Saving for the Future While Paying Off Debt

How can you save for the future when you're still paying off the past?

Who Do You Want to Be When You Grow Up?

No matter your age, it’s never too late to chase your dreams and achieve financial freedom

I don’t know about you, but the ongoing scarcity of women in leadership positions continues to blow my mind. Sometimes it’s hard to believe that it’s 2018, because not nearly enough has changed when it comes to gender equality in the last century. It’s well documented that women are just as capable, if not more so, than our male counterparts, yet we still face a tremendous amount of obstacles clawing our way into senior leadership positions.

According to an article in Inc., six of the top issues that contribute to this phenomenon include:

1. Outdated gender biases that are deeply ingrained in workplace culture.
2. A gap in perception—in a recent survey, 86 percent of men said women have as many or more opportunities than men do, but only 56 percent of women agreed.
3. Women in leadership tend to be relegated to traditionally female roles, such as human resources or public relations, versus IT and finance.
4. Continuous lip service, in which companies say they’re addressing issues of equality but they don’t hold their leadership team accountable for taking action.
5. Disparity in pay for men and women in the same roles.
6. Work-life balance concerns, which result in women being put on the “mommy track,” which prevents them from advancing.

Clearly it’s not easy to change workplace culture, but we’ll keep hammering away at it. In the meantime, if any of these six things sound familiar, it’s time to focus your attention on what you can change: your own mindset.

What do you want to do with your life?

Robert asked me this hard-hitting question on our first date. I told him I wanted to start my own business, and that’s what I did.

Yes, it was difficult. I had to learn through experience and a lot of trial and error. Back then, we had nothing—we even lived in our car for a short period of homelessness. It was extremely scary and stressful. But I did not give up…and things worked out just fine in the long run.

My dream became a reality because I had the courage to focus on my financial education, keep moving forward and not let the naysayers change my mindset for success. I remained steadfast in my purpose and zeroed in on my why.

With this in mind, what do YOU want to do with your life? Who do you want to be? What goals do you want to achieve? What legacy do you want to leave behind?

Do you want financial freedom?

Whether you are a mom trying to balance an impossibly tight budget, a stressed-out executive daydreaming about a better life, or just someone who has “settled” for what you have, have you put your dreams on hold? Do you yearn for something more? Something different?

Well, stop making excuses. It’s time to push yourself to the next level!

Life is a never-ending workshop, and when you stop learning, you stop living. Yes, you will make mistakes, but that’s how you learn. The important thing is to take action.

Put yourself in a position where you have to do something beyond what you think you can do. Make yourself just a little uncomfortable.

Sure, it’s scary. And you will have to fight the negativity out there—not only from your own self-doubt, but from all the people who will tell you your dreams are impossible (especially friends and family, who are either jealous or trying to protect you from making mistakes and getting hurt).

But this is how you break out of a rut, build confidence and get the skills and financial education you need to make positive changes happen. This ties in perfectly to my Be-Do-Have philosophy of chasing and achieving your dreams.

Who knows? You just may surprise yourself at what you can accomplish if you put your mind to it!

Source: http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/May-2018/Who-Do-You-Want-to-Be-When-You-Grow-Up.aspx

How to Buy Your First Investment Property

In this video Robert Kiyosaki of Rich Dad Poor Dad gives advice on investing in your first property

How to Significantly Increase Your Prices,Without Losing (All of Your) Customers

I have the answer to all your business problems and prayers. There is one really easy think you can do to go from struggling to making consistent and significant profits. It’s so simple anyone can do it, even you. But you probably won’t do it. You’ll know you should, but you’ll still have doubts. I’ll reveal this in a moment.

I’ve helped hundreds of thousands of start up and scale up business owners in the last 11 years, and most of these people initially think you can’t just increase your prices overnight. Why?

• They think they will lose most of their customers
• They think their customers will complain
• They don’t think it is fair to their customer loyalty
• Other fear they don’t yet know is real

They only think of the cost of increasing their prices, and not the cost of NOT increasing their prices. After all, Apple and Rolex seem to have no problem with it.

So consider these 8 points and then test the following 7 points to significantly increase your prices (or face the costly consequences)

1. 10-20% swing won’t impress you much

If you had assets or investments, and they went down 10-20%, you probably wouldn’t go into a fit of panic or rage. Sure, you wouldn’t be happy, but you could probably handle it and control your emotions well enough not to make fashion selling decisions. If they went down 50% that could be a different story. And in reverse, if they went up 10-20% you probably wouldn’t be overly manic, excitable and plan your retirements. So a 10-20% value (or price) swing wouldn’t likely bother you too much. And so it likely is with your clients and customers if you increase your prices. Would a tenant move out for a 10% rent rise? Probably not because inconvenience and removals could cost years of that extra rent.

