Don Dodge on The Next Big Thing

How early product failures led to huge successes

Failure is not an option...it is a requirement...to future success. Failure gets a bad rap. It is actually an important element of success. When I speak at conferences around the world I say "In America we don't use the word failure...we call it experience". You learn far more from failure than you do from success. And those lessons from failure are what prepares you for future success.

Angry Birds became an overnight success...after 51 failures. Thats right, Rovio produced 51 other games before hitting it big with Angry Birds. Can you name any of the 51 games Rovio produced before Angry Birds? I doubt it. No one remembers failures. And that is a good thing. It means your reputation is not irreparably harmed by failures.

Guitar Hero, the music game, was another overnight success that took 10 years to materialize. Harmonix produced nine other games before hitting it big with Guitar Hero. All the previous failures were required to get to the huge success.

WD40 is a popular lubricant with hundreds of uses. Do you know why it is called WD40? Because the first 39 formulations didn't work. The 40th one did and they called it WD40. The WD stands for Water Displacement.

Now I bet you can guess how Formula 409 got its name. Thats right, the first 408 formulations didn't work. In fact, lots of very successful products were the result of previous failures.

Post-It Notes are the result of a failed experiment by engineers at 3M to develop a new adhesive. It would stick to some surfaces but could be easily peeled off, or fall off with too much force. It was considered a failure until the 3M engineers thought of different possible uses. Super Glue was another product success born from a failed experiment.

Odeo was a startup focused on building a new podcasting product. They weren't having much success. One of the engineers was playing around with a side project to publish short messages to a small audience. That project became Twitter.

Can you think of other product success that came after initial failure? Or startup companies that succeeded after their first ideas failed? If so, leave a comment on the far right side of this blog.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

Fear & Greed - how housing market drives the economy

The economy is all about confidence. Fear = lack of confidence. Greed = supreme confidence. Individuals feel confident when the stock market and housing prices are up. When individuals feel confident they spend money, and even borrow money, to buy more stuff. Consumer confidence drives the economy. When consumers spend, business do well, stock prices go up, consumers feel more confidence and spend more. Virtuous cycle.

When confidence is down consumers "de-leverage" reduce borrowing, reduce spending, which hurts business, and starts the death spiral. The Fed can lower interest rates to ZERO, but businesses will not borrow or expand because they aren't confident. Conversely, when confidence is high, businesses will borrow no matter what the interest rates (or tax rates) are.

Government can't control the economy anymore. In the old days the Fed could raise interest rates to slow down inflation, or lower interest rates to speed up the economy. It doesn't work anymore because our economy is now global, and interconnected with other global economies. Money and wealth can move globally in seconds with the click of a mouse.

Congress could raise tax rates or lower them to incentivize the economy. They could give special tax incentives (R&D tax credit, solar tax credit, jobs credit) to make certain things happen. It doesn't work anymore. Business got wise to the constantly changing rules and has decided not to play anymore.

Today it is the housing market and the stock market that drives the economy. When housing prices and stock prices are up, people and businesses feel confident...and they spend money...which drives the economy and jobs growth.

When housing and stocks are down people and businesses get nervous, consumers don't spend, businesses don't hire, and everyone gets very conservative. Economic death spiral (Fear) ensues. When this happens lowering interest rates won't help. Raising or lowering tax rates won't help. Political speeches won't help. There are no quick fixes. Economic cycles take time to adjust.

Remember one thing; fear is temporary, greed is permanent. Greed always wins out over fear. Fear = lack of confidence, and is temporary. Greed = supreme confidence. People don't want to miss out on new opportunities or fantastic buys. The economy will come back strong in spite of government policies...not because of them.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

TC Disrupt SF 2011 easy to start company, hard to build business

TechCrunch Disrupt has 30 companies on stage and 200 more in the Startup Alley. Here are the 7 finalists picked by judges. And here is a good review by Jeremiah Owyang. So, what looks interesting and what are the trends?

