money Pearls

Hot Stock Tip #0

I’m very, very good at trading stocks. I do not gamble. I, literally, mathematically, like clockwork, always make money. I have not posted my Year 3 returns yet (I have for Years 1 and 2 ), but they are better than ever. I have surprisingly consistent annual returns in excess of 20%+ in all conditions: both boom times, flat markets, record-breakingly volatile markets, and now deep recessions. I will write about my 2008 returns as soon as I finish my taxes.

Right now, however, I do not have significant excess investment capital outside of my Roth IRA. My Roth IRA I use for long-term investments in which I do not trade in and out frequently. Therefore, I now sometimes see some trades which I may or may not have taken if I did have some capital. I want to share one idea I had today with you.

First, please note that this information is not to be construed as either an endorsement or a recommendation; as investment advice or as an offer to buy or sell securities of any kind. Please consult with your own advisor before using this information.

I read that Amazon just launched an online game trade-in systemGamestop dropped almost 14% upon the news.  I know Amazon. I love Amazon.  I have made lots of money off of Amazon recently.  But this will not affect GameStop’s sales in the long run.  As the analyst in the article notes:

GameStop has previously tested out online trade-ins, but with limited success because of the time consumers had to wait to receive store credit, Sebastian said. The retailer’s trade-in model is successful in part because it gives gamers instant gratification.

The best products have the best design.  They make customers fall in love with their simplicity and instant feedback.  Amazon’s mail in system offers none of that.  Netflix works because, with its queue system, you passively receive new content.  Amazon’s system requires quite a bit of active involvement before you receive game credits.

If anything, GameStop will receive extra attention because of Amazon’s offering.  It may even grow more quickly.  I would buy GameStop right now.

Of coure, I would also hedge against the market by buying a short or double-short (more leverage!) ETF like QID.  That way, you can buy into the pure alpha of GameStop, without exposing yourself to the crazy movements of the market as a whole which nobody in the world can predict or even understand.  I will write more about this later.

over 10 years ago on March 5 at 7:45 pm by Joseph Perla in finance, money

Y Combinator Application Guide

Y Combinator, a kind of mini-venture capital firm, invests tens of thousands of dollars ($$$) into very early seed stage start-up companies run by smart technology hackers.  They wanted to fund me in Summer 2008.

I applied to Y Combinator two times.  The first time, when I applied with my friend Mason for the Summer 2007 round,  I arrogantly presumed that Paul would lavish on us praise and beg us to fly to California to work with him.  I spent no more than an hour on the application.  We had no passion in the idea we presented.  Our projects list hinted at nothing particularly remarkable or unique.  Our analysis of the idea and our competitors delved only into the shallowest parts of a deep lagoon.

The second time, when I applied alone in Summer 2008, in an inspired moment I sat down in Starbucks for a solid few hours to work on the application.  I strived for excellence, not perfection.  A few months prior, I had briefly glimpsed the semi-successful application of Liz Jobson and Danielle Fong.  I recalled their deep detail and thoughtful writing, so I imitated that kind of deep analysis which shows off one’s mastery of logic and breadth of experience.

I wish I had known how to write a good application the first time.  So, taking my cue from Brian Lash’s recent question on Hacker News, I helped him out.  I write here a slightly expanded version to help out anybody else who wants Paul Graham & co. to fund his or her startup.

If I were to advise myself in 2007, I would recommend that I write briefly but write a lot.  This advice seems contradictory, but I mean it in a very specific way.  My first application, I kept brief.  I did not want to swamp YC with a tome of text. I saved many of my accomplishments for the interview.  Do not do this.  Write, write, and write some more.  Write everything interesting and unique about yourself.  If you have doubts about a statement you made about a competitor, qualify it.  Don’t vacillate, but at the same time don’t seem shallow, ignorant, and inexperienced.

