Fastlane AMA: James Altucher; Startups, Publishing, Bloggin More...

[J. Altucher]

Just curious as to what you grabbed onto for strength during all those low times, and at what point exactly did you feel like you "made it?"

Love your quote of "cash in the bank helps me sleep at night." I just told my wife about that this morning and how that's my new motto.

In my book I describe what I call "the daily practice" which I described earlier on this thread. It's corny but it's the oNLY thing that helped me.

I will tell you: one time I tried something else - My ex was leaving me, it was Thanksgiving and I was eating in a deli, and I was going broke and losing my house.

So I put an ad on Craigslist saying, "I'm a psychic and will answer all questions".

I only answered the questions sent to me by women.

The results are in my book.

But basically, the daily practice I describe is better.

In terms of when I feel like I "made it".

I was talking to my wife about this recently (good that we both talk to our wives):

I was telling her when things are going very well I sometimes am anxious that I can't keep it going this well. And when things are going poorly I get anxious they will continue poorly.

This is an issue for me. Most of the time now, I'll admit, things are going pretty well. But I never feel like I've made it. I have to try harder to not try so hard.

 

[J. Altucher]

How does a shy person develop that quality?

Jon, I know what you mean because I'm extremely shy.

What happened with me is that I had training-by-force. I did a project once for HBO, a web show for 3 years, where I interviewed people at 3 in the morning on a Tuesday night, every Tuesday night. And I had a crew videotaping it.

So I had to walk up to drug addicts, dealers, pimps, prostitutes, couples fighting, etc and get them comfortable with me within seconds and then get them to spill their life story to me.

So I still remained shy (I am so bad at parties and dinners I can't even go to them) but in situations where I really needed to be "ON" I learned the skill and it turned out to be a different skill from shyness versus not-shyness.

One thing I recommend is watching a lot of standup comedy. Those guys, surprisingly are very shy. BUt you would never be able to tell it. I watch a lot and then take what I learn into my other activities. Daniel Tosh and Louis CK in particular.

 

[J. Altucher]

How can a service biz turn into a product biz?

Most product businesses started out as service businesses. here's the problem, when someone wants to sell a service business it's usually valued much more cheaply than a product biz. Acquirers say, "all the assets of the business walk out the door every night".

The key is to take services you do over and over and package them as products.

Oracle did this. Oracle is a "database company". But for the first five years they were in business if you bought their "database" they would need to send in 50 consultants to "install" the database and provide consulting services.

Eventually, they actually had a product to sell (the database) but it took a long time.

Another example I've written about is Buddy Media, which i was a seed investor in and which sold to salesforce.com for $900mm last year:

Here's where I wrote about it:

"How to Make a Billion Dollar Co from Scratch"

How To Make a Billion Dollar Company From Scratch Altucher Confidential

 

[1PercentStreet]

James, thank you for taking your time and giving back to this community.
Pressing the thanks button isn't enough, it's great to have someone like you here. I'm sure you've already changed several people and their lives will never be the same.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[J. Altucher]

What does, in your opinion, the future hold for Greece?

What is Greece?

 

[J. Altucher]

how does one know when it is time to sell?

Most acquisitions turn out bad for the acquirer. Which means that most times you start a business, you should sell as quickly as possible and then start a new one.

BUT, how do you know when?

- if you feel that only one or two things can happen to cause you to go out of business
- if you sense cheaper competition is on the way. When I had a web services busniess I saw jr high school students were learning how to do web design so I knew the whole industry would collapse (it did)
- if you feel your business is slightly hype driven (a "myspace for finance" was bound to be overvalued for awhile)
- you should sell when your business is overvalued. For instance, I was involved in a mental health institute. We sold for 6x NEXT YEAR's planned EBITDA which was a lot higher than anyone was valuing that type of business then. And they ended up not making the EBITDA so we probably sold for 40x next year's EBITDA
- you should always be raising money and never worry about dilution. Because whne you need money you're going to be forced to sell with a gun to your head. I've seen a few of these also.

