Sleep Deprivation = Drunkenness

I read this doozy of a paragraph in a story in Inc on "Sleep & Productivity":

"Lose just one night's sleep and your cognitive capacity is roughly the same as being over the alcohol limit. Yet we regularly hail as heroes the executives who take the red eye, jump into a rental car, and zoom down the highway to the next meeting. Would we, I wonder, be so impressed if they arrived drunk?"

Note the perfect use of the jarring juxtaposition. It's a master stroke, much like Seth Godin calling for "global warming" to be renamed "climate cancer."

Needless to say, I'm a big champion of sleep. And since I'm still sick with a cold, I took a 12-minute nap on my famed afternoon sleeping cot earlier this afternoon!

Branding -> Accomplishment -> Ability

This blog post began as a comment on Ma.tt's blog. You may want to read his post first for maximum impact.

The shift away from traditional credentials like degrees, honors, and past accomplishments has been gradual.

In the ancient days, people focused on brands on resumes--which school did you attend? Which companies did you work for?

When I was at D. E. Shaw in the 90s, we had a specific list of 25 CS departments we were allowed to recruit from. Resumes from other schools were automatically filtered out.

The shift to accomplishments was actually progress--rather than relying on brands, we actually cared what people had done. But this was still somewhat unreliable because of the major role luck plays in success.

YC's accomplishment in hiring Aaron Iba and Garry Tan is to focus on ability, independent of resume brands or the magnitude of accomplishments. EtherPad was a great product (disclosure, I was an investor) even though Google shut it down after the acquisition. Posterous is a great product, even though its traffic and traction are overshadowed by Tumblr.

I also think that YC is very smart to focus on design and coding for its hires. As an accelerator/seed firm, YC deals with very early stage startups. I often tell founders that until they have a great product, outbound sales and marketing are a waste of time.

But I also want to be fair to the many traditional VCs who do a good job. As a company grows beyond the YC stage, considerations like sales, marketing, operations, and people management become increasingly important.

Many of these are issues that can only be dealt with based on experience, rather than on what one reads in Hacker News. As you grow, traditional VCs and other grey hairs can actually help (though they don't always do so).

UPDATE: One thing I just realized is that this transition isn't universal. When I meet people outside Silicon Valley, they still seem inordinately impressed by my degrees. It will be interesting to watch whether this ethos spreads to the wider world.

Embracing Entrepreneurship @ The Intersection

More notes from #theXEvent12

Payam Zamani, CEO of Reply.com (http://www.linkedin.com/in/payamzamani)
Jacquelline Fuller, Director of Charitable Giving, Google (formerly of the Gates Foundation) (http://www.linkedin.com/pub/jacquelline-fuller/8/990/8b7)
Leila Janah, CEO of Samasource (http://www.linkedin.com/in/leilajanah)

Jacquelline: "The business model at Google.org is to attack a problem from all angles--funding NGOs, funding companies, advocacy, lobbying. There are more companies that want to give back, but in a way that reflects their DNA, and in a serious way." Evidence-based giving.

Google takes a portfolio approach--sometimes giving is evidence-based, sometimes it bets on early innovators.

"We back the leader, and we give them the freedom to iterate."

"You have to understand the context in which the frontline is operating." To help understand global health, Jacquelline moved her entire family to India for a year.

"Launch early, fail fast, iterate, move on if you have to. Too much of philanthropy is afraid to take a risk. It should provide risk capital for innovation."

The future:
"One of the things that encourages people to give is social." Crowdsourcing. Direct to consumer.

Leila: Used a tobacco company scholarship to take a year and teach English to kids at a school for the blind in Ghana. Became obsessed with the idea of creating jobs in poor places. What if we could take work to places where poor people live?

"The fundamental thing that leads to innovation is not accepting the status quo." We are habit-forming, assumption-making creatures. Going to Africa challenged all my assumptions. We send our people out into the field every year to shake them up."

