Saturday, February 28, 2009

"What do you most want for your children?"


Image courtesy of lepiaf.geo

That's the question that Positive Psychology pioneer Martin Seligman asks his audiences. Usually, the answers are things like happiness, health, fulfillment, and love.

Here's the punchline: Then he asks them, "What do schools teach?"

So the real question is, when are we going to create an educational system that teaches our children the truly important things?

Or, even better, how do we create an educational system that lets our children learn what's truly important?

Wanted: Co-founders for a recession-proof business concept

I recently Twittered about the fact that I have a plan for a recession-proof business. I created the plan a couple of years ago, even lined up some killer reference customers, but never had time to put it into effect because of more time-sensitive priorities (Ustream, PBwiki).

My "problem" is that between work, family, and all my other commitments, I don't have time to execute against the business right now, even though with the economy in tatters, now is the perfect time.

Thanks to the enthusiastic responses and curiosity about my tweet, I've decided to run an experiment. I am now seeking co-founders for my recession-proof business.

Here's the deal; once you hear the terms, you can decide for yourself if you want to apply.

1) I'm retaining a 51% stake in the common stock. Fair or not, the company needs to have someone to make final decisions.

2) I want a team of at least two people. I won't have an enormous amount of time to help with the day-to-day, so I want people who can work together as partners and co-founders even when I'm not there.

3) I prefer a local team (SF Bay Area), but I'm willing to consider people who will relocate once the company gains momentum.

4) I've got a soft spot for Harvard MBAs, but you need to have at least one semi-technical person on your team. I can provide some software development help, but you really need a reasonably technical founder.

5) You've got to be willing to raise money. Even thought this is a bootstrappable idea, I'm of the opinion that you should always raise some outside capital to avoid groupthink. It's also the case that my plan for world domination actually uses fundraising as a strategic part of the go-to-market plan.

6) I'm not going to reveal my plan to you without a signed NDA. Sorry, I've got to protect myself. I'll start with my favorite team, and if they don't want to tackle the concept, I'll move on down the line until I either find a team that I like and is enthusiastic, or until I decide to wait until the next recession to start the company.

If you're still interested despite all my warnings, email me at harvardmbastartup@gmail.com with your application and answer the following questions:

a) What are your past entrepreneurial experiences?

b) Who was the best manager you ever had? What made that relationship so effective?

c) How do you like to learn?

Good luck!

When Frugality = Insanity



My friend Ramit recently issued a challenge to fellow personal finance blogger Trent of The Simple Dollar after Trent called Ramit's "Scrooge Strategy" short-sighted for arguing that small frugality tips are counter-productive because they require too much effort for too little gain:

Over a period of 1 month, starting Monday, March 2nd, I say we each pick a group of 50 readers and send them 4 tips. (I’m just going to take the first 50 people that sign up for The Scrooge Strategy.) I propose that we’re also allowed to do one hour of private instruction to them (webcast, phone, email, etc), but no more. We let the tips stand on their own.

At the end, we see which group has saved more — the Scrooge group or the frugality group. And I’m willing to bet, if you are: I suggest the loser pay $1,000 to the charity of their blogs readers’ choice.

Alas, Trent did not take up the challenge (despite Ramit's use of the nifty Wii Boxing graphic above), though he did respond with a thoughtful post on why he felt that the best course of action was for people to practice frugality in both the big and little things.

I'm a bit conflicted on this one--on the one hand, Ramit is a dear friend, and I like nothing better than a good fight (when the Malice at the Palace broke out, I remember telling my wife, "I am so glad that I am catching this on live television)--on the other hand, I am famously proud of being a cheap bastard, and I've often complained to Ramit that he spends money like a drunken sailor.

In the end, what decided it for me was reading some of the comments on Trent's blog, which included one person who said:

I wash Ziploc bags, and I wouldn’t consider myself any kind of extremist. But for me, reusing bags (and plastic utensils, and jars, bottles, and containers) is more about not being wasteful - why would I want to throw something perfectly good in the trash just because it’s dirty? - and less about piniching every penny. Although I do pick up pennies I see on the sidewalk. So maybe I *am* an extremist.

The bottom line is that the two blogs have very different audiences.

