Origin of speculation
The recent craze on financial markets made me think about the markets and decision making. First, why would somebody buy an asset on financial market (stock, bond, crypto and other currencies, derivatives)? I guess there are 3 reasons: investors (people, who make money investing other people's money), savers (people, who invest for the reason of dispersing their wealth - for maintaining their current value), and speculators (people, who invest due to expectation of further growth). In principle the price of any financial instrument consists of the "real value", which is "corrected" with expectations. It is hard to calculate the real value, but for the sake of keeping it short, let's say that such estimate shall take into account the [...]
Pain is not suffering
Pain is not the same as suffering. Pain is objective - physical. Suffering is subjective - mental. Suffering is a result of us wishing the pain to end. Proof? [A true story!] Witold Pilecki was a Polish army officer, who sneaked into the Auschwitz by allowing himself to get arrested. Once there, he planned to organize with other Polish soldiers, coordinate a mutiny, and break out of the prison camp. Even though Witold was in the same bad conditions (pain) as the other officers (and prisoners), he wasn't suffering. How come? He had a mission to complete! So, any time you find yourself suffering, think about if the suffering you're experience can serve any purpose. After all, such thinking [...]
Free Cash Flow vs. Bank Account Balance
I've figured that when I'm investing I'm almost completely disregarding my bank account balance. I determine the amount of investment by looking at the free cash flow (By free I mean the money that is left after I pay all fixed costs) that I'm currently generating - especially the last 3-month average. Why is that? Why doesn't my bank account balance play important role? I believe that the bank account balance represents the amount of value that I've created in the past. However, it doesn't show if I'm creating any value right now. When making an investment which amount I cannot precisely determine (e.g. development of a new product), relying on the most current free cash flow is superior [...]
Selection is a never ending process
It is common sense that entrepreneurs need to create something from nothing (Zero to One). What about established businesses? Have they really found a business model with indefinite shelf life? There's a saying among special forces: "Selection is a never ending process.". Nokia, Toys'r Us, BlockBuster and Kodak are just some of the companies that serve as a reminder that being selected once doesn't mean you can sleep on your laurels. Even established businesses need to keep innovating. They need to keep trying to find/ build the new "One". Otherwise...
A few thought on testing ideas
To properly test a business idea, practically every start-up book recommends setting up a landing page, funnelling traffic to it and testing whether the idea (main value proposition) will gain traction, measured by number of subscriptions. The main problem that I have with this approach is that unless you're selling a very simple product/ solution, a simple and cheap landing page won't cut it. You will have to spend substantial time and money on a landing page that will be good enough to make a proper impression with the target customers. Why? Target customers care about the design of the page (it's a marker of trust) and user friendliness (even for SaaS) of the site/ app/ product etc. (it [...]