"All the people who were previously invisible are becoming visible to us. I met a Sudanese boy in a refugee camp. A month later, he friended me on Facebook." The power of rapid feedback.

Payam: Giving needs to be genuine and part of what you do or it won't have staying power. Make bets that are big enough to make a difference if they succeed, but not so big that they take down your business if they fail. "The best ideas that really changed our business came from outside, not from sitting in our own cocoon."

"Innovation without execution isn't innovation. It's just an idea."

Pixar, IDEO, and Innovation

Here are detailed notes from Frans Johansson's conversation with Ed Catmull of Pixar and Tim Brown of IDEO:

PIXAR

"The easiest way to make a movie is to do what worked in previous movies. But you won't end up with an original result. The alternative is to go out into the world and learn from other industries."

For Ratatouille, the Pixar team went to Paris to visit French restaurants, and did a 5-hour, 28-course tasting menu at the French Laundry.

"We like ideas that are unlikely. Because they're unlikely, we have to protect them."

"The original idea sucks. You can't show it to marketing or the toy people, because they won't get it. But you can't protect it for too long; engaging with the world forces you to make the necessary decisions. There's a lot of pressure on us to get the process right. 'Hey, if you guys got it right up front, this would be a lot easier.' Getting the process right is *not* the goal. (implied: The goal is to make something great)"

"You have to be able to work with other people. You can't just piss everyone off."

"You want to signal to everyone else that it's okay to be unusual. 'That guy is really pushing it, and he didn't get in trouble, so I guess I can too.'"

"We want unusual things to happen. We can't predict what will happen. At every level, things are going to not work. You can't send the message that if you fail, something bad will happen."

"Interesting stuff happens in the messy place in the middle. The director wants to make the best possible film. The art director wants to make the best looking film. The marketing people want to make sure they can sell the film. They're all pulling in different directions. If any one of those groups wins, you lose."

"We have had some films that failed. We didn't release them. Toy Story 2 was a restart. Ratatouille, we kept one line from the original script. The first version of Up took place in a floating castle in the sky. The only thing left was the bird and the word 'Up'. The next version, there was a house that floated up and landed on a lost Russian dirigible. The next version, the bird laid eggs that conferred long life. You can say that these were failures along the way. The things that don't work right are just things that we tried. That's learning. Why do we associate that with the word failure? We should associate it with the word 'learning'?"

"Every 3-4 months, we have a screen of the reels. We have mockups, voices, music. The director has the final word. Nobody overrides the director. It's important that everyone know that before they enter the room. All the focus is on how do we make this better; if people think their project is in danger, they'll get defensive."

Interesting story: "Steve was the once per movie external force to say articulately what had already been said, but because he said it, people listened. He didn't come to the story meetings because he knew his words would carry too much weight."

"We bet on the person, not the idea. We never start with the idea. We ask them to come up with three ideas so they aren't stuck on a single idea."


IDEO

Tim Brown: "We look to extremes for insights."

"People think we stand in a room with the product under a black drape, unveil it, and then have the client admire it. Usually, they look and scratch their heads. The art is bringing in people at the right time. Sometimes, we embed the client from the beginning, which is a pain, but effective."

"There's a tendency in business to want to search for the answer before you ask the question. That's absurd."

Less than 50% of IDEO employees have formal design training/education.

"We tried multiple times to bring in people with business thinking expertise. We did the obvious thing--brought in people from management consultancies. It was a disaster. They wanted specific, concrete, future plans. What finally worked was to bring in business people who were already creative, and could make that translation."

"You have to balance passion and evidence. We try to have a culture where people ask the question, 'Is there evidence that this is the right idea?' Not did we get the idea right, not is someone going to tell us the right idea. If you only believe in passion, you get a lot of egos fighting it out, and the biggest ego will win. If you only believe in evidence, there will be no energy and spark."

"You have to think, 'I'm marketing my idea.' I'm not selling my idea, I'm trying to connect my idea with the needs of the market."

