Ep441: Furqan Aziz – Validate Every Idea You Invest Time In

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Quick take

BIO: Furqan Aziz is the CEO of InvoZone, a software development company that specializes in resource augmentation.

STORY: Furqan took on a client who promised to pay him in the form of shares to develop what seemed like an excellent product for airlines. Unfortunately, COVID hit, and the product never saw the light of day. Needless to say, all the time, money, and resources Furqan invested in developing the product went down the drain.

LEARNING: Do thorough research to validate every idea before you invest in it. Size your position; invest just a little if the investment idea is high risk.


“Fail fast, and don’t keep sporting your mistake by making another mistake.”

Furqan Aziz


Guest profile

Furqan Aziz is the CEO of InvoZone, a software development company that specializes in resource augmentation. He has over 10 years of experience in the IT industry and specializes in architecting concurrent, distributed, fault-tolerant, scalable applications.

Worst investment ever

In 2018, Furqan met with a client whose background was very solid. They were providing big software to airline companies. The client came to Furqan with a great idea. They had a lot of data from the airlines they worked with, and they wanted to build a big data product where they would utilize that data and give some analytics to the decision-makers. The idea was to pitch these to the airline industry decision-makers and have them buy the product.

The idea had the potential to make a lot of money for Furqan and the client. The catch, however, was that the client could not pay Furqan for any services rendered but offered him shares in their company. Usually, Furqan would never get into such a deal. But because the company had an excellent background and the idea was also exciting, he decided to take the risk.

Furqan started the development, and after six months or so, they prepared their proof of concept and then demonstrated it to the airline decision-makers, and they were okay-ish at that moment. But they asked for more features to make the product useful. Furqan sat down with the client and talked about these extra features, and they agreed to add them.

Again, Furqan spent six more months and made the additions. They went back to the airline companies, but again, they asked for more features. Furqan spent three more months, and before they could go back to the airlines, COVID hit. Now the product was a waste. All the money, time, and resources Furqan invested went to waste.

Lessons learned

  • If you’re going to ask someone to put money into your solution, you must make it a lot better than what they already have.
  • Don’t deviate from whatever you are doing as a core business unless you’re really sure about the new thing you want to delve into. Remember that chances of failure are pretty high.
  • Don’t set your expectations too high even if you’re very successful in your core business because your core business is pretty different from whatever you will do.
  • Do the market research by yourself rather than relying on someone else, especially the person selling the idea to you.
  • Fail fast, and don’t keep sporting your mistake by making another mistake. Walk away as soon as you realize that this is not going to work.
  • Don’t wait for the golden moment. If things are not working well, just cash out whatever you can because acquisitions are not always bad; sometimes, they are good for you.

Andrew’s takeaways

  • In life and business, there are all kinds of risks you can face. Your goal is to try to reduce those risks, but you can never reduce them completely.
  • Don’t just look at the upside; you always have to look at different downsides too.
  • Size your position. If you know that you’re taking a big risk by doing something that you don’t normally do, put about only 5% of your resources into it, and then slowly build up.

Actionable advice

You must validate all ideas by doing extensive research so that you can fully understand them before you commit. Don’t rely just on the person who is presenting the idea.

No. 1 goal for the next 12 months

Furqan’s number one goal for the next 12 months is to build another product for the healthcare industry, this time around employing all the lessons he learned from his worst investment ever.


Read full transcript

Andrew Stotz 00:02
Hello fellow risk takers and welcome to my worst investment ever stories of loss to keep you winning. In our community. We know that to win in investing, you must take risk but to win big, you got to reduce it to join our community go to my worst investment ever.com and received the following five free benefits. First, you get the risk reduction checklist I created from the lessons I've learned from all of my guests. Second, you get my weekly email to help you increase your investment return. Third, you get a 25% discount on all a Stotz Academy courses. Fourth, you get access to our Facebook community to get to know guests and fellow listeners. And finally, you get my curated list of the Top 10 podcast episodes fellow risk takers. This is your worst podcast hosts Andrew Stotz, from a Stotz Academy, and I'm here with featured guests for Guan Aziz for Kwan. Are you ready to walk rock?

