Recently there has been a lot of press about the startup community in South Florida and Miami in particular. There was the editorial in the Miami Herald "Miami's Silicon Beach", Brad Feld speaking at Rokk, the One Community One Goal report and the Miami Herald-FIU Business Plan Competition to mention a few. All of this activity is good to foster interest in startups here in Miami. There is, however, one problem.
In an article, "America's Leading Metros for Venture Capital", the following chart prepared by Zara Matheson of MPI shows the amounts of venture capital invested by city. Miami does not rank in the top twenty U.S. metropolitan areas. Provo, Utah, Phoenix and Pittsburgh have more venture money invested than Miami.
If Miami wants to create a vibrant community for startups we need to attract professional venture capital firms to Miami. When Israel started its high tech community the government created a pool of funds and then turned the management over to foreign private venture firms. Perhaps the government and the private sector in South Florida need to pool their capital and invite 2-3 venture firms to manage the money for local investment in startups. The venture firms selected should specialize in seed and Series A investments. Early stage investing is very local where firms invest typically within 1-2 hours drive. We do not need later stage firms because more mature companies can attract funding from anywhere.
The other thing that would help is if each local college and university had an incubator, including funding, to invest in student and faculty startups. Universities are a key part of almost every successful startup community. The students and resources of local universities need to be part of any master plan for Miami's startup community.
I always tell my students that they should read the blogs of venture capitalists as a way to easily expand their knowledge of entrepreneurship. Successful VCs are students of new business concepts and the factors that lead to large new businesses. They study ideas and companies from the "napkin stage" through to market traction and scaling. A few VC blogs I especially like for their thorough analysis of issues are AVC, Both Sides of the Table and the posts of Michael Skok.
Josh Ellman has written an excellent post on consumer network companies, "“How will they make money?” is the wrong question". Josh is a Principal at Greylock Partners and formerly worked at Twitter and FaceBook. He cites four factors required to build a successful consumer network:
Is there a new behavior here that you can see 100M+ people doing? Is the network going to change the way people think about the world?
Is the product evolving in a way where people are getting more and more engaged and committed over time? Are members adding more and more content over time?
Will the growth be sustainable? Do new user patterns follow the patterns of early adopters.
If the product succeeds at scale, can you monetize the key behaviors? If one builds a large network it can always be monetized by direct purchases or advertising.
One of my pet peeves is all the silly new network concepts that have no future. I hope everyone will read Josh's post in its entirety and evaluate their new business idea against the four factors.
It has been stated many times that passion is a key to success, whether in business, research or art. Passion can be defined as an intense, enduring motivational feeling or conviction, which extends beyond romance and sexual activity. Passion is one of several emotions we all feel.
Schopenhauer said that art is the physical expression of emotions. This insight is both profound and useful. It is profound perhaps because of the simplicity it brings to understanding art. It is useful in that it focuses the creator of art inwardly on their own knowledge. Maurice Sendak, not surprisingly, said it better--"knowledge is the driving force that puts creative passion to work".
However, why are so few of us able to use knowledge to produce art? Part of the answer is found in this quote from Isabel Allende, "Writing is always giving some sort of order to the chaos of life." Writing and art comes from the processing of emotions and knowledge in order to reach an understanding. Therefore, art comes from a commitment to reach understanding and the commitment is grounded in discipline. Ursula Nordstrom stated this point beautifully, "emotion combined with the artist's discipline is the rarest thing in the world".
While this post focuses on art, the "trilogy" of passion, knowledge and discipline is a recurring pattern in most creative people regardless of their area of interest. The theme of "order from chaos" also recurs not only in art but also in science and math and perhaps other fields.
I went to visit the offices of a friend's new business yesterday. Particularly liked the painting of the Muppets. He told me that he was synching all five of his computing devices so he could work anywhere. Always interested in synching technology, I asked what app he was using. Answer: Dropbox. No new information in that answer. I have been using Dropbox since it first came out in 2008. It is an excellent product with a profound understanding of user interface.
