Bill Gates and Jeff Bezos Drink 10 Cokes A Day, And So Should You!

The best entrepreneurs and billionaires in the world drink coke.  They say that drinking coke really ignites the creative functions in their brain by getting their neurons firing at 100%.   It also allows them to reset their internal body to perform better during the day as they have to go to the bathroom about 10 times a day to remove all the sugary liquid.

If you believed the above  paragraph and were about to get 50 cans of coke, I feel bad for you.  You are one of those people who are always looking for correlations on why people are successful.  I have seen COUNTLESS articles and times when someone is looking to copy something that a successful person does, in hopes of emulating that person’s success.

Tell me if the following sounds familiar.  People dressing like Steve Jobs in order to be as good at building products as him.  People eating the same foods as Warren Buffet to be as rich as him or following the same sleeping routine as Elon Musk.

There is a whole industry (books, magazines, articles etc) such as this one from CNBC on how you can be successful by copying what other successful people do.  This CNBC article is stupid for several reasons.

1 – They say that BOTH Bill Gates and Jeff Bezos do dishes at home (which they might) and that is why they are successful.  But that fact that the two richest people in the world do the same “average guy” chore does not mean they are successful because of it.  It means that they have PR people who are not that creative and are copying the same idea from each other

“hey…let’s tell everyone that Bill does dishes. That will make him more human”  —

two days later “Hey, let’s tell people that Jeff Bezos also does dishes, that will make him more relatable as he kills local retail stores”

2 – I call this behavior the STARTUP CARGO CULT SYNDROME.  This is when someone blindly copies and mimics something in hopes of having the same outcome.  During world war 2, when US military sent technology and cargo to the pacific islands (jeeps, walkie talkies, lights, etc), the primitive natives wanted those things as well and then went about making replica jeeps, walkie talkies and other things from bamboo sticks.  The thing is, they thought by just making something look like something on the outside, it would do the same thing.  There are many stories of them making “airplanes” and flying off cliffs to their ends.

My advice to anyone looking for inspiration is not to look at these “cargo cult” traits that the magazines and newspapers want to sell you.  In reality, the traits that made almost all of the top entrepreneurs successful can be summed up in 5 parts.

1 – They had great timing – Most people don’t want to admit it, but timing is important.  If YouTube launched 2 years earlier or 2 years later, it would have not been as successful as it is now.  Bill Gates got into software at the right time.  Jeff Bezos created Amazon at the right time to be the leader in e-commerce.  Facebook was launched just when people really wanted a “real identity” social network.

2 – They went all in and focused – No great endeavor happens part time.  All successful entrepreneurs went all in and focused like crazy on a singular problem.  Google was just search it’s first 7 years.  Microsoft was just an OS company for its first 5, and WhatsApp is still just messaging.  If you focus on being the best singular product in an industry, you have a shot of building something sustainable.

3 – They were ruthless – let’s not kid ourselves.  All entrepreneurs were ruthless and then they got softer (or their PR got better).  Building something from scratch is hard and you need 100% of your energy and the energy of your employees to make things work.  You will break some eggs along the way.   If you want the truth, Google stole the idea for Adwords from IdeaLab.  Facebook stole it’s idea from two twins who hired Zuckerberg to create a social network for them.  Microsoft crushed any tiny company that it saw as a threat.   The world’s not fair and some of the best things created in the world had very dirty beginnings.

4 – They were learning machines – The best entrepreneurs are one’s who learn everyday.  They are not “know it all’s”, they are “learn it all’s”  – I’ll invest every time in someone who I think is constantly learning and adopting.

5 – They understood scaling – Scale is the thing that separates “lifestyle businesses” from “global enterprises”.  Papa John’s saw something more than just a pizza joint. He saw a franchise opportunity that could be international.  Bill Gates did not just see himself selling software to IBM.  He saw an opportunity to have his software on EVERY computer in EVERY home.  If you can scale your business to reach everyone on the planet, they you have scale.