Easier to start a company, harder to build a business - It has never been easier or cheaper to start a company. Venture capital is plentiful and Angel investors are more active than ever. Ycombinator pumps out over 150 companies a year. TechStars launches another 100 or so. 500Startups is getting close to helping 500 or more. But, many of these "companies" are small apps that are more like a "feature" not a product, and certainly not a viable stand alone company.

Building a business - Most startups fail, that is a fact of life. The difference is that in the past it cost so much to start a company that fewer were actually started. Then, because it was so expensive, these startups  would either live or die (run out of cash) within 12 to 24 months. Today, web startups can start for less than $50K, and stay up and running for peanuts.

Rising above the crowd - It is easier to start a company, but harder to rise above the crowd, attract an audience, and build a viable business. Social networks help build viral growth. Buying keyword advertising helps get your message to a very targeted audience. Influential bloggers and Twitter titans can help attract a lot of attention. The old school PR approach doesn't work as well unless you engage the super plugged in mavens. 

Me too - I have seen 20 or 30 Groupon clones, deal aggregators, mobile deals by location, social network deals, etc. Sorry, but that game is over. Every product segment tends to have a gorilla, chimp, and monkey that dominate most of the market. Everyone else fights for the crumbs.

Another meme is "I'm the AirBnB for ...", meaning we provide a market to rent out your personal car, apartment, boat, office space, etc. on a short term basis. Social networks and web based marketplaces make it possible to sell or rent anything.

Cream rises to the top - One well known VC told me he was so tired and overwhelmed by all these startups. He was having trouble calibrating and sorting them all out. I told him this is an important part of the process, and in my view, actually makes it easier for the really great ideas or entrepreneurs to stand out. The secret to success in the VC business is to spend a little time with a lot of companies, and a lot of time with a few companies. The trick is to quickly figure out which are the few companies to focus on. After seeing so many companies and pitches the good ones actually stand out pretty quickly.

How to stand out - My last post was "How to pitch your company to investors, customers, and employees".  Take a few minutes to read this post and learn why the "elevator pitch" is so important, and how to determine if someone is really interested. 

Do your research - A conference like Techcrunch Disrupt, DEMO, or Launch lets you see over 100 companies in a couple hours. You can get a very good look at trends, possible competitors, features you might want to add to your product, or potential partners. When pitching a VC you must know the competitive landscape. If you don't know about an emerging competitor you look clueless. There is no better place than a conference to quickly do your market research and see all the players in one place.

I am a big fan of conferences, but I work them. I don't just sit in the audience and listen. I spend my time trying to see every company, talking to people back stage, and asking lots of questions. You can learn a lot in a very concentrated investment of time. The parties are pretty good too :-)

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

Thank You Mike Arrington

Mike Arrington announced yesterday at Techcrunch Disrupt that he is leaving Techcrunch and AOL. Mike thanked everyone for their support and quickly moved to put the focus back on startups and the conference. Class act. Mike has done more for the startup community than anyone else. Loic Le Meur wrote a great post about the real Mike Arrington today. Here is mine.

Mike helped me when I was laid off from Microsoft. I will never forget it. Mike was the first person to call me after I was laid off. He called as a friend, not as a reporter looking for a story. But, he did write a story, and it changed everything for me. That call from Mike meant the world to me. Thank you Mike. Mike has a huge heart, great sense of humor, and is intensely loyal. Mike changed the tech world, and I think he will change the VC world too. Think back 6 or 7 years ago, before Techcrunch, before Facebook, before Zynga. It was a very different world...kind of boring. Techcrunch brought focus and attention to startups, and made it interesting again.

Mike worked 20 hours a day, 7 days a week, to build Techcrunch. He loved his work and it showed. Mike attracted a talented team of writers and expanded far beyond just a blog. A few years ago he started Techcrunch TV to cover more startups and do more in depth, personal interviews.

Mike started TC40 with Jason Calacanis to give a bigger better platform for startups to launch their companies. They wanted to make it FREE for startups to present, and keep the focus totally on new startups. Mike went on to form Techcrunch Disrupt, a new conference with interviews of great entrepreneurs, VCs, and tech execs, and of course, lots of startups. Mike took TC Disrupt to New York and helped revitalize the NYC startup market. This year there will be a TC Disrupt in Beijing. The world wants more Techcrunch. It helps energize the startup community, and it puts the spotlight on entrepreneurs. 