2. Most of price rise is profit (overheads covered on current pricing)

Most people don’t realise that if you have a 10% profit margin (let’s say you make £10 on every £100), if you increase your prices by just 10% (assuming no extra overhead) you double your profits with such a small price increase. All your overhead, staff, loan, premises, stock and more costs are currently covered (or not quite) by your current pricing, so all (most) of the price increase is profit.

3. Inflation

Every 15 years or so inflation halves the relative value of money. This means your prices need to have risen around 100% in that time, to not have risen at all in relative terms. So every 15 years you need to 2x your price to 1x your price. If you don’t meet this rise, your suppliers will and the costs or goods and services to you will rise, but your prices won’t and your profit will get eaten two ways, lower pricing and increased cost, which is the direct opposite of what you want to do.

4. Would you really lose all your customers?

If you increased your prices, would every single one of your customers really flock to your competitors? Really? Sure, you might you lose the demanding ones; the ones who want £10 for £5, but that could be a good thing (next point). Not all customers cost you the same overhead, because some customers are a huge drain on your time, resources, staff, customer service, refunds and cost you a LOT more than others (even in commodity based business). one customer could cost you 5 or 10x what another does, and as such the least demanding one has a huge profit margin and the most demanding one has a negative profit margin. So you know what you’ve got to do.

5. You won’t be able to grow or sustain your enterprise

If your margin isn’t good, because prices are too low (or costs too high), then you can’t sustain your business, and it will go bust, and the very customers you wanted to give a bargain or great service to end up losing out. Or future customers lose out. There HAS to be fair exchange, balancing the selfish and the selves, the profit and the service, the price and the value. That means depending on your business niche and scale between 5% and 50% net profit margin sustainably, even and especially through leaner times.

6. If prices are higher, service & value are better

Or at least they should be. if you have fair profit margin you can give a better service, reinvest to innovate and improve your product, and overdeliver. Price is what you pay, but value is what you get. You get less complaints and more gratitude the more value you can offer, and you can’t do that without any margin. Rolex put their prices up regularly, sometimes as much as 10% in a year. The Daytona has almost doubled in price in the last 8 years yet the waiting list to get a new one is 9 years or more.

7. You will resent customers if your prices are too low

When I was an artist, struggling to sell my work and make any money, I had guilt around pricing my work. I’d sell my art for less than it, and I, was worth, then I’d be bitter towards my customers. But they aren’t going to offer you 50% more than you price your products. If you increase your prices you can always discount them. The low prices that cause resentment become a self fulfilling prophecy in that you don’t want to give service and gratitude, because you aren’t making any money. And none of it was their, or the markets fault.

So here are 6 ways to increase your prices and increase your profits without losing all your customers:

1. What about a higher end product?

Most people wouldn’t buy a £50k Toyota, so they created Lexus. Nissan created the GTR ‘brand’. Apple have the iPhone X. Giorgio Armani created Armani exchange at the lower end, and Collezioni at the higher end. If you are concerned about increasing your prices, create new models or even brands, to protect existing products and smash through price ceilings.

2. You doubt it, but you haven’t tested it. So test it

Unless you try, how will you ever know? Why not test a higher price point to a small segment of customers? You could sell newer or more expensive versions to proven, high paying customers, or even new ones. The market will tell you the optimum price, and sometimes that price is actually higher than you think. Low price means low value in the minds of many of your customers. You should always be testing new products and price points anyway, to innovate and grow through market and competitive forces. Do. Not. Wait. Or guess. Test.

3. Commodity or rarity?

Some people feel their product is commoditised, the price is set, and they couldn’t increase it as no one would buy their products. They could be in a very mature or competitive market. But even in those cases, you can usually find a way to increase profit margin. Airlines are price competitive, so different classes of travel and add ons were created. You could add bolt on services. Uber created Uber Exec and Lux. Or, you could simply move away from a commodity model into a rarity model, like Sunseeker, Ferrari or Audemars Piguet. You have a desirable product, finite supply and therefore virtually no price ceiling.

4. Invest in your brand & your equity (prices) rise

Market forces encourage reinvestment in quality and innovation to get the edge over your competitors and differentiate yourself in that marketplace. Do not get lazy or complacent, re-invest into improving and innovating existing and new products and services to increase the quality and value. As you do that will push the price up. But it only goes up if you push it up. ‘Brand equity’ is the goodwill value in your brand. how you do anything is how you do everything, so invest in brand value, reputation, customer care and service, as well as product improvements. Build your customer base and give value to your followers and fans, and they will be loyal in spending with you, even if you are more expensive.