 

 

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Rhino’s vs. Unicorn’s

I hate unicorn startups.  Most of them are complete fakes.  Take Fab.com, a typical unicorn startup that had great hype and marketing, but never a real business model and when one thing goes wrong, it collapses like a house of cards.

A typical unicorn startup has the following properties.

1 – A lot of hype and is great to look at.  Looks almost unreal.  The founders look and act like the next Steve Jobs (remember Theranos and Elizabeth Holmes).

2 – A ton of money behind it from flashy VCs who look and act like rainbows.

3 – A unicorn startup, like a unicorn, will collapse and need to be put down if the tiniest thing goes wrong, like a sprained ankle.

Unicorn startups are weak, fake, and built on hype.  A few of them include Theranos, FAB, One Kings Lane, and Outcome Health.

In the case of Outcome Health, it was such a sparkling unicorn that it fooled even Google Ventures, Goldman Sachs and some of the top VCs in the industry.  Everyone wanted it to be a unicorn and they fell in love with the founder story.  Even politicians like Chuck Schumer, Elizabeth Warren and the mayor of Chicago visited Outcome Health and were spellbound by the company.  Yet, in the end, it was all fake.  A complete sham.

If you are an aspiring VC, please note that if you see these traits in a startup, run the other way – a lot of hype, flashy founders with no substance, a lot of money behind them, a product that is hard to explain / mysterious.  These type of companies almost always break an ankle easily and need to be put down.

 

Now, a Rhino startup is what you want to invest in.

1 – Rhino startups are tough as hell.  They don’t budge and if challenged, they get more into the fight.  This is the trait I want in the founders of a Rhino startup.  I love founders who are real and genuine.  They know who they are and don’t pretend to be someone else.  I remember living in Silicon Valley when Facebook became hot and seeing all these wanna-be founders walking around with a hoodie and acting like Mark Zuckerberg.  Stay away from those founders.  They are fake, flashy, and weak.  They crumble at the first sign of trouble.

I only invest in founders who know who they are and don’t pretend to be anything else.  They may be rough around the edges, they may be difficult to work with, and they might not fit in the mold of a “typical founder”, but I know I am getting the real thing.  I want founders who are tough, not afraid of a good fight and will not let go of something until they succeed.   You can shoot a Rhino 20 times and they will still keep coming at you.   Rhino’s don’t quit and that’s what I want to invest in.  What I don’t want to invest in is a founder who like a unicorn, at the slightest sign of trouble, they crumble and run the other way.

2 – Rhino startups are hard to move and hard to stop because of their size and speed (yes, they run over 30 mph).  I like startups that can build an unstoppable momentum behind them.  A great startup will generate marketshare fast and make it impossible for someone else to stop them.  Think of the network effect of Facebook, Microsoft and eBay.  Or think of the utility value created by Google, WhatsApp, and Uber.  All of these companies created such scale and momentum that they are hard to stop.  In fact, these companies generate such a momentum that even company mistakes can be overcome.  Think about all the mistakes Uber management has made and how most other startups would have crumbled.  Yet, because Uber is such a good product with such scale, they can survive.

3 – They have a killer single horn.  Their product is so good and so focused that it’s next to impossible for another company to catch them.  Google did nothing but search for 6 years, Microsoft was just an OS for 7 years, and Facebook is still “only” a social network.  Most Rhino startups are really really good at one thing and make a lot of money from it.  I love companies that have a category killer product.  Something so good and powerful, that’s its 100x better than the competition.  A Rhino’s horn is a killer feature / product of the Rhino.  I expect each startup I invest in to have something similar.  In comparison, a unicorn’s horn is weak and fragile.  It won’t do you much good in a fight.  Most unicorn startups have horns like these.  They don’t work in the real world.  Remember the startup called Color.  It had all the makings of a unicorn startup and the tell tale sign was that they had a product no one wanted to use.

You will never go wrong investing in a Rhino.

 

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How The US Post Office + Microsoft (Or Google / Amazon) Can Save 375 Million Trees Per Year!