Techcrunch will not be the same without Mike Arrington. I hope he continues to write a blog to share his insights, humor, and curiosity. Mike should be very proud of what he created at Techcrunch, and the team he built. Techcrunch will live on as his legacy. One of his legacies.

The Venture Capital community should brace themselves for disruption. Mike Arrington will change the VC world too, and that is probably a good thing. 

Thank you Mike, and good luck to you!

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

How to pitch your company to investors, customers, and employees

I see about 400 startup pitches every year. This week at Techcrunch Disrupt and DEMO conference there will be over 200 companies pitching on stage and in the demo area. The good ones stand out immediately.

How can you get noticed? Don't expect to tell the whole story, just enough to get them curious and wanting to know more. You need several different pitches. The demo pit / exhibit area pitch is 1 minute. The on stage pitch to the audience is 6 minutes. The investor meeting pitch is about 30 minutes.

Don't waste time with people who aren't interested. At a conference like Techcrunch Disrupt or DEMO you will see hundreds and hundreds of people. The goal should be to connect with five people who can help you. Be clear about what you need; customers, investors, partners, introductions, or maybe new employees. Focus most of your time on the people who can hep you the most. Don't spend time on people who aren't interested, or can't help you get what you need.

How do investors decide who they want to engage with at a conference? They look for ideas that align with their investment thesis. The secret to success in the VC business is to spend a little time with a lot of companies, and a LOT of time with a few companies. They want a quick overview of everything to make sure they don't miss anything and to see macro trends. But, they only want to spend a lot of time with a few companies that align with their investment thesis. So, if you are in a demo area with hundreds of people walking by, don't waste time with someone who isn't really interested. The one person you really need to see might walk by because you are too busy with someone else who isn't interested. Be available when the right person comes along.

How do I know if they are interested? They self select. They nod their head as you are talking. They ask a question. If you don't see any of this, or just a blank stare...move on. If the name of your company doesn't describe what you do, then make sure you have a great tag-line or "bumper sticker quote" that does. As people stroll down the aisles of an exhibit area they are looking for key words that capture their attention.

Who is your Customer? - The first question I ask a startup is "who is your customer?" or "who pays you money?". This helps me understand where the company is positioned in the ecosystem or "value chain". You would think this would be intuitively obvious...but it isn't. Many companies use the same buzz words and technologies so they all start to sound the same. They aren't. Knowing who your potential customer is helps me understand if I am a potential customer, or if my customers might need your product to build a complete solution.

What Problem do you solve?  Start with the problem you are solving or the need you are filling. A real life story about a person who needs or wants your product helps the investor understand the problem or need in personal terms, and agree that it is an interesting problem that needs fixing. Too many entrepreneurs start by talking about their solution and whiz bang technology. How they do it, versus what problem they solve. If the investor is not interested in the problem…there is no way they will be interested in your solution. Once they are nodding their head in agreement about the problem, then move on to the solution. If they don't nod in agreement cut it off right there. Don't waste your time, or theirs.

What is your Solution? – Explain why your solution solves the problem, and why it is better than other solutions. We do X for Y, or we are the X (well known product) for the Y market. For example, "we are Twitter for the enterprise market". Or, we do "enterprise level security for mobile handsets". Once they understand what problem you solve, they might listen to why your solution is better. It might be cheaper, faster, smaller, easier, more enjoyable, or whatever. Don’t waste time explaining the technology, or flowcharting the process or value chain. Just explain why your solution solves the problem better than anything else.

Who is the Competition? – If there is no competition there probably isn’t a market. Naming competitors help the investor understand the problem, existing solutions, and potential size of the market. Even if you think you are inventing a new market, the problem has been there a long time. People have figured out some way to solve it. That is your competition. Acknowledge that there are existing ways to partially solve the problem, and companies that have part of the solution. Then explain why yours is better. Investors will be very nervous if there is no competition.