5. Price escalation model

You could, if you are not that brave, increase your prices gently, around 5% a year. No one would likely bat an eyelid if it is that small and incremental. What’s stopping you? What’s the worst that would happen?

6. Increase VALUE first

Still here? Still not convinced to up your prices? Then try increasing value first, and you will see prices rise in alignment. You could offer extra care, add on services, better quality, or simply roll in all the above benefits in one go. But if you don’t then increase your prices you could have increased your costs and therefore reduced your margin.

7. Let your worst customers go

Not all customers have the same overhead costs. It is likely that 20% of your customers are causing 80% of your customer service, complaints and time drain. So let them go. Don’t offer them future products, let them expire gently. Once you do this your overhead will reduce and importantly, you will FREE UP time and space for higher quality, higher spending and less demanding customers.

As you raise your prices, incrementally of exponentially, your self worth rises in alignment. This in turn radiates gratitude from you to the customer, and back again. You then attract better people (staff, customers and partners) to your enterprise. That ‘goodwill’ goes back into the care or your product or service. And of course the reverse is also true.

What have you got to lose, other than your worst most demanding customers? TEST. Now. The answer to most of your business problems raised at the beginning of this article, and the easiest way to dramatically increase your profits is this: Put – Up – Your – Prices – Now.

Remember when a phone used to be free with contract? Now a new iPhone is over £1,000!

Source: http://unlimited-success.co.uk/blog/significantly-increase-priceswithout-losing-customers/

How To Go From ZERO to £Multi-Million Property Empire

Learn how Progressive Property went from dining room to a £Multi-Million business through unplanned, organic JV's and none of Rob Moore's money.

COULD GOVERNMENT ISSUED CRYPTOCURRENCIES BE THE FUTURE?

Prominent economist Mohamed El-Erian sees a future in which an “officially sanctioned” cryptocurrency will exist.

GOING CASHLESS

“We are moving away from cash,” El-Erian says. “Go to Sweden and you’ll see how fast.”

In Sweden, just 2% of the country’s transactions are conducted with cash, and that number is expected to decline further down to 0.5% by 2020. Countries like Canada, the US, and the UK show similar stats.

Despite his predictions, El-Erian understands that we are still years away from cryptocurrency US dollars:

Change in consumer habits and trust in the new medium doesn’t happen overnight. It’s not something that we’re going to see in the next three to five years.

WHO BENEFITS FROM GOVERNMENT ISSUED CRYPTO?

Governments launching their own cryptocurrencies via private blockchains seems like a smart move as the dollar and other fiat currencies continue to lose value and more citizens discover Bitcoin. Venezuela was the first major country to pull this off after suffering from a hyperinflated currency and severe economic issues.

However, given that the whole point of Bitcoin is to subvert government and bank control over an individuals money, its hard to see how a crypto dollar that tracks all of your transactions, earnings, and tax liabilities will be the favored choice by citizens. A government controlled cryptocurrency goes against the blockchain ethos of decentralization and self-governance, making it no more valuable to regular citizens than today’s fiat money.

What may become a useful crypto-currency for institutions to trade services across borders may not be what is adopted by citizens’ seeking autonomy over their spending and finances.

Despite this, countries like the US, who have a dominant position on the world stage could ensure that a government-issued cryptocurrency becomes as ubiquitous and in-demand as the current fiat US dollar.

‘BITCOIN IS OVERPRICED’

Unsurprisingly, Mohamed El-Erian is skeptical about Bitcoin’s status as a currency, and has in the past claimed that Bitcoin is overpriced and that governments “will not allow the amount of adoption that it is currently priced at.”

His comments show a fundamental lack of understanding of how the technology works, and how the act of ‘allowing’ is simply not a choice in a decentralized globally distributed system.

Perhaps El-Erian’s prediction for governments issuing their own cryptocurrencies is less about migrating away from cash and more about trying to usurp Bitcoin and maintain control over financial markets in the long term.

Bitcoin economist Saifedean Ammous has been quick to respond to El Erian’s thoughts on government-issued cryptocurrencies.

"Nothing can be both ‘government-issued’ and ‘like bitcoin’. Government currencies are already mostly digital. Making them any more ‘like Bitcoin’, by introducing cryptographic payment clearance & automated monetary policy, can only mean ending government control over them."

On an institutional level (e.g., government to government or bank to bank trading on private blockchain ledgers) it sounds like officially sanctioned cryptos would be a successful initiative, but for general user adoption, I certainly wouldn’t bet on it.