 

[J. Altucher]

Just out of curiosity, what is your take on Taleb's thesis that risk is mispriced in the markets?

I know that is Taleb's thesis but I think the way he presents it is incorrect. A couple of comments:

A) Even if risk is mispriced it's very rare that you can take advantage of it. The Black Swan event happens, but not every day. Or even every year or even every decade. So just knowing risk is mispriced can help you hedge assets but not make money.
B) In "fooled by randomness" I felt his theory was beautifully written. BUT, I thought his examples were off. In each example, basically a trader would follow his model, make a lot of money, then start losing money, then go crazy.

Not every trader goes crazy when his model is off. That's what separates out the pros from the guys who are fooled by randomness.

A very common saying in quant rooms is..."The model works...until it doesn't." Ultimately trader psychology is just as important as the model. There's no black swan when the psychology is right.

 

[andviv]

I struggle a lot with this situation... What is the one thing you do to help you balance your responsibilities as a father and as an investor/entrepreneur?

 

[J. Altucher]

Some pundits are very negative on Americas future and seem to think China is poised to displace America as the economic superpower, while others think that Chinas success is largely fabricated and the general order of things will not change. Where on this spectrum do you stand?

Do you see the consumer market in America eroding to a point where we should start targeting consumer markets in other countries?

Is the end game that China gets reserve currency status from the rest of the world while the American dollar takes a dive?

Thanks James!

A) Let's say China displaces us. Is that a big deal? They might get bigger in terms of GDP but they are a century away from the point where you can say: "I trust their court system".

It's more about contract law than it is about who has the biggest consumers.

B) Our consumer spending is at an alltime high. I'd be happy if we start selling somewhere else and our consumers start making more money but for now that has not happened. It doesn't seem bad to me though either way.

C) I focus on the innovations occurring in our economy: biotech, robotics, 3D printing, diagnostics, energy. We have a long way to go before countries catch up to us on innovation.

So it depends what metric you are using. But our public companies are so global anyway it doesn't really matter from a stock market point of view (or a consumer one) what economy is first in GDP.

 

[J. Altucher]

What is one thing you wish someone would do for you but are not yet receiving?

Nothing. I have pretty low expectations on people and so my expectations are consistently exceeded.

 

[J. Altucher]

James,

If you have a chance to read this, I would like to really thank you.

I read your earlier post in here about cold e-mailing and I've decided to immediately take action. So, I e-mailed a lifestyle blogger (here's his website) and I suggested 10 things that he should publish, one of them being my weight loss experience. He got back to me within the same day with a couple of things for me to share on his blog. So, we're currently working on a possible guest post about my 265 pound weight loss experience! When it's all and done (hopefully), I'll gladly share it with you guys when it's posted.

So, I would like to also note to y'all to choose yourself (and I bought and read the book as well, which I very highly recommend). It really works!

This turned out to be a very good day.

Ingenius, that's great. The technique really does work.

One thing about advice in general - I never say anything that didn't work for me personally. I'm glad you had a chance to try that particular idea out and it worked for you. You will write a great article. Sounds like you had an intense experience with the weight loss. Please send me the link when you first publish and I hope it becomes a series of articles. Congrats.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[J. Altucher]

E) last on the list is try and provide value. But this is hard. First I make sure I provide value to me. Writing ultimately is my way of finding out what happened to me.

Oh, and I should add: I then post on 4 different FB pages that I manage, on G+, on LinkedIn, and on Twitter. And sometimes on reddit. Then other blogs syndicate what I write.

In terms of title. I pick a title that is relevant to the story that I KNOW people will click on.

Like:

"How I Screwed Yasser Arafat out of $2 million and then lost another $100 million in the process"

sounds like a BS title but it's totally true. So because people know it's going to be true on my blog, people are going to click on a title like that.

How I Screwed Yasser Arafat out of $ 2mm (and lost $ 100mm in the process) Altucher Confidential

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[J. Altucher]

James, does this apply to any business or only new cutting edge VC backed start-ups that are doing something very different?