What is your Business Model? - Who will pay? Is your solution a vitamin or a painkiller? Vitamins are nice to have, painkillers are a must have. There are some problems that no one will pay to solve. There are other problems where the one getting the benefit is not the party that pays the money. Sometimes there are multiple players in a value chain. Be very clear about where you are in the value chain, who will pay for your solution, and how much they will pay.

The Team – What experience do you and your team have starting companies or specific experience in this market segment? Are there any well known advisors or financial backers helping you? Do you have connections to people who can help you get your first customers? This is important because in the end it is all about the team. The best ideas will fail if there isn't a team with domain experience that can execute. For example, I could have a great idea about making the best Whoopie Pie you ever tasted. But, I don't have any experience in running a bakery, or getting wholesale distribution, or Consumer Packaged Goods, so I would most likely fail to execute on the idea.

The Close – We are solving a big problem, in a growing market, with a model that works, and a team that can execute. We need X dollars to reach Y milestone. We need investor partners to help us achieve this success. Show passion and confidence. Ask them to join the crusade. This is going to be The Next Big Thing.

Spend one minute on the problem, three minutes on the solution and demo, and 30 seconds each on the competition, model, team, and close. That is 6 minutes. Practice it 20 or 30 times.

Every founder and early employee should be able to do the elevator pitch. The pitch is critically important to the success of your company. Every potential new hire needs to buy into the story just like investors do. Customers need to buy into the story too, before they purchase your product or service. This is important. Get it right and life will be much easier. Get it wrong…and you will get a NO in 5 minutes or less.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

Can Yahoo or AOL be saved?

Yahoo was once the biggest and most valuable web company in the world. AOL was a dominant company too. MySpace was the clear leader in social networks. Dinosaurs once ruled the world too. They didn't die because they were big and slow. They died because they couldn't adapt to change.

How can clear leaders crumble to directionless losers in just a few years? Poor management decisions, trying to do everything, over-extending, and forgetting their core values. Can Yahoo be turned around? Yes, but it is unlikely to happen because they can't bring themselves to adapt and make the necessary changes.

The Biggest Loser - The TV show "The Biggest Loser" is about grossly overweight people completely changing their lives with diet and exercise to get back to healthy, happy people. It looks impossible. These people feel like they have tried everything to lose weight, and have just given up, or maybe convinced themselves it isn't that bad. The truth is they can do it, but not on their own. They need a coach to control every aspect of their lives, totally change their daily routines, and get them back on track. Once they do this the results are absolutely amazing.

Back to basics - Both Yahoo and AOL need to get back to basics, and focus on what is working. Some of those things that worked in the past might not work now because the competitive landscape has changed. They need to laser focus on the things that are working, and cut everything else. Literally, cut everything that is not core to their success, or not profitable.

Admitting mistakes - The concept is simple, but hard to execute. People don't like to admit that they made mistakes. They don't like to admit that they can't fix something that isn't working. They rationalize that things really aren't that bad. They always believe that given some more time everything will work out. Sorry, but it won't. This is why new management is usually required to make the tough decisions. The old management made the decisions that led to the failure and they can't admit that, and change course. Just like The Biggest Loser, they need a coach to come in and change everything. They need a plan that can work.

Complacency rules - The biggest barrier to change is complacency. We rationalize that things aren't that bad. In the case of Yahoo they have over $6 Billion in revenue and over $1 Billion in net income. Their market cap is over $16 Billion. What's wrong with that? Nothing if you are satisfied with being average. Stockholders and employees expect more.

Grand plans - Great visions, innovation, and grand plans can not be built on an unstable foundation. Sometimes you need to cut back to your core before you can resume growth. Sort of like a shrub or tree that has grown tall and spindlely, with a bunch of bare spots. You need to cut it back to the base in order to get abundant growth. So, there will be a time for grand plans and technical innovation, but for now they need to focus on strengthening the core business.