Source: http://bitcoinist.com/government-issued-cryptocurrencies-future/

LET YOUR MONEY GROW

There is one simple thing that separates the rich from the poor – this one principal is the reason the rich build more and more wealth, and the poor get even poorer, and traditional streams of education fail to teach our youngsters meaning most are faced with having to figure it out for themselves… and most never do.

But first, let’s look at defining the problem in simple terms so we’re all on the same page – what’s needed is some basic definitions of common terms that are often misunderstood.

One of those big problems we face as a society in this modern age is debt. More specifically – bad debt.

There are two types of debt you can have – good debt and bad debt. The difference? Well, the simple defining difference is that bad debt is credit you obtain and then use to purchase liabilities – or several liabilities. This could be taking out a loan for a new car, or purchasing this years holiday on your credit card. Good debt is credit that you leverage in order to purchase assets – this could be taking out a mortgage to purchase a rental property that’s going to return you a second, almost passive income.

The first thing we should probably clear up is the definition of an asset and a liability – they are not what most people think they are! For example, the house that you own and live in – is it a liability or an asset? Let’s make the assumption that you’ve been lucky to pay off your mortgage and you own it outright – how would you answer that question bearing that in mind?

Most people believe their home is an asset – especially if they have no mortgage on it. How can it be a liability when I haven’t got any credit to support it’s ownership and I have a store of value in the property’s equity? Well, according to Rich Dad Poor Dad, the simple definition of a liability is something that costs you money to own, and an asset is something that you own that provides an income over and above the expenses incurred to own it.

So, in the case of your house, unless you’re renting it out and making a profit, it’s a liability – it costs you money to own it and live there! You pay water and electricity bills to keep it operational, you pay council tax for the pleasure of it existing within a certain jurisdiction, and you probably pay insurance to protect the potential downside. If you’re not charging rent to someone to live there over and above YOUR costs then it’s costing you to own it. It’s worth mentioning also that if you rent it out but don’t make enough from the rent you’re charging to cover the expenses then it’s still a liability – the defining difference is whether it achieves positive cashflow or not.

Hold on, I hear you cry, but I don’t have a mortgage and I can sell my property for hundreds of thousands of pounds if I wanted to so it’s an asset because when I sell it I’ll make lots of money! Erm, not quite. You see, you only realise the paper value stored in a property like that once you sell it… and you can only sell it for what someone is prepared to pay. For example, you might have been unfortunate in a relationship and going through divorce where you need to sell quickly – you’re a highly motivated seller, and there are no buyers in the market for your type of property who are prepared to pay what you want to sell it for. All of a sudden, the value in your assets diminishes considerably simple because of someone else’s perception of value.. which could be drastically different to yours! You only realise the value in an asset like that at the point of sale, and there’s no guarantee you’ll find any buyers at the time you’re looking to sell, and there’s no guarantee that if you find a willing buyer that they’ll want to pay what you think it’s worth. This doesn’t sound like a very reliable asset to me – especially given the potential return can so easily change based on multiple variables that are completely out of your control. Yes – you might sell and make a profit, but you might equally have to sell at a loss, and you won’t know which it’s going to be until the point of sale.

Now that we’ve clearly defined good and bad credit, and the definition of an asset and a liability, let’s have a look at the key problem most people face when it comes to finances – financial education.

The one key difference between the rich and the poor is this; the rich know how to master their money and create assets that provide multiple streams of income – more simply, they understand the art and the science of putting their money to work in a way that means their money makes them more money without the controlling person having to exchange time for more money.

But this is exactly the opposite of what we’re taught in school, where the focus is on finding a skill, becoming qualified, and then finding a position where you can exchange your time for money for the rest of your life.

Okay, but what’s wrong with that?

Well, nothing if that approach aligns with your values and allows you to achieve your goals in life. However, the key limitation with this approach is this – you only have 24 hours in a day like everyone else, so what happens when you reach a point where you’re exchanging all those hours for an hourly wage? Well, when there’s no more hours in the day to exchange, you’re not only burnt out and unfulfilled because you have no time to direct towards the things you love in life (let’s face it, most people are far from doing a job they love), but you have now hit your earnings ceiling. How do you earn more when there’s no more time to exchange? This is the key limiting problem with this approach.

Yes, most of us will have to start with this inefficient exchange in order to generate our first income, but it’s what we do with the fruits of our labour that really defines where we’re going to mature into wealthy people or poor people. For those of us who have been lucky enough to have some financial education, we start to do things with our money that let it grow all on it’s own. For those who don’t, they spend all their spare money on holidays, new gadgets, and toys – aka liabilities!

