The Modern Entrepreneurs Handbook
b"With Michael Palumbo,\\xa0trader, entrepreneur, venture capitalist, and author of\\xa0Calculated Risk: The Modern Entrepreneur's Handbook
Michael Palumbo and the Modern Entrepreneur's Handbook
Steve welcomes guest Michael Palumbo to today's show.\\xa0 Palumbo has been variously a trader, a venture capitalist, an entrepreneur, and an author. He recently published a fascinating, useful, and concise book entitled Calculated Risk: The Modern Entrepreneur's Handbook.\\xa0 \\xa0Michael's impressive resume includes, among other accomplishments, launching Third Millennium Trading at the Chicago Board of Options Exchange, a company he started for $250,000 which was valued at $100 million just 10 years later.\\xa0 He also found success as an angel investor in a financial tech startup which grew to a $1.7 billion dollar business.\\xa0 Michael joins Steve today to talk about what makes successful companies thrive while their competitors fade, checklists that entrepreneurs launching new companies should consider (as well as the investors evaluating them) and how entrepreneurs can value their own companies the way that venture capitalists do.
New Company Checklists
The conversation begins with a discussion of some of the aforementioned checklists which Michael believes can help entrepreneurs and investors better understand a company's prospects.\\xa0 These checklists apply both to the value of the core idea or ideas underpinning the business (its main products or services) and also to the execution of a plan to bring these ideas to market.\\xa0 The first checklist is the \\u201cgeography test,\\u201d which looks at the chances that an idea will be likable and find a larger audience of potential buyers beyond the company's local market.\\xa0 It's a fairly simple test that attempts to assess whether an idea is going to catch on and help the company grow.\\xa0 Steve asks Michael to give an example of a company that started small and then realized its potential for \\u201cscalability\\u201d and executed on that.\\xa0 Michael opines that Amazon is a perfect example of this kind of company, and marvels that they have grown from a bookseller to become the largest retailer in the world.
The next checklist has to do with \\u201cfeasibility,\\u201d which Michael explains as having to do with the question of whether current technology can provide support for the product and enable it to sell.\\xa0 This leads to some interesting speculations about internet companies from the late 90s that did not survive the tech bust of 2000.\\xa0\\xa0 Michael asserts that some of these companies had solid ideas but were simply too early in their entrance to consumer markets.\\xa0 Because dial-up internet was far slower in those days, creating a compelling user experience on the web based on their ideas was simply impossible.\\xa0 It's fascinating to think of how some notorious failed \\u201cweb 1.0\\u201d companies might have become great successes if they had only waited 5 or 6 years before launching. This thought experiment illustrates the principle of feasibility and the dangers of mismatches between great ideas and the technological environments needed to realize them.
People More Important than Ideas: Management and Sales
Demonstrating his background as a venture capitalist with expertise at evaluating startups, Michael makes a compelling case that the founders, management, and sales talent at new companies deserve to be treated as critical checklists of their own."