Furqan Aziz 00:59
I am absolutely ready. Thank you so much for having me today.

Andrew Stotz 01:03
I am really excited to get you on. I love your energy so far. And I'm looking forward to learning more. But let me introduce you to the audience. For Kuan Aziz is the CEO of invo zone, a software development company that specializes in resource augmentation. He has over 10 years of experience in the IT industry and specializes in architecting, concurrent, distributed, fault tolerant, scalable applications. My goodness, take a minute and Phil any further tidbits about your life and explain what that business does.

Furqan Aziz 01:42
All right. So if we talk about in gozone, in its business, it is something in a very simple word, developing the software applications for businesses for work for the world to to automate some stuff that can reduce the human effort, human energy and can give you much better than what a human can give you. One example if we talk about Tesla, and you see that how Tesla is acquiring a lot of stuff, Atheneum and less a car in any way talking about Uber in Korea, and overlay riding in its service, who can imagine in 10 years or 20 years back that something will come like this, and taxis and then the traditional yellow cab and all that will be gone away altogether. And just imagine our mobile application in your mobile and how useful that is for you or like just like a podcast, podcasting application. So these are the couple of examples. and if we talk about Amazon, Amazon, do work with the variety of the industry like FinTech. FinTech is the biggest thing we're working with. Because financial Institute's like banking sector, insurance forms and other the cybersecurity and you know, cryptocurrency related stuff is very popular at Amazon right now. And related to healthcare, healthcare became number one at our house during COVID. Prior to that, it was just like you can say on the second tier, but now it is the number one and we are working a lot on data privacy and data security, you know, HIPAA compliance stuff. And then if we talk about the HIPAA compliance these days, the data of the healthcare industry is is much more precious and secure as compared to FinTech even in that data is not that secure. We talked about that. And the third level is ecommerce and we have seen that with the rise of the COVID e commerce domain is now billions of the domain you can say people are trying to put their businesses on the digital market and they are not relying on their physical stores even even like the people having very great running physical stores are losing and they are now trying to put some ecommerce store or marketplace and something like that. And even as a user, now I am getting four to five orders one day on a daily basis that I used to drive my car and then going through some shopping mall and something like that and then gathering things and I was investing my time I was investing on the fuel on my car and I wasn't paying the parking ticket I don't have to pay for anything I go in in the very interesting thing you know, when I go to the shopping mall, I cannot compare the prices and get pick the best one with the cheapest one but on the online I can do right now. So this these are the all stuff that it was on empowers. So it was only a tiny little little like easy model. But we do for example you bought an idea of doing some mobile application for you or for your business or desktop application or something whatever you are thinking about. You just connect with info zone asking was zone two Got the development done and it goes on, we'll dedicate a team for you, who will be working for you nine, like 40 hours a week or something like that. And by the end of every week, we'll be delivering a milestone. And by the end of the whole project, we will give you a final product. So the very interesting thing about like, people ask us, okay, what is different about impose on another company, why we should like a bias, but is different and but is special, we tell them the delivery ratio in the IT industry, you can, the people who knows, the I have heard a lot of people in in your podcast, or who lost a lot of money in the IP, IP application and stuff, and they've been conned by the IT companies a bit. But the point here is, man, I am as a provider, as a service provider delivering you some portion of the application every week, the things are continuing our gradually proceeding to word a goal proceeding toward an end. And definitely, if I am adding some portion or some part or completing some part of the application, every week, it's mean, I will reach the end, by the time we have decided, and most of the failures in doubting the car, because the commitment of the project is done by the three months or four months or six months like that, after six months, you've come to the ID company and ask them okay, very, very my product if you don't know where that is. And yeah, that is something different about InDesign. I know a little more deep and explanatory, but I wanted to like share what been going on here,

Andrew Stotz 06:35
right. And for the listener out there, I'll have all the links in the show notes. So if you're thinking about an app, you're thinking about outsourcing some work related to applications and other software, contact for one and see what you can find out. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be. Tell us a bit about the circumstances leading up to it and tell us your story.

