Sunday, December 26, 2010

Mobile Computing: A Wasted Opportunity

There's a revolution brewing because of mobile computing, but it might never get off the ground.

Thanks to Steve Jobs, we're now making computers so small and portable that they can be used anywhere--like right now, as I stand in line at Nordstrom Rack (Editor's note: This blog post was written on 12/23/2010). All of a sudden, there is something productive I can do wherever I go (assuming you consider writing blog posts productive).

The danger is that all the usual siren songs are also there--the Four Horsemen of distraction: Email, Twitter, Facebook, and the Web. And with mobile computing, consumption is always going to be easier than creation. Even now, I find typing on my iPod painfully slow.

Clay Shirky writes about the potential benefits of "cognitive surplus" if we can redirect TV time into productive work. Heck, I'd settle for redirecting waiting-in-line time from videogames and idle sexual fantasies to productive work.

I would love to see people taking advantage of their downtime to write or self-reflect, but Silicon Valley seems determined to lure them into raising virtual crops or making virtual friends instead.

What do you do with your mobile computing time? Are you using it to advance the things that really matter to you? Or are you still wasting it?

Rewards and the Motivation Paradox

I'm finally getting around to reading Daniel Pink's "Drive." I had held off for a long time, figuring that I didn't need to read someone else's rehashing of Deci, since I'd already read the source material.

I was wrong.

Pink does a great job of synthesizing a number of different strands, including behavioral economics, Deci's work, as well as reformers like Alfie Kohn. I found myself discovering unexpected new insights.

1) I've always had difficulty reconciling studies that show that extrinsic rewards hamper productivity with clear business examples where they help. For example, one of the classic studies I recall from HBS is Emerson Electric, which uses piecework rewards to drive incredibly high levels of productivity.

Pink explains this paradox by highlighting the mechanism of action. Extrinsic rewards harm productivity by displacing intrinsic motivations. But in cases where intrinsic motivations don't apply (e.g. situations where the work is routine and straightforward), extrinsic rewards increase motivation and productivity.

That fits perfectly with piecework assembly of electronic components (though even then, one must be careful to specify a quality target as well, since extrinsic rewards tend to encourage corner-cutting).

2) I've also had difficulty swallowing the notion that money doesn't motivate simply because Silicon Valley is built on money. For all the high-falutin' talk about changing the world, most entrepreneurs still fight like hell to avoid dilution.

But after reading Pink's book, the answer there is clear as well. For entrepreneurs, the intrinsic motivations for starting a successful company are so strong that no amount of external rewards can affect them. Creating a new company is a process that drips with the key factors of autonomy, mastery, and purpose.

In addition, the very uncertainty of entrepreneurship may inoculate entrepreneurs against the negative effects of rewards. Researchers have found that contingent ("if-then") rewards affect motivation, but unexpected rewards do not. Since no one can guarantee the results of your startup, the potential reward doesn't reduce intrinsic motivation.

For proof, just look at instances where startups are acquired with a contingent earn-out--how often have you seen acquired entrepreneurs go nuts as they "punch the clock" and "turn the crank", counting the days until they're free to start a new company.

I'm only 1/3 through the book--hopefully I'll have more insights to report when I'm done!

Tuesday, December 21, 2010

My Recipe For A Happy Life

Here's my recipe for a happy life:

1) Do the things you want to do

2) Accept that you'll never have the time to do *all* the things you want to do

Once you follow those two principles, the rest is simply time allocation!

Monday, December 20, 2010

The Chris Yeh Travel Channel: The Pepper Tree Inn

Every year, the Yeh family journeys down to southern California for the week of Christmas. I get to visit my ancestral home (Santa Monica, natch), the kids get to see their grandparents (whom they enjoy far more than their parents), and Alisha and I sneak away to Palm Springs for an archetypally American vacation of shopping, eating, and relaxing.

If GTL (gym, tanning salon, laundry) is the key to the Jersey Shore life, our vacation focuses on the MRJ instead (mall, restaurant, jacuzzi).