Every business. I've done this to "reinvent" myself in standard industries on 3 or 4 different occasions.

Let's say I wanted to reinvent again. For instance, let's say I wanted to write comic books.

I'd spend 6 months on the latest things in the DC and Marvel world. And I'd read the best guys: Alan Moore, Grant Morrison, etc. I'd read books on scripting comic books (Scott McCloud has a good book), etc.

Then I'd start writing down scripts and ideas. This is in the 6-12 months period. MAYBE, I'd start sending them out.

Eventually something will stick somewhere (its a quantity game). This could happen within 2 years.

Now my foot would be in the door. I'd write and throw me all into it and come up with ideas for more titles, etc until I built up good trust.

This could take another 2 years but now I'm getting paid well.

Comic books you can't sell a company but hopefully by 5 years I'd be doing enough titles I could name my price. At least that would be my goal.

I pick "comic books" at random. It could be any field.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[J. Altucher]

Sticking with stocks, I'd also be interested in hearing his current thoughts on Apple. I have a very large bet on Apple, and know in the past James was super long on it.(I think $1k+/share prediction) Would love to hear his thoughts on if he still feels as strongly, or if things have changed enough to where he wouldn't bet too much on Apple anymore.

There are three "stacks" in the internet economy right now: from device to operating system to services to commerce in all areas: Google, Apple, Amazon.

I do think that lately Amazon and Google have been more innovative, which is why Apple has suffered. As well as the deadly onslaught of the S3, S4 and Note II from Samsung (and now the HTC-1). I don't care what anyone thinks of those phones, they are just as good as the iphone 5 depending on your preferences.

That said, AAPL is still one of only 3 players in the world providing EVERYTHING. AND Apple is a deep value play, trading at a cheaper multiple than Con Edison. So right here it's a huge buy. I definitely was wrong on the timing of $1000 though. I did not think Samsung would be the Apple-killer that they were. That said, I wouldn't be surprised to see a 50%+ move higher in next year.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[J. Altucher]

The Easiest Way to Succeed as an Entrepreneur Altucher Confidential

In the above article under "How do you get that first customer?" in between the communicate and meet stage...are you asking for the meetings or is your objective to provide enough value to them that they invite you in to a meeting without asking?

In addition to the question "what's one product can I build for you that you will definitely buy?" Can you share anymore of your favorite lines of questioning for discovering opportunities or problems worth solving?

Sometimes I ask for the meeting, sometimes they ask. But it's always give and take. I have to give something of value. Nobody is really that interested in giving me anything of value. When I built stockpickr.com I wanted to partner with thestreet.com because I wanted them to send all their customers and ad dollars to me.

So I had to come up with something they needed. Well, Wall Street loved social media. And I had the "Myspace for Finance" (myspace was hot then). Plus I gave their customer extra ways to stay on the site and create pageviews. I ended up generating an extra several hundred million pageviews for them.

When coming up with something to say to potential customers, always start with either questions ("what do you want?") or tell them ("You want your stock price higher. I can help." or "You want to sign with a record label. I will make that happen") In both ways you have spoken directly to their ego and their attention will be spiked.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[J. Altucher]

I don't like Journey's either. I like destinations. Destinations full of stress-free days and wealthy happiness.

Funny, people always say it's about the journey.

I really hate that. When I'm traveling, I can't wait to get there. Or I can't wait to get back home. But the journey usually sucks.

 

[J. Altucher]

I am working on a site that will rely primarily on ad revenue and traffic. Do you feel that this is an effective strategy? Also, any other tips on market validation?

Hi Tony, Don't rely just on ad revenue and don't count on traffic. Here's some possible ideas:

A) Partner (or give equity) with a high-traffic site that could use a site like yours as a bolt-on of sorts. Write articles for that higher traffic site that contains many links back to your site. This will get you more traffic. Do it with more than one site if you can.