Every year, the average US resident gets 41 POUNDS of junk mail! That’s nearly 15 BILLION pounds of paper that is destroyed throughout the year to send mail.

This does not even include normal mail (credit card statements, govt. notices, letters from people, etc). In total, we are probably destroying 25 to 30 BILLION pounds of paper in order to send mail in the USA. It takes about 25 trees to produce a ton of paper (2 thousand pounds). Thus, 375 MILLION trees are being cut down per year in order to support our paper mail addiction.

The US Post office can save the environment and actually be more profitable in the process. Here is how we get there.

1 – The post office makes every US resident get an email address with @usps.com domain. The Post office would assign the email addresses to each resident – it could be some combo of people’s name and random numbers, or just random numbers of a certain length (imagine a “postal number” – that is like your social security number).

2 – We don’t need the Post Office to build out this technology. Microsoft, Google or Amazon can handle this scale with their current services. We can have the US Post office submit a bid to these tech giants to power this email system. Here’s the cool part. We dont need fancy features here – No chatting, calendering, or other things. Just pure e-mail that comes into an inbox.

3 – Here is the simple “innovation”. No one can randomly email to people with a @usps.com address. Current direct marketing firms and other firms who send a lot of marketing mail such as credit card companies would have to sign up with USPS to be on a whitelist of valid senders. Once a firm is approved and wants to send mail to let’s say, to all households in New Jersey, they can just filter to that segment and create an email and send it out via the @usps.com platform. Now, they would have to pay for this. We would have “digital stamps” – so maybe instead of spending 35 cents per mail, the marketer is charged 25 cents per household delivery. This becomes a great way for the post office to maintain a strong revenue stream and might actually result in more companies wanting to send mail through this platform. It also reduces the burden on the post office to physically deliver this mail (gas costs, truck costs, man hours, etc). The existing postal mail carriers can then focus all their energy on sending “bulky” mail to households – such as amazon boxes, gift boxes, food deliveries , etc. This would allow the post office to compete more successfully with the likes of FedEx and UPS.

4 – We would make all Government related communication come through this platform as well. So any notice from the Social Security Office, IRS, Medicare, your state or local govt, etc would come through this platform. The nice thing here is that we will be able to track if people got the message and read it.

This is NOT that hard of a technical problem to solve. The technology and scale already exists and can be provided by Microsoft, Google, or Amazon. If this was created and enforced by the US Govt, within 5 years, we can greatly reduce forest pollution at a scale that would actually be meaningful for the planet.

Jay Bhatti

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My TEDx Talk

I had the privilege of giving a TED talk last year.  If anyone is interested in learning why Silicon Valley became what it is today and why New Jersey missed out, check this out:

 

 

 

 

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An MBA: The founder’s recipe for failure

See Original Article @ Quartz

So you think an MBA arms you with the skills needed to launch a successful company?

Think again. The degree might actually make you risk averse and cripple your ability to innovate.

In a recent article for Quartz, I wrote about how MBA programs are not designed to help students become better entrepreneurs. However, when MBA graduates decide to go out on their own, I found that they have the same failure rate as non-MBAs. I talked to professors, angel investors and venture capitalists, and none sees a correlation between a startup’s success and the founders having an MBA. Collectively, they have dealt with more than 300 such companies over the last 20 years.

While there have been recent MBA startup successes like BirchBox (Harvard) and Warby Parker (Wharton), the founders of these companies were already high-achieving individuals who got into top programs and probably could have succeeded without their MBAs. In an article by Reuters, career services departments at major MBA programs reported that in 2011, nearly 5% of the graduating class started a company right after graduation. Taking just Harvard and Wharton, which each graduate 800 MBAs every year, that means about 80 startups were founded in 2011, from which only one of two have become standout companies (i.e. the BirchBoxes and Warby Parkers). The overall failure rate is about 90% for all startups. (In venture capital terms, a failure is when the startup fails to produce a positive return on investment for the fund.)

While many non-MBAs might fail at a startup because they lack marketing experience, business development expertise, the ability to manage cash flow—things that two years of business school can teach you—MBAs fail at launching successful startups for one big reason: their inability to identify innovation.