The mall we visit is called the Desert Hills Premium Outlets, with 130 shops worth of brands and bargains.

The restaurant we patronize is Pomme Frite, a traditional Belgian/French bistro with, naturally, outstanding fries. (Here's my previous review of Pomme Frite)

As for the jacuzzi, we stay at the Pepper Tree Inn, where we can get an in-room jacuzzi with a poolside view. (Here's my previous review of the Pepper Tree Inn)

As an avid fan of both the Food Network and the Travel Channel (favorites: Guy Fieri's Diners, Drive-ins, and Dives and Anthony Bourdain's No Reservations--talk about polar opposites), I've always dreamed about being a travel host, getting paid to eat and enjoy myself. I even made a couple of short videos the last time we stayed in Palm Springs. As you can see, I think I need a better producer:


Peppertree Inn 1 from Chris Yeh on Vimeo.



Hot Tub! from Chris Yeh on Vimeo.

Tomorrow, we'll be heading out on MRJ 2010. Alas, it looks like it will be raining the whole time, but we'll do our best to enjoy ourselves anyways.

* I have not received any compensation for any of the links or reviews, but as a good capitalist, if anyone wants to bribe me, I'm all ears!

Saturday, December 18, 2010

RIP, TV

This morning, I heard the death knell for traditional broadcast television.

My 6-year-old, Marissa, woke up called me to the living room. "Daddy, can I watch TV?"

"Sure," I said, reaching for the remote control.

"No, not that TV," she said, "This TV." She held up the iPad, which the kids have been using to watch Charlie the Unicorn.

To Marissa, all screens are the same. Traditional broadcasters should be quaking in their boots.

"I'm Proud of You"


Is there anything more emotionally potent than someone you really care about and admire telling you, "I'm proud of you?"

It feels like I can name many movies where this serves as the emotional climax. Just think of "The Sixth Sense," where the son tells his mother that his dead grandmother wanted her daughter to know that the answer to the question she asked at her mother's grave was "Every day."

His mother begins to cry, and he asks her, "What did you ask grandma," and she replies through her tears, "Do I make you proud?"

The same trope appears in many children's movies (Babe, Mulan)--is there anything more important to a child than their parent's love and approval?

That's why we value this sentiment so much when it comes from a beloved a mentor. In this sense, a mentor is a parent that you choose, and the desire for his or her love and approval is as natural as the desire for that of a parent's pride.

At the same time, that's why we get so upset if someone who isn't a mentor--a peer, or a wannabe--tries to claim that status by telling you, "I'm proud of you."

If one doesn't respect one's parent, what is the reaction to such a statement? It's probably contempt and anger.

Similarly, if someone tries to imply a mentor relationship by telling you, "I'm proud of you," it's like a bad parent trying to claim the rights and status of a good one. You'll feel mad and resentful.

"I'm proud of you" is a phenomenally powerful phrase. Use it wisely.

(written in response to this post from Ben)

Thursday, December 16, 2010

WikiLeaks' Fundamental Hypocrisy

Few subjects have been more in the news than WikiLeaks; few have been less understood (for example, WikiLeaks is not a wiki!).

For a great profile of both WikiLeaks and its controversial leader, Julian Assange, I direct you to the New Yorker, which posted a 12-page masterpiece. Here is the most important paragraph:

Experimenting with the site’s presentation and its technical operations will not answer a deeper question that WikiLeaks must address: What is it about?

The Web site’s strengths—its near-total imperviousness to lawsuits and government harassment—make it an instrument for good in societies where the laws are unjust. But, unlike authoritarian regimes, democratic governments hold secrets largely because citizens agree that they should, in order to protect legitimate policy.

In liberal societies, the site’s strengths are its weaknesses. Lawsuits, if they are fair, are a form of deterrence against abuse.

Soon enough, Assange must confront the paradox of his creation: the thing that he seems to detest most—power without accountability—is encoded in the site’s DNA, and will only become more pronounced as WikiLeaks evolves into a real institution.

That is the main problem I have with WikiLeaks; if you read the New Yorker piece, you'll discover that far from being an open information source, WikiLeaks produces painstakingly edited editorial content.