This is the difficult but the most exciting part of the podcast, no doubt. Since we are a service provider company, we provide this set of development services to the companies or to the businesses or to the investors, we usually get some investors or some enterpreneurs not having the investment in their hand. But having a very great idea, having a very great Inception having a great plan of some mobile application or desktop application or some software, or some SAS base application that can make millions out of what they actually have in their mind. So they come to us and they asked us, okay, let's partner together, we have this idea, you have human power, we can call join to gather, I don't have money to pay you but I have shares to give you our you can of course be become a partner and when we will be successful, we will be sharing the success definitely. And this is the projection of the whole plan. Today we are 1 million and after, let's say five years, we will believe we will be 10 billion or something like that, but the numbers are, but I don't have the money to pay you. But eventually, as a business owner, I have to pay salaries and another cost to my employees because they are not the partner or definitely the venture. So, this is very normal, very common practice. And we normally do not get involved into this kind of story. Because no, you know, if I will be a friend with with an investor without our money, then I cannot feed my developers, I cannot keep my employees. So we never normally go into the budget. In 2008. We met with a company and their background was very, very solid. I don't want to disclose their name, but they were providing a big software already. They were providing a big software to airline companies. It is called ID internet booking engine. Whenever you try to book an airline ticket, you go to any airline website. And then when you put your destination and put your dates for the flight details or flight search, all the processing is happening behind the scenes on an internet booking engine. And this IP is a very complex software in the IP world. And internet booking engine was what they were providing to 12 very big airlines and one of them was Emirates Airline from Dubai. So they were providing this event booking engine and they were having a very solid background. They came to us with a very, very you can say generous idea in the idea was they said they have a lot of data from these 12 Airlines Let's say past 10 years of data, and they want to build a big data product, where they will utilize that 10 years of the data and give some analytics to the, to the decision makers, here are some decision makers about for example, the route between Kuala Lumpur to Singapore is the most making the most profitable route on the flight going from one place to another place at 10am is making more money as compared to apply during that 1030 or something like that. And on the basis of that, this data analytics for that, you know, this is just a nutshell, I'm just telling, but this was a very big idea. And in real, the idea was to pitch these the airline industry and makers, and we will be making a lot of a lot of money out of it. And then, because the company was having a very solid background, the idea was also very interesting, no doubt. And we decided, initially, we resisted a bit, but when I decided, Okay, let's take the risk, and let's see how it goes. Although we are not taking such such products or such clients, and they don't have money, they have shares, a pretty handsome share they are offering to us and then we just need to do the development, they will present it to the airline, the car makers, and they will buy it and then we will be and we will be, you know, like how they can retire. Yeah, exactly make that. And I will be on a beach to might be Bali or somewhere and then spending my retro life here. And also, this was the exciting part. And then we started with development.

