What a great time you chose to replay this show. It's great how it directly contradicts the recent shows on passion and control; as well as other shows.

At first when Fred talks about how he doesn't do any market research and says that people shouldn't do it, Angels might get the wrong idea. But he eventually goes on to say that knowing the market is very important and that he relies on Caltech's Professors to tell him what's going on in the market and who's who in the market, and how vital it is to know those things.

It makes perfect sense to use the Professors that way. They have a close relationship with big players in industries. They learn what's going on so they know what to teach and are able to prepare interns and graduates properly for the job market. Note the word "market" in "job market". Knowing the market has always been very important to universities. But most Angels couldn't care less.

Fred mentioned how rigorous his job is in constantly learning new things. Something Angels refuse to do. Angels talk about the Entrepreneur who is full of himself but then they strut with the arrogant belief that they don't have to educate themselves.

I laughed at how Fred's version of passion contradicts what Angels claim passion leads to. He talked about taking a pay cut because it's important to do what makes you happy. How would you like to hear that in a pitch; screw the money, let's follow our passions.

Fred's refusal to do market research makes sense because in his organization (Caltech) it is something that has already been done and is a continuous ongoing process. He also justified not doing it in a cost to benefit analysis. In other words he had some useful statistics. Unlike a lot of the info we hear from Scott Shane.

I saw an article on the most recent Orange County Fast Pitch competition. It remains a confusing morass that leaves Entrepreneurs clueless about what they can expect from TCA.

Angels tell us they don't fund science projects. But the overall winner who also obtained funding is a research project that has been going on for years and has been collecting more and more Angel investment as the years go by. It is said that 65 million people worldwide will benefit if they get their surgical laser perfected. I wonder how many of those 65 million have insurance that will cover the procedure. I also wonder how it looks when the remaining number gets divided by all the investors who have joined over the years. The Angels might not like the price the insurance companies are willing to pay, assuming it get perfected.

Another prize also went to a science project. They say they are going to make robots that use sight to do things like vacuum your house instead of the cheaper and less power hungry methods already used by robots that vacuum and mow lawns. They are also creating a much more expensive way to pick fruit off of trees as well, with sensors that examine each fruit by sight and touch first. Sounds like the gas guzzler of fruit picking. Didn't anyone tell them that the minimum wage laws do not apply to fruit pickers? I guess the people who pick the fruit now can be hired to clean the lenses and sensors.

Neither of those two "winners" are producing revenue or can claim there research will be perfected within the amount of money they are asking for.

http://www.thisamericanlife.org/Radio_Episode.aspx?sched=1303

Hi Frank,

Here is more myth busting for you and your listeners. Maybe you would like to interview these guys.

The above link will take you to a page on the website of This American Life, public radio, where you can listen to a show for free about the myths that surround currently successful entrepreneurs.

Your listeners may find this myth busting important. The researchers interviewed include Professor Pino Audia of Dartmouth University Business School and Columnist Dan Heath of Fast Company magazine.

Their research not only shows the importance of specifically studying the winners instead of lumping the data of winners and losers together, it also supports what a few of your guests have been saying about the importance of studying the market, business, and customers.

Most Angels want to play this fictitious numbers game of their own creation that is not what they claim it is. They don�t want to study the market, the business and customers. They want to just pick some guy they happen to like that is going to magically make it happen.

Most Angels tell us that their mentorship will lead to success if they just had the right guy who is willing to learn from them. However, the research shows that when Angels are successful, it is because they chose a guy who did all the necessary market, business, and customer research, that most Angels don�t want to do and don�t want to be bored with having it explained to them.

Angels talk about not throwing good money after bad. But by picking the entrepreneur without first verifying the market they are throwing good money in bad way right from the start. I think Jim Armstrong called it shooting first and then checking later to see if you have hit anything. I don�t think most Angels would have survived the Battle of Bunker Hill where the order was �don�t fire until you see the whites of their eyes�.

Because of their past performance it�s easy to imagine most Angels as the type that would be shooting helter skelter when the battle starts, quickly running out of ammunition. TCA would increase its credibility with both its members and quality opportunities if it became an organization that did not shoot until it saw the whites of the market�s eyes. Don�t shoot until you see the whites of the market�s eyes.

Matthew, come on now... Is there not an entrepreneurial/investing forum (community) you belong to? Because I would love to see an active community respond to you.

You seem to have a lot of opinions when it comes to being critical of investors' advice. First off, this is the internet and as a human being in this age of being overloaded with information, you should be intelligent enough to know who makes sense and is giving good advice and who is not. Obviously you seem to only intake and spit out what you see as bad information by repeating it and showing its holes. That is fine to do but it gets you no where in terms of learning the right information.

Like Dave Berkus said, or Jim Armstrong said also, "You show me a deal with 10 reasons to invest and I can show you 100 reasons not to (given enough time)."

What I'm saying is, maybe you should be a defense attorney or something. You always make sense in a way but its 95 percent pessimistic bullshit that's never going to get a read or a response. Most people who learn from these podcasts spend their braincells sorting out the information instead of manipulating it.

