NERD to MOGUL dotCOM

I found a great article on how entrepreneurs are rushing to turn members into profits.  The amount of money to be made is huge.  $50 billion dollars a year in online advertising in the US alone. 

But the competition is steep.  Some experts predict that there will be 250,000 social networking sites within a year; from 850 sites today.  Furthermore, the US market is dominated by the top three sites.  MySpace, Facebook, and Linkedin are the top social networks earning $700 million, $300 million, and potentially around $100 million, respectively.  So where’s the money?

If you add up the top three earnings, there are still roughly $49 billion left over to divide–that’s a big pie.  Jump on the wagon and get yourself a slice.

(read the whole article at the link below)

http://www.usatoday.com/tech/techinvestor/industry/2008-05-11-social-networking_N.htm

Who will be the next Facebook or YouTube?  The founders of these social networking sites have been catapulted into wealth and fame.  Tens of thousands of social networking sites have sprung up in hopes of reaching the same level of success.

But its not just the pros putting up social networking sites.  Every day people are putting up sites about baseball, gardening, video games, and everything in between.  Sites that cater to social network entrepreneurs and amateurs have also made a name for themselves.  Ning and ONEsite have given non-programmers the ability to easily establish their own social networks without any coding.

I am also trying to cash in on the social networking wave.  I came up with my social network concept and have been looking for freelancers to do the coding.  One guy gave me a quote of $45,000, while a second guy quoted me $1,800.  The first quote is way out of my budget.  I offered him a chance to make more money by letting him take a down payment of $5,000 and 25% of monthly revenue until a total of $120,000.  That’s three times his asking price.  But he turned it down, said it was too risky.  That’s one of the differences between an entrepreneur and a worker.  Entrepreneurs will take calculated risks to obtain unproportional gains.  The second quote was way too low.  I can’t trust a million dollar idea to a thrift shop.

If there are any programmers out there that are interested in being part of a startup social networking site, send me a note at huynhcorp@gmail.com.

Somebody tell me why the ISM numbers, which came out this morning, are bad but WM hasn’t come down yet?

Yesterday I overreacted and sold all of my WM holdings–10,000 shares–the second it broke $5.00.  Granted I made $11,000 in three days from WM, but I could have made so much more.  To my dismay, right after I sold my WM holdings, the price went up.  And up.  And it didn’t stop until $5.80.  I could have made another $8,000 (or 72%) if I had not overreacted and waited a couple of seconds.  Well, that’s the stock market for you (luck+skills+tears and sweat). 

Now I’ve been waiting for it to come down so I can jump in again.

Last night I had the best business discussion I’ve ever had.  This business professor/entrepreneur  and I were discussing the viability of a business idea I had.  It’s still in the early stages of development.  But after speaking with him for only 30 minutes, his insight and questions have pushed us ahead significantly.

He wasn’t my professor, but he was gracious enough to point me in the right direction.  So when you are looking for advice and mentoring, don’t just stick to people you already know.  Go out on a limb and seek help from experience entrepreneurs that have the same interests as you.  If they are too busy, then they’ll politely turn you away or they’ll refer you to somebody they know.  You really have nothing to lose (maybe a little pride and self-confidence).

Founder & CEO of 1-800-got-junk Brian Scudamore claims that entrepreneurship and success are in his blood.  He had the idea to start a 100 million dollar at a very young age.

You can watch a short clip of how he came up with the business idea on The Big Idea.

http://www.cnbc.com/id/15840232?video=800837344

Wow!  What a ride it has been for the stock market this month, especially the financial sector.  Many, such as FNM, FRE, WM, and WB have lost 90% of their value in one year.  The lowest point for most of these stocks took place on 7/14/08 or 7/15/08.  Then in one week their value doubled!

Folks, this is where you make quick CIF.  And if you time it right, you can make a lot of CIF.  I just figured this out for myself.

Up until 7/14/08, I never thought I would trade stocks.  I’ve always felt that it was another form of gambling.  Not gambling like playing the slot machines, which is totally random with no skill factor.  More like poker, with both elements of luck and skill.  Stock traders use technical tools such as ratios, charts, and equations.  Similarly, poker players use tools like pot odds, draw odds, and hand odds.  Both stock traders and poker players use bids to bluff their opponents.

I am terrible at poker and have lost money in most of the home games I’ve been in.  So I didn’t think it would be wise to risk money in the stock market.  But for some unexplainable reason I took interest in stocks on 7/14/08. 

