There were a few people upset with me about what they call a rather negative post I wrote about investing in the digital marketplace. All I was trying to do was warn the neophytes that most people lose money in start ups, especially digital ones. My husband and I lost $25,000 over 12 years ago on an Internet project that was going to be the first directory of some kind. It sounded so exciting at the time that we were jumping up and down for joy.We were going to get rich with the creator, then referred to as the young genius.
The genius must have made a few errors because all of the investors lost their money. The reason given was that the technology needed a lot more funding than anyone anticipated. This is very typical. We didn’t sweat it too much because in those days we were making a lot of money in our own business. By the way, the young genius never apologized and was never held publicly accountable. That is also very typical. Today he is the owner of a well known Internet site and begrudgingly answers the calls of his former angels. Most of the time he never calls back.
This experience didn’t stop us from other investments. We were always ready for someone else’s engine to make money for us. Again we lost money but we justified it because we were doing very well with investments in real estate. Today it would take a sledge hammer for us to open our wallets. What we did when we were younger no longer exists.
Investing is really a young sport. They have the time to make up the possible losses. Personally, I think I gave you the best financial advice possible.This morning I was reading some investing advice from probably the best known and respected Venture Capitalist in the digital business, Fred Wilson of Union Square Ventures, He is revered. When he speaks everyone listens and he confims some of what i am saying here. He also adds other important investing trends that cannot be ignored.
One of the greatest things about being in the tech industry for so many years is that I get to meet hundreds, maybe thousands, of people who have a dream of building or creating something. I can probably tell within minutes of meeting that person if he or she is going to be successful.
Scary isn’t it? Not really. Most of the time the person’s success really depends on his or her personality. There are certain ingredients that an inspiring entrepreneur must have in order to be successful. Sadly, most people just don’t have what it takes. I know a lot of seniors live vicariously through some of the young folks today who created something out of nothing and sold it for a billion dollars, like Instagram, or now have their companies valued at a $100 billion, like Facebook. I have to tell my generation that 99.9 per cent of the young people in the digital world today are not capable of inventing something and turning it into gold.
My advice is to hold on to your money. I am not trying to be mean or negative. I just want to be the conveyor of reality. Most angel investors are prepared to lose their money. They deal with percentages. If one out of 10 deals work, they have made back their losses and if they are really lucky they made a sizeable profit. Investing in social marketing or smartphone apps is an art. The average person doesn’t know what questions to ask or how to evaluate the business plan. A word to grandparents. If you finance a grandchild’s dream, consider it a gift. You most likely will never see a return.
Everyone thinks they are Mark Zuckerberg or Steve Jobs but the truth is unless today’s tech entrepreneur is obsessed with his or her work, compulsive, controlling, fearless, articulate and a problem solver, they will fail sooner or later. I even dare to say that unless today’s entrepreneurs are willing to give up quality time with their families, they are dead ducks. That is just what it takes to make it in the age of the Internet where one week is like one day, one day is like an hour and one hour is like one minute. Internet time is much different than what the rest of the world is used to. Everything is instant response and instant gratification.
I have witnessed so many people with tons of ideas that went nowhere fast. They just didn’t know how to execute. They were either so in love with their concept that they thought it would just take off, or they liked the idea of creating something but really had no interest in exerting enough sweat to see it to fruition. I can remember so many times, when I truly got excited about handling the public relations for a new invention or service only to have the creator flame out. Many of these guys are screw ups and can’t handle success so they unconsciously do something that causes their downfall.
My next blog post will be about some of the characters I’ve come across over the years. Get ready for a good laugh. You can’t make this stuff up.