“I’m not sure it is the MBA degree that matters positively or negatively for startup success. But I do think the expectation of what that degree should bring is what creates a lot of cultural and performance problems with MBA’s and startups,” says David Stern, a prominent VC at Clearstone Ventures. One of the common concerns voiced by startups who have MBA founders is that they are book smart and detailed, but lack the ability to change and adjust quickly in a fluid market.

VCs believe that MBAs spend too much time thinking about the business, as opposed to being able to identify and build the underlying technology that will create a stand-alone company someday. And one angel investor reminded me of a famous line from Bill Gates, where he stated that he “only spends about 10% of his time thinking about the business and 90% of the time on emerging technology.”

This VC felt that founders who were “MBA heavy” spent too much time away from the innovation side of the startup market/industry, making them less likely to identify the technology that would make them break out from the competition.

The reason MBAs fail at identifying innovation is that they get committed too early to a particular “innovation” and do not know when to pivot or experiment with other models. If you look at MBA programs in detail, you’ll notice that many of the core classes teach the following philosophy: with enough data, enough analysis, and enough focus groups, you can come to the optimal solution for any problem.

While this line of thinking works well in private equity or hedge funds, where you can analyze years of data about a company and model out how the companies’ profits will be impacted by changes in the market or changes in the structure of the company, you cannot do this type of analysis when trying to innovate. When it comes to innovation, an MBA is probably the worst training you could have.

The MBA program is designed to teach people to look at prior data and patterns in order to identify future outcomes. In the real world, this just does not work when it comes to new markets or innovation.

I have seen many of my MBA friends go out and do years’ worth of research, analysis, focus groups around their “perfect idea” and execution plan. Once they’re convinced that the data supports their idea, they spend years toiling away to make the idea work. I keep telling them to pivot or experiment with other models, but they stand firm on their belief that all the research they have done confirms that they are on the right path and they just need to keep pushing forward and eventually they will succeed.

If human nature is predictive, this is not surprising. When you commit so much time and effort into something, you tend to stick with it and not change direction. We are all guilty of it. If I stand in line waiting for something, with every passing minute, I become more determined to “stick it through” just because of my sunk costs. Many home owners stayed in lose-lose situations during the financial crisis because they believed they could not let go of their home because of all the previous time and capital put into a house. No matter what the cost to their future might be, they refused to let go of the past and marched toward bankruptcy.

It’s not much different in startup land. Many MBAs and non-MBAs become so committed to a certain model that they refuse to do what is best for them at that moment in time. In fact, large companies can be called out for being even worse at this. How many times have you seen a big organization go after the same model that worked for them in the past (Microsoft, BlackBerry, Yahoo) only to fail again and again when trying to enter a new market?

Innovation is hard. Yet, it’s the only thing that will allow you to create a truly unique company that can have staying power. Looking at the past for innovation is a mistake. Yet, MBA schools and large corporations tell us to do this all the time. There are hundreds of startups that had great teams, huge funding, but could not identify the right product to build because they did not move fast enough in terms of identifying the right innovation for their particular market. Maybe they should have skipped the MBA and gotten right to work.

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How US Policy is Forcing 5 million Americans to Reconsider US Citizenship

Imagine if both your parents were born citizens of Canada.  Now, imagine that they moved to the USA over 30 years ago (before you were born) and became US citizens themselves.  You are born in Texas, you have never been to Canada, and don’t have any plans to visit Canada.   

You are a red blooded American who can run for President.  However, you get a letter from the Canada Revenue Department telling you that you are a tax cheat and owe Canada money.  If you don’t pay massive penalties and fines for not “paying” your fair share of Canadian taxes over the past dozen years, they will prosecute you as a criminal.  Even worse, they will get access to you bank accounts and financial data in the USA.   If that happened to you, it would make you hate Canada, would it not? Well guess what. That is really happening. Except, the country doing it is not Canada, it’s the USA!