Of course, once you’ve written all that, you have a very long application.  Now, take out filler words.  Compress ideas that take up two sentences when you can use just one. If you waste two words in a sentence, delete the whole sentence and write it again from scratch.  If you see a phrase that you think an investment banker might use on his resume, nuke it.  Achieve a high density.  In my experience, the YC crew truly pores over these applications to understand all of the meat of it.  They do not skim your application when it has rich content.  Cut, cut, and cut some more.

Now, step back and look at your application.  If you have very little writing left, real content, then you may not be the best fit for Y Combinator this year.  That’s okay.  It’s good you know now.  Take this year off and work on some interesting, hard projects that nobody has done before.  Bounce your idea off of the smartest person you know.  Hell, micro-test the idea.  Then, repeat this process.

Step back, look at your tight list of accomplishments.  If it’s long, that’s great, since reading something long but rich in content everyone loves to do.  The length indicates strength.  In my limited experience, I think this is how I made my application successful.

Here’s some of my application below (I elided some less relevant parts). I was accepted for Summer ‘08 2008 but decided to pass this time for a variety of reasons.


What is your company going to make?

I’m open to anything. Here’s one idea:


Have you ever scanned a document before? How was that experience?

It was terrible for me, too. Everyone I have ever asked has agreed that it is physically painful. But, there is a solution, one based on understanding actual human needs. What is wrong with the scanners of today?:

* slow (takes time to heat up)

* slow (scanning at a high dpi takes a long time)

* complicated (please select the dpi, now select bla, now bal[sic]…)

* cumbersome (files generated at high dpi are huge, slow down system)

* cumbersome (OCR’ing a document is a whole other rigamarole)

What do people really need?  Simply a decent, readable scan of the document. This should be as easy as holding the paper up to face the monitor.

Imagine that.

I propose that I sell a device which is basically just a decent-resolution CCD chip with a special lens which connects to a computer (wired at first, but v2 wireless). Scanning a document is as simple as holding the camera up to a document and clicking. In my tests, scanning a whole text books takes 5-10 minutes. This is a game-changer. I’ve worked with an ip lawyer to file the provisional patent on this and a few other aspects of the designs.


For each founder, please list: name, age, YC username, email address, personal url (if any), and current employer and title or school and major. List the main contact first. Separate founders with blank lines. Put an asterisk before the name of anyone not able to move to Boston June through August.

….. [Be sure to put your blog here. Don't have a blog? Make one. Blog about whatever is on your mind. Blog about your hacking.

To be honest, an Ivy League pedigree probably helped.  Also, my computer science degree (as opposed to Economics or Business one) probably encouraged YC's faith in me.]

Please tell us in one or two sentences about something impressive that each founder has built or achieved.

Looking at some things in ~/projects folder: ……..

[Here I mention a few of my projects, with links to open source code, web pages, anything I can publicly show. I didn't spend more than one or two sentences describing any one project, but I listed many of my most interesting projects and why I worked on them. YC likes to see you working on real problems, so I talked about problems I solved for myself and for others directly

They want to see that you think creatively and that you actually finish things.

It goes without saying that you should list projects which uniquely describe you.  Building a toy language in Programming Languages class many people probably do.  Yes, it may have taken you a long time, and you may have learned a lot, but you do not necessarily stand out.  Writing a CAPTCHA solver to hack Digg few people do or can do.]

Please tell us about the time you, ljlolel, most successfully hacked some (non-computer) system to your advantage.

…… [I talked about my shotgun email to dozens of startups here in Silicon Valley which gave me the opportunity to meet a lot of cool entrepreneurs.  I'll probably blog about this at some point in the future.]

Please tell us about an interesting project, preferably outside of class or work, that two or more of you created together. Include urls if possible.

(see above) [I applied alone, so group projects inapplicable.]

How long have the founders known one another and how did you meet? Have any of the founders not met in person?

n/a [Again, I was a sole founder.]

What’s new about what you’re doing? What are people forced to do now because what you plan to make doesn’t exist yet?

(see above) Basically, nobody ever scans anything because it takes forever, doesn’t really do what you want (you just want a readable, small image and for the document to be searchable),

What do you understand about your business that other companies in it just don’t get?