"Marketing is figuring out what people want and giving it to them." --Peter Drucker

Hotel Re-Review: Alcazar Palm Springs

As I've written before, one of our holiday traditions is for Alisha and I to sneak away to Palm Springs for a night or two while the kids stay with their grandparents in Santa Monica. It's a great time to recharge and relive being married without children (more on that later on).

In the past, we've stayed at the Peppertree Inn, with great results. But this year, when I went to make our reservations, I discovered that the Peppertree Inn had changed ownership, been remodeled, and was now Alcazar Palm Springs. With anticipation and nervousness, we set off to try the new Alcazar. Would the changes be an improvement? Or would they detract from a much beloved experience?

Two hours later, we drove up to the Alcazar in its familiar location in downtown Palm Springs. We were pleased to see that the trademark gates (complete with stained glass pepper tree) were still in place; clearly the designers wanted to rebrand, but weren't going to throw the baby out with the bathwater.

The word Alcazar comes from the Spanish term for a type of castle (I had to look this up--the only Alcazar I remember from my youth was the hen-pecked General Alcazar of Tintin fame). I can see why the new owners selected the name. The remodel gave the hotel a clean, white look, vague reminiscent of a castle. The exterior landscaping had been remodeled as well. Whereas the old Pepper Tree had a classic California Mission style, the new Alcazar had a much more modern touch.

It was particularly striking at night; here's a picture I took when we returned from dinner at Pomme Frite:


The grey rectangles in the background are actually continuous waterfalls over glass; the overall effect was elegant and attractive. Alisha insisted I take a picture.

Poolside, things remained much the same, with the same salt-water pool I enjoyed so much on previous visits, and the same great view of the mountains. Because of the relatively cold weather and packed schedule, I didn't get a chance to try out the pool. Next time.

We were in for another surprise when we got to our room. When we opened the door, it was clear that the remodel had focused on the rooms:


The entire room was white--floors, walls, ceiling, and bed. The desk was black. And the desk chair was clear acrylic:


The effect reminded me of both the Apple Store and the bridge of the Enterprise in JJ Abrams' Star Trek reboot:


Once we got over the initial shock, we decided that the change was an improvement. Since we usually get a room with a Jacuzzi bath, one concern Alisha always had was the tendency for carpets to retain moisture and damp; the new white floors eliminated this issue.

Indeed, the gleaming white room serves as a very effective means of demonstrating the cleanliness of the hotel and the dedication of the cleaning staff. When you offer an all-white hotel room, you darn well better keep it clean. It's the same effect that many high-end boutiques aim for; walking into a gleaming white space just says "expensive."

The remodel also included large LCD HD TVs, which I definitely appreciated when I was watching a preseason Lakers-Clippers game.

The Alcazar also continues the Peppertree's tradition of providing a continental breakfast to guests. The selection was narrower (the old breakfast included bagels and cereals) but a bit more elegant (higher-end coffee cake, fresh blueberries). But when we're on vacation, we prefer a fuller breakfast anyways. As we often do, we got breakfast from the neighboring restaurant, Cheeky's (breakfast quesadilla for Alisha, bacon flight--six varieties of artisan bacon, only $4--for me). The owners of Cheeky's are the new owners of the Alcazar, along with Birba, a stylish pizza and Italian joint. All three now share the same minimalist design aesthetic.

The only two problems we encountered were some flakiness with the WiFi connection, and some rude guests in the next room over, who ran their Jacuzzi at 1 and 3 AM. That's never happened before, and I hope it never happens again. Presumably they were either vampires or bathing addicts.

All in all, the Alcazar is a worthy successor to the old Peppertree Inn, and we will almost certainly continue our traditional couple retreat in the future.

Book Summary: "StandOut" by Marcus Buckingham

I've been a fan of Marcus' work since his original breakthrough book, "First, Break All The Rules." His core message of the importance of casting people in the proper roles has stuck with me.