Unfortunately, this isn't TV. Just changing the CEO will not solve the problem. They need to clean house, eliminate whole divisions, cancel products, double down on the things that are working, and clearly spell out a road map to success. They will lose some employees in the process who don't agree with the direction. Pundits will complain that they have lost their vision, ruined the culture, and made reckless cuts. What they fail to realize is that the current situation isn't working, and is never going to work. They can die a long and slow death clinging to the status quo, or they can make drastic changes and pivot like a start-up would, to chart a new course.

Who could turn Yahoo around? Kara Swisher has some safe good choices. My choice would be Mark Cuban. Mark was the founder of Broadcast.com, which he sold to Yahoo many years ago. Mark understands the media business, and he understands technology. The new leader for Yahoo must be an expert in both. Terry Semel knew media, and Carol Bartz knew technology, but neither of them could master both. It is not easy. 

Who would acquire Yahoo? Microsoft is not coming to the rescue. They are not likely to again offer billions of dollars to acquire the company. They already got what they wanted (search business) without buying the company. 

What is likely to happen? Yahoo will probably name a new CEO with a well known name, or prior history at Yahoo. The new CEO will make incremental changes, trim here and there, and announce a new product direction. None of it will work...soon enough. Unless the economy turns around and ad spending increases dramatically...things won't improve much. Expect more of the same.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

Acquisition success depends on founders

Techcrunch is living a very public drama on what can happen when you are acquired. Things change, people leave, competition reacts, and customers make choices. Sometimes these changes are great. Android was acquired by Google and changed dramatically...for the better. But, sadly, most acquisitions don't play out as expected.

Founders matter. Founders are the heart and soul of a company. The identity, vision, and culture of the company is inextricably linked to the founders. Mike Arrington is Techcrunch, and Techcrunch is Mike Arrington. This is true of most startup founders. Take the founders out of the equation and most startups will fail.

But startups grow and change. Great people join the company, and new leaders emerge. New products and services are introduced. New markets are opened up. Revenues grow, headcounts grow, loyal customers attract new customers, and momentum propels the startup to new heights.

The liquidity event - Acquisition or IPO is the financial reward every startup is working towards. Most don't make it, but those that do reap tremendous financial rewards. But, there is usually a cost...or trade-off. Things are not the way they used to be. You have new bosses, new objectives, and new rules. The culture is inevitably different. 

The transition - It is critically important to the success of a merger/acquisition that the founders stay on for a few years, hopefully a lot more. Most acquisition failures can be tied directly to the founders leaving too soon. There are usually great financial incentives for the founders and key employees to stay. But many times the money just isn't enough to keep them. The founders already have more money than they ever thought they would have. The thought of adding more wealth doesn't compensate for the feelings of lost control, lost excitement, and sheer terror/thrill of running a startup. 

Who stays / who goes - After a couple years most employees of acquired companies get comfortable with their new jobs, new managers, and maybe even new challenges. Sometimes they get to play on a bigger stage at the parent company. Sometimes the acquired company is far more successful than they ever could have been as a stand alone startup. This success exhilarates them. They stay with the company and grow to new heights. This is what every acquirer hopes will happen.

Successful acquisitions start with the founders - Android is an excellent example of an acquisition done right by Google. Android is far more successful today than it ever would have been as a stand alone company. Andy Rubin has stayed on and led the Android team. Rich Miner, another Android founder, is now a partner at Google Ventures. Google did a great job with the YouTube acquisition too. The founders stayed on for a long time, and the transition to new management went very well.

Then there is Dodgeball, an acquisition by Google that didn't work out. Dennis Crowley, the founder of Dodgeball left Google to start FourSquare. More recently, Google acquired Slide. Max Levchin, the founder, is leaving about a year after the acquisition. In both cases the founders left relatively quickly, and the acquisitions could be considered failures. So, even when you know what you are doing, and even with the best of intentions...acquisitions can fail.

When the founders leave too soon after the acquisition...problems are more likely. Mike Arrington has built a great team at Techcrunch. MG Siegler, Paul Carr, Erick Schonfeld, Sarah Lacy, Heather Harde, Alexia Tsotsis, Leena Rao, and many more are very strong personalities, great writers, and have their own loyal following.

