Here’s some excerpts and thoughts:

Causation v. Effectuation

• Causal logic is based on the premise: “To the extent we can predict the future, we can control it.”
• Effectual logic is based on the premise: “To the extent we can control the future, we do not need to predict it.”
• Causal problems are problems of decision; effectual problems are problems of design. Causal logic helps us choose; effectual logic helps us construct. Causal strategies are useful when the future is predictable, goals are clear, and the environment is independent of our actions; effectual strategies are useful when the future is unpredictable, goals are unclear, and the environment is driven by human action.
• Causal question: What should I do to achieve this effect?
• Effectual question: What can I do with these means?
• Surprises are usually relegated to error terms in formal models. Effectual logic sees them as source of opportunities for value creation.
• Contractual claims are causal claims on the predictable future; equity provides effectual claims on the unpredictable future.
• The paths to entrepreneurial success expand in the future rather than converge (one-to-many, in contrast to causation’s many-to-one approach towards ‘the goal’)

On the Entrepreneur

• Expert entrepreneurs distrust market research; distrust attempt at predicting the future
• “In commercializing new technologies, entrepreneurs often find that formal market research and expert forecasts, however sophisticated in methods and impeccable in their analyses, fail to predict where the markets will turn out to be or what new markets will come into existence.” Christensen (1997) and Mintzberg (1994)
• Expert entrepreneurs start with three categories of means: their identity, their knowledge base, and their social network.
• Theme of converting initial customers to partners
• Entrepreneurs perceive the world around them as human-made
• “Serial entrepreneurship is a temporal portfolio” – diversified over time rather than concurrently like a traditional investment portfolio

Decision Making

• Pragmatism does not assert a singular truth and declare all else false; rather, it compares truths and tests for differences. If no difference in the consequences of the two truths, they are the same pragmatically.
• What does this truth tell us that we don’t already know?
• Risk involves known distribution of options (1 in 5 chance of winning). Uncertainty involves unknown distribution of options
• “Rational choice involves two guesses, a guess about uncertain future consequences, and a guess about uncertain future preferences.” March (1978) in RAND Journal of Economics
• Human rationality is bounded by cognitive limitations such as physiological constraints on computational capacity, and psychological limitations like biases & fallacies

Principles of Entrepreneurial Expertise:

• Bird-in-hand principle: create something with existing means rather than discovering new ways to achieve goals (“What do I have?” vs “What do I need?”)
• Affordable loss principle: Committing what you’re willing to lose rather than investing based on expected returns
• Crazy quilt principle: Negotiate with all stakeholders willing to commit to a project without worrying about the opportunity costs. The venture (or “quilt”) evolves over time based on interactions of all stakeholders (investors, customers, employees, suppliers…).
• Lemonade principle: Leverage surprises rather than avoiding them
• Pilot in the plane principle: Rely on human agency as prime driver of opportunity rather than technical/economic trends. (Comes from SpaceShipOne putting a pilot in charge of the spaceship instead of a computer. The pilot can think on his feet, while a computer would need every possible contingency pre-programmed.)

I’m not sure where I found this book, but it was most likely a blog post or tweet by Ben Casnocha or Paul Kedrosky. Whoever suggested it, thanks.

More information:
Effectuation: How Entrepreneurs Think

Jason Fried @ Big Omaha 2009 from Big Omaha on Vimeo. Many of his thoughts on starting a business are aligned with the idea of Effectuation. “We don’t have a plan.” “We don’t set sales targets. They’re numbers you pick out of the air and make you do things you don’t want to do”

I’m not an expert on the financial markets; for that, go to Paul Kedrosky and Roger Ehrenberg, my two favorite financial bloggers.