B) Just ads is not so good. Other possibilities include:
i. sponsorships
ii. money in exchange for app installs (many apps want to get noticed and will pay per install)
iii. other referral fees
iv. premium services
v. information products for sale
vi. other ecommerce sales

Build up an email subscriber list so you can potentially sell information products down the road.

 

[J. Altucher]

You have mentioned that you don't want to own a home and that you invest only 1% of your portfolio on an individual stock or fund. What does your net worth asset allocation look like? Do you own real estate rentals such as apartments? Do you hold mostly cash? stocks and options? precious metals?

What do you think about diversifying into owning small stakes of other businesses? Not as in public stocks, but for an example, owning 5% of a Jimmy Johns. Should that be something to think about as we try to diversify our portfolios?

40% one public stock. Started out as 2% of my net worth but it grew. As Warren Buffett once said, "I don't trade away a basketball player just because he turns out to be Michael Jordan".

30% private companies that I invested in diversified over tech, biotech, energy. About 20 separate investments.

15% other public stocks. Two of whom have grown much higher than the 2% and maybe another 5 or 6 after that.

15% cash. I don't like to run low on cash. I like to always be able to take advantage of good opportunities.

 

[socaldude]

James,

You have started several successful companies. Can you share with us your thought process or checklist or criteria or important variables you go through to maximize the chances of starting a successful company. Hopefully that makes sense.

For example here at the Fastlane Forum we use "CENTS", an acronym from the book: The Millionaire Fastlane

N= Need, your product or service must be of value or benefit to others to warrant the transfer of money between parties.
E= Entry, there must be barriers to entry.
C= Control, you must control vital variables that influence your business.
S= Scale, it must be a scalable business, instead of just being able to sell 10 units, you need to be able to sell 100,000.
T= Time, the business must be able to become a self existing organism on its own to free you of time bondage.

Thanks,

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Vigilante]

What are your thoughts on renting versus owning a home?

 

[J. Altucher]

What about cars? They seem to suck even worse. Lease every time?

I do lease every time. But perhaps in this situation one should own. I don't know. I like to lease just because of a general philosophy of never owning has been the safest policy for me (in houses, in cars, in everything).

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[MJ DeMarco]

James,

Question regarding self-publishing...

Do you have an intent on selling rights to any of your books for international translation? If so, what's your opinion on a literary agent for this purpose? Or would you do it yourself?

The reason I ask is because my book (The Millionaire Fastlane ) has sold international translation rights in 8 languages-- I've had to do that all on my own and I was wondering if you had thoughts on this process. I'm entirely self-published, right down to the book itself. Thing is, I'm not exactly in love with the process of selling rights, contracts, negotiating, etc.-- the one time I used an agent it went much smoother, and was actually more profitable.

Thanks for the insights on virtually every topic we find dear.

 

[J. Altucher]

Also do you have any suggestions for how to get past procrastination? I have that plus trouble with focus, it's a deadly combination.

I procastinate almost every day. But it does wonders for my productivity. Here is my procrtastination technique:

I usually have a primary thing to do and then a bunch of secondary things.

Often I will procrastinate on my primary thing. I will say to myself, "Ok, clearly I am procrastinating" and then BAM, I start knocking off the secondary things one by one. It's amazing how much I get done.

#2. If you are procrastinating it could be your body's way of telling you this is not the right thing for you to be doing. Or you are not ready for it yet. Pay attention to what your body tells you. It might be important.

 

[J. Altucher]

1.Earlier you said procrastination might be your body's way of telling what you are doing is not the right thing, or it could mean you're not ready. How does that compare to making excuses and not wanting to step out of your comfort zone? Isn't breaking through procrastination a good thing? Doesn't it mean you're growing?

My rule #1: I never do anything I don't 'want to do. So if I'm procrastinating at something, it doesn't mean I am "bad". It means (in part because I know I'm operating on all cylinders most of the time) it means that perhaps there's something wrong.