Where Marcus' previous books focused on the role of managers, StandOut focuses on your individual career, and better understanding yourself and your strengths.

I got my copy of StandOut from Daniel Pink's podcast, for which I am very grateful.

StandOut is an assessment tool that evaluates which of the following "Strengths Roles" are the best fit with your natural abilities:

1) Advisor
You are a practical, concrete thinkier who is at your most powerful when reacting to and solving other people's problems

2) Connector
You are a catalyst. Your power lies in your craving to bring two people or ideas together to make something bigger and better than it is now.

3) Creator
You make sense of the world--pulling it apart, seeing a better configuration, and creating it.

4) Equalizer
You are a levelheaded person whose power comes from keeping the world in balance, ethically and practically.

5) Influencer
You engage people directly and persuade them to act. Your power is your persuasion.

6) Pioneer
You see the world as a friendly place where around every corner good things will happen. Your power comes from your optimism in the face of uncertainty.

7) Provider
You sense other people's feelings, and you feel compelled to recognize those feelings, give them a voice, and act on them.

8) Stimulator
You are the host of other people's emotions. You feel responsible for them, for turning them around, for elevating them.

9) Teacher
You are thrilled by the potential you see in each person. Your power comes from learning how to unleash it.

For more details on these roles, you can find a complete summary on my Book Outlines Wiki.

When I took the StandOut assessment, I assumed that my top roles would be Advisor and Connector, since they reflect my daily activities as a mentor and investor. Yet when I got the results, here was the order of roles:

TOP 2
1) Equalizer
2) Teacher

REMAINDER
3) Advisor
4) Connector
5) Pioneer
6) Provider
7) Creator
8) Influencer
9) Stimulator

My self-awareness wasn't totally off; Advisor and Connector were two of my top four roles. But upon further reflection, the results made more sense. Advisor and Connector describe my profession; Equalizer and Teacher describe my daily activities.

As an advisor to first-time entrepreneurs, I've often been told that I add tremendous value by reassuring people and teaching them about how things work. In my various companies, I've often served as the "glue" that helps various departments work together. And the few people who have ever seen me angry know that the one thing that is likely to set me off is the perception of unfairness.

Indeed, the summary of this combination's value describes me to a "T": "You bring order to the messiness of our growth and development."

As an Equalizer, the key question is, "What is the right thing to do?", a phrase that can often be heard issuing from my lips. As a Teacher, the key question is, "What can he learn from this?"

My comparative advantage is as a performance coach:

"People who come to you for advice will not only get forthright, practical guidance, they will also get a system to track their progress. You love to keep score. And while this logical, disciplined approach creates security and certainty with others, you temper it with a heartfelt belief in them and what they can achieve. Your goal is to create self-reliance in others. You don't want them to have to keep coming to you. You train them, empowering them to create their own internal measures and motivators. And then, you stand proudly on the sidelines and watch them deliver."

Just to prove the validity of the test, I gave my other copy of the book to David Weekly. His Top 2 roles, predictably enough, were Creator and Pioneer.

There are any number of books that promise to show you the pathway to success. But few deliver so personalized a map, or back it up with as much actual research. StandOut is a great value for anyone who is trying to understand their strengths and how to shape their career.

What Startups Can Learn From Tim Tebow

The Tim Tebow phenomenon has become the biggest story in the NFL, exceeding the routinely remarkable perfection of the Green Bay Packers and the quietly dumbfounding turnaround of the 49ers under Jim Harbaugh.

For those who aren't sports fans, Tim Tebow is the quarterback of the Denver Broncos. That in itself isn't that remarkable; Tebow won the Heisman Trophy while playing at the University of Florida, and was a first-round draft pick.

