Friday, April 06, 2001

Eliminate Serial Killers

To make your business successful, eliminate serial killers from your staff.

I'm not talking about the run-of-the-mill sociopaths you see on the evening news, I'm referring to something far more insidious, that may even be affecting your own job performance: Serial-itis.

All business tasks fall into two categories: serial tasks, and parallel tasks. You can't start working on a serial task until its predecessor is complete, and you can't start working on its successor until you finish the task at hand. You can work on a parallel task whenever you want, without interfering with other work--there are no dependencies.

Serial killers turn parallel tasks into serial tasks.

You may ask, "What's so scary about serial killers? Whether the task is serial or parallel is irrelevant, as long as they get the job done." What serial killers kill is any chance you have at rapid time-to-market, and in the post-Internet age, time-to-market is everything.

Think about it. Let's say your new product requires accomplishing tasks A, B, C, and D. Worked on in parallel, you might have a time-to-market of X. Once the serial killer completes his grim work however, your product's time to market might be 4X, or even more!

Thus, Windows 93 becomes Windows 95, Windows 97 becomes Windows 98, and so on.

The problem is that becoming a serial killer is so damned seductive. It's easier to work on one task at a time, to take a mental break by waiting until Jones finishes task A before you start on task B.

The justifications sound so reasonable: "I don't want to redo work that we've already done. We have to wait until everything is coordinated. Well do X when we do Y." Unfortunately, they're dead wrong.

To eliminate serial killers, you can't simply tell your people to avoid serializing parallel tasks. One, they won't know what you're talking about, and two, it's difficult for anybody--even you, the entrepreneur--to police themselves appropriately.

What you need to do is to challenge people's assumptions whenever you see a serial task. Ask, "Do you really need to wait? Isn't there a workaround?" Remind them that their time is a sunk cost. Be a bastard if you have to.

If you don't, the serial killers will remain on the loose, and they'll kill your products' chances at success.

The angry capitalist will be on vacation for a week, with absolutely no Internet access, so check back on the 16th for the latest rants and raves (okay, the latest rants).

Thursday, April 05, 2001

Budgeting Made Easy

Entrepreneurial budgeting is simple: Give every program a $1 budget.

You may think I'm joking, but I'm not.

As a entrepreneur, you need every project to pay off quickly. You can't afford to take a flyer on a long-term investment, where the term may exceed your company's life expectancy.

Painful experience has taught me that "Investment" is simply a code word for, "Bend over and pull down your shorts."

I'm not saying that you can build a billion-dollar business without spending money--you can't. What I am saying, however, is that you need to make sure that any money that you do spend results in a pretty darn quick payback.

A classic example is 3M's approach to innovation. 3M allows its researchers a certain lattitude to pursue untried, unplanned, unbudgeted ideas. It's not easy, but if you can beg, borrow, or steal the resources, 3M will look the other way. In fact, this approach has resulted in some of 3M's greatest products, like Scotchguard and the Post-It Note.

Constraints breed creativity. If your team knows that it can't undertake a project unless it a) costs nothing, or b) has a payback period of one month, you people will get very creative.

You want every one of your employees to act like the cost of their projects is coming out of their own pockets--that will give those programs the best chance of success.

Wednesday, April 04, 2001

Contrary to Popular Belief...

Many entrepreneurs (myself included) have a contrarian streak. We don't like to go with the crowd, figuring that their lemming-like behavior will get them killed, sooner or later.

For example, I've believed since 1998 that Internet stocks were ridiculously overvalued, and refused to invest in them. Actually, I decided that the only sane thing to do was to become a seller of stock, so I started a company, but that's another story for another time.

This refusal to participate in the NASDAQ bubble earned me a lot of strange looks, especially from my business school classmates. "You mean you aren't investing in Internet stocks," they'd say, in a tone generally reserved for child pornographers and Yale alumni.

I have to admit that my faith wavered at points, especially after I found out that several classmates had maxed out their student loans, put it all into Internet stocks, and racked up 6-figure gains. Nevertheless, I stuck to my guns. Now, with the Nasdaq approaching 1600, I feel vindicated.

Nevertheless, my anecdote underlines the perils facing the dedicated contrarian. The world *is* subject to manias and irrational exhuberance, and it can be a trying task to be the lone voice of reason. In addition, a contrarian can be just plain wrong. You can argue that horses will replace the automobile, and that would be a contrary position, but you'd be waiting until doomsday (or a post-nuclear civilization).

Don't be contrary just to be contrary--you have to carefully research and prove your position before you spit defiance at the gods of consensus.

One friend of mine believes that now is a good time to become a venture capitalist. Right now, the masses believe that the VCs fleeced them out of their hard-earned cash. Opinionis still split on whether this occurred because the VCs were feeble-minded simpletons or high-pressure con artists, but neither option is what I would consider flattering.

Yet his contrarian stance is well-supported. Entrepreneurship isn't going away, and valuations are a lot more reasonable (for the VCs at least!) now that the bubble has burst. Furthermore, a look at the history of the VC industry reveals that many of the greatest venture investments of all time (Cisco comes to mind) were made during difficult economic times.

As a entrepreneur, you'll often find yourself in the contrary position. Just make sure that your beliefs are well-supported, and stick to your guns, and you'll find success.