Furqan Aziz 11:48
And then after six months or so, we prepared our demo or proof of concept. And then we demonstrated it to the airline decision makers and airline the car makers were okay ish at that moment. But they said, Okay, this is kind of 10% or 20% of what we can think of, which will be a useful product for us. This is like 10% or 20%. And if you can add this and add that and then like add 10 features more into this product, then we might be able to buy this product. And then we again, sat down together with the company I'm talking about who was the partner with us. And we sat down and we did a chat, okay, these 10 features, okay, six months, more or less, let's put more investment and let's put more more of them. Okay, so, this was the This was that I can I can point out this is the, this is the second point, we did another mistake, or I can say to support our first mistake, we did another mistake now. Okay, we again spend another six months and we went to the airline companies. Now airline company said okay, now you came to us, but we need the five teachers more to make it make our executives to put the funding on this product. And then Okay, again, three months more, and after three months, eventually boiled at the COVID were grounded. No, they were not making any money they were not giving any money to anyone else. And what happened the product went into a scrap yard altogether. And the money invested the time invested and the resources invested all went into you can say best mean in other words, because the product is failing in a scrapyard and the time when I came to know that this store is not at least for two years or three years is not salvageable. So, you can you can you can say that I was in such a huge shot that I could not help myself for a couple of days. I was losing my senses because it was millions of dollars I invested on that product and my dreams and emotions were attached actually. So, when you say money is definitely a parameter to success, but emotions of you know when you are attached to something because airline industry is a was actually a prime or golden industry. And it still is is golden industry without airlines people are disconnected across the borders. So it is a necessity component of the human life right now.

Andrew Stotz 14:39
Can you remember like the worst moment when you realize it was all gone?

Furqan Aziz 14:45
Alright, so I came to know that it is all gone. So I buzz. Sousa mom and Youngblood so thankful thankfully I did not went into any physical From like something, but I was I was sweating altogether, I eat four of my body was having a water drop or speed drop, and then you can say I was not ready to listen anything, I was not ready to, like even somebody somebody was saying something I was, I was blind. In my processor, my brain was processing something else altogether. And it was trying to connect the dots. Okay, there I started. But um, but it was the first mistake and then how I processed it further. And even equally, I was trying to courage the COVID. But still, that is a natural factor as, as an entrepreneur, as a business owner or as an investor, you have to keep all things in your metrics. Yep, okay.

Andrew Stotz 15:55
Well, let me maybe share a few things that I was thinking about as you went through that. First of all, let's talk about the risks related to COVID. Or, as you said, natural factors. The reality is that in life, and in business, there's all kinds of risks, there's all kinds of mistakes, and you will pay the price. This just, it's, you know, the first objective is to try to reduce our risk, but you can never reduce it completely. And so, you know, I think when we go into business and stuff, we oftentimes just look at the upside. But here, you're helping us to remember, we always got to look at many different downsides. The second thing is, you know, I can, I can relate, and I'm sure the listeners can relate to that feeling. When the sweat just comes out of every pore of your body. And you feel all of a sudden, there's this fear, this scared moment that it's all lost. And that I think everybody can really relate to that feeling. The other thing is that you also highlighted you know that money is one part of business, but emotion is another part. And a lot of people who aren't on the entrepreneur, entrepreneurial rollercoaster, no big deal, you just have a tough day at the office, you go back home, you relax, and then you go back the next day, and you do the best that you can. But for an entrepreneur, you go to a maddening roller coaster, of how do I take care of my staff? How do I get this job? How do I get the cash out of it, and all of that. And then the other thing, you know, there's one last thing that it made me think about, and that is, I remember I was in Hong Kong, and I listened to a speech by a guy, he was from New York. And he was explaining about how they've used spent maybe $50 million to develop an AI model that read all of the information coming out about companies, and they look for words, like default. And it was these types of words bankruptcy default, and they use those words to try to predict whether a company would go bankrupt. And then they would basically come up with some idea like this company is close to bankruptcy, and therefore, they would advise investors to get out of that company. And I listened to the whole presentation was very impressive, very impressive. But I raised my hand at the end. And I said, I have a question for you. In 1960, maybe 1970, there was a something called the altman Z score developed by a guy named altman. And basically, it was just a simple measure of, you know, how much debt does the company have? What's the market capitalization of the company? What's the interest burden? Just a few different things. I think it was like five variables that were in there. Any basis? Yeah, if you could combine these five variable into a score, you could pretty much predict bankruptcy. So I said, he knew what the altman Z score was. And I asked him to tell me, there's already this methods already out there, the altman Z score, how much better is your $50 million solution. And he looked at me and he just put his fingers like this, he said, just a little bit better. And it really made me think about, you know, when you're developing software, when you're developing ideas, you've got to make sure that they're a big bit better. Otherwise, the airlines in this case or others will end up just reverting to what they're doing and you can't convince people that this is miles better. So it just made me think of that. Is there anything else that you would add to my feedback on your story?