This behaviour sends us into a downwards spiral that can be extremely difficult to get out of. You earn money, and use that money to buy liabilities. Those liabilities increase your monthly outgoings, meaning you have to exchange more time for money to increase your income so you can continue to service the new liabilities you have purchased. You increase your income further so you again have some surplus (but you’re now working 12 hours days and barely seeing your family), and then you use that surplus to purchase more liabilities… and so the vicious cycle continues. Can you see now why this behaviour is so destructive to people’s finances? Can you see why we have such a problem with bad debt these days? All because financial education is considered unimportant by our educational institutions. This needs to change, and this change starts with you educating yourself, so you can go on to educate others and set the next generation up for greater levels of financial success.

So, how do the wealthy grow their money?

There are multiple strategies people use, but they can all be classed as one form of investment or another. You could invest in stocks and shares that not only appreciate in value but that pay you a dividend throughout the year whilst you own them. You could invest in the wild west market of crypto-currencies and benefit for the massive bullish gains we’ve seen in those markets in recent years (I was trading Bitcoin at $900 at the start of 2017, and it’s now broken right through $10,000 – all in under 12 months). You could put your money into cash-flowing investment properties, or you could either start your own business or invest in one.

There are so many strategies you can employ to make your money work for you, rather than you working for money. All it takes is the commitment to educate yourself in whatever vehicle you choose and get started.

I’ve written several blogs on trading and investing that you can find by searching those tags so please feel free to check those out to get some more information on these strategies – there’s also loads of great resources on-line, but there’s also a lot of shit. Be careful and do thorough research from reputable sources.

You can also join my trading education group on Facebook by clicking the following link: LG Trading

You can find some of my trading and investing blogs at the links below:

• Trading: The Basics

• Understanding The Stock Market & Trading

• Financial Wealth: What, How & Why

Enjoy! Please drop me a comment if there’s additional content you’d find value in me covering on this subject!

Source: https://littlegreysays.com/2017/11/29/let-your-money-grow/ 

How Hustling Only Makes You Tired Not Rich

In this video Dan Lok, The King of High Ticket Sales says 'If you ever want to be rich, you've got to work smart' Find out how hustling only makes you tired not rich.

Today is Your Most Important Trading Day

Had a bad run of trades? 

You sat down at the computer last week with your cup of coffee and your favourite pair of lucky slippers on, just another trading day. You were making good progress, and there was a little whisper from way back in your head saying, 'I think we can do this. We're getting there...'

And then you went into self-destruct mode. Trade after trade of emotional trading, the monster coming out of nowhere and taking control, firing off orders like a stereotypical office-manager flipping notes at the pole-dancer after one too many drinks.

It hurts. Hurts like hell.

But tomorrow will be different, right? You sit in the corner of the room after the trading destruction derby and feel awful about yourself. You go for a walk and try and figure this shit out. It needs to change and YOU need to change.

You get revved up and ready. Tomorrow will be different. You're going to change and become more disciplined.

Right?

Except, you've been saying that for six months, a year, longer even.

Until you come to realise that you only ever have TODAY to trade effectively, you are going to continue making excuses and mistakes.

Every day when you wake up and sit at that computer, that is your most important trading day. Not yesterday. Not tomorrow. Today.

You want to be a trader? You need to be willing to focus yourself TODAY. The discipline needs to be there TODAY. The ability to follow your rules ODAY and never mind how long your setup is taking, or the loss you made yesterday that you want to make back.

It sounds like it should be easy, but it isn't. We all have 'off' days. You know the ones where we wake up and it feels like a greyness has settled over the world. We don't want to work, we certainly don't want to do anything difficult.

But guess what? Today is the most important trading day. And when you are feeling like that, you should underline those words on a post-it and stick it to your computer monitor. Because those are the days when the damage tends to be done.

When you feel like that, try this... Just don't trade.

I'll give you a minute to get over that ground-breaking statement. It can be hard to grasp.

Today is your most important trading day. And every day, focus number one is protecting your account. If you feel like rubbish, the best defensive move can be to simply stay away.

Approach every day like it is your only trading day. Don't allow yourself to slip and then assure yourself that tomorrow will be better. In trading, you don't have a guarantee of tomorrow. That damaging behaviour you keep carrying out WILL one day pull your ability to trade from under you. The account will disappear and you will be left with nothing. It won't matter what you tell yourself on your walks or when you're rocking back and forth in the corner of the room. Because you will have allowed yourself to forget that TODAY is your most important trading day, and that will have finally caught up with you.

If you want to succeed, in trading or anything else, you need to come to terms with the fact that all you have is today to make it happen. Your focus and your drive and your determination needs to be there today. Not tomorrow. Not yesterday.

