Amortization
Revenue Engine = Sale Price * Volume
Cash Flow
When do debts mature, accounts payable, accounts receivable?
Management Summary
Presentation
Presentation + Business Plan are called a DECK :). A presentation is an evidence based story.
Presentation Sections.
Problem, Solution, Successes in other Markets, Our Market, Our Progress so Far, This is our competition & their weaknesses, this is why we are the winning team, these are our financials, this is what we need from you.
All of your data should fit the storyline and be backed up by research. Collect all the sources and create a data room.
Benchmark your numbers with peers in the industry. Conversion Rates, Seasonality, What's the ROI, how long before it can be self sustaining? When will you have proof of concept?
Proof Of Concept is achieved as soon as you hit positive CM2.
Hiring
Always hire A players.
Include Moral Values.
Don't ask to be followed, earn the right to be followed. Show real interest in your prospects.
No Limit Mentality - Oh there is no payment provider, build your own.
Rely on process creation - Automated, Scalable & Fraud Proof.
Practice seeing the world from the eyes of the people around you. - You can't expect someone to not steal funds if their mother needs emergency surgery.
How to Judge Trustworthiness.
How are they when they have a sense of anonymity, reduced inhibitions, sense of justification.
Past behavior is a strong indicator of future behavior. Patters don't lie. - Forgive Mistakes, Not Choices.
The Three Mindsets
No Need
Leadership, resource independence, Emotional Stability, Omission.
All In
Massive Action, Conviction, Empire Building, Luck Conversion, Based on Unconditional Love.
Used during execution.
No Limit
Only legal & moral boundaries.
Used during planning and crisis management.
Financing
Verbally Determined but behaviorally rigid. The tragedy of the almost-entrepreneur.
It is important to have a big enough TAM, and operate in a country with available venture capital.
Don't design your business to appeal to investors, design it to appeal to your customers, if the customers love you, the investors eventually will too.
Angel, VC
Angels Help in the Greenfield Phase - With 10k to 500k Usually.
While VCs invest in business with Revenue>1M$ Per Year, with the potential of a 10X Return and exit valuation of around 100M.
Your MAIN DUTY with VCs is to increase shareholder VALUE, by building a great business, not a vanity one.
Customer
Getting your customer to pay before you fulfill/pay the suppliers. - Basically Free.
Crowdfunding could work for prepaid inventory, but you need high margins, valuable cash, seasonability and expiration dates are some issues etc.
Government
Usually only for citizens and no need to give it back, good to research.
Bootstrapping
Covering business expenses purely from profit, usually need internal investing from the founder himself.
Bank
Debt financing, they require collateral.
4 Fs
Founder, Family, Friends, Fools.
As long as markets are rising, early investors & founders look like geniuses. - You might think you can fly when you jump out of a plane, until the ground proves you wrong.
Elevator Pitch.
Problem, Solution, Our Market, Our Progress, Why we are the winning team, 60 seconds.
If you can't explain your business in 60 seconds to a 10 year old, you don't understand your business.
Tell and exciting story, Master the Numbers, And Have a Clear Idea on How much Capital is required. Timing is Critical.
Time is the enemy of deals.
5 Investment Stages
Series B - Expansion Round
Series C - Late Round
The Series A Round
You repeat the Late Seed Story just with much more data and objectivity.
IPO/Sale
The Seed Round
You have Revenue & Feedback From Early Adopters.
Profitable Scaling usually is funded by 4Fs, Government, Angels, Customers.
Late Seed = Positive CM2, 1M Annual Revenue.
Early Stage VCs get involved.
Greenfield(Pre-Seed) = MVP, Team, Idea.
The Founder, The Model, The Market - At least two have to be good for VCs.
Number Of VC Shares = Money Invested/Revenue Run Rate
Revenue Run Rate = How much Revenue will you generate in a year if everything goes on like this?
Always keep a network of investors and keep in contact with them, even when you're not looking for funding.
Talk to banks, lawyers, recruiters, other entrepreneurs, do not cold approach VCs, that doesn't work.
Qs to Ask to check the Fit of the Investor - Are they leaders or followers, do they invest in your region & industry, at your company stage, do they have investments in your competitors(might not want to help you), do they have money to invest, what's their average investment size.
The Investor will do his Due Diligence on you & your company, do the same to him.
Legal Agreements
Nobody Remembers Verbal Agreements, only Legal Ones.
Hire Great Lawyers and get a strong Share Holders Agreement (SHA) & Subscription Agreement (Under which terms are the investors subscribed)
Price-Based Anti Dilution
Liquidation Preference
Drag-Along Provision - They can force other shareholders to sell if a certain % agreed to sell.
Tag-Along Provision - If somebody wants to buy 80% of the company for example, if they are in the remaining 20%, they can use the tag along to be included in the sale.
Pay-to-Play Clause - Investors need to keep investing the same amount or more, in further rounds in order to keep their preferential rights.
Have strong governance procedures, and a strong peripheral vision - Consult lawyers :)
Conflict Resolution Mechanism - Texas Shoot Out, Mexican Shoot Out, Mediation etc.
Hostile Takeover
Offensive
Interlocking, Gray/Black Knight, Toehold, Creeping Parent, Bear Hug, Dawn Raid, Proxy Fights.
Defensive
Backward/Forward Integration, Golden Parachute, Safe Harbor, Showstoppers.
Busines Operations
Cybersecurity
Invest in Cybersecurity - You are only as strong as your weakest link.
OWASP - Open Web Application Security Project Top 10
Hire Cyber Sec companies to do pen testing, social engineering etc.
Data
Collet as much as possible, and use Data Science and BI to guide the business.
The Autopilot Customer
The Goal is to increase the monopolistic area, the are between P1 and P1. (P1 The Optimal Price, P2 Lowest Optimal)
The 3 Axes of Conversion
Transformation, Assimilation, Loyalty.
Track your Leads for months after registration, to determine when they convert, the CTA lowers the more time that passes.
You can then determine when you collect the most of your marketing investment (Which month) - This is the cohort model
LTV(CM1 Per Customer)
%Of Leads to Customers = How much to spend on leads, LTV
%Of Visitors to Leads = How much to spend on visitors.
Be Obsessed With Creating Repeat Buyers.
Optimize for: Quick Lead to Customer, Purchase Frequency and Purchase Recency
A Few Life Lessons
If children don't like you, adults shouldn't either.
If you are thinking about doing something for more than a month, do it.
Let People Finish Talking.
Don't talk badly about someone if they're not around.
When confronted with adversaries, don't react right away. Wait and smirk.
Reread Page 181 and 182 :)
If you talk like you are hungry, you will starve.