Furqan Aziz 19:37
Well, yeah, you absolutely added a lot great points about when when you have to make it a lot better to convince someone to put money are whatever you are asking for them to into your solution as to why and definitely if they have something similar, or if they are doing it manually with least cost why They will come to you and buy it. Just because like you are making a small problem. Like you're trying to solve a small problem for a lot of money. Yes, that is a very valid point you raised and this is something that is like the crux of the whole story.

Andrew Stotz 20:19
Yeah. And it's also interesting, because for the listeners out there, as you're thinking about problems to solve, you know, make sure that you're working on problems that that are that have a value to them, you know, if you're doing it for profit, if you're doing it for business, so let me ask you, what were the lessons that you learn? How would you describe the lessons that you learn from this story?

Furqan Aziz 20:43
Alright, so number one lesson was when you do not you should not deviate from whatever you are doing as a core business, or whole business model or value. Unless you are really ready for something to like, you should be keeping it in mind that this is new thing for us, we have not tried this before, this is the first thing that we are going to have, like do past times, and chances of failure are pretty high. Don't set your expectations a lot if you will say okay, 90% success and 10% are margins for the failures. No, this is absolutely wrong. Even if you are very successfully in your core business, the core business is pretty different from whatever you are going to do. So since we are providing we are providing software development services, it does not mean that we can start building the product with having a joint venture with some some investor or some entrepreneur or someone who is just having an idea number one, and number two, the market research that actually relates to your point of having of adding enough value to something. So the market research is something that you should do by yourself rather than relying on the company or on something as someone else. For example, if someone come to me and ask, okay, this is the idea, and this is my production. And this is something that I am envisioning. And I'm sure because I'm in this industry since 10 years, so I'm sure we can achieve that often. Rather than blindly trusting on them or doing not not not completely doing the validation of that. That projection, it is something that we did as a mistake within advance to the airline, this decision makers before even starting the product, didn't ask them, okay, what exactly you might have what exactly will be convincing for you to put the money in in such kind of system, either we're ready for such thing or not at all, might be they are not ready, they were not ready, or they This is not a solution for any of their problems. But we were depending on a third person or pet company who was actually in the industry. And the only convincing point for us, that seems we are in the industry since 10 years and very successful with their current products. It's mean, they know everything in which a which was another mistake, and we learned the hard way. And that is you should fail fast. And then we have heard it a lot. You should not keep sporting your mistake by making another mistake. And you should pay for it. As soon as you realize that this is not gonna work the way we are. We were thinking or we were like trying to make it just for that. Or it might be okay, but another thing we got in the middle, while we were demoing this, one person from one airline asked us okay, what if I acquire your solution rather than buying it or rather than subscribing it but if I acquire with a reasonable not very money was with a reasonable amount I can acquire it. But we refused because our projections were saying something insane in and his his thing his like offering was very near to what we had invested at that time. So it was just, you can say, a cost or breakeven thing. So we were just recovering the cost and but we refuse to sell the solution or acquisition because because of predictions and all that. So the third or the last lesson that I learned is you should not wait for the golden moment or you should not wait for the right moment. If things are not working well. Just let just cash out whatever you can at that time in acquisitions are not bad all the time. Sometimes they are good for you.

