Damir Perge - Entrepreneur Myths : Forget Business School. Get a $50 Million Education from a Startup Venture Capitalist

DAMIR PERGE

ENTREPRENEUR MYTHS

FORGET BUSINESS SCHOOL

GET A $50 MILLION EDUCATION FROM A STARTUP VENTURE CAPITALIST

Edited by Jana Arnold

AN ENTREPRENEURDEX BOOK

ENTREPRENEURDEX DALLAS

entrepreneurdex

Publishers since 2011

Copyright 2011 by Damir Perge

All rights reserved

Library of Congress Cataloging-in-Publication Data

Perge, Damir

Entrepreneur Myths: Forget Business School /

Damir Perge 1st ed.

Includes bibliographical references and index.

(1) Business (2) Entrepreneurship (3) Management (4) Investing (5) Capitalism

ISBN 978-1-61061-244-9

Entrepreneur Myths books are available for special promotions and premiums. For details, contact: Director, business development, entrepreneurdex, info@entrepreneurdex.com

First published in digital format in 2011

entrepreneurdex Edition 2011

Cover design by Chiko StatChimp

Cover photography by Andreirybachuk | Dreamstime.com

WARNING: THIS IS THE UNCENSORED VERSION OF ENTREPRENEUR MYTHS, FOR CENSORED VERSION PLEASE SEARCH FOR THE FOLLOWING ISBN: 978-1-61061-604-1

For my parents, Mira and Ivan Perge, for having the courage to leave Yugoslavia and enable me the opportunity to become a capitalist

To my children, with love: Coby, Michael, Jon, Paige and Isaac

Shit, I truly wish Id had this book when I started out as an entrepreneur after dropping of out college my senior year. Entrepreneur Myths is for anyone who wants to become an entrepreneur, or is already an entrepreneur. Whatever your age or experience theres something you can learn based on my investing $50 million into startups.

After you read this book, I hope youll feel you got a $50 million MBA avoiding the bullshit I went through. First, let me tell you an old, but true story.

IBM chief Thomas Watson was once asked whether he planned to fire an employee who made a mistake that cost the company more than half a million dollars. Watson shook his head, "I just spent six hundred thousand dollars training him. Why would I want anyone else to hire his experience?"

I spent close to $50 million investing into over 25 startups by applying the principles of complexity science. I founded the Tesla Capital venture fund and named it after the great Nikola Tesla. We managed the seed fund somewhat like a combination of Y Combinator and 500 Startups (before those two companies were in existence), but the process, principles and methods were different we operated at a higher velocity with larger chunks of money. My partner in Tesla Capital committed to $100 million in funding, then came in $50 million short. It was a major clusterfuck. Obviously I learned not to make investment decisions based on committed capital but on actual capital in the bank.

I still believe in the power of applying complexity science to early-stage investing. And I plan to do it again under the entrepreneurdex business model a venturcelerator. I coined the term venturcelerator for a different kind of combination of incubator and accelerator a company using complexity science to fund and launch startups. Nothing teaches you like real-time, hands-on experience.

Watson was right. Why would he fire someone who just got a $600,000 education? The same applies here. Because I was a hands-on investor, I was in a position to clearly see patterns and myths about entrepreneurs. These entrepreneur myths cost me $50 million to learn. So you could say each of these 50 chapters is worth $1 million.

Background

I was infected by the entrepreneur virus at the age of 20. I wasnt born to be an entrepreneur my goal was to be a professional soccer player. Since then, Ive gone through the entrepreneur journey quite a few times, learning by doing.

Wearing both the venture capitalist and entrepreneur hats, I see that entrepreneurs and investors have many ideas and practices that are just plain fucking fantasies, out-of-date dogma or misperceptions. They acquire these myths from the media, word-of-mouth from other entrepreneurs or from entrepreneur-published books that focus on the psychobabble aspect of starting a business.

You should read as many books as you can on business and entrepreneurship. But remember this: most books on entrepreneurship dont focus on providing real world, real-time advice. They talk about the past rather than the current state of entrepreneurship.

Things move rapidly in the land of entrepreneurship. Look at the current velocity of high-valued tech companies in Silicon Valley and Silicon Alley. No one can predict how long it will last. But it proves the point that rapid innovation in the marketplace brings down existing beliefs about entrepreneurship.

This book was written for the new generation of entrepreneurs who are creating the next Twitter, Foursquare, Zynga, Wooga, LinkedIn, Chipotle, Taco Diner, Tesla Motors or Facebook.

I immigrated to the United States of America from Yugoslavia at the age of 11. As an immigrant, I realize America is great because it allows entrepreneurship to prosper and grow. Startups are the foundation of any entrepreneurial economy especially in America. My mission with this book is to help entrepreneurs become better by providing thought-provoking advice, questions and discussions.

I wrote this book in the same words I use when discussing entrepreneurship with my friends over a cappuccino or beer or preferably a nice glass red wine. So dont be shocked to find a fucking curse word or two.

This book is like a software program or app. The current version is 1.2 and Ive frozen the specs for anyone to read now. As I receive feedback from readers, the myths will be updated with comments utilizing the principles of swarm intelligence.

The entrepreneur DNA is it real? Based on my experience of investing into more than 25 startups, I dont believe there is an entrepreneurial gene. Environment and state of mind have more to do with becoming an entrepreneur than genetics. If anyone tells you they were born to be an entrepreneur, bitch-slap them a little for me.

When I was younger, people said I was born to be a soccer player. My father was a great athlete and a great player, and I may possess some athletic genes but my success on the soccer field was a result of playing four to five hours every day, 365 days a year in sizzling heat or snow. My teenage son has tremendous talent for soccer but doesnt love it enough to play for hours every day. He chose another sport. And he practices three to four hours per day because he realizes you cant be good at an anything unless you practice every day. To me, entrepreneurship is like a sport.

Education isnt the solution either. I funded one PhD entrepreneur in the hardware sector who was a very resourceful, creative and frugal entrepreneur, regardless of his education. And I funded another PhD entrepreneur who was a domain expert when it came to his field in the software sector, but he was not much of an entrepreneur.

A few years ago, I gave a speech on entrepreneurship to a group of MBA students at Oxford. The students wanted to know the secret to why Silicon Valley is the epicenter of technology innovation and the reasons for its success. Having lived in Silicon Valley, I realize its not about the geographical location. Its not a specific area you can find on the map. Silicon Valley is a state of mind. When you go there, you feel the spirit of entrepreneurship.