When Assange decides what to include or exclude from raw footage of the US military mistakenly killing a reporter and other civilians, his decisions (including the choice of title--"Collateral Murder") make it impossible for me to view WikiLeaks as an unbiased source of information.

To be fair to Assange, the piece implies that he selects inflammatory material because that's the only material news outlets will run. But that implies that his goal is coverage and attention, not simple transparency.

To me, the tragedy is that we need ways for information to be safely and anonymously leaked. Just read this article on U.S. citizens who are being prosecuted for releasing videos of bad behavior on the part of police officers.

By focusing on coverage rather than credibility, Assange is tainting WikiLeaks' ability to serve as on objective source of transparency.

Instead of providing a revolutionary service to overturn the traditional order, WikiLeaks is in danger of becoming just another media outlet.

The situation calls to mind the famous quote about the Vietnamese town of Ben Tre: "It became necessary to destroy the town to save it." Ironically, the very accuracy of that quote is in dispute, exemplifying the challenge of finding the objective "truth."

Tuesday, December 14, 2010

Impatience Kills Startups


We live today in am impatient world. In many ways, that's good. We're unwilling to wait for the world to change; instead we go out and change it. But this impatience has a cost.

People tend to view startups these days as overnight successes. Nothing could be further from the truth. Most successful startups had a long gestation period during which an impatient person would have concluded that they were going nowhere.

Seth Godin calls it "the dip"--the valley of death every new idea has to survive.

Take PBworks, which has taken five years to grow from a hackathon project into a substantial business. David Weekly spent 18 months working on the project, by himself, without pay. If he had given up after 6 months, PBworks wouldn't exist today.

Twitter was born from the failure of Odeo. Ev had been incredibly patient with Blogger, roughing it out brought some very lean times. When Odeo failed to catch fire, Ev and he team persisted, convinced that they were on to something with Twitter. Twitter itself was a curiosity for many years before breaking into the mainstream.

But perhaps a homier story will be even more illustrative. A few years back, a friend of mine decided to create a blog network. He bought some domain names, set up WordPress, and started paying a couple of freelance writers.

When he started, no one read his blogs. And I have to say, I was pretty skeptical of his business prospects, especially since his blogs covered well worn topics like food, sports, and gadgets.

Fast-forward two years and his little blog empire generates $10,000 per month in revenues, growing fast. It's already profitable, and in a few more months, he might even be making enough to quit his day job (though I doubt he will).

And thanks to his patience, my friend is in a great position to start future companies. He has a source of income, and can use he remnant advertising inventory from his network as a low-cost marketing tool. I'm sure he wishes it had taken less time, but I guarantee that he's glad he was patient.

P.S. In the couple of months it's taken for me to transfer this post from my iPod to this blog, my friend has grown his blog network to a $50,000 per month run rate. I think that just reinforces my original point--growth can be explosive once you reach the tipping point. But it might take years of toil to get to that point.

Friday, December 10, 2010

Sport is meaningless; Fandom is meaningful


Spectator* sports is meaningless, but fandom gives it meaning. We all want to be part of something bigger. When we find something that connects and uplifts us, does it matter how trivial it might be when reduced to essentials? Singing in a choir. Worshipping in a church. Partaking in a LAN party. In the end, what makes them any less trivial than tailgating before a football game, or watching March Madness with your buddies?

The next time that you're tempted to mock another's hobbies as a waste of time, ask yourself if someone else might say the same about your favorite activity.

* Clarification added after Jim pointed out that playing sports is a meaningful activity for the participants, even without an audience.

Thursday, December 09, 2010

Why You Should Hire Nerdy Businesspeople



Hire nerdy business people.

Counterintuitive, right? When you think businessperson, you think of a smooth-talking charmer, the opposite of the archetypal "nerd."

But when you're hiring business people, the most important interview question might be, "Kirk or Picard?"

It's not that they'll be more fun at hackathons (though that helps). It's that nerdy = detail oriented.