What is remarkable is that nearly all football experts agree: Tim Tebow does not have the skills required to be a successful NFL quarterback. His throwing motion is slow. His accuracy is poor. He has only completed more than 50% of his passes in two of his games, an atrocious figure considering that the Packers' Aaron Rodgers has completed 70% of his passes on the season. Last month, in a game against the Kansas City Chiefs, Tebow completed just two (2!) passes. By many conventional measures, Tebow is *historically* bad.

(Note that he does perform reasonably well on some conventional measures such as touchdown to interception ratio (11:2) and quarterback rating (83.9))

Even more remarkable? Despite the judgment of the experts, Tim Tebow has led his team to victory seven times in his eight starts, including six in a row. In each case, the Broncos trailed at the end of the game, only to rally to victory at the last moment.

Compounding the Tebow-mania is the fact that he is a devout Christian and avowed virgin, but even without these factors, his story has been remarkable.

So, you're probably asking yourself, what does all this football talk have to do with startups?

Here's my point:

A lot of entrepreneurs focus their energies on looking good for the experts. Even if they won't admit it, investors like startups that fit certain stereotypes. A team of 20something Stanford CS grads with the right connections are the football equivalent of a 6'4" quarterback with a strong and accurate throwing arm.

Yet these stereotypes are heuristics, not laws. We use them because they help predict success. The one thing that trumps them is success itself.

If Tim Tebow wasn't winning football games, we wouldn't hear much about him, just like you probably don't hear much about Blaine Gabbert or Colt McCoy (two other young quarterbacks who aren't winning games).

In fact, many journalists have argued that the Broncos started playing Tim Tebow at quarterback because they expected him to fail. The Broncos started the season at 1-4; a poor finish might give them the ability to draft Andrew Luck or Matt Barkley, two collegiate quarterbacks who do fit the classic mold that football experts prefer. Playing Tebow and watching him struggle would have killed two birds with one stone--it would quiet the fans who were clamoring for Tebow to play, and increase the chances of getting a high draft pick that would allow the team to select a "real" quarterback.

During the early stages of his professional career, Tim Tebow tried to mollify the experts by reworking his throwing motion to better fit the classic stereotype. This failed miserably. Instead, Tebow has become successful through the simple expedient of winning football games.

In the startup world, as in pro football, winning ugly is better than losing pretty. Even if investors don't swoon at your hip team or hyped up space, just keep racking up the wins, and you'll be a success.

Want my time? Fight cancer!

Seven years ago, Jennifer Goodman Linn, the wife of my old HBS classmate and basketball buddy Dave Linn, was diagnosed with with a rare soft-tissue cancer. Most people, when facing such a challenge, turn inward to focus on fighting the disease.

Instead of withdrawing from the world, Jen focused on helping others. She founded Cycle for Survival, a fundraising program that has raised over $9 million for the Memorial Sloan-Kettering Cancer Center (where she was treated), making it the most successful patient-run fundraiser in the history of that institution.

She worked tirelessly to make Cycle for Survival a success, and her story was featured in Redbook, Self, the Wall Street Journal, and on the Today show.

Each year, I've donated to the program, and followed Jen's fight via her emails and videos.

Jen passed away this year, but her fight lives on.

In her honor, I'll be riding in Cycle for Survival in San Francisco (and those who know me know that I would never go to San Francisco except for a very good cause).

Here's where you come in. If you've ever wanted some of my time, you can donate to a good cause AND get a piece of me.

$20 Donation: I will answer any one email you send me
$50 Donation: I will have a 20-minute telephone conversation with you
$100 Donation: I will meet you in person at my office (San Mateo, CA) or in Palo Alto
$500 Donation: I will take you out to a leisurely lunch (Peninsula only)

Just visit my Cycle for Survival page and donate. The website will send me your contact information, and I'll email you to arrange for you to collect your prize.

This is a great cause. I hope you'll help me fight cancer in Jen's name.

UPDATE: Great question from Bill Grosso in the comments. Yes, this is 100% tax deductible!