That morning, I was doing my usual round of news gathering on the net when I landed on a news article about Rite Aid (RAD).  They were saying how Rite Aid was heading towards bankruptcy and that shareholders will lose all of their equity.  When I looked at the RAD price, it was only $0.98.  I don’t know much about the stock market, but I know plenty about the retail pharmacy sector.  CVS and Walgreens are the largest and second largest retail chains, respectively.  CVS stocks are around $38 and Walgreens are around $34.  Rite Aid, the third largest pharmacy chain in the US with over 5,000 pharmacies nationwide, was at $0.98.  Can you believe that?  The third largest pharmacy chain, with expected one year revenue of $25 billion, on sale for 98 cents apiece?

If you don’t see the opportunity to make mucho CIF, then call me.  I will send you a “clue”.

I saw potential and acted on it.  I immediately instructed my Self-directed IRA to open an account with TD Ameritrade.  But the whole transaction took a week and a half.  By the time my TD account was funded and ready to trade, RAD had gone up to $1.45.  Most of the stocks on my watch list doubled:  WaMu (WM) 3.23 to 5.92; Fannie Mae (FNM) 7.00 to 15.00; Freddie Mac (FRE) 5.26 to 10.80.  In one week I could have doubled my money.  That’s the type of returns you need to become a mogul. 

My point is not to dwell on what could have been, but to tell you about positioning yourself to succeed.  Moguls have multiple streams of income and are open to different ways of accumulating wealth.  You can not overlook the stock market.

Here are my moves so far:

     First ever buy: 3,404 shares of FNM at $11.75.  Sold in one hour at $11.85 = $340.40 gain.

     Second buy: 10,000 shares of WM at $3.90.  Currently at $4.74 = $8,400 unrealized gain in 2 days.

     Third buy: 575 shares of FHN at $8.64.  Currently at $9.45 = $465.75 unrealized gain in 2 days.

If I sold my portfolio closing today, I would have had $9,206.15 gain in two days.  That’s without doing any work.  That is the true meaning of making your money work for you.         

I just submitted my Executive Summary, along with a $100 entrance fee, to the Fresno California Start It Up Business Plan Competition.  This is Fresno’s first time hosting a competition like this (and my first time entering a competition like this).  Fresno gets publicity while the winner gets $100,000 in cash and $150,000 in prizes (office furniture, etc.). 

I read about this competition a couple of months ago but didn’t think anything of it, especially because the winner has to establish and operate the business in Fresno.  Don’t get me wrong, there’s nothing wrong with Fresno.  It’s a great city.  I just don’t think it’s worth picking up and moving 1,500 miles for $100,000.  So I didn’t think about; until a few days ago.

Why shouldn’t I enter the contest?  It only costs $100 and it wouldn’t take that long to write an executive summary.  Besides, I’ve never been in a business plan competition before and the experience would make me a better entrepreneur.  That’s right.  One of the most important and powerful tool an entrepreneur has is the business plan.  VCs and other investors use it to decide whether or not they will fund you.  You use it as a blue print build and manage your business.  The business plan is invaluable.

Gaining valuable experience and doing something I’ve never done before; well, these are good arguments but not enough to justify moving my family half way across the country.  Then I thought about the hidden benefit of entering the competition: exposure to the funding world.  Do you remember the saying “It’s not what you know but who you know”?  In the funding world, “It’s who knows you” that really matters.  After the crash of the dot coms in the early 2000s, getting funded by VCs is harder than or at least just as hard as winning the lottery.   They tighten their purses after bursting of the dot-com bubble and haven’t let loose since.  So, to even submit your business plan to a VC, you have to be known to that VC already.

Since I don’t know any VCs or know anyone who knows a VC, I’m almost certain that they don’t know me.  Even if I don’t win, just being able to speak in front of an audience that includes VCs is priceless.

So I took out my business idea book and picked one that had a great chance of winning (I’m saving the “Big Idea” for the VCs).  It took me a day to write the first draft and another day to get a finished executive summary.  I think it’ll make top 10 (only the top 10 are invited to speak for the final round).

I’ll tell you the results of the competition in a few weeks.

I would be lying to you and myself if I said that I’ve always had the thirst for knowledge and the drive to succeed.  I would also be lying if I said that my ambitions have always been high; higher than 99% of people on the planet.

What’s the truth?

For most of my life, I was on cruise control; just coasting along with no direction or even a destination in mind.  In high school, my only goal was to go to a university.  But I had no idea where or for what.  I just knew that I had to attend college.  In college, my only goal was to finish.  But I didn’t know what I wanted to do when I got out.  I just knew I needed to get a job.

Then one day my cruise control turned off, my turbo kicked in, and I acquired a GPS navigational system.  Suddenly, I went from drifting along with no direction to having clear goals.  Now I want to learn everything, from financing to construction to stocks.  I read self improvement books, business books, management books, finance books, CEO profiles.  The more I learned the more I wanted to learn and do. 

Before, I would have been satisfied retiring as a millionaire at the age of 65 and living in a four bed room house with a wife, 2.5 kids and a dog. 