Contrary to popular belief, business is a science. And practitioners who are dedicated and detail-oriented (that is, nerdy) are more likely to succeed.

Note that I'm not saying that you should post your sales positions at the local comic book store. You still need to look for salespeople in target-rich environments, like ex-athletes or Oracle refugees. But if you find a successful Star Trek-watching salesman, grab him. He'll probably be worn his weight in Latinum.

Wednesday, December 08, 2010

Respond Specifically

I often think of my email inbox as a tennis game.

Each email that comes in is like a tennis ball, which needs to be volleyed back to my rally partner.

The temptation is to simply swing the racket and volley the ball back as quickly as possible. But life is not tennis, and volleying quickly is likely to lead to a long, time-consuming rally.

Instead, take the time to respond specifically, to make it easier for you or your correspondents to hit a winner.

For example, instead of asking, "Do you have time to meet next week?", short-circuit the conversation by offering specific times (or by using Tungle). Use if-then statements to cover contingencies, and make it clear exactly what you want from people.

Soft volleys may clear your inbox temporarily, but the return volleys will soon bury you once again. Take the time to laser in a few winners.

What Internet Startups Can Learn From Comics And Porn Stars

It's no secret that media businesses have struggled with monetization in the Internet era. Journalism, for example, is famously in free-fall. But all the hand-wringing conceals a simple fact: There is a very successful model that has been around for decades, and it still works today.

All we have to do is learn from porn stars and stand up comedians.

While these two groups may seem dissimilar, they both follow the same successful business model: Give away content and sell the experience.

Content is valuable but difficult to monetize. You can't get people to pay for things they think should be free. Instead, use content to drive non-monetary value, such as awareness and loyalty, which you can monetize by charging them for things they are willing to pay for.

Take porn stars. You would probably be surprised to learn how little porn stars earn from appearing in films. A woman might make $500 per scene. To earn $100,000 per year, you would have to shoot 200 scenes per year. You don't even want to consider the plight of male porn stars who might earn $100 per scene.

So where does they money come from? Porn stars make their money in two ways. First, they build their own websites, and charge their big fans for subscriptions which entitle them to attend live broadcasts where they can interact with the star. Second, they hit the exotic dance circuit as "Featured Dancers", who are paid to dance because they bring in bigger audiences. The tips aren't bad either. Give away content, sell experiences.

The same holds true for standup comedians. You've probably seen those comedy specials on Comedy Central. How much do you think the comic gets paid for those specials?

About $1,000. And no royalties.

Comics make almost nothing from appearing on TV. What those appearances do is help them build awareness so that they can go on the road and make their money by touring.

When a comedian books a tour, they get paid a portion of the gate; their ability to build a fanbase is directly correlated with their ability to get paid.

Give away content, charge for experiences.

How can you apply this lesson in your business?

Tuesday, December 07, 2010

Don't Take Sides, Take Issues (How To Think About Wikileaks)

I've been following the Wikileaks saga with increasing interest, because it embodies a principle in which I firmly believe:

Don't take sides, take issues.

People have asked if I'm pro-Wikileaks or anti-Wikileaks. One of my friends said she was anti-anti-Wikileaks.

The problem with taking sides is that its rare that sides are drawn up based on a single issue. And Wikileaks is decidedly *not* a single issue. Here's my own list, just off the top of my head:

1) Freedom of speech

Wikileaks is founded on this principle, which I have always strongly supported. It is far too easy for wrongdoers, be they nation states or other actors, to suppress damaging secrets. Wikileaks is a useful tool for increasing transparency. For example, previous leaks included footage of American military forces accidentally killing friendlies and reporters--footage that the military had tried to suppress. Surely this sort of information should be available to the public.

2) Responsible foreign policy

On the other hand, diplomacy between nation-states relies on privacy and confidentiality. Perhaps it would be nice if nations were honest about their motivations and actions, but a little privacy is the social lubricant that helps the world run more smoothly.

Your family holiday party would probably be a bit more awkward if everyone knew that you said your uncle was a boring loser who was probably a pedophile, just as the Middle East is a bit tenser because Wikileaks leaked that various Arab states urged the United States to bomb Iran.