My friend said that his son recommended against Dropbox in favor of Google Drive (formerly Google Docs). My friend's son is 11...11. The son attends a very good private school in Miami where they use Google Drive for all document storage. The son prefers Google Drive because of the larger feature set for collaboration, which is a critical skill for the 21st Century and a very effective learning technique. Points to note--Dropbox:
An 11 year old can compare products and determine which one has better collaboration features
Google's efforts to penetrate schools with Google Drive is giving them the opportunity to shape software/app selection at an early age
If private schools are using Google Drive to facilitate collaboration, public schools will not be far behind.
The most popular posts at Sophisticated Finance over the years have been some posts I did on Excel modeling, which are in the link at left called "Excel Models and Tips". All the posts related to Excel are here.
Some folks sent me the announcement for a world championship of Excel Modeling called Modeloff 2013. This is a cash prize competition to find the best young modeler in the world. Competitors are required to have a knowledge of finance and Excel but statistics also looks helpful.
One of the sample questions from the 2012 competition is here. It is a list of 50 tasks in Excel and the competitors had to identify the Excel command. Also a nice review of advanced Excel commands if anyone wants to improve their skills.
A lot of students ask me what business school they should attend. If they think they have a shot at a top ten school I recommend Stanford, MIT, Harvard, Columbia and Wharton. For entrepreneurship I recommend Stanford and MIT. For students interested in finance, despite my efforts to change their career direction, I recommend Wharton and Columbia.
After the school selection question, everybody asks for advice on their application essays. Application essays require a lot of work for the student and anyone advising them. Recently HBS announced that an application only requires one essay and that one is optional. Hopefully this change will be adopted by all the top 10 schools.
Thank you HBS on behalf of everyone who advises students on their application essays.
I am not much of a game player, except for an interest in Texas Hold'em. I believe that computer games offer a new way to improve children's learning, but it is not an area that interests me. A recent article in Wired, "How an Entirely New, Autistic Way of Thinking Powers Silicon Valley" got me thinking about Go and chess, two of the oldest and most popular games in the world. Go was developed in China in the 4th century BC and chess was invented in India in the 6th century. Why have these games been so popular for so long.
Both Go and chess are widely admired as complex strategy games, which in part explains their popularity. However, it may be that the popularity of both games is also because they develop a different way of thinking--paternicity or pattern recognition. Patern recognition may be a third way of thinking, in addition to visual and verbal. The Wired article states:
"For a century now, chess has been the petri dish of choice for cognitive scientists. What makes a chess master a chess master? Definitely not words. But not pictures, either (which is what you might think). When a chess master looks at the board, she doesn’t see every game she’s ever played and then find the move that matches the move from a game she played three or five or twenty years earlier or from a nineteenth-century chess match that she’s studied closely. The stereotype of a chess grand master is someone who can think many moves ahead. And certainly, many chess players do strategize that way. But the grand masters retrieve from their memories not more possibilities but better possibilities because they are better at recognizing and retaining patternsor what cognitive scientists call chunks."
While everybody uses visual, verbal and pattern recognition ways of thinking, certain disciplines generally require a particular way of thinking. For example, pattern recognition is widely used in mathematics, engineering and certain sciences. Pattern recognition is also an important skill in programming, as the Wired article explains.
John Von Neumann, the great 20th century mathematician, said that chess was "trivial" because at any point in a game one could identify all the remaining moves in a game (with enough computing power). Watson, the IBM computer that beat the world chess champion in 1997, perhaps proved Von Neumann correct. However, in this case the computer was programmed to utilize a Von Neumann type strategy and not pattern recognition. Never the less, Chess remains widely popular, and approached correctly, can develop pattern recognition skills. Go offers the same way to improve one's thinking.
The Good blog has a video posted (below) of Peter Norvig talking about online learning at this year's Google I/O conference. Norvig is well known for his online course in computer science that attracted 160,000 students. He is also an AI expert who heads Google's search quality unit and a professor at Stanford.
About 13 minutes into the video, Norvig makes the comment that "the answer is easy" (...search on Google), "the interesting part is what was the question". My own variation on this is "the answer is easy, understanding the problem is the hard part". Many people define science as the determination of what we do not know. The pursuit of science is to answer the unanswered questions.
With the continuing increase in information and access to it, answers become less important. As I try to teach my students, what is interesting is what is currently outside the scope of human knowledge. Unfortunately most of us have been trained to focus on what is already known.
