Passion versus Drive

January 6, 2015 By in Entrepreneurship Tags:

“Find something that you are passionate about” is absolutely the worst advice anybody can give to an entrepreneur or a job seeker. People get a job for one reason only and that is to earn a living. Otherwise it is charity or a hobby. Sure, you want a job that is not horrible and maybe even pleasant but how much are you willing, let alone able, to sacrifice financially to find something that you are passionate about?

Similarly an entrepreneur wants to build a product or a service, to acquire clients by innovating. Being en entrepreneur in the end means delivering a superior product or service and/or a better price. These are commercial goals and they come first.

Do not misunderstand, a person’s mental and emotional health is important and should not be ignored in chasing financial rewards. The myth, however, that passion at work is not only attainable by most job seekers and entrepreneurs but that it leads to career and business success is plain wrong. Continue reading →

The Information Diet: Bad for Your Investment Portfolio

January 4, 2015 By in Investments Tags:

They say that information is power. Data providers think so. Prices delayed by 15 minutes can usually be had for free, but real time prices cost thousands of dollars per month. Data providers and hedge fund managers will place their own servers in the same building as that of a securities exchange, just so that they can gain an extra few microseconds of an information edge over the rest of the market.

High frequency traders pay exchanges to allow them to see prices a split second before anyone else (don’t ask me how this is legal, it certainly isn’t ethical). There are strong insider trading laws banning the use of information that is obtained inappropriately, another pointer to the value of information. Continue reading →

Why the iPhone is Feminist

January 4, 2015 By in Finance Tags:

This is going to be a short, but powerful, post.

We all know that the iPhone is a battery hog. If you use any of its features then the battery will not last for the whole day. Quite often the battery will drain even when you are not using it. This has created a massive market in mobile phone chargers.

The size of these chargers ranges from a small cigar, capable of a single recharge, to bricks that can provide four recharges to two iPhones at a time.

Men might be able to ensconce a single charge portable on their person.

Women, who are not threatened by carrying a personal container, can easily store a four charge mobile charger in their purse.

The personal advantage of women being able to communicate with the world when men have long lost their battery charge is enormous. But the true power for women comes from men requesting access to the net via their female colleague’s phone, or even more emasculating, to ask for a recharge of their phones using the second connector on their colleague’s mobile charger. Seriously, it’s like being the mistress.

Men, who have been earning far more than women not because they are better but because the world is sexist, will finally learn what it is to ask a woman to treat them as an equal.

It is not clear to me if Apple has secretly been working as the gender equaliser, or if their massive incompetence has led to this situation. A global karma possibly? Or would that be iKarma?

They say that a change in the wind creates deserts. Perhaps a change in technology can alter misconceptions held for far too long.

An economy missing half its population is running at 50% of potential. What a waste.

Scaling Profits

December 30, 2014 By in Cash Flow Tags: ,

Why do so many start ups manage to reach cash flow break even and often manage to break through that barrier but then get stuck in terms of growing their profits much more than that?

Arguably the number one reason is that entrepreneurs have a fear of failure. This is normal, only sociopaths and narcissists feel no fear. The problem lies in an inability to overcome that fear and manage the business in way that balances fear of risk with the equally important requirement to make a return. Continue reading →

Breaking the cash flow break even barrier

December 23, 2014 By in Cash Flow Tags: , ,

I recently covered the challenges of managing negative cash flows. Breaking through the cash flow break even barrier is a completely different matter. Start ups seem to reach this point and never leave it, a gravitational black hole not unlike the friend zone. Understanding this statistical anomaly requires a mix of finance and psychology.

Continue reading →

Entrepreneurs Face Trust Challenges in the Middle East

December 17, 2014 By in Entrepreneurship Tags: , , , ,

Trust in the Middle East is based on social networks: how much I trust you depends on how often I have interacted with you and whether people I trust also trust you. Essentially, trust is a commodity that is built up over time. This model is found globally but there exist alternatives and substitute models that are applied when appropriate. One such model is the swift trust model that Americans often use when faced with situations where trust is needed but there is no time to build it up using a conventional model. This is a trust first, verify later model. A simple example is disaster relief groups which are composed from various sources who need to act immediately. This model is precisely why Americans seem to be able to repeatedly launch successful start ups, whilst in the Middle East many start ups seem stuck.

Continue reading →

SME financing needs from management's perspective

December 16, 2014 By in SME Tags: ,

Small and medium enterprises (SMEs) have been getting a lot of attention in the past few years. Government initiatives such as the Khalifa Fund and Dubai SME 100 complement private initiatives seeking to provide financing for these SMEs. Everyone agrees that SMEs form an important part of the economy. Everyone also agrees that supporting SMEs is challenging. That is the sum total of what people agree on with regard to SMEs.

Continue reading →

Cost Management Insights for Entrepreneurs

December 14, 2014 By in Cash Flow Tags: , , 1 Comment

My basic philosophy on business is that opportunities and challenges are continuously presented to us and we need to respond appropriately. When it comes to managing challenges it makes sense to prepare in advance. My experience is that many entrepreneurs have difficulty doing this at two key points: right after a round of funding and when their business goes cash flow positive. The idea of saving for a rainy day goes right out the window and the dangerous assumption that the business will never go cash flow negative again sets in. This has destroyed many a promising start up.

Continue reading →

Planning and Reorganising Masquerading as Work

December 11, 2014 By in Management Tags: , , ,

One of the recurring themes in my writing is that there is not enough planning before action is taken. Maybe what I should have said is that there is not enough effective planning. The distinction is important as far too often too much planning and reorganisation gets in the way of real work. My experience is that there are two main sources for this wasteful work: perfectionism and deception. Continue reading →

Saudi Oil: Through the Looking Glass & Other Adventures in Investing

December 10, 2014 By in Oil Tags: ,

About a month and a half ago I wrote an article on the sudden drop in oil prices, pointing out some basic errors in the media analysis and providing alternative interpretations for what was going on. The media flurry continued, and the errors in reporting and analysis also continued. So I wrote a second article diving in deeper into the analysis. The media storm continues unabated. To understand the insanity, Reuters on 17 November reported that hedge funds where net short oil. On 8 December Reuters announced that hedge funds were net long oil. What gives? Continue reading →