In the past 6 months, I have seen a high level of fear, apprehension, and outright anger with regards to this US policy amongst not only US citizens living abroad, but also people looking to become US citizens someday.  Given really  short sighted and  poorly thought through decisions by congress and a overzealous IRS, I fear that some of the smartest people living in foreign countries who might have become US citizens will not opt to stay in their home country. Worse yet, many Americans living in foreign countries and in the USA might outright renounce their US citizenship thanks to current policies that are both confusing and fear inspiring.

 

A little background.   The USA is the only country on the planet that taxes your entire worldwide income, regardless of where you live.  If you’re a US citizen who has lived in Australia for 20 years, you will still have to file taxes and probably pay taxes to the good old USA every year.    Japan used to have this policy as well. But they got rid of it several years ago due to the burden it caused its citizens.   Given this US law and a recent crackdown by the IRS called the Offshore Voluntary Disclosure Initiative, many US citizens are going to be unfairly punished over the next several years.  The Offshore Voluntary Disclosure Initiative allows “tax cheats” to come clean to the IRS by September 9th 2011 or face criminal prosecution.  The original intent of this program was to get rich people with Swiss bank accounts to come clean and save the IRS the headache of catching them.

 

However, since the scope now includes everyone and anyone with any foreign ties, this is quickly going to become one big mess.  Especially since many of these people and their CPAs probably thought they were doing everything according to law.  Many of the laws that the US is using to enforce this policy have been recently created and in most cases, they were old laws that were never enforced and being interpreted by the IRS to their favor.  Like the one where anyone born with US citizen parents is a citizen and has to pay taxes, regardless of the fact that they never lived in the USA.

 

Let’s take a look at how the upcoming September 9th deadline will affect US citizens.

 

USA Citizens Living Abroad: 4 to 5 million

Any US citizen living abroad, even those who have become citizens of other countries (and technically renouncing their US citizenship) are scrambling to figure out if they are going to be on Interpol’s most wanted list.  If you read some articles like this one in the Vancouver Sun and this one in their editorial, you will see that US citizens living in Canada are really worried.  When in fact, they never tried to do anything wrong and thought they were filing all the right forms.   Even children of US citizens who were born in Canada are considered US citizens by the IRS and subject to these penalties.  Does this even make sense to anyone?   I’m all for going after real tax cheats with offshore accounts, but this is a scorched earth policy by the USA.  They will cause tremendous harm to honest Americans living in foreign countries.  I’m sure we will see the most  people renouncing their US citizenship in the next few years ever.

 

 

USA Green Card Holders and Those Looking to Move to USA

 

In the past, it was not too difficult for smart well educated people from other counties to come to the USA for college, stay here, and build a better life for themselves and contribute to the country. However now, in additional to poor immigration visa laws, the new tax laws are making people come here for the education, but then take that skillset and go back home.

 

If I am a foreign born person who moves to the US and becomes a citizen or green card holder, every asset I had in my original country is subject to US taxation.  For example, if you were born and lived in the UK for 25 years, but moved to the USA 10 years ago, you might still have some property in the UK, maybe even a bank account or two.  Now, having lived in USA for 10 years and thinking you filed all the correct tax forms, the USA tells you that you evaded taxes by not properly declaring your UK assets and that they will prosecute you as a criminal. That is exactly what is happening to thousands of foreign born US citizens.  Take a look at articles like this one by Time of India and you’ll see the gravity of the situation.

 

I have spoken with many people who have moved back to China, India, Europe, and even South America.  They all had a few common themes about their reason to leave the USA.  The top three reasons were bad economy, immigration laws, and poor tax policy with regards to people like them who might live between the US and their home country.  In several talks, people said that even with an expired Green card, the IRS could come after them.    In fact, several people I interviewed said they decided to NOT get US citizenship even though they got notices from the INS that they were eligible for it and to come and take the Naturalization Exam.  They preferred to stay on a worker visa so that they would not be forced to comply with US policy for the rest of their life they decided to live someplace else later in life.