Norvig also has interesting comments on how to make online courses more effective and how to improve learning in general (minute 18). Norvig also comments on Nobel Prize winner Herb Simon and his thoughts on learning.
The Wall Street Journal has an interesting article, "The New Science of Giving", that focuses on the philanthrophy of Houston couple Laura and John Arnold. John Arnold is a former hedge fund operator who accumulated a fortune estimated at $4 billion and who now devotes himself to philanthropy. The difference is in the approach to philanthropy, which is illustrated with the quotes below. (The Foundation website is at http://www.arnoldfoundation.org/front.
The foundation's approach is to "focus on systemic problems without easy answers ". The Arnold's define this focus as "public-policy problems that led to ... "moral inefficiencies". Their methodology is to "spend a lot of time doing research and evaluating data, and then make a handful of big bets, even if they involve considerable risk" (similar to well run hedge funds). Areas of particular interest are K-12 education and the U.S. justice system.
What I like about the Arnold approach is the following:
Focus on the really big problems (the only one's worth working on)
Use a data driven, analytical approach to develop new solutions (don't follow the philanthropy crowd)
Focus on the project results and their measurement
Set aside the "feel good" part of philanthropy and look at the results produced
I laughed at this story from The Chronicle of Higher Education, "Faculty Backlash Grows Against Online Courses". According to the story, philosophy professors at San Jose State rejected the administration's request to use an online course from a renown Harvard Professor. The SJS professors' argument was that this was the first step in a plan to reduce teaching positions in the Philosophy Department.
The President of the university is an advocate of reducing the time and cost to get a degree by increasing the use of online courses. Tuition has increased over 100% in the last 10 years for in-state students at public universities (such as SJS) and 60% for private universities, according to the College Board as reported by CNN. These increases are far in excess of inflation and suggest an "industry" likely to be disrupted. Looks like the President of SJS has a legitimate concern.
If we step back and look at the problem universities face, I conclude the following:
Few students benefit from lectures unless the professor is both brilliant and an excellent orator (George Polya comes to mind); this is a rare combination
Textbook reading is more efficient and effective than lectures for conveying basic facts and simple theories
Most students look to professors for help with applying the coursework in real world, practical ways
Problem solving and analytical techniques are the areas where students can most benefit from teacher involvement
Where I think MOOCs and online courses will end up at universities is as part of a two-tier tuition scheme:
Lower cost online courses with no live professor involvement
More expensive courses that combine in classroom time with a professor and online lectures
I know lots of motivated students who take Coursera courses in addition to their full-time class load. Given the choice, more students would opt for online courses without a live professor if the quality matched the best professors on Coursera or edX and the courses counted toward their degree. Maybe we should focus the problem on what the students prefer.
The views stated herein are my personal views and do not reflect the opinions of any organization, university or client with whom I am affiliated.
"Design school is the future, business school is dead."
The point may be stated in the extreme, but the point to consider is the importance of design in the future of business.
I have heard Nicholas talk about design several times but my thinking on design began with some posts from Frog Design after reading Helmust Esslinger's "A Fine Line" (Esslinger founded Frog Design.) Frog helped me to see the parallels to entrepreneurship in design. I then found the Stanford Design School, which is heavily influenced by the thinking of the design firm IDEO, and began reading about their design processes. Lately I have been reading Karl Ulrich's writings on design. Ulrich is another alumni of MIT (Negroponte) who teaches a Coursera offering on design. He also advocates that design should be part of a general requirements university curriculum, like writing, calculus, etc.
All of this reading lead me to realize that design process is an excellent model for the first part of a two-part process approach to entrepreneurship, which I described in this post a few days ago. I think both Nicholas and Ulrich would agree with this concept that a formal design process is the foundation of entrepreneurship, or at least the foundation to develop the hypothesis to be tested in the market. (For the sake of completeness, let us assume that the design process is used for addressing documented large market opportunities.)
In this post, "How to Survive the End of the Industrial Age", I basically argued that the individual must control their economic destiny in the 21st century and that entrepreneurship is the best solution. Therefore, I believe that business schools, as one means to teach entrepreneurship, must change as follows:
Business school curriculum must be changed to use entrepreneurship as the principal theme of the curriculum, as opposed to the current focus on strategy, productivity and finance.
