#1 Give Your Talents Until They Can’t Live Without It

“Wake up in the morning and find out what you want to give as opposed to what you want to get,” he says. “Through this practice of becoming a good giver you become a good getter.”

Simmons gives examples of many of his former selfless, tireless and upaid interns that went on to greatness, including Sean Combs, Kevin Liles, and Julie Greenwald, recently named COO of Atlantic Records Group.

“Those who focus on being good servants usually attract the most in the end,” he says.

Basically, offer your talents and skills for free and the rewards will find you.

#2 Relentlessly Pursue Your Goals Without Appearing Needy

Simmons’ law of attraction says: “when you chase things, they will always run from you.”

This principle goes hand-in-hand with principle number one by virtue of the more you give, the more good that will just find you.

#3 If You Don’t Love it, Leave it Alone

This is not only the idea that you should do what you love and a wealth of richness will follow, but the idea that you should only do things you are “karmically” comfortable doing.

“People can sell anything,” from bombs to drugs, he says, even though there are very serious ramifications to those actions. “I want to stress that making money just for the sake of getting paid is a pedestrian activity that you can rise above.”

If you don’t love it, don’t do it.

#4 Let Go of the Results

“You really have no control over the results, you have control over the action,” he says. “So make sure you perform your action and your duty well.”

In the accompanying clip, he explains that he has no recollection of his very first paycheck, but says he certainly does remember making his first good record.

“All I could think is ‘when my friends hear this record’ it will make them so happy,” he reminisces. “Do things you love. Do things that you have faith will make other people happy and that will give back what you give them.”

#5 Get Open

“You want to always be open, creative and fluid as possible, and never become rigid, old or tight,” he writes, encouraging readers to let loose and lower your defenses.

And if you’re thinking these principles are easy for someone worth millions to say, Aaron asks him about that too in the accompanying clip.

The Joy of Giving

Simmons’ list of his successes are deep but the endeavors most important to him may be those that go along with his first principle listed above. The idea of being a “good giver.”

He is known globally for not only his business acumen, but also his commitment to philanthropy. Simmons has devoted an entire division of empire to charity and non-profit work.

Dear American liberals, leftists, social  progressives, socialists, Marxists and Obama  supporters, et al:

We have stuck  together since the late 1950′s for the sake of  the kids, but the whole of this latest election  process has made me realize that I want a  divorce. I know we tolerated each other for many  years for the sake of future generations, but  sadly, this relationship has clearly run its  course.

Our two ideological sides  of America cannot and will not ever agree on  what is right for us all, so let’s just end it  on friendly terms. We can smile and chalk it up  to irreconcilable differences and go our own  way.

Here is a model separation  agreement:
Our two groups can  equitably divide up the country by landmass each  taking a similar portion. That will be the  difficult part, but I am sure our two  sides can come to a friendly agreement. After  that, it should be relatively easy! Our  respective representatives can effortlessly  divide other assets since both sides have such  distinct and disparate tastes.

We  don’t like redistributive taxes so you can keep  them. You are welcome to the liberal judges and  the ACLU. Since you hate guns and war, we’ll  take our firearms, the cops, the NRA and the  military.  We’ll take the nasty, smelly oil  industry and you can go with wind, solar and  biodiesel.  You can keep Oprah, Michael  Moore and Rosie O’Donnell. You are, however,  responsible for finding a bio-diesel vehicle big  enough to move all three of them.

We’ll keep capitalism, greedy corporations,  pharmaceutical companies, Wal-Mart and Wall  Street. You can have your beloved lifelong  welfare dwellers, food stamps, homeless,  homeboys, hippies, druggies and illegal aliens.  We’ll keep the hot Alaskan hockey moms, greedy  CEO’s and rednecks. We’ll keep the Bibles and  give you NBC and Hollywood .

You  can make nice with Iran and Palestine and we’ll  retain the right to invade and hammer places  that threaten us. You can have the peaceniks and  war protesters. When our allies or our way of  life are under assault, we’ll help provide them  security.

We’ll keep our  Judeo-Christian values. You are welcome to  Islam, Scientology, Humanism, political  correctness and Shirley McClain. You can also  have the U.N. But we will no longer be paying  the bill.

We’ll keep the SUV’s,  pickup trucks and oversized luxury cars. You can  take every Subaru station wagon you can find.

