The Power of Networking
- Posted by James Altucher
[this first appeared in The Financial Times in February, 2009. Reprinting here.]
I gave advice recently to a company I know that was starting to get nervous about how to sharpen up their business given the recession that is occurring. Everytime I visited my friend, the CEO of the company, we’d try to get a conference room to hang out in and we couldn’t find any available ones of the 10 or so in his company. “Whats everyone doing in these?” I asked him. Finally, I knew exactly what he had to do to bring his company into the 21st century. “You need to get rid of all the chairs in the conference rooms”. Bill, the CEO, laughed. “I’m dead serious,” I said, “when someone goes into a meeting they have two goals: eat some donuts, and say something that makes them seem important. When you remove the chairs, suddenly everyone has to eat standing up and it’s a little harder to wait your turn to say something important. No meeting will last longer than ten minutes, no matter what the topic is. Profitability will be restored, my friend.” Oh, I added, maybe get rid of the free donuts every morning.
My personal rule is: no more than 3 meetings a day. A meeting in the morning, a meeting the afternoon, and one meal meeting. And try to meet only with people you personally like. Life is too short. And this is maximum – three meetings a day. No more.
But when my friend, Howard Lindzon, came into town last week I decided to tag along with him and his associate Marissa Campise in order to learn a bit more about what they were up to, particularly since we are partnering on some VC deals. Howard is one of only two people I know who had a successful 2008 (the other will kill me if I reveal his name since he is a massive shortseller and probably made more than a billion from shortselling last year). Howard built and sold Wallstrip.com in 2007 to CBS. In 2008, he exited out of limos.com, rent.com, golfnow.com, and did well with Lifelock. I’m normally an antisocial guy who doesn’t like to meet new people and what I consistently learn from Howard is that you can’t underestimate the power of networking. From the minute he gets up he starts emailing, phone calling, breakfast meeting, more meetings, more twittering, meet for coffee, more emailing, dinner meetings, then meeting for drinks. So I followed them that day on EIGHT straight meetings. BRUTAL.
Part of my goal was to learn something in each meeting and also to try and figure out where everyone saw opportunities in this environment. Its clear we are in a recession but everybody is strill striving for the perfect deal. What I learned:
A) Quant investors need to go beyond the normal price-action data to have any edge in this market. Met with Roger Ehrenberg of Kinetics to learn about his company that is mining the text in SEC filings (and other pieces of text) to see what particular word clusters are predictive of future performance.
B) Met with a VC firm that has a company with $100mm in revenues and $10mm in EBITDA that’s growing and they still can’t sell the company. So they are thinking of doing a reverse merger into a public shell. With all the banks going out of business it makes me think a viable business now is to create a small bank bringing highly profitable companies public through reverse mergers.
C) I learned from the founder of Twitter Search (formerly Summize) that Google is not good enough if you want realtime search. The lag between a new web page being posted and that same page appearing on google is anywhere from 2 hours to a month. Relevant realtime search is a somewhat unsolved problem that is critical for quick processing of realtime news, blog posts, twitters, stock events, etc.
D) I met with the founders of bit.ly, a company which shortens URLs (think those long annoying URLS that are so awkward to IM or email around. Use bit.ly to shorten them) and is experiencing enormous growth in part because of the rise in twitter and facebook. Found out how they are dealing with scale issues and monetization issues. Some problems (the increasing complexity of URLs) are never going away, regardless of the economy.
E) Its easy to negotiate on rental deals in NYC. If you want to rent an apartment, you can probably get it for 20% less than the asking price.
F) MC Hammer loves twitter.com (you don’t want to know the details of this meeting but, suffice to say, 6000 guys twittering on their blackberries while MC Hammer is rapping (“cash for gold!”) is an unpleasant experience after 7 other meetings that day).
Opportunities abound in this environment. But the main thing I learned with Howard and Marissa that day is the only way to take advantage of the opportunities is for me to leave my computer and actually interact with people the old-fashioned way, face to face.blog comments powered by Disqus
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