What I’ve found interesting is the “Tips for Startups” coming from VC’s on how to survive this downturn. Om Malik has a great post highlighting Sequoia’s advice to its portfolio companies: What You Can Learn from Sequoia Capital’s Doomsday Plans

Most of these tips also apply to individuals trying to make it through:

• “Cut spending. Cut fat. Preserve Capital.” – Cut back on anything you don’t need. I love going to the Alley Theatre for plays, but I probably won’t be going anytime soon. This also goes along with:
• “Start with zero-based budgeting.” – Use online financial management tools like Mint and Wesabe to see exactly where your money is going, where you can save, and set budgets.
• “Reduce risk.” – This isn’t the time to be risking all your capital betting the market will turn around. Only invest with money you don’t need for 10-20 years. I bought some Russell 3000 (IWV) in my Roth IRA last week and it’s already down 20%. While I don’t like losing that much money, I don’t plan to need that for at least 40 years. I can take the short-term unrealized losses, as long as I’m not forced to realize them anytime soon.
• “Unprofitable companies would have tough time raising cash, so get cash flow positive as soon as possible.” – With frozen credit markets, consumers will have a hard time getting loans and credit cards. Make sure you’re cash flow positive; that is, spending less than you make each month. This is not the time to go into credit card debt, if you can help it. Interest rates will be much higher than they’ve been over the past 10 years.
• “On a scale between Capital Preservation and grabbing market share, he advised that everyone should be only preserving capital.” – For all you digital nomads out there (myself included), time to cut back on your travel/conference budget. It’s been fun flying to a conference every month, spending a ton of money in the name of drumming up more business (and catching up with friends along the way). But now it’s time to lower costs as much as possible; the lower your costs, the less work you need to survive. You can also save more of those earnings, which gets us to:
• “Make sure you have one year of cash.” – When the work doesn’t keep flowing in, you’ll need to live off savings for a while. Save as much as you can now, with a goal of having about 1 year’s worth of expenses in savings. Keep this out of the market, even out of money market funds for now (isn’t it amazing how many “cash-like” securities are no longer cash-like?). Your best bet is 3-6 month CD’s.

Do you have any other tips for individuals? Post them in the comments.

The Idea
In college, you have many friends who have taken many courses, but there’s no easy way to know WHICH friends took WHICH courses, and what they thought of them. It would be great to know which 10 of your friends took GEOL 101 and what they thought of it, but you don’t want to ask all your friends if they’ve taken this course – most of them haven’t. Coursevote was a way to see what your friends, and everyone else, thought about courses.

There’s many services out there that tell you what everyone thinks of a course (RateMyProfessor, PickAProf…), but your friends’ opinions matter more than the crowd. Coursevote would let you see that 40 people liked this course, 5 of them were your friends, list those friends and make it easy to ask them about it.

The original monetization plan was allowing students to sell ads for used books alongside relevant course pages. So on the MGMT 211 page, students could advertise their used books for this class. I quickly gave up on micropayments from the masses and shifted to reaching critical mass at universities so I could sell ads to local businesses. It never got big enough make ad sales worthwhile.

How it got started
Around March of 2006 I decided I wanted to pursue this idea after thinking about it for a few months. I entered a business competition called the Texas A&M Ideas Challenge, and sold a content site I managed to raise some money. In May, I won and the next day I hired a developer to build it.

We worked over the summer to build the beta site using the Facebook API, which is where we got the friend connections. Right as we were testing out the beta the Facebook Platform was launched, and I decided we had to rebuild it as a Facebook application.

What went wrong
I did a lot of things wrong, but the two biggest mistakes were jumping on a new, unproven piece of technology and not hiring my developers correctly.

Mistake #1 – Facebook Platform
The original plan had been to build our own website ( www.coursevote.com ) and use the Facebook API to figure out the social graph. Moving our application inside of Facebook right as the Platform was launching was terrible because the Platform didn’t work. There was no documentation, which made my developer’s life hell. And they liked to change things without notice, so my developer spent countless hours trying to figure out what Facebook decided to “fix” that broke our app.

The worst part was the constant downtime of the Platform. After about a month of talking to professors and staff of Mays Business School, I was allowed to show Coursevote at a required meeting of about 500 students. I gave the demo on a Tuesday and Thursday – the entire Platform was down Monday to Saturday that week, so all the students I showed it to went home and found my application broken.

I don’t want to blame Facebook for it all. Even if the Platform worked, moving my application inside of Facebook was a bad idea and I should have realized it sooner.