Now, I want to make my first million by 35 (I’m going on 33), build billion dollar businesses, and make the world my home.

Where did my new found ambition and drive come from?  The answer will shock you.  It came from within me.  I’ve always had this passion and desire to succeed (contrary to what I said at the beginning of the post).  It just took time for it to reach the surface.

 That’s what makes people different.  We all have the ability to succeed (success is a result of determination, ambition, drive, motivation, and perseverance).  But our receptiveness to success comes at different stages in our lives.  Some people find it early on and make millions before they are old enough to get a driver’s license, while others take it to their graves.

The question is not: “Where can I find success?”  It is: “When will I be receptive to success?” 

One of our readers, Nick, brought up an interesting question.

This question has been asked by students, teachers, scientists, and governments since the beginning of modern history.  On one end of the argument, it is proposed that people are born with innate abilities, desires, and personality traits.  These characteristics are determined at birth and cannot be modified.   On the other end of the argument, people are born as blank slates; coming into this world with no preconceived abilities and desires.  Instead, interpersonal interactions and environmental cues shape and mold the persona. 

So, do people steal, lie, and cheat because they are born with “bad” genes that dictate their actions.  Are moguls like Bill Gates and Warren Buffet born with “rich” genes that gave them the ability to make lots of money?

I think it’s a mixture of nature and nurture, with nature playing a bigger part.  It is a proven fact that different people are born with different abilities.  Certain people are born with the ability to discern keys and chords.  Others are born with the ability to duplicate keys, chords, and melodies with their voices.  Does this mean that all musicians are born with the ability to hear music, or all singers are born with the ability to sing?  No.  Although it would be extremely easy to be a singer if you were born with the ability to sing, anyone can be a singer.  If you have the will to sing, you will be able to sing.  Just get a voice coach, practice every day, and don’t give up.  You will eventually be a good singer.  Likewise, if you were born with the ability to sing but had no will to sing or you were raised in a culture that banned singing, you will most likely not be a singer.

Nick, the majority of moguls out there were born into poor environments (nurture).  Yet they used their brains (nature) to get them where they want to go.

So, use what you have to get what you want.

Me, I’m using my nerd powers to make CIF  (cash in fist)!!!

Nerd to Mogul is finally back online.  I apologize to my fellow entrepreneurs and readers for the long absence.  My hiatus from writing and working was brought on by the birth of my first son.   

My Baby Mogul, aka Kingston, was born on 4/20/2008 7 ibs 3 oz and 19 inches.  I was fortunate enough to be in a position to spend 24 hours a day with him for his first month of life.  It is a period in his life and my life that would never happen again.  And I treasure every moment I’ve spent with him and look forward to the moments to come.

Also a lot of other exciting things have occurred since our last conversation.

First, my quest to get funding for my 3,400 sqft salon has materialized.  After being turned down by Wells Fargo—which took a big hit on subprime mortgages so I don’t blame them for being extremely conservative at this point—I turned to a mortgage broker who specializes in finding financing for hard-to-fund ventures.  They introduced my project to First Heritage Capital, which approved a $400,000 SBA loan.  In this tight capital market, a good mortgage broker is worth her weight in gold.  A good broker will not only have access to a vast network of lenders, but they will know how to package your loan in a more attractive light.  This will greatly enhance your chance of getting funding, especially in a tight credit market.

Secondly, I’ve found and have been working with a dependable designer/contractor.  Contractors can either be a godsend or a nightmare.  If you have the misfortune of hiring a bad contractor, which happens to people more often than not, things can get bad and costly.  A bad contractor will not finish on schedule or within budget.  He may also not deliver on quality of material and workmanship.  But I am working with one of the best contractors in the area, which has made sleeping at night that much easier.    

Thirdly, I’ve made up my mind to go back to school and get my MBA.  For the past few years, I’ve constantly thought about getting a MBA.  But I didn’t think it would be worth my time or money.  What advantages would sitting in a room and listening to a lecture give over actually doing things in real life?  Now, I’m working with lenders, contractors, real estate brokers, land lords, newspapers, magazines, and networking with other business owners.  I now have experience writing a business plan and am a self-taught financial “expert”.  All of this for free and a chance to make a lot of money.  Why would I spend a huge sum of money to obtain a degree so I can hang it on the wall? 

Well, that was my thinking the past couple of years.  But I’ve realized that getting a MBA at a top school can be priceless.  It would give me credibility to investors, customers, and lenders.  And it would introduce me to potential partners.  But the number one reason is access and credibility to venture capitalists.  If you want to do big business, you have to be able to get funding.  The right venture capitalists will give you access to a wealth of information and experience as well as money.

It’s great to be back.  Hopefully my experiences—successes as well as failures—will help you on your journey to becoming a mogul.

Join me next week when I will talk more about the construction process of my salon.