Techcrunch will be fine, but it will never be the same without Mike Arrington. He is one of a kind. That is true of many startup founders. Take them out of the equation too soon...and there is no company left. Startup founders and corporate acquirers should think long and hard about how to deal with this before making the merger decision.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

How technology productivity kills jobs

Technology is all about productivity. Getting more things done, faster, cheaper, with fewer people. This has been called the "Jobless Recovery". Here is why. Companies have spent billions of dollars on technology to gain productivity improvements, and it has worked. The bad news, for some workers, is that it has worked so well that some of those old jobs are never coming back. And, the new jobs that are created by technology may not be a good match for displaced workers. Take a careful look at this jobs chart.

Chart: Calculated Risk via Business Insider

Note how recessions (job losses) are becoming deeper and lasting longer. This chart measures job losses from the peak employment month. We are now 4 years into a job recession, and it is deeper and longer than any other recession in history. In fact, the last four recessions have been deeper and longer than others in previous decades. Why is that?

Travel agents, stock brokers, and record stores - Technology, specifically the Internet, has disintermediated and disrupted entire industries. When was the last time you used a travel agent? Doesn't everyone book their own flights and hotels online? Do you use a stock broker to buy stocks? I haven't used a stock broker in over 20 years. When was the last time you went to a store to buy music? Does anyone have a secretary anymore? When was the last time you went into a bank and talked to an actual person? Doesn't everyone use ATMs and bank online? All of these jobs have been severely disrupted and reduced by the Internet. Those jobs, and many more like them, are never coming back.

Preparing for the future - The new economy and new jobs all have a technology component. Auto mechanics today use more computers and electronics than college professors of 30 years ago. Manufacturing jobs today require knowledge of computerized inventory systems, production planning systems, test environments, digital scanning, RFID tags, and loads of other technologies. High schools need to teach kids how to use computers and information technology. There are very few "low skilled" jobs in this country. The technology bar has been raised significantly, and some are failing to reach it. Others are unaware that it even exists.

Health Care and Education - Health care and education are two of the largest sectors of any economy anywhere in the world. More people work in health care and education, and more money is spent on it, than almost anything else. Yet, these two sectors are probably the least efficient and productive. Technology has not been applied here in the same way it has in other major industries.

Labor unions dominate both sectors. Labor unions are all about preserving the status quo. They "protect jobs" by demanding "work rules" that effectively block technology improvements and productivity...because these improvements would reduce the need for some workers. Look at any job sector that is dominated by labor unions and you will see a lack of technology and productivity.

Who is right? - Politicians and government bureauocrats pontificate about jobs, but have no clue what creates jobs, or more importantly, what kills jobs. Unions talk about protecting jobs, but fail to realize how their work rules kill jobs. Perhaps they are right. Maybe protecting existing jobs and limiting productivity is the right way to go. 

My view is that technology makes the world a better place. It makes things faster, cheaper, more productive, and opens limitless new opportunities. Technology facilitates creative destruction, destroying something old to create something new. It is that transition from old to new that we need to better manage. Our education system needs to prepare students for the new reality. Those old jobs are never coming back.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

Markets driven by fear and greed - Entrepreneurs by opportunity

The investment market is driven by two things; fear and greed. Fear is temporary, greed is permanent. Markets over time always move up but there are periods of fear and doubt that cause investors to retreat. But only for a short time. Greed takes over when investors see others making money and want to get back in the game before the opportunities get away. This happens in the stock market and in VC investing.

When fear takes over it consumes everyone. Everything looks black. Investments that looked great 6 months ago look like risky charades with no business fundamentals today. We saw this happen in 1987, 1994, 2001, 2008, and again now in 2011. The difference today is that the mood swings from fear to greed are happening every other day instead of every three to six months. Investors are confused and even bi-polar.

There are usually a few high profile examples of "irrational exuberance" that were indeed big mistakes. These irrational valuations cause investors to rethink all investments and second guess themselves. When this happens the rest of the market gets slammed irrationally.

