Interesting Documentary on Quants
This is definitely worth watching -- http://vodpod.com/watch/3021879-tegenlicht-2010-quants-de-alchemisten-van-wall-street.
The film is a series of opinions from several principles of Quant Community. Two of those featured are Paul Wilmott and Emanual Derman. Together they've come up with The Financial Modelers' Manifesto. Despite the homage to the Communist Manifesto, it provides some useful and comedic insight and advice, specifically the end:
The Modelers' Hippocratic Oath
~ I will remember that I didn't make the world, and it doesn't satisfy my equations.
~ Though I will use models boldly to estimate value, I will not be overly impressed by mathematics.
~ I will never sacrifice reality for elegance without explaining why I have done so.
~ Nor will I give the people who use my model false comfort about its accuracy. Instead, I will make explicit its assumptions and oversights.
~ I understand that my work may have enormous effects on society and the economy, many of them beyond my comprehension.
Share on FacebookSweat Equity Part II: “That being said, my time is more valuable than your money.”
This is a comment responding to an article written by Chris Dixon "about Ideal first round funding terms". As I said in my last post it is this kind of attitude from Founders that is a major disconnect from early stage Angel investors. It is my goal to warn new Angels not to fall into the trap of accepting deal terms that place their after tax dollar investment at a lower value then Founder sweat.
Share on FacebookScrew Sweat Equity, If You Need Angel Money Prepare To Give Equal Upside Exposure
The Angel is sure as hell taking equal risk why shouldn’t they get equal exposure to the upside? Too often, I hear early stage entrepreneurs talking about there sweat equity as if it’s a human right. It goes something like this:
ANGEL: “So, Mr. Entrepreneur, how much money are you putting into this venture?”
ENTREPRENEUR: “I’ve spent a considerable amount of sweat equity cultivating the idea and will be working day and night to see this venture succeed.”
ANGEL: “So that’s no cash?”
ENTREPRENEUR: “Well yes, no cash.” As if I’ve called his/her mother a dirty name.
ANGEL: “Will you be paying yourself something while you toil away?” This time I’ve insulted their father’s side of the family.
ENTREPRENEUR: “Yes, some small stipend so that I can put food on the table for my family.”
I love the “food on the table”. My response will now be “Yes, for this investment I’ll be using the money I usually spend on my child’s lunch.”
I’m here to set the record straight. The after tax dollars Angels put into these ventures are a tangible manifestation of their own sweat equity that has actually been translated into value – dollars. Follow me here; the dollars represent not only hard work but hard work that was exchanged for money in excess of necessities” now used for this investment. Those dollars are not speculative they are proven value.
To review, the Angel is supposed to provide after tax dollars to start the venture. For this, the Angel’s investment is often valued on a percentage basis less than the Entrepreneurs vaunted sweat. That’s Bullshit.
Share on FacebookMark Cuban sets the looters straight.
Mark Cuban recently dissected an email he received from a would-be entrepreneur pitching his idea for dollars and failing spectacularly. It’s a good read and illustrates that anyone with a piece of paper and a crayon can create a business plan. Which leads me to Rule No. 1:
Don’t get caught-up in the “mysticism” of being included in a private placement.
Usually it’s the same pitch as the guy on the corner with an outstretched hand, the difference being the “entrepreneur” is dressed better and has a longer laser printed sign.
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