Thursday, April 24, 2008

Thoughts Right After Sending the Last Assignment

I just hit the "send" button for my last two assignments for Prof Wessel's class in Venture Capital and the Finance of Innovation. Great class, totally recommend it. I give him some props for keeping our interest for the second half of the last term. He really tied together all the finance concepts we learned in one half term course.

Here's a link to another book he wrote on valuation (already ordered a copy for my bookshelf):

And now I am really done! Here's some thoughts....

One thing that you learn on Day 1 at Wharton is to measure everything. And I mean everything! We learned a ton of acronyms and frameworks, as well as how to measure them, and then to convert them to log scale and run regressions on them. My classmates will smile as I rattle off the following terms and acronyms from our first year: MC=MR, two-part pricing, T accounts, B/S, I/S, SCF, R^2, t-stat, PVLR, IS-LM, Fisher relation, PPP, linear optimization, the Newsvendor Model, 5Cs and 4Ps, STP, conjoint, and perceptual maps. Oh yeah, and there’s the good ole Greeks: alpha, beta, gamma, rho, sigma, tau. And before I forget, there’s some of the second year stuff: integrative and distributive negotiations, DCF, NPV, cost of capital, WACC, CAPM, currency exposure, IRP, Fama-French, Multi-factor models, APV, LBO, multiples, Section 144A, post-VC valuation, participating preferred, liquidation preferences, entrepreneurial marketing and new product development, and real options. There’s also: bricolage, kumbaya, the Saddu, Porter’s 5 Forces, total leadership, “strategery”, and synergy. We met and learned from CEOs and ex-CEOs, renowned venture capitalists, successful entrepreneurs, and the ex-minister of finance from Argentina that pegged the peso to the dollar. Bernanke wrote our macroeconomics book. (By the way, if you want to see the picture of one of my classmates unwrapping the plastic off of it right before the final, see me for more details.)

I’m sure I’m forgetting about 100 other terms that we could have talked about. For those of you who didn't get an MBA, I’m sure I lost you a while ago in the alphabet soup, but hopefully this gives you a bit of an idea of what we learned in class over the past two years.

But the Greek letters, management frameworks, and formulas will soon start to fade away; it’s what we learned outside of class that really mattered. And I think that this is much harder to quantify.

The Wharton MBA Program for Executives was also very much about learning to juggle the intense demands of a job, family, and school at the same time (and sometimes dropping more than one ball), learning how to help each other, the importance of getting to know the people involved, and figuring out that the team is indeed stronger than individuals. It's nothing short of amazing that I didn't get fired, divorced, and/or fail out of school. I know a lot of my classmates felt the same way. We learned how to think differently, to think outside the bun (er, I mean box), and to apply the tools we learned in the classroom in a world of uncertainty. And these tools and the intuition behind them will help us navigate the real world. They certainly have helped me to look at our bear stock market (worst in five years), the Bear Stearns bailout, and the sub-prime mortgage meltdown through different lenses.

But the events I will remember aren’t those from class but those outside of it, and I’m sure many of my classmates will agree. For example: the conference calls (for most of us that made them), the endless IM chats, the countless emails that made me laugh, the week long trip to Philly, standing on the top of Christ the Redeemer monument in Rio, trekking on the glacier in El Calafate, going to the Old Ship for a nightcap after 12 hours of WEMBA, playing poker, the NCAA basketball pool, the prom, our fantasy football league, travels to Philly, Las Vegas, and other places, the picnics, dinners, and parties we went to, getting pizza for a late night snack in North Beach, and countless others.

To my classmates, I leave you with some thoughts:

Whew, it’s over. It’s been a lot of hard work, sacrifice, and investment in time and money. This definitely wasn’t an MBA-lite; this was the real deal. When they say that it’s the same curriculum as the FT program, they weren’t kidding. I still remember thinking after the first week of Term 1 the following: “Oh my gosh, what did I just get myself into? This is going to be way more work than I thought.” I know that there were many others in our class that felt exactly the same way that first week.

But we made it to graduation! It’s been a tremendous experience; you are an incredible group of talented people that I am blessed to have crossed paths with.

Many of us have switched jobs already or are in the process of doing so. Some of us are staying put. But irrespective of what lies ahead, the future is bright.

We sit at the tip of the Silicon Valley, the center of the innovation for technology. One of the reasons Wharton West was established was to tap into the talent and creativity here. Our last term at Wharton kind of brought it all together for me with the classes on entrepreneurial marketing and venture capital. In thinking about starting my own company someday, I ran across some advice from Guy Kawasaki, founder of Garage Technology Ventures and an ex-Apple Fellow. Not everyone is in technology or is thinking about entrepreneurship, but I think Guy’s advice applies to way more than starting a company; it applies to life.

I’d like to share his top 10 list now:

So You Want to be an Entrepreneur? (from Guy Kawasaki's speech)

10. Embrace the unknown.
09. Don't ask people to do something that you wouldn't do.

08. Focus on implementation.

07. Don't be paranoid.

06. Pursue entrepreneurship for the right reasons.

...Happiness is temporary and fleeting. It should not be the goal of entrepreneurship.

Joy is the right goal. Joy, by contrast, is unpredictable. It comes from pursuing interests and passions that do not "obviously" result in happiness. It comes from building a great team, from family, from friends and inexpensive if not free things.

05. Continue to learn.

04. Be brief.

03. Obey the absolutes.

02. Play to win.
Play to win and don't let the bozos convince you to do anything less. Indeed, the more bozos tell you that you can't succeed, the more you may be on to something.

Playing to win is one of the finest things you can do. It enables you to fulfill your potential. It enables you to improve the world and, conveniently, develop high expectations for everyone else too.

And what if you lose? Just make sure you lose while trying something grand .

01. Enjoy your family, friends, and colleagues before they are gone.

That last one is key, and I’d like to encourage you all to think about it carefully and what it means. Enjoy your family, friends, and colleagues before they are gone. Now we have the time to reconnect and to re-examine our priorities which have been so skewed toward school for the past two years. On a personal level, I know my wife Cindy has a list of “honey-do this” stuff that I’ve been putting off for two years, and from what I hear from my classmates, we all have a bunch of catching up to do on a lot of levels. It will be nice to get our lives back.

Peace out! Gotta get to those honey-dos.

-Chairman P

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