But fear is temporary, greed is permanent. Greed is a much stronger emotion than fear. Greed in this sense is a good thing, more like motivation and risk taking. No, I am not channeling Gordon Gecko. Simply saying that greed and competition is more powerful than fear.

Entrepreneurs see opportunity - Regardless of the environment, entrepreneurs are always going against conventional wisdom. They think big, think about what could be, and ignore the naysayers. Yes, entrepreneurs do take big risks, but they don't look so big to them. It just looks like a big opportunity. If it were easy or obvious everyone would be doing it. Entrepreneurs ignore the fear and focus on the opportunity. I have never seen an entrepreneur who said "I would start a business if only the tax rates were lower...or the interest rates were lower." It is all about confidence. If entrepreneurs are confident they will start businesses no matter what.

Consumers think differently - Consumers are more cautious when fear takes over, and more reckless when greed is in full swing. With consumers it is all about confidence. Fear = lack of confidence. Greed = supreme confidence. Individuals feel confident when the stock market is up and housing prices are up. When individuals feel confident they spend money, and even borrow money, to buy more stuff. Consumer confidence drives the economy. When consumers spend...business do well, stock prices go up, businesses hire more people, consumers feel more confidence and spend more. Virtuous cycle.

When confidence is down consumers "de-leverage" reduce borrowing, reduce spending, which hurts business, and starts the death spiral. The Fed can lower interest rates to ZERO, but businesses will not borrow or expand because they aren't confident. Likewise, consumers will not borrow money to buy cars or houses. Conversely, when confidence is high, businesses will borrow no matter what the interest rates (or tax rates) are.

Not to get into a political debate, but my point here is that interest rates (The Fed) and tax rates (Congress) have far less influence on the economy than they think. The political extremists in Washington arguing both sides of these issues have no clue how job creation and business actually work. Ignore them. Instead, focus your attention on entrepreneurs.

This too shall pass. Fear will subside and greed will take over. Consumers and businesses will borrow money and expand. The stock market and housing market will again be good investments. The virtuous cycle will again start turning in the right direction.

This market madness is of no concern to start-up entrepreneurs. Stay focused on solving real problems and creating new opportunities. The markets will reward you for your focus and perseverance.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+

Celebs and Tech leaders on Google+

There are a surprising number of celebrities on Google+ only 3 weeks after launching. Ashton Kutcher is deeply in the tech scene so no surprise he was one of the first. Hey, even Facebook execs are on Google+.  I'm sure there are lots more celebs on Google+ that I don't have in my circles. But, here are some you might want to add. Click on their names to get to their Google+ page.

• Alyssa Milano - Actress
• Ashton Kutcher - Actor / Entrepreneur
• Britney Spears - Singer
• Chamillionaire- Rapper / Tech enthusiast
• Dane Cook - Comedian
• Floyd Mayweather - Boxer
• Lance Armstrong - cyclist / cancer survivor
• Snoop Dogg - Rapper
• Shannon Brown - LA Lakers
• William Shatner  - Actor
• 50 Cent - Rapper

Here are some tech and business people that may also be considered celebs. I consider them friends :-) In no particular order;

• Mark Cuban - Owner of Dallas Mavericks
• Michael Dell - Founder, Dell Computer
• Om Malik - Founder, GigaOM
• Kevin Rose - Founder, Digg and Milk
• Dave Morin - Facebook, Founder, Path
• Bill Gross - Founder, IdeaLab
• Marc Benioff - Founder, Salesforce.com
• Ev Williams - Founder, Twitter
• Tom Anderson - Founder, MySpace
• Michael Arrington - Founder, Techcrunch
• Pete Cashmore - Founder, Mashable
• Robert Scoble - Blogger
• Jason Calacanis - Founder, Mahalo
• Brad Feld - Foundry Group VC
• Fred Wilson - UnionSquare VC

I'm not a celeb or tech leader, but I am on Google+. Add me to your circle and lets start sharing.

Subscribe - To get an automatic feed of all future posts subscribe here, or to receive them via email go here and enter your email address in the box in the right column. You can also follow me on Twitter @dondodge and on Google+