Think of the constant dieter. Always tomorrow. Always next week. And in the interim, they continue on with the destructive behaviour that continues adding to their problem and making it more difficult to overcome.

Now think of the person who loses all the weight. They decided that TODAY is their most important dieting day. All of their focus and determination went into it and they stuck with it on every today.

If you want it, whatever it is, go get it TODAY.

I hope you've all had a great trading week!

James Orr

Source: http://www.thinklikeatrader.co.uk/2018/05/today-is-your-most-important-trading-day.html

Finding “Unicorns:” Questions to Ask Before You Invest in a Startup

Many people ask me about startup investing and how to get started.  

This post — while for informational purposes only and not investment advice — is intended to show you how one successful investor approached the early-stage game.

Jason Calacanis (@jason) has made 125 early-stage startup investments and picked 6 “unicorns” (startups to exceed $1B in valuation) — one out of every 21. Based on his AngelList profile, Calacanis’ investments includes: Tumblr, Cozy, Thumbtack, Rapportive, Uber, Chartbeat, Groundcrew, Evernote, Pen.io, Nimble, Crossfader, Signpost, Calm, many many more. He’s accelerating his deployment of capital and plans to invest in an additional 150 startups over the next 30 months.

The following guest post is an exclusive excerpt from his new book, Angel: How to Invest in Technology Startups—Timeless Advice from an Angel Investor Who Turned $100,000 into $100,000,000. Using stories from his own angel investing career, Jason wrote this book as a playbook for aspiring angel investors.

In particular, this post focuses on questions to ask founders before you invest, but it also serves as a tutorial on how to ask better questions in life and in business.

Enter Jason

A THOUSAND FIRST DATES

The life of an angel is all about managing a deal funnel, which includes three distinct steps: sourcing deals, evaluating deals, and, finally, picking which founders you’re going to fund.

Meeting with founders for an hour is the most frequent technique for angels to decide who to invest in, but certainly not the only one. There are some angels whose primary technique for selecting investments is to follow other smart investors, drafting off of their meetings and deal flow.

Another technique is simply to review the core metrics and decide based on those. This can be done by reviewing a deck or by checking public information sources, like the App Store rankings, and traffic monitoring services, like Alexa and Quantcast.

Some investors have a huge Rolodex and simply invest in the founders they already know, a technique that worked extremely well for investors who knew Elon Musk (Zip2 and PayPal before Tesla and SpaceX), Evan Williams (Blogger before Twitter), and Mark Pincus (Freeloader and Tribe before Zynga).

Of course, the “invest in who you know” approach would mean you missed the biggest startups in history: Mark Zuckerberg, Bill Gates, Evan Spiegel, and Larry Page, who all hit the ball out of the park on their first try—at the ages of nineteen, twenty, twenty-one, and twenty-five, respectively.

Meetings are important and free. You should take a lot of them. Ten one-hour meetings a week is a good target for a professional angel. Half that if you’re doing this part-time.

My best advice to you as you start dating is to be promiscuous with meetings—but a prude when it comes to writing checks. Don’t be a tramp like I was.

I’m going to take you through the four most important questions I ask all founders. The goal of asking these questions is not just for you to understand the business but also so you yourself can answer four critical investor questions:

1. Why has this founder chosen this business?
2. How committed is this founder?
3. What are this founder’s chances of succeeding in this business—and in life?
4. What does winning look like in terms of revenue and my return?

HOW TO ASK QUESTIONS

Your job in these meetings is to play Columbo, the unassuming and always underestimated detective from the classic TV show that started in the ’70s and ran for more than three decades. Your job is not to show off or demonstrate how smart you are by explaining to the founder what they’re doing wrong or by bragging about your heroics as an investor or, even worse, as a founder yourself.

You want to have big ears and a small mouth in these meetings. You want to ask concise questions that take no more than a couple of seconds and then listen deeply to the answers, considering them with every fiber of your consciousness as you write your notes on paper—just like Columbo.

Listening like this will serve two virtuous goals, the first being that the founder will feel heard and understood by you.

If people believe they are being deeply listened to, they will talk more.

This is why, when you talk to your therapist about your mom, they say “hmm…” while tilting their head and looking at you with sympathy. Then they add, “Tell me more about your mother,” or “Unpack that some more,” or simply “Your mother…”

There are six words, four words, and two words in those responses. The last one is the most powerful because it just hangs there, inviting you to build on the topic.

You want to be Dr. Melfi, Tony Soprano’s therapist, sitting patiently while the passion and pain pour out from the boss you’re meeting with. If you’re a great listener, you will be a great investor, as well as a great friend, a great parent, and a great human being.