Example: someone shows me a great great deal but I'm procrastinating on calling him back. Something is probably itching inside of me that the deal is no good and I need to research further.

rule #2: always have my backup list. If I'm procrastinating I just switch gears and start returning emails or doing stuff on all my secondary projects. Procrastinating on the tier one projects always helps me get done the tier two projects I've been avoiding.

But you are right, I have to examine if perhaps this is just me not wanting to go out of my comfort zone. So I make sure every day I go alittle out of my comfort zone in some way so I don't feel blocked in that way. Usually by writing every day I go out of my comfort zone in some way.

Today I went out of my comfort zone by giving harsh advice to a friend that needed it. It's hard for me to sometimes be harsh with someone I like. I'm not a tough love kind of person. But I did it today and I don't know if it worked or not. For me, that's out of my comfort zone to not know something like that.

 

[Berto]

BUT

even with all this, some evil bitch nicknamed doubt, fear and insecurity showed up the other day as I came closer to launching. I pushed through it and forced myself to speed up my timeline instead of further postponing. The best validation is to get it out there now so I've decided that I will make a sale this weekend, guaranteed.

...Basically I don't know what I'm asking, I was just hoping for reassurance that this doubt is just the little bitch inside me forever trying to condemn me into the life of a slowlaner. The same little bitch that all successful entrepreneurs before me have faced and conquered in the past.

This is actually a very valid question, and a problem that nearly all of us have at some point.

I'd paraphrase it as "How do you motivate yourself to push something out the door even if you know it's not 100% ready?"

This is right in James' wheelhouse...

 

[J. Altucher]

Can you elaborate more on this bolting-on strategy?

I'll give a generic example and then a specific one.

What if there was a popular site that had restaurant reviews.

Now you made a site that interviewed the best chefs around the city and included recipes of their best dishes. Your site could be bolt-on to the restaurant review site.

More specific examples:

Matt berry was running a fantasy sports site. It had a lot of traffic. ESPN.com bought it. Obviously a fantasy sports site is a great bolt-on to ESPN's content.

I set up a site in 2007, Stockpickr.com which was like a social media site for finance. It was a great add-on to content at any finance site and eventually thestreet.com acquired it.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[theag]

A country.

https://www.google.lt/search?q=Gree...:en-US:official&client=firefox-beta&gws_rd=cr

The unemplyment rate has been climbing steadily since 2008 and it doesn't seem like it's going to stop.

Seems like Spain has finally caught up, too.

I barely know anything about it myself, though. Just curious what you think about it.

He already gave you the answer Think about it again

 

[InMotion]

James will probably hop back on here again soon. If he is not going to answer anymore questions the thread will most likely get locked.

This is a forum and not a timed Q&A; therefore, I'm fairly certain we will see him again.

 

[Vigilante]

James. If you are still around, here's another question for you.

Lets say you owned a completely kick a$$ company. It was profitable, and owned it's market share position.

You wanted to cash out. Do you simply wait for someone to come along and express interest, or do you actively market the business as being for sale?

I assume if you are the hunted and not the hunter that the multiple works more in your favor.

How do you go about finding a buyer for the company? Or don't you... do you wait for them to find you?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Jonleehacker]

I've read a lot of your blog posts etc and they really inspires me.

It seems to me the key factor in you being able to come back from the depths each time has been your Rolodex.

1.) What would you do if you were down and out again, but didn't have the list of important contacts at your fingertips that you had at the past?

And also, in this article you talk about how you self-published your latest book: How To Self-Publish A Bestseller: Publishing 3.0 | TechCrunch it is a great article and congratulations on the success of your book, but that article is more like "How to Self-Publish Your 5th Book" since you already had an established track record and you were purchasing services from the "best in world" to help you.

2.) Any adaptations to that approach that you would take for a first time author?

3.) You said in several places that you like to exercise your idea muscle by generating lists of ideas for businesses, book, articles etc. Makes a lot of sense. I do this as well. Then I end up with a problem: too many ideas that I want to work on, and not enough time or focus. Do you have any tips on how to prioritize, and then stick with one until it is completed properly... or is there an entirely different approach that you use?

Thanks!