Design courses and the design process must be taught as a required course with several electives in the subject
Computer science must be taught such that every graduate has sufficient knowledge to program, understand the design of a computer or smart phone at the component level and recognize a business opportunity in big data and the technology required to commercialize it, to name a few courses to be offered
Every student needs to develop a new business with each course/semester helping the student to refine their concept and commercialize it. (Ideally the business school would provide the seed money.)
Adjunct professors with practical experience would teach a larger percentage of the courses
Many experts are considering what a school should be in the 21st century in order to foster "21st century skills" in children. 21st century skills generally are described to include:
Creativity
Critical thinking
Collaboration
Communication
Some experts add problem solving skills to the list but I personally believe it is redundant if critical thinking is developed properly.
One company that has a long history in child learning is LEGO, the Danish company. They have a long history of innovation in toys and robots to foster participatory, hands on learning (as opposed to consumptive learning). LEGO has announced that the LEGO Foundation is opening a new school, which I believe is their first school. The Isbillund International School will serve children 3-16. LEGO describes the school as follows:
"Children are open-minded, curious and innovative. They are not afraid to experiment. These abilities will be nurtured in our school to help our pupils reach their full potential. We believe that all children have the right to become the best they can be. The school is based on Danish learning traditions, the IB [international baccalaureate] programmes and the creative approach of the LEGO Group."
School activities begin at 7am with breakfast and include after school activities til 5pm.
What I like about the school:
The LEGO philosophy of hands on learning applies to all courses and not just science and robotics
The International Baccalaureate is a rigorous curriculum that is used beginning in the primary school
The school starts for 3 year olds when children are in their most formative intellectual period
If LEGO were to ask for my suggestions, I would offer three ideas:
There should be no grades; students should be able to learn a subject or area of interest at their own pace.
The concept of a school building should be re-thought; instead of using classrooms as the core concept, the building should be designed to foster communication and collaboration between students.
Use teachers as mentors or guides and rely on e-learning to provide basic instruction; of course every child would have their own connected laptop computer.
In the fall I am going to teach a new undergraduate seminar at FIU--"Entrepreneurship, Design and Thinking". In many ways this course is the result of my thinking over the last three years on entrepreneurship. An important part of my thinking on entrepreneurship is that it is a process, a deliberate set of steps, that leads to better results. I now believe that this process has two parts:
The design process, in which the customer problem is defined and a solution is developed to fill the gap caused by the problem. An excellent book on the design process is Karl Ulrich's Design: Creation of Artifacts in Society, which is used in Ulrich's Coursera design course.
The business model process, wherein the five parts of a business model are systematically analyzed and the best choices are selected. (My book, Billion Dollar Company, deals with the business model process.)
However, neither of these processes individually or together explain the difference between great new business ideas and mediocre ones. What explains the difference is the quality and type of thinking that one brings to the development of the startup. Therefore, to provide a complete methodology on entrepreneurship, I have concluded that I need to teach about thinking, the alternative approaches to problem solving and other methodologies.
Fortunately, Marvin Minsky has written a lot on the subject of thinking about complex problems. One of Minsky's books that deals with thinking is "The Emotion Machine: Commonsense Thinking, Artificial Intelligence, and the Future of the Human Mind". (Ulrich studied with Minsky at the MIT Artificial Intelligence Lab, that Minsky co-founded.) The quote from Minsky that started me thinking about thinking is a remark he made at the 25th anniversary of the MIT Media Lab.
As I more fully develop the curriculum for the seminar, I will be posting on the readings for the course. I will continue to teach my courses on entrepreneurship and social entrepreneurship.
The NYT Sunday Review had an article, the Secrets of Princeton, in which they criticized the university for selecting upper class students over lower class students with higher GPAs and test scores. They went on to say that such an approach helps to undermine democracy and perhaps capitalism.
Princeton was founded in 1746 and has probably been selecting students the same way for the last 267 years. Yet the U.S. has flourished in that same period both politically and economically. Princeton's admission policy appears to have little effect. The admission policies of elite Ivy League schools do not undermine the meritocracy in this country. The policies merely point out that certain people could do more to foster a meritocracy.