Scanner manufacturers try to pack in the highest dpi they possibly can. They focus on resolution, when they should be focusing on the user experience. Speed is what they should optimize, but I see no scanner manufacturer doing that.

Who are your competitors, and who might become competitors? Who do you fear most?

HP, Xerox, etc, also ScanR, Qipit, Evernote …… [I go on to be brutally honest about the difficulty and vulnerability of my position as a hardware startup in a crowded field. Remember, you are writing for some very, very smart people. They want to see your analytical thinking skills here. They want to see you be realistic, not delusional.]

……. more questions, answer analytically deeply, answer honestly to the best of your ability ……

If you had any other ideas you considered applying with, feel free to list them. One may be something we’ve been waiting for.

…….. [I always think of new ideas and discuss them with friends. I chose 4 and listed them here. I crisply described each in no more than 2 brief sentences.]

over 10 years ago on July 20 at 10:37 pm by Joseph Perla in entrepreneurship, hacks, life, money, personal, technology, ycombinator

TipJoy ingeniously simplifies and enables micro-payments

I have already written about my distaste for advertising.

Sometimes, however, these newspapers and blogs manage to make something of value. A particularly hard-hitting expose in a newspaper, or a particularly helpful guide in a blog, offers to people real value. Nobody can create this kind of content every day, or probably even every week or month. A subscription subsidizing the page-filling fodder misallocates wealth. I want to pay for the value more directly, not indirectly through ads.

Or, more commonly, a blog post provides for me a little bit of value. Not $50/month in value, but perhaps 50 cents/month. No payment system can pass around payments like that easily for the user, especially without ridiculously large credit card fees. How can I tell Michael Arrington of TechCrunch that his site I find useful sometimes? Combined with the millions of others who find his site just a little bit useful, he can make some money directly from us.

Fortunately, I think TipJoy solves many of these problems. The site only launched a few months ago, so it has to grow quite a bit before it reaches a tipping point. Nevertheless, TipJoy designed their product beautifully.


First, for new users, creating an account takes a few seconds. Just click on the TipJoy button, write in your email, quickly create a password, and finish up. No credit cards required. A new user signs up by tipping, integrating the first-use with registration. Ingenious.

They follow a model that bar’s use where you can set up a tab and pay later. Readers get drunk tipping blogs here and there all around, running up a huge tab. Users only pay once the tab gets large enough to justify the credit card fees. Their model differs from the bar, of course: just like the tips themselves, paying the tab is optional. Nevertheless, through this system, TipJoy encourages people to sign up easily, and only over time pay off their tabs.


Second, once signed in, tipping takes just one click. No annoying confirmation steps required. No complicated questions about how much you tip. You get one choice: 10 cents. Of course, you can tip more if you want. This encourages readers to tip generously around many sites across the web. The tab builds up invisibly behind the scenes.

When I first read about TipJoy, I knew that it, or a model very similar to it, would take over the web. I think it will take time. However, I will support this service by putting it up on my blog. Maybe, one day, I will write a post that many people find just a little bit useful, and I can finally monetize this blog :) .

over 11 years ago on April 20 at 5:45 pm by Joseph Perla in entrepreneurship, money, technology >

A recently-launched startup, won the TechCrunch40 award for best new startup. TechCrunch raves incessantly about I had used Microsoft Money a couple of years ago, and I liked that I could sync up with some of my banks and credit cards. Unfortunately, the process was tedious, Microsoft Money did not automatically categorize my expenses. It did not do what I wanted. Because of the hype surrounding Mint, I finagled an invitation to try out the site. I used very early on; I beta-tested their product.

I put in my bank information, which was relatively easy to do. It loaded up my credit card transactions, although that process took a long time. showed me charts of my spending and nothing else., not only devoid of features, actively tolerates bugs in the website. Their product loaded the transactions from my Bank of America accounts twice. It said I was spending twice as much as I was, it said I had twice as much money in the bank as I did. Seems like a simple bug to fix, and a common one considering the popularity of Bank of America. As a beta-tester, I emailed customer service informing them about this problem. Their reply: “we know.”