Ramit's blog is designed for young people with decent incomes who don't think rationally about their finances, and rightly tackles automated big wins.

Trent's blog is designed for people are are already unusually frugal, and want to improve their frugality by learning about new ways to save even more money.

You can even see the different in their styles...Ramit's is written in an edgy, wiseass tone that in a previous era, would be been dubbed "extreme." His job is to break through the clutter in an unfocused person's life and shock them into taking the first, important steps.

Trent's is written in a soft-spoken, straightforward style that makes even my writing look impolite. His job is to preach to the converted and help move them even closer to perfection.

This may be why Trent didn't take the challenge--his readers are already so frugal, that they simply couldn't save that much more (versus Ramit's readers who include the profligate Manhattan "Sex and the City" types).

It's true that Ramit's advice ignores certain opportunities to save money. But it's also true that not many people have the discipline and willpower to follow Trent's advice.

It turns out that all of us have a limited amount of willpower. This resource, which scientists call the "executive function," is responsible for restraint and decision-making ability. Each time you use your executive function to use less toilet paper, you use up a bit of it, leaving less for everything else. Like anything else, you can develop more willpower with practice, but in the short run, it's a fixed resource.

If you're living a fast-track life, you probably expend much of your executive function on your career; if you then try to tackle a laundry list of frugal activities like making your own laundry detergent, you're rapidly going to run out of gas.

If you're living the simple life, or if you're unusually blessed with executive function, you may have the juice to spare to focus on frugality.

I admire Trent's readers for their frugality, but I suspect that most people are more like Ramit's readers. Whose advice you should follow depends on your own assessment of your available executive function.

With that in mind, I've prepared this handy-dandy guide:



My guess is that most people think 3) is nuts, and 4) is truly cuckoo territory. Of course, right now some of the frugality people are thinking, "Yes, if I can just obtain some surplus Bulgarian toilet paper, the high thistle content will let me wash and reuse it!"

Thursday, February 26, 2009

What Makes Ambition Good Or Evil Is...


Image courtesy of madonna-pix

...Mindset.

My pal Ben just posted his thoughts on Joseph Epstein's "Ambition." In it, Epstein tackles our ambivalence towards ambition:

"In the modern world, and especially in America, a new distinction, a cruel twist, has been added: not to succeed means to fail. Leaving aside for a moment what it is that constitutes succeeding -- something that depends upon where one starts out from, what aspirations one sets for oneself, what league one chooses to play in -- the crux of this distinction is that it enters everyone in the race for success. The need to succeed, in other words, can also be viewed as the need to avoid failure. And as to which is greater, the hope of success or the fear of failure, this, in individual cases, does not always allow a clear answer."

As I read Epstein's words, I realized that whether ambition is a force for good or ill in one's life depends on one's mindset.

Carol Dweck, a professor at Stanford, found that there are two basic mindsets.

Fixed: The fixed mindset believes that one's abilities are largely fixed. Activities are undertaken to prove one's worth (or avoided to prevent being found out as a fraud).

Growth: The growth mindset believes that achievement comes through intelligent effort and execution. Activities are undertaken to stretch one's capabilities, and failure is not the devastating evidence of incompetence, but a valuable signal of where to focus one's efforts.

The fixed mindset leads to the dark side of ambition--obssessive behavior, attempts to prove one's superiority. The growth mindset demonstrates the good side of ambition--the desire to do and be more.

For more on mindsets, check out Dweck's book, "Mindset: The New Psychology of Success"

Those who see success and failure as opposites are doomed to dark ambitions. Those who see success as the logical result of failure can channel their ambition to positive ends. I'll end with another quote from Epstein:

"We do not choose to be born. We do not choose our parents. We do not choose our historical epoch, or the country of our birth, or the immediate circumstances of our upbringing. We do not, most of us, choose to die; nor do we choose the time or conditions of our death. But within all this realm of choicelessness, we do choose how we shall live: courageously or in cowardice, honorably or dishonorably, with purpose or in drift. We decide what is important and what is trivial in life. We decide that what makes us significant is either what we do or what do refuse to do. But no matter how indifferent the universe may be to our choices and decisions, these choices and decisions are ours to make. We decide. We choose. And as we decide and choose, so our lives formed. In the end, forming our own destiny is what ambition is about."