I really don't get your posts though, you seem bright but you're full of pessimism. And most likely the worst part, you probably consider yourself an optimist. I promise that's how you feel in terms of your outlook on things. Most delusional people are.

Please write a term paper for me or start your own blog. Maybe you can call it "The Entrepreneur's Term Sheet: 95% BullShit"

kind of creative, eh? That's my biggest strength. That and not intaking bad information like what most of your posts are full of.

Adam,

I sincerely want to know what bad information you think I've been putting out.

But I think you would agree with me that our time is better spent debating what leads to success and what doesn't.

I think you would have to admit that your post is much more optimistic than mine. You claimed that most people sort out the information stated on these podcasts. That's a nice view to have of people. But we certainly don't see that in the Budding Brilliance podcast, in the awards the TCA gives out, in the complaints of some of the members, in the attrition rate of members, in the lack of returns, and in the VC meltdown.

There has been a lot of looking back in hindsight with people saying they shouldn't have said this, thought that, or did the other thing.

Where are these "...most people..." who were not phased by the wrong thinking of the past? But it is nice to think that all those bad things never happened because most people were not fooled.

It's like you're saying it is alright for people to give garbage advice because most people will sort it out anyway. In one sense you put down the quality of these podcasts more than I have. It's like you have said the quality of the advice doesn't matter, they don't have to try, and maybe also saying if the quality of the advice doesn't matter maybe the podcsts don't matter either.

We are always hearing you and your fellow TCA members say that it's the ones who are able to generate excitement in their fast pitch that get funded. And you say this as if it is an immutable law of science rather than a preference.

I'm reminded of the other Golden Rule that reads "He who has the gold makes the rules." Then I wonder why Angels impose these fast pitch rules on themselves that make success more difficult and maybe even impossible for them to achieve.

One can only get excited about things that one already knows and understands. Therefore when presented with a new market ripe for exploitation Angels are unable to see the forest from the tree. Take new foods for example. Until you have tried it you don't know to be excited by it or not.

For example I often create an enjoyable time for people who are new to Guam and who have never been in a tropical region before. Young coconuts cannot be transported over great distances. So they wouldn't know to be excited by the meet of young coconut which can look like a slippery slimy mess, but tastes 100 times better than the coconut meet on the store shelves in California. They also wouldn't know that nobody in the tropics cares to drink the juice of the older coconuts you have on your store shelves, it just doesn't have the same quality and sweetness of young coconut. Another coconut product that you won't get on your store shelves is from older coconuts that were allowed to grow for awhile. The inner meet is changed into a sponge material we call faha that fills the entire nut and there is no juice in these nuts. It's a natural slightly denser angel food cake about the size and shape of a softball.

As some of us go through life we discover our favorite Egyptian food, and favorite Indian food, and the better taste of fresh ingredients on a pizza over what the fast food chains sell, and so on. We are never as excited before we try something that becomes one of our favorites as we are after we have tried it.

Angels who refuse to learn about new markets and new possibilities to take advantage of are analogous to finicky eaters that always eat the same thing never learning anything new, except Angels expect a different result from relying on the same old information. When Angels advertise themselves as looking for something that excites them within the short time frame of a fast pitch, they are also advertising their unwillingness to open their minds, to learn, and develop comprehension of what the new possibilities are.

I ask the question, how is it that people who are telling me that they insist on being closed minded also expect me to believe that they are qualified to be my mentor? At the very least, these Angels are telling the world that they are not looking for opportunities with the potential of generating the highest returns.

It will be interesting to see how this fast pitch excitement formula which has failed for the past decade will do in the aftermath of the VC meltdown. There is a lot of talk about valuations, but ultimately VCs have to show large returns in order to not become part of the meltdown, especially in today's venture capital climate.

Lower valuations can only have a limited affect on increasing profits. Ultimately a VC firm must show large returns in order for it to have a strong ability to raise capital. The biggest and best VC firms are not going to be responsive to the finicky eater/finicky learner process of the TCA.

The TCA does not have an appetite for learning about new markets and new possibilities. TCA might make 15 investments in a year. One month is more than enough time to explore two new types of possibilities, but they aren't willing to do it.

It should be kept in mind that the modern VC industry is still new and developing. After the VC meltdown we will see new categories of VCs emerge.

There will be those who develop a reputation of relying on low valuations. Those will only attract deals without the possibility of large sells nationally and or globally, and deals that don't require an investor to learn about new markets and new possibilities.

Then there will be those VC firms with the reputation of fostering companies that develop large sells nationally and or globally. These will be the power houses with a strong ability to raise capital.

It will be easy to sort out which VC firms are which. It's just a matter of looking at the size of their fund, the amounts they invest, and their recent investments. Which types of firms are knocking on TCA's door?

This information tells the Entrepreneur with a new type of opportunity that has a large market whether or not TCA is worth approaching. Whether or not TCA realizes it, it has already put itself in the category of pursuing more limited markets.