President Obama has been focused on short term job creation. While this has positive effects on the lives of the unemployed, it does little to correct structural problems in the system. The President should be focused on leading a national initiative to reform education for the 21st century so that people have the skills required to better manage their own economic well being. There are two powerful reasons for such an initiative:
The country badly needs a stated direction. Since the fall of communism the country has had no core focus, a set of beliefs and aspirations that unite us. The recent plague of congressional bi-partisanship is a symptom of such a lack of direction.
There will be fewer and fewer traditional jobs that were so plentiful after WWII. Outsourcing, offshoring and increasing labor productivity all point to the erosion of the traditional notion of jobs.
As Thomas Friedman so eloquently states in thisSunday Review NYT's article, there are only:
"high-wage, high-skilled job[s]".. “because knowledge is available on every Internet-connected device, what you know matters far less than what you can do with what you know. The capacity to innovate — the ability to solve problems creatively or bring new possibilities to life — and skills like critical thinking, communication and collaboration are far more important than academic knowledge".
The job opportunities that remain will require the ability to add value rather than perform rote tasks.
No less a commentator than Clayton Christensen, the HBS professor, shares Friedman's view. Christensen believes that the education system is so endangered that even the continued existence of HBS is in doubt. Christensen believes that education must become more practical to meet the requirements of the 21st century.
Another group that shares the Friedman view is Education Futures, who advocates for Knowmads. "A Knowmad is a "creative, imaginative, and innovative person who can work with almost anybody, anytime, and anywhere."
My own views match very closely with Friedman, as shown in this post from January 2012 titled "How to Survive the End of the Industrial Age". For about the last two years in my entrepreneurship classes, I have been advocating that students study entrepreneurship as much for the skills required in a jobless 21st century as for learning how to identify opportunities and build large new companies. The skills required for entrepreneurs are detailed in this post and closely match Friedman's emphasis on critical thinking, collaboration and communication. These skills can, of course, be learned at a very young age. The original research on learning by Jean Piaget demonstrated this fact.
One may wish to point out that a dramatic change to the education system does not require federal government leadership. However, the private sector appears as disinterested as the governemnt in reforming education to produce 21st century skills. The non-profit sector lacks the resources to really take on the challenge. Most likely the U.S. will just muddle through to mediocrity by never vigorously considering the skills that children need for the 21st century. The Bush initiative for "no child left behind" would appear to support my view on the future of U.S. education.
To reform education requires four key parts:
Education must be focused on student centric learning to match the need in the 21st century for individual responsibility for economic well being; self-paced learning as opposed to grade-based classes is probably a natural outcome of such an approach
Education must be managed at the local level rather than by the federal government in order to encourage community support for the initiative; community/parental support greatly improves educational outcomes
Teaching of entrepreneurship needs to be started at the middle school level to reorient the next generation of children to the concept that they must manage their economic well being
Online resources need to be meaningfully integrated into the curriculum to free up resources for the new educational environment, which means that teachers likely will need training to successfully work in the new environment
Do five year olds need to manage their own fate. Probably not, but they need to be raised in an environment that encourages individual initiative and not rote memorization of facts that are better explained by an online lecturer.
Addition: This post from Edudemics advocates four activities for students to foster learning. Number 3 is startups.
Much has been written about the "upside down classroom", where students access online lectures at night and work on problems in class with the teacher. Yesterday I tried something new and had the students do the lecture and I just made comments--the reversed classroom.
I have been wanting to try this technique ever since I discovered that children learn to teach before they learn to read. The brain develops the ability to teach before it develops the ability to read. So naturally we are all teachers. However, this natural ability is not used frequently in classrooms, except hopefully by the teacher or the professor.
Yesterday two students independently presented Michael Porter's Competitive Strategy, probably the best book ever written on business strategy. The first student elected to focus on the concepts in the book, and except for one small omission did a good job. The second student presented on the details of using the "5 Forces" and extracting value and probably did a better lecture than I do. My role in both presentations was as the play-by-play commentator in football broadcasts, interjecting comments to more fully develop an idea or to make a related point outside the scope of Porter.
The class was one of the best classes in eight years of teaching. The students were more involved than usual, asking more questions and offering more of their own ideas. Not having the burden to follow a lecture plan, I was able to expand the discussion into a wider range of related topics which made the class more interesting to the students.
