Friday, March 02, 2001

In praise of obstinacy (part II):

Obstinacy defines entrepreneurship. This may come as a shock to some, but until very recently (and probably again in the future), a career in entrepreneurship was viewed with the same welcoming attitude as having your children run off to join the circus. Entrepreneurs were seen as starry-eyed dreamers, stubborn fools, or both. The smart money was on becoming a doctor, lawyer, or, if you were really wild, and investment banker. Generally, an entrepreneur became such because he or she couldn't work for someone else.

The past few years witnessed the elevation of the entrepreneur to demigod status, making it attractive to the best and brightest, who, being pretty sharp, gravitate to whatever promises the most money, prestige, and sexual appeal. This meant that a lot of otherwise mainstream individuals started companies, hoping to get rich quick.

These new-look entrepreneurs did what they always had done to succeed: follow the rules, and execute to the letter. When VCs said to "get big fast," they booked television campaigns and gave away products. When magazines emphasized the importance of hype, they committed the equivalent of 10X revenues to a PR campaign. And when the tide turned, they had nowhere to go--except back to whatever conventional wisdom dictated was the best bet. Companies like Goldman Sachs that couldn't beg a second-tier MBA to join them two years ago now have their pick of Harvard and Stanford MBAs.

The true entrepreneurs are obstinate to the point of stupidity. They doggedly find ways to keep their companies alive, and keep fighting and scratching for every last dollar. And those entrepreneurs will be around and thriving, long after the new-look entrepreneurs and their $50 million venture rounds have gone the way of the velociraptor.
Forget about Reality TV--if you really want to be entertained, tune into Reality Check Television, brought to you by the capital markets.

Survivor:
Outwit, outplay, and outlast your fellow dot com entrepreneurs in the funding desert. Every day, another contestant gets voted out--and onto the pages of F*ckedCompany. Take the Downsizing challenge to win immunity from Chapter 11 for another week. Whoever is the last man standing wins the grand prize: a bridge loan with 200% warrant coverage.

Temptation Island:
Tune in to see what happens as struggling entrepreneurs are tempted by the siren song of B2C and B2B (back-to-consulting and back-to-banking). Watch as contestants break down in tears when confronted with videotapes of McKinsey recruiting events. If you're still your own boss 6 months later, you've won.

The Mole:
One among them is a management plant. Try to spot the mole as our intrepid team of dot-bomb employees works together to steal company laptops and dodge successive rounds of downsizing.

Big Brother:
24-hour, round-the-clock coverage of employees locked in a sea of cubicles. Watch as they try to hide their forays onto Monster.com, HotJobs, and beapimp.com from their eagle-eyed managers. See the 2-hour lunch breaks, and the office supplies stuffed into khaki pockets. Marvel at the extreme boredom of watching the same gray wall, hour after hour, without any new stories on ESPN.com.

So I Used to be a Dot-com Millionaire:
Nah, too depressing.

Wednesday, February 28, 2001

In praise of obstinacy (part 1):

The #1 lesson that I've learned from my business experience is that I should trust my own instincts. When I was younger and less experienced, I often deferred to my elders, believing them fountains of hard-won wisdom and experience. What I've discovered (and this should come as no surprise to anyone who has worked in any business organization) is that older doesn't mean wiser, it just means closer to death.

Get this through your head: No one knows what they're doing. Not your boss, not your co-workers, not your professors, not even your parents. Regardless of how sure someone seems of their convictions, if they don't make sense, they're probably full of excrement.

Trust your instincts, and don't let your fear of being an asshole override your better judgment. I did, and it cost me over $5 million.

Tuesday, February 27, 2001

You can't teach an old dog new tricks. Perhaps unfair to geriatric canines, but quite applicable to the workplace.

I've gone through a heck of a lot of management training and theory, and that one adage probably explained more to me about management than years of study.

The simple fact is that people can't change what they are. If an employee is impatient, she'll always be impatient. If an employee is sloppy, he'll always be sloppy. A poor manager complains about this fact. A good manager uses it to her advantage.

It's like the old joke about heaven and hell. Heaven is where the French are the cooks, the Italians are the lovers, the British are the cops, and the Germans are the engineers. Hell is where the British are the cooks, the Germans are the lovers, the Italians are the cops, and the French are the engineers. The point is, know what people are good at, and don't expect your German engineer to be a love god. That's just not who he is. (Pop quiz: Name one modern German sex symbol)

I had to fire people who would have been perfectly capable employees, were the circumstances different. But a methodical bureaucrat should't work for a startup, and an impatient cowboy shouldn't work for General Motors.

Every employee (even you, you budding capitalists) is imperfect. Just make sure that his role emphasizes his strengths and hides his weaknesses.

By the way, this principle also helps prevent one of the most common management mistakes: spending time improving poor performers and neglecting your stars. Face reality: Your dead wood should be fed to the chipper so that you can spend your time working with the top talents in your organization.

And for your employees out there: if you choose your role carefully, you can avoid being Fargoed like Buscemi.

Monday, February 26, 2001

Lies, damned lies, and Internet statistics. Boy did Mark Twain get that one right.

If there's one thing that you should learn from the dot-com meltdown, it's that most of what you see in print is a total lie. And I'm not just talking about fake press releases or even faker news stories, I'm talking about that 9th level of dot-com hell, the statistic.

Don't get me wrong, statistics can be very useful. Seldom, however, are they true. Take online advertising for example. Every couple of months, the Internet Advertising Bureau and AdKnowledge release glowing reports on the rapid growth of the online advertising market, and the steady advertising rates. Guess what? They're lying.

Take AdKnowledge, for example. They can go ahead and claim that rates are stabilizing, but as long as companies like 24/7 and Engage are teetering on the edge of bankruptcy, their claims have all the value of eToys stock options. But perhaps that's to be expected--after all, Engage *owns* AdKnowledge.

What's far more frightening is that the media accepts and publishes numbers from these house organs. And it's not just the online advertising companies (though they were probably the worst offenders). It's every industry.

As a raging capitalist, I still believe that caveat emptor applies: you should always treat statistics with an appropriate level of skepticism. The problem is that too many people don't. Why? Because it would be inconvenient. It would be inconvenient to have to find the answers to hard questions, to abandon existing business models, to close down a company that doesn't have a Snowball's chance in hell. Even the VCs, who are typically more cynical than a NYPD cop, had no problem tossing tens of millions of dollars at business plans that were based on the very statistics that they knew were a crock.

Guess what guys, no one's buying it anymore, no more than they're buying Dr. Koop stock. Mark Twain* would be proud.

*Of course, Mark Twain died in poverty, having gullibly squandered his money on foolish investments. No word on whether any of those investments promised to change the world.