UPDATE: Many thanks to those who have already contributed. I've achieved my goal, but I want to keep going to raise as much in Jen's honor as I can. Keep those donations rolling in, and I'll keep opening up slots on my calendar!

UPDATE: Today is the last day for donations. Last chance to get my time.

Doing What You Love

It's a paradox.

Any time you hear the story of a wildly successful person, they tell you to "do what you love."

Yet for most, this advice rings hollow.

How do we reconcile these two facts?

The problem is survivorship bias.

It's probably true that people become successful by doing what they love.

But it's also probably true that most people who do what they love don't become successful.

Here's what I think is the actual mechanism of action:

1) Great success comes from doing something original.
2) By definition, the original isn't understood at first.
3) Only people who are doing what they love will persist long enough for the world to catch up.
4) But there's no guarantee that something original will ever be accepted.

I may be the first person to make chocolate sardine candy, and I may love it, but no matter how long I stick with it, I'll probably never build a successful candy business on it.

So instead of "do what you love," we should say, "Do what you love, if what you love is a) original, b) plausibly something the world will come to value (even if it doesn't value it now), c) something you won't regret doing even if you never become successful."

A bit of a mouthful, but more useful as career advice!

(Inspired by Steve Martin's excellent memoir, Born Standing Up."

Don't Confuse Signifiers and Substance

When it comes to startups, its easy to confuse signifiers and substance. The truth is hard to know, especially with early stage companies. If you don't have a product or customers, it's hard to have substance.

Yet whether you're a startup or investor, you'd be wise to focus on substance rather than signifiers. Not because it's the right thing to do (though it is) but because it delivers better results.

Humans have a weakness for signifiers. We like things to be black and white. We constantly seek confirmation for our beliefs, even when that confirmation is spurious.

Consider the race for the Republican presidential nomination. In extremely short order, we have seen Palin, Bachmann, Perry, and Cain take turns as the "frontrunner" based on the polls. These polls are just signifiers--the real substance consists of state and local organizations that will get the votes to turn out. Anyone who bet on any of them to win the nomination (thanks Intrade) would have lost their shirt.

In the startup world, we make a big deal out of things like social proof and press coverage. But in the end, these are signifiers, not substance. They might reflect the underlying reality, but then again, they might not. The real work consists of making products that users love, then generating profits. That's a battle that you fight one user at a time. If the product doesn't cost-effectively solve a problem, endorsements and press won't help.

I'll admit that I'm part of the problem. I help startups frame their stories for investors. Some might even call it my specialty. But there's a difference between getting a spin doctor to help you put your best foot forward and believing your own press.

As an investor, I try to get to the substance of a startup in three main ways.

1) I try the products myself. Sometimes, I like the product so much, I'm comfortable making an investment decision.

2) I talk with experts. This can be dangerous--think of all the great ideas that experts have dismissed. By definition, experts represent the status quo. Otherwise they wouldn't be known as experts. The key is to use expert opinion to amass hypotheses you can test, rather than simply relying on a "vote" of opinions. I call this "principles, not positions." Don't tell me if you're a Romney man or a Perry woman--tell me which principles you believe in.

3) I talk with customers. Testimonials aren't enough--I want to dig for details so I can understand why customers adopted or bought the product. Sometimes, they cite unscalable factors like founder attention. Without checking deeper, simply reading a testimonial might result in a false positive. As with the experts, the reasons are as important as the opinions.

All of this takes more work than looking at a few charts and asking, "Who's in the deal already?" It may not always lead to the right decisions or generate the best returns. But I believe it is the right way to invest. And you know what? If you're an entrepreneur, getting the substance right is usually going to lead to a successful startup.

If you can build a product that an investor will use and love, wins the endorsement of experts, and gets customers to buy, you're well on your way to success.

Even more important, even if social proof and press get you your seed round, they won't help you build a business. All those stock certificates are worthless unless you build an enterprise that either the public or a well-heeled company decides is worth buying. Good luck conducting a sale or IPO without the substance to back it up.