Second, if you are hyper-present in the meeting, thinking deeply about the founder and why they are taking on the irrational pursuit of starting a company, which comes with a greater than 80 percent chance of failure and a 100 percent chance of suffering, then you will be able to make a better decision on whom to invest in.

Basically, if you shut your trap and listen like a detective or a therapist, you’ll be able to uncover the answers to those four questions better than other angel investors.

You’ll have more hits and fewer misses.

QUESTION ZERO

When you are starting a founder meeting, ask one icebreaker question to get your subject warmed up.

How do you know Jane?

If you were introduced to this founder by a mutual connection, you can quickly establish common ground by asking these five simple words. Listen to the answer you are given and construct a follow-up question based on their answer. So, if the founder said that they worked with Jane, your next move is to say, “You worked with Jane? What was that like?”

I have a game where I try to say things with as few words as possible because it reminds me that this meeting is not about me, it’s about them. It also makes me sound wise, like Obi-Wan or a Toshiro Mifune character.

These are the exact four questions I ask every founder. The answers to these questions will give you most of what you need to make your investment decision. We spend the first half of our hour-long meeting exclusively on them. Then we go deeper.

1. What are you working on?

The reason I phrase this question as “What are you working on?,” versus something more company-specific, like “What does Google do?” or “Why should I invest in Google?” or the supremely horrible “Why do you think Google is going to succeed after eleven search engines have already failed?,” is that it celebrates the founder (the “you”) and what founders do (the “work”). It shows that you have deep empathy and you recognize that this isn’t about what the thing does (Google helps you find stuff), but rather it’s about people (Larry and Sergey write software that helps people find information faster).

2. Why are you doing this?

Again, five simple words that are focused on the founder. When I ask these first two questions, I almost universally see founders melt into their chairs. They relax, let their guard down, and feel like I care about them, which I do. Just like Columbo cares deeply about the suspects he’s interviewing when he asks, “So, what do you do here?” when he walks into their office, as opposed to leading with “Where were you on the night of the murder?”

Just like Columbo, I’m looking for killers and I’m trying to eliminate suspects.

There are some really, really bad answers to the question “Why are you doing this?” The worst two answers, which you’ll hear often, are “To make money” and “Because INSERT-SUCCESSFUL-COMPANY-NAME-HERE doesn’t do it.” If folks are building a startup for money, they will eventually quit when they realize there are many better ways to make money faster and with more certainty. If you want to make a lot of money, you’re better off being a world-class programmer on a very esoteric and in-demand vertical and getting Google or Facebook to give you $1 million-plus a year in stock and cash for ten years in a row. You have no downside, you can work a couple of hours a day, and you get unlimited free food.

If you’re building something because another hugely successful company doesn’t already have that feature, well, you’re wildly naive or, more often than not, plain old stupid. For years people pitched me on startups that were supposedly going to be Google search for news, Google search for video, and Google search for books and magazines. We all know how that turned out.

More recently I’ve been pitched hard on “Uber for food,” “Uber for helicopters,” and “Uber for shopping.”

While there have been some successful startups built by running ahead of market leaders, in general, those kinds of startups get crushed or bought for small dollar amounts. Summize was a search engine for Twitter, back when Twitter was so technologically incompetent that they could barely keep the service online. They bought Summize to catch up, as well as TweetDeck, a more advanced client for reading multiple feeds at once, but the return to the investors in Summize and TweetDeck for these acquisitions were minor when compared to the returns of the company that bought them.

The big problem with “founders” who build a feature that a market leader will inevitably get to—and I use quotes here for a reason—is that they lack vision. The act of selecting a feature as their life’s work, as opposed to a full-blown product or a mission, disqualifies them from being a true founder.

Elon Musk didn’t build a battery pack: he built a car and eventually an energy solution that included solar, home batteries, and, perhaps when you read this, a ride-sharing service like Uber.

It’s okay to start small, but it’s not okay to be a small thinker.

The right answers to “Why are you building this?” tend to be personal. Travis Kalanick and Garrett Camp built Uber because they couldn’t get a cab in Paris at a technology conference. Elon Musk built SpaceX because he wanted a backup plan for humanity. Elon’s earlier idea, that no one knows about, was to put a series of greenhouses in space to back up the biosphere— just like the Bruce Dern movie Silent Running—which, as an interesting aside, came out five years before Star Wars and featured drones that were an inspiration for R2-D2.

Zuckerberg was awkward with the ladies, so he built a social network that would show him their relationship statuses.

Think about that for a second: Is there anything more important than procreation? Not according to Darwin or Freud, so Zuck’s lack of game led to the fastest-growing consumer product in the history of humanity, largely based on people needing to find a mate or to connect with previous lovers (as demonstrated by the number of divorces that mention Facebook in their filings).