At the risk of drawing more conclusions than one event warrants, my observations on why the class worked so well are as follows:
New presenters were a change of pace that prompted the students to pay more attention
Students were less intimidated to ask questions of fellow student presenters, which lead to a larger number of participants in class discussion
The presenters did additional research beyond reading the book, which lead then to find some excellent new presentation materials
The students had just returned from spring break, so they were more rested and engaged in class than normal (maybe we need more breaks during the semester)
Next week one of the students is going to present an HBS case. That will be more challenging than a book lecture. If that goes well I will keep going with this experiment of the reversed classroom.
Much has been written about how schooling diminishes the natural talents of children to be curious, passionate explorers of all things new. The natural ability of children to teach as a learning method has been almost totally overlooked. This is despite the fact that every good teacher comments on how much they themselves learn by teaching.
The writers at Edudemic were nice enough to present their take on the 10 themes at SXSWedu, the edtech spinoff of the popular SXSW event. Eight themes look really boring such as BYOD, big data, MOOCS and classroom in the cloud (read the article for the other boring themes). These themes are boring to me because anyone seriously interested in education should have already figured out these issues about 2-3 years ago. However, Clayton Christensenbelieves that the challenge of MOOCs has not been adequately addressed by universities.
The two interesting themes from the conference are:
Personalized learning (incorporating personalized data into the student learning process)
Blended learning (redefining the role of the teacher in a technology rich educational environment)
These issues are interesting because they focus on new ways for children to learn through the use of technology. Developing new ways for children to learn should be the real focus of technology in education.
Student learning is usally a secondary issue in education today, as everyone focuses on improving school administration and teacher productivity in the classroom through technology. Administration and teacher productivity improvement are such popular topics because school district budgets represent a large market for suppliers. Also, the technology sellers have 30 years of experience in positioning their products for administrative and productivity improvement.
In fairness to SXSWedu, perhaps the writers at Edudemics missed other interesting themes at the event.
Edudemic has a great post today on entrepreneurship by university, captured in this infographic. Maybe there is something to this studying entrepreneurship in universities. Note the information is only for six universities and overlooks all the other college educated entrepreneurs.
In a recent video interview with Mark Suster here, Clayton Christensen, the renowned HBS professor, presented some additional thinking on his theory of disruptive innovation. What was new for me was Christensen's position that disruptive innovation only applies in industries with a technology core. What Christensen means is that if an industry/product is using technology and that technology is critical to the customer experience and value creation (for the customer), then there is the possibility for disruption.
Certain industries lack such a technology core. Christensen sites the hotel industry as an example. The hotel industry cannot be disrupted. A hotel chain can only emulate a competitotr with a richer feature set for the customer. Disruption through technology is not possible. Other "old" industries such as restaurants and construction probably are in the same situation as hotels.
Another group of industries which lack a technology core are probably heavily regulated industries such as healthcare and education. Until very recently neither industry used technology for a better customer experience and only relied on technology for improved administration or staff productivity (doctors).
Of course, the absence of a technology core does not prevent outsiders from introducing customer facing technology to "disrupt" the industry. Coursera, the online university, would be an example.
Christensen has a very gloomy outlook for the future of HBS and universities in general. He asks us to pray for HBS. If we are praying for HBS then we need constant prayer vigils for some other universities.
Christensen also believes that university education must be more focused on teaching the practical skills required by employers. For business and engineering schools I would agree. However, some of the best disciplines to develop critical thinking are philosophy, economics and history. Not sure that any of these disciplines would meet Christensen's standards for practical training.
One of many other posts referencing Christensen's thinking is here. The post references his theory of how to size a market.
Kara Swisher at All Things D had an interesting article on TSL Education. TSL's primary service is to allow teachers to exchange lesson plans through TES Connect. To quote from their website, TES Connect is:
"With over 2.3 million members spread across 270 countries and territories, TES Connect is the largest network of teachers in the world. www.tesconnect.com has over 2.8 million downloads a week and is home to more than 550,000 individually crafted teaching resources developed by teachers for teachers. This massive collection helps to inspire and inform teachers when they are preparing their lessons."
While many are focused on improving teacher productivity through technology (in the classroom), perhaps more attention and investment should be directed toward making traditional tools available through the technology.