So, the only feature Mint offers to me, expense tracking, I cannot use. The other major feature they claim to offer, as well as putatively their only source of revenue, lies in their “intelligent” financial recommendations. Really, they just try to get a referral fee by directing you to ING or American Express. If you have a low-yield savings or checking account, they recommend a high-yield ING account. If you use a credit card with no rewards, Mint refers you to American Express or another card with benefits. That’s it, I already have both, so Mint offers me nothing.

I closed out my account, and I can only hope they deleted all my financial information. (Either way, knowing how startups and hacking work, I think my accounts are fairly secure). I waited for another new product to rise to the challenge of managing my finances. I had tried another company,, which is a well-designed website with learning algorithms to categorize expenses, plus they don’t offer to store your passwords for you. But, you have to download a client for you to download financial statement updates yourself. I tried it out to discover that I’d really rather they use up their bandwidth and their time downloading financial updates. Moreover, they didn’t have a Linux client. They recently released a Firefox client, but I prefer Opera now. Finally, on balance, my passwords on my computer have a higher chance of being stolen than my passwords on enterprise servers.

Fortunately, recently, I noticed a relatively new feature on the Online Banking website: My Profile. BOA offers Online Banking free to pretty much anyone with an account. When I first opened my account, the website loaded slowly, crowded text together, and thirsted for features. Hardly usable, I rarely logged in. Over the past two years, though, the website has significantly improved. Bank of America has won awards for its online banking interface. BOA could rest on its laurels, but instead the company seems to be throwing lots of money and resources at building a truly next-generation banking interface.

First, it innovated in security with its SiteKey program. Recently, they’ve launched added security with SafePass. Instead of typing in your password, potentially revealing it to malicious persons, BOA text messages you a temporary password to use to log in. This looks like a 21st-century equivalent to the old key fobs people had to carry around and click when they wanted to type in a password to a highly-secure area, except better since you can use your own cellular phone normally.

In terms of banking, they offers checking, savings, and business accounts. CD’s, and now stock investment options, IRA’s, and mutual funds. They now have a sophisticated, granularly-controlled alert system, and free online BillPay for automatic payments. I can send money to other Bank of America accounts, even recurring payments, easily at no charge. Sending money to other banks is only slightly harder. They released a new mobile banking interface that let’s you do everything from your cell phone. The site is now fast, secure, easy to use, and I love it.

Finally, my favorite new feature, My Portfolio. It does everything Mint claimed to do and more, but it does so correctly. Moreover, it’s probably more secure. This feature is powered by Yodlee, which is also used by Microsoft Money, ETrade, and many other major companies. They have to be secure.

The features of My Portfolio are extensive. I set it up to automatically update my transactions from ING, Scottrade, my other Bank of America accounts, and American Express. It even let me add my investment in Nexus Capital as a custom account. Bank of America correctly categorizes most expenses automatically, and I can set up rules easily if it doesn’t. The categories are clear and make sense. Simple, beautiful, and clear, the charts actually help me understand my expenses:
BOA Expenses

Among other charts and views, it shows me a high-level overview of my net worth and investments:
BOA Net Worth

What I like best about BOA is that it constantly impoves its site. The past two years have shown me massive improvements. I do not know what to expect over the next couple of years. I do know that still offers no new features since I tried it a few months ago. Their team is small, and they must worry about scaling more than offering useful new features. Bank of America has proven that they are fully committed to offering me more services through the website for free, and I trust they will continue to do that. I can hardly wait to see what new features the bank will be integrating next. 21st century banking is just around the corner.

over 11 years ago on February 5 at 2:18 pm by Joseph Perla in money, technology

Howdy, my name is Joseph Perla. Former VP of Technology, founding team, Entrepreneur. Actor. Writer. Art historian. Economist. Investor. Comedian. Researcher. EMT. Philosophe

Twitter: @jperla

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