You can give everyone healthcare  if you can find any practicing doctors. We’ll  continue to believe healthcare is a luxury and  not a right.  We’ll keep “The Battle Hymn  of the Republic” and “The National Anthem.” I’m  sure you’ll be happy to substitute “Imagine”,  ”I’d Like to Teach the World to Sing”, “Kum Ba  Ya” or “We Are the World”.

We’ll  practice trickle down economics and you can  continue to give trickle up poverty your best  shot.
Since it often so offends you, we’ll keep our  history, our name and our flag.

Would you agree to this?   If so, please pass it along to other  like-minded liberal and conservative patriots  and if you do not agree, just hit delete. In the  spirit of friendly parting, I’ll bet you answer  which one of us will need whose help in 15  years.

Sincerely,
John J. Wall
Law  Student and an American

P. S. Also,  please take Ted Turner, Sean Penn, Martin Sheen,  Barbara Streisand, &  Jane  Fonda with  you.

P. S. S.  And you won’t have to  press 1 for English when you call our  country.

Prime Minister Kevin Rudd – Australia

I was talking to a friend over the weekend and he told me a story about a person he knows who made hundreds of millions of dollars of net worth in his career and then lost it all. I asked my friend how that could happen. He said “he made a lot of risky bets and none of them worked out.”
I don’t get how anyone could do that to be honest. I don’t understand how someone gives Madoff all of their money to manage for them. When someone has very little to lose, I totally get betting it all and going for it. But when you have accumulated a nest egg or more, you must be diversified in your investments and assets. You cannot put all of your eggs in one basket.
Last week on MBA Mondays, we talked about Risk and Return. I made the point that risk and return are correlated. If you want to make higher returns, you must take on higher risk. But you can mitigate that risk by diversification. And this post is about that strategy.
One of the things most everyone learns in business school is portfolio theory (that’s a wikipedia link if you want to learn more). Portfolio theory says that you can maximize return and minimize risk by building a portfolio of assets whose returns are not correlated with each other.
Let’s use some real life examples. Let’s say you have a portfolio of stocks and all of them are tech companies. To some degree, they are all correlated. When the tech bubble blew up in March of 2000, every tech stock went down. So if you had that portfolio, your portfolio went down big. Let’s say you have a portfolio that has some tech stocks, some oil stocks, some packaged goods stocks, some real estate, some bonds, and some cash in it. When the tech bubble bursts, you get hit, but your portfolio does not “blow up.” That is the power of diversification at work.
I have my own tech bubble story that is similar to that example. When the Gotham Gal and I moved back to NYC in the late 90s, we bought a large piece of real estate in lower manhattan from NYU. We sold a big slug of Yahoo stock that we got in the sale of Geocities to fund the purchase. And then we sold another big slug of Yahoo stock to fund a complete renovation of that real estate. Beyond those two sales, we did not get liquid on most of our internet and tech stocks because our funds were locked up on almost everything else.
When the bubble burst, our net worth dropped 80% to 90%. But it could have dropped 100%. That real estate did not drop in price. It actually increased by 2.5x over the eight years we owned it. That is the power of diversification at work.
Of course, we learned our lesson from that experience. We now have a fairly diversified portfolio of assets that includes venture capital investments, real estate investments, hedge funds, and municipal bonds. I am not suggesting that our mix is a good mix. I suspect we could be much more conservative and more “efficient” with our asset allocation if we hired a professional financial planner to do this work for us.
But this post is not really about our portfolio construction or even about asset allocation. It is about the power of diversification as a risk mitigator.
Let’s talk about diversification in venture capital funds. Making “one off” early stage venture capital investments is a bad idea. The chance that you will pick a winner in early stage venture capital is about one in three. I’ve said many times on this blog that one third of our investments will not work out at all, one third will work but will not be interesting investments. And all of our returns will come from the one third that actually work out. If you are making “one off” early stage investments and make five or six investments over the course of a few years, you do not have enough diversification. You could easily pick five or six investments and not once get to the one third that work.
We put 21 investments into our 2004 fund and I believe we will put between 20 and 25 investments into our 2008 fund. With that number of investments, we have a good chance of finding one investment that will be good enough to return the entire fund. And we have a good chance of finding another four or five investments that will return the fund again. We can handle a complete wipe out on between five and ten investments and still produce excellent returns. That is how diversification helps to manage risk in an early stage venture portfolio.
So if you are building a portfolio of anything, be it financial assets or anything, make sure to fill it with things that are not too similar and not too correlated with each other. To do otherwise is not prudent.