Andrew Stotz 24:44
And you know if I summarize that first thing I think about is you know, do your research. That's the first thing. The next thing is about what we in the finance world. We call it sizing your position. If you know that you're taking a big risk by doing something that you don't normally do, only, only Put maybe 5% of your resources to it, and then slowly build up. The third thing that you made me think about is the idea of monitoring the investment. You started this podcast by saying, one of the things that you do with clients is that you have deliverables on a weekly basis that you're delivering. And, you know, I can see now why you see how important that is. Because that wasn't happening in this case. So let me ask you, based upon what you learned from this story, and what you continue to learn, what one action would you recommend our listeners take? When that man or woman walks in with that great idea? What one action would you recommend them to take to avoid suffering the same fate?

Furqan Aziz 25:40
So I guess the validation of the idea, by doing an extensive research should be the very important thing for everyone to clear the situation have a better idea, please, do not rely on anyone who is presenting the idea. Because he, he, he no matter how expert, he is, in that domain, how long we've been working in that domain, but he is also a human being, and he might have exaggerated something because of emotions of like, you know, again, because he is inventing, or he is going to bring up something new to the world, he is also excited, the excitement makes someone you know, you cannot predict I will think very well, the numbers can be exaggerated very easily when excitement. So you can not rely on that person. Because the numbers can be exaggerated. Or statistics can be exaggerated or idea even can be exaggerated altogether. So whenever someone comes to you with an idea with a plan with whatever research he has done so far, try to validate it by yourself and do an extensive research before saying yes or no. Well, that's the idea.

Andrew Stotz 27:01
And I would add in one thing that I learned from a friend of mine, who he created software to run hospitals. And he basically partnered with one hospital, and he set up his office right next to that hospital. And he made it such that the hospital was had some investment in it, but he had the majority, but they really wanted to see it work. And it allowed him to test his ideas every day, as he was developing the software, you can take it and see a doctor and say, how difficult would it be for you to key this in? What would be the problem with this. He was constantly validating. And in your case, when you're looking at, you know, this type of thing, finding one airline that would give a little resources to say, I would like to come and meet with you on a weekly basis or you know, every two weeks or every month to review what we've got, and see get your feedback. So I love the idea of validate, validate, validate. All right, last question, what's your number one goal for the next 12 months?

Furqan Aziz 27:58
Alright, so number one goal of my next 12 months to make another similar mistake. I don't want to say mistake, by the way, but try to build another product this time, but avoiding all those things that I did with the first experience. So as we Everyone knows that losing investment can be a great teacher. And we will learn from every investment mistake you made. So whatever I have, I have learned, I want to reiterate that I want to bring those things into practice and then tried to build another product. But this time, I want to hit my the healthcare industry that is in like on the top of my mind right now pacifically, after how world has suffered with COVID, and how, like how insufficient resources we have on the healthcare side, is actually itching me to jump into this domain. And, of course, as we spoke earlier, that money is one factor. But emotions are the also main factor there we can say. So the next goal for me is to build a healthier product that can serve a bigger community and can make more impact to the community.

Andrew Stotz 29:23
Fantastic. Well, listeners, there you have it another story of loss to keep you winning. My number one goal for the next 12 months is to help you my listener, reduce risk and increase return in your life. To achieve this, I've created our community on my worst investment ever.com and I look forward to seeing you there. As we conclude for one I want to thank you again for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the Audience

Furqan Aziz 30:02
It was a very great time I spent with the new in the audience, I'm sure I am connected with them. And they are connected with me as well. While listening this short podcast, I would love to keep learning a lot more from your next episodes. And I'm sure I have contributed enough. And I would love to contribute more by our blog, it goes on blogs or some other places as well.

Andrew Stotz 30:28
Fantastic. Well, we all appreciate, you know, frequent, I asked many people to come on the show, and many of them say no, one guy said to me, interesting idea, not my style. Many people are not willing to talk about the worst investments and the challenges. So my hat's off to you for sharing and contributing to our community. And I appreciate you as a listener also. And that's a wrap on another great story to help us create, grow and protect our well fellow risk takers. This is your worst podcast host Andrew Stotz saying. I'll see you on the upside.


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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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