3. Why now?

This question has been floating around the Valley for a while, and the first time I heard it was from my friend, Sequoia Capital’s Roelof Botha—the venture capitalist who convinced me to become a “Scout” for their firm, which led to my two greatest investments to date: Uber and Thumbtack.

If you unpack this question, you’re really asking, “Why will this idea succeed now?”

For Uber it was simple: mobile phones were becoming ubiquitous and they had GPS. In fact, another company had already tried to help you order a cab via SMS messages a year before Uber came on the scene. Their “why now” was simply “text messaging,” but that, frankly, wasn’t enough. Without advanced mobile CPUs (central processing units) to power big beautiful touch screens with military precision GPS (global positioning system), there would be no Uber.

For YouTube, which had Roelof Botha as its first investor, the “Why now?” was a confluence of factors and breakout successes that tend to be born during these perfect storms. First, bandwidth costs plummeted after the dot-com crash. Second, storage costs were dropping due to this new thing called cloud computing. Third, blogging was taking off. Millions of folks were writing tens of millions of posts every week and YouTube offered a clever way to embed their videos on other people’s sites—reaching a massive audience for free.

There were dozens of video companies before YouTube, but they all charged people for bandwidth and storage, which meant that if you wanted to post a video on the internet, your reward for going viral was a ten-thousand-dollar server bill. Instead, YouTube sends you a thousand-dollar check from the ads they run on your hit video.

Dropbox, which launched onstage at the first year of my LAUNCH Festival and was also funded by Sequoia Capital, had the same “Why now?” as YouTube: plummeting bandwidth and storage costs.

Founders tend to have these “Why now?” insights without recognizing how profound they are. When I started my blogging company, Weblogs, Inc., in 2004, I had a very simple thesis: I believed that great new writers publishing five short, unfiltered posts a day would get more readers than established journalists writing one story, edited by a half dozen people, once a week.

When I had this realization, it was perfectly clear to me, but even the New York Times journalists didn’t see it. I remember running into legendary tech journalist John Markoff at the Consumer Electronics Show in Vegas when our blog Engadget was covering it for the first time. He asked me how many people we had at the show and I said fifteen. His jaw dropped and he asked me how often they were filing, and I said four times.

He replied, “You’re going to do sixty stories at CES?”

I said, “Actually they’re posting four times a day. So sixty stories . . . per day. How often is your team filing?”

He said they had three journalists at the show and they would do two or three pieces each over the next month. So, they were doing six stories and we were doing sixty a day for five days— three hundred total.

In some ways, “Why now?” is the most important question about the business you can ask because there are so many folks constantly trying the same ideas over and over again in our business.

Google was the twelfth search engine. Facebook was the tenth social network. iPad was the twentieth tablet. It’s not who gets there first. It’s who gets there first when the market’s ready.

4. What’s your unfair advantage?

Founders with breakout startups often have an unfair advantage. Google had their Stanford connections, filled with talented algorithm-writing engineering geniuses. Facebook launched while Zuckerberg was still a student at Harvard, and they used their understanding of campus culture and directories to figure out the dynamics of building online social networks that scale. Mark Pincus launched Zynga with a multi-year cross-promotion deal with Facebook, which allowed Zynga to tag along with Facebook as it grew at an astounding rate. Mary Gates was on the board of United Way with the CEO of IBM, which led directly to IBM hiring her son Bill’s new company, Microsoft, to build the operating system for their first personal computer.

Said another way, this question is asking, in just four words, “What makes you uniquely qualified to pursue this business? What secrets do you know that will help you beat both the incumbents and your fast followers?”

Sometimes, founders will not have an answer for this question. And that’s okay. This is one you often end up answering while looking in the rearview mirror.

WHAT HAVE WE LEARNED?

After asking these four founder questions, which in total are sixteen words, you should have an excellent idea of what this person is building and why.

These four founder questions give you a great starting point for answering the four investor questions every angel needs to ask themselves before investing. Remember, we want to figure out:

1. Why has this founder chosen this business?
2. How committed is this founder?
3. What are this founder’s chances of succeeding in this business—and in life?
4. What does winning look like in terms of revenue and my return?

After thirty minutes and four questions, you’re going to have a strong sense of why the founder picked this business, why it might work right now, and, of course, what they are building.

What you probably won’t know are the tactical details of how they plan on executing on their vision, including their go-to-market strategy, what kind of team they have, the competitive landscape, and the nuances of their business model.

You are going to find out the answers to those questions in the second half of your meeting. But this is the foundation.

Source: https://tim.blog/2017/08/04/questions-to-ask-before-you-invest/