Facebook applications were mostly games, and functional applications got drowned out in the noise. The applications inside Facebook should be things you use often; Coursevote was something you’d use once a semester. And many students didn’t like the concept of applications, so would refuse to try it out regardless of its utility.

If I had kept it on its own website, I could have used the Facebook API without having to get caught up in the “useless Facebook app” wave. It could have developed its own brand, and students could have associated Coursevote.com with “where I go for course information each semester.”

The Platform added no new value, only more complexity. It transferred control of my application from me to Facebook. If I hadn’t been distracted by the shiny new technology, Coursevote might have had a better chance of succeeding.

Mistake #2 – Hiring Developers
This was the first time I had ever hired someone to do work on a startup with me. I didn’t know the proper way to compensate, and I learned a lot by seeing what didn’t work.

I hired my first developer the day after winning the business competition. He was a friend of a friend, and I had heard great things about his programming abilities. But he wasn’t passionate about the project; he was just a “hired hand” doing his job. I told him the project specs, he quoted me a price, and we got to work.

After Facebook launched the Platform, we had to rebuild almost everything. He reached the point where he just wanted this project to be done, and the code reflected that. I had to hire another developer take over.

I saw that just paying someone who cares nothing about the project didn’t work out well, so I sought out a developer who liked the idea and would work for equity – becoming a cofounder. This worked well at first, but he became less interested in the project when paying jobs came around and he saw Coursevote wasn’t taking off as well as we hoped.

If I could redo it I would have vested his ownership and paid him a small salary – letting him choose his own salary/equity balance.

Where Coursevote is now
It’s still on Facebook, but its main differentiating feature – what your friends think – still doesn’t work. What’s up now is Version 1, Version 2 (with the new developer) never got finished.

What I learned

• Put together a great team who loves the idea, and compensate them fairly.
• Fail early. Be willing to pull the plug when it becomes obvious it won’t work.
• Seek the advice of people who have done this before. This could have solved a lot of the developer problems.
• What your customers say and do are two different things. Everyone I asked said they would definitely use the service, but it was so difficult getting people to actually sign up for the service.
• Have more money on hand than you think you need. Nothing goes according to plan.

http://www.ablanksite.com

Basically, it is a multipage writeboard that exports clean html. It’s not ready yet, but should be in a few weeks. If you give us your email address on that page this weekend, you’ll get a free pro account for life.

Today I’m officially releasing Coursevote. It went live Sunday and since then I’ve had about 20 of my friends test it out. I’ve made most of the major UI changes, but there’s still a few things left to do.

Read the full launch post at the Coursevote Blog. I won’t talk too much about Coursevote on my blog. I hate it when people only talk about their product – that’s what product blogs are for. But please subscribe to the Coursevote RSS feed if you’re interested in it.

My first goal is to get 1000 users. Right now I have 20 beta testers, so I’m 2% there. If you’re on facebook, click the big button at the top to get to it. If you’re not on the Texas A&M Network, it’s going to be pretty empty. Each network gets a different Coursevote (UT students aren’t interested in A&M classes). But you can check out some of the screenshots at the Coursevote blog to see it in action.

There’s more details at the Coursevote blog.

With my Coursevote.com idea, I won the Business Ideas Challenge.

It was an amazing experience. The judges had some great questions and advice, and really saw the potential of this project. I wasn’t allowed to actually demo the site (not allowed to use computers), but I printed out a few key pages from it for the judges. After the presentation we had a reception where I talked with a bunch of the judges, only a few had seen my idea. We had interesting conversations about my product and the new media landscape in general.

I’m about to hire a developer and we’ll get to work on building this site right away. Hopefully by mid-summer I’ll have a working prototype, which I’ll test out with some people and work out any bugs. The goal is to open it up university-wide by the beginning of school this fall.

If you’d like to beta test the site, or just keep up with it, go to Coursevote.com and type in your email address.

If you were a judge or someone I met today, send me an email so I can stay in contact. Thanks again for spending this whole day at Texas A&M helping us with this event.