Sunday, December 18, 2016

The Law of Zero Sum Learning

When we are young, if we put our heart and soul into becoming excellent at something, that comes with a cost of not learning something else. At age 15, 20, or 25, if we become a star athlete, we simply do not have the hours available in our day, week, month, or year to also become a star musician. If we master the guitar, violin, and six other instruments, we probably are not simultaneously attending med school. If we become a surgeon by age 30, we probably didn't also write the world's next great novel or win gold in the Olympics.

Learning the Five Leverages

As a young man, I decided that if I were to make a difference in the world, and I don't mean a small difference, but put a real dent in the world in some positive way, then I'd need leverage. The world is too big and its momentum too strong for one person to create much lasting change without leverage.

I also realized that five kinds of leverage have much more power than any other in today's world: communication, technology, entrepreneurship, capital, and politics.

Wednesday, December 7, 2016

Opportunity Funnel for the Soul

Hope is a virtue... to have it, we must work at it.
- Mary Berry quoting her father, Wendell Berry

Entrepreneurship is hard. It sometimes destroys lives and livelihoods. This is precisely its greatest value, the best argument for doing it.

I'm not saying that failure builds character or any such trite nonsense, though it probably does do plenty of that. What I mean is a little more nuanced.

Wednesday, November 23, 2016

Metafocus: It's Alive!

I just started writing a monthly column for Learning Solutions Magazine. I call the column Metafocus, and it's all about VR, AR, MR, and games in the eLearning field. My first piece came out today, an overview of virtual and mixed reality in eLearning. Check it out:

Friday, September 23, 2016

Unit Economics Explained - Part 6: Summary

Unit Economics are the most important quantitative tool for opportunity analysis. Having even read this chapter, you’re in the company of an elite group of savvy entrepreneurs and investors who actually understand the basics of Unit Economics. Reading about it, however, is not enough.

Unit Economics Explained - Part 5: Common Mistakes

Even though basic Unit Economics and the four formulas are simple, novices often make mistakes when calculating Unit Economics. Here are a few of the most common mistakes people make:

Don’t Confuse the Types of Costs. 

Many entrepreneurs don’t understand Unit Economics or even how much it costs to make their products simply because they confuse the various costs, often lumping them together. This creates confusion in the best case scenario, and in the worst case, causes entrepreneurs to go bankrupt without understanding how it happened. Here are some common examples of how costs could end up being miscategorized.

Unit Economics Explained - Part 4: Advanced Unit Economics

The Unit Econonics in some businesses can be quite complicated. Airlines and schools are good examples. Airlines must understand how many tickets they must sell to Break Even, but each plane has limited numbers of seats. Therefore, the airlines must also understand how to Break Even on each individual flight. However, each route – with Austin to Denver being one route and Austin to Des Moines being another route – has limited flights that can be taken each day, so they must understand the Unit Economics of each route.

Unit Economics Explained - Part 3: The Formulas

Unit Economics are calculated using four separate formulas that build upon each other and use the various cost totals as detailed in Unit Economics Explained - Part 2: Units and Costs. The first formula calculates Contribution. Once you calculate Contribution, then you can calculate Break Even, then Pre-Tax Cash Flow, and lastly Payout. Below, we'll dig into each formula and run through an example business's Unit Economics from start to finish.

Unit Economics Explained - Part 2: Units and Costs


When calculating Unit Economics, you must first decide what unit you will use as your base unit for the calculations. If you’re a pizza restaurant, you could run the Unit Economics based on one slice of pizza as your unit, or one whole pizza. You could also consider one new customer as a unit, one customer visit, one table, one restaurant location, or even one whole city that you’re thinking of opening locations in. It’s not a bad idea to

Unit Economics Explained - Part 1: Why Unit Ecomics Matter

The single best tool for analyzing a potential entrepreneurial or investment opportunity is Unit Economics. Unit Economics answer three basic questions, perhaps the three most important questions to ask when analyzing a new opportunity: 
  1. Break Even – How many units must you sell in order to pay your monthly overhead? 
  2. Pre-tax Cash Flow – How much profit is this business likely to make every month? 
  3. Payout – How long will it take to recoup the up-front capital investment? 
There are plenty of other financial questions you could, and should ask, but many are more relevant to more established businesses. Other questions require different tools. 

Why These Three Questions?  

If Break Even is too high, then it’ll be hard to get the business off the ground, and the business will be at risk from