 

I’m all for the IRS going after people who hide hundreds of millions of dollars in foreign accounts and  increase the burden on the rest of us Americans.  But in this case, they are throwing out the baby with the bath water.  The USA is still the greatest show on earth, but the cost and headache of admission is becoming high enough that many people prefer to stay home.  We are going to get more people renouncing their US citizenship and even more people who were thinking about getting citizenship, instead deciding to go elsewhere.

 

We need our government to promote policies that incentivize smart, motivated, and hungry people to want to come to America, as opposed to giving them reasons to stay at home or leave altogether.  By going after this policy with such vigor, the US will probably lose out on even bigger tax revenue that might have been generated by people who stayed US citizens and created companies and jobs.

 

 

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Jay Bhatti to Councilwoman: Why did you ask Steve Jobs for Free WiFi?

Cupertino Councilwoman: Here’s Why I Asked Steve Jobs For Free Wifi

Read more: http://www.businessinsider.com/apple-spaceship-cupertino-councilwoman-2011-6#ixzz1YnTMesw7

 

 

When Steve Jobs appeared before the city of Cupertino to pitch Apple’s new HQ, one particular exchange with the city council caught our attention.

 

Councilwoman Kris Wang asked, “Do we get free wifi or something like that?”

Continue…

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THE FUTURE OF BING: Microsoft’s Next Big Partnerships

This article was written by Jay Bhatti and published on Business Insider – Click here to view.

 

My last article regarding Bing’s partnership with Kayak resulted in several emails asking who Bing might partner with next.  It’s an interesting question and one that merits thoughtful consideration.

Let’s go back a few years, when Bing was officially launched. On May 28, 2009, Microsoft launched Bing and Steve Ballmer declared it the decision engine. In the press release, Microsoft specifically called out Travel, Shopping, Local and Health as verticals where they wanted to simplify the task for consumers.

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5 Things The Kayak Deal Tells Us About Bing

This article was written by Jay Bhatti and appeared on businessinsider.com – click here to see full version.

On Friday, Microsoft announced apartnership with Kayak to provide travel results. Jay Bhatti is a former Microsoft employee who founded the people-search engine Spock. Here’s what he sees in the deal:

1. Microsoft purchased Farecast a few years ago for more than $100 million. It’s safe to assume that it was another waste of money for Microsoft. The Farecast team combined with Microsoft’s resources could not build a compelling enough product to compete with Kayak. Heck, two years ago, Kayak complained to Microsoft that Bing’s travel product looked identical to Kayak. Looks like $100 million gets you a team that at least knows how to copy and paste.

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Darwin Ventures Appoints Jay Bhatti, Veteran Vertical Search Engine Entrepreneur, as a New General Partner and Opens an Office in New York City

SAN FRANCISCO–(BUSINESS WIRE)–Darwin Ventures, a private equity firm focused on venture capital, today announced that Jay Bhatti has joined the firm as a General Partner and Zach Heilman has joined as Lead Engineering Manager. “Expanding the Darwin Ventures team with Jay and Zach will allow us to focus on new opportunities in the burgeoning New York City business environment,” said Peter Freudenthal, managing general partner of Darwin Ventures. “We are very excited to have Jay aboard as our new partner and Zach as our lead engineering manager. We feel that their unique skill sets will allow us to expand our existing business interests in Manhattan.” “Internet search has been my core technology interest for many years, and the addition of Jay and Zach plants our flag in New York City,” said Frank Caufield, managing general partner.

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Why Did Google Breakup With My Website?

When it comes to relationships on the web, there are none as one sided as the one between Google and your website.  Google can decide at anytime to rank your site higher, lower, or remove it all together from its entire index.

Google’s rankings have helped some small e-commerce merchants grow to heights they never imagined, and in other cases, it has caused businesses to go bankrupt!

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New Beginnings

Well, after selling Spock.com and spending a year with the acquiring company, I am now ready to embark on my next venture. I moved to NYC this time. Decided that one startup in the valley was enough. Today, we got office space:)

Lets see what happens this time around.

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