Everyone knows what everyone thinks, but not saying out loud allows us to preserve the social niceties...useful for your dinner party, essential in the case of preventing war and conflict.

3) Corporate responsibility

In response to recent developments, a number of corporations such as Amazon and PayPal cut off service to Wikileaks. Was this a responsible response to a high-risk customer that endangered shareholder value? Or a craven cave-in to government pressure? Or both?

4) Vigilante justice

In response to the corporate boycott of Wikileaks, online communities such as Anon launched DDOS (distributed denial of service) attacks on the companies involved. Is this activism? Vandalism? Terrorism?

5) Crime and punishment

The founder of Wikileaks, Julian Assange, has been charged by Swedish authorities with rape, sexual molestation and unlawful coercion, and was arrested in the UK. Those who commit crimes should be tried, and if found guilty, punished, regardless of their other deeds (good or ill).

6) Political persecution

On the other hand, what most headlines do not report is that the charges against Assange are that while engaged in consensual sex, his condom broke, and that he either failed to disclose this to his partner, or (more damagingly) continued the intercourse after being asked to stop. The former is clearly boorish and dangerous, the latter criminal. But the details don't match the headlines, which clearly imply that Assange is the perpetrator of violent sexual assault.

Is Sweden's decision to charge Assange justice at work? Or an attempt to punish him via whatever means are convenient?

The point of this is that simply saying you are pro- or anti-Wikileaks is insufficient. For example, if you are pro-Wikileaks, you are implying that you are pro-freedom of speech, but also that freedom of speech takes precedence over diplomatic concerns.

Instead, you should make clear your stance on the issues, and avoid blanket judgment.

Wikileaks should be commended when its leaks bring clarity, and reprimanded when they do nothing but harm diplomacy.

Companies should be shamed for giving into pressures, but we should understand that their duty is first and foremost to their shareholders and employees, and that they are not required to risk their livelihood just to satisfy our consciences.

Those who want to protest others' actions should do so, but legally.

We should recognize that someone like Julian Assange can be both a positive and negative force, and that just because we agree with some of his principles doesn't mean we have to support him in everything he does.

Nor should this advice be limited to Wikileaks--taking issue rather than taking sides is good advice for all of life.

Tuesday, November 30, 2010

The Week of Blogging Asynchronously

I've been pretty bad about putting out posts on a regular basis. The funny thing is, they've actually been building up as text-only notes on my iPod Touch. So over Thanksgiving, I transferred a bunch of posts to my drafts folder, and I'll be pushing them out at lunchtime (assuming I remember).

I hope you enjoy them!

Saturday, November 27, 2010

Take What The Defense Gives You

I've noticed that fewer and fewer young people are sports fans these days, which is a shame, because the world of sports is rich with useful metaphors.

For example, last week during my regular basketball game, I was having trouble scoring against my friend Mon. I used to be able to bully him in the post. But not last week.

I asked my friend John, a sort of basketball Yoda, what was wrong. Naturally, he had the answer.

"Mon is playing off you and standing near the basket. When you try to post him up, he's ready and waiting for you. Instead, you should just take advantage of the space he's giving you and shoot as soon as you get the ball."
(As a side note, when Mon and I first met, he was a 150 pound beanpole. Since then, he's put on 30 pounds and I've lost 15, reversing what had once been a considerable weight advantage for me.)

In other words, take what the defense gives you.

Business, like sports, is about tradeoffs. You can't make the iPhone slim and elegant, and give it a physical keyboard. (As much as I wish Steve Jobs would!)

The competitive landscape for your firm is the defense. Your competitors are defenders, and they are each covering various portions of the playing field (with the varying degrees of skill). Your job as an entrepreneur is to read the defense and take what the defense gives you.

Conversely, you have to decide what you're willing to give up to your opponents. Are you going to cede the high-end business? The low end? There is no single right answer, but you have to make a choice rather than trying to be all things to all people, or trying to beat everyone at their own game.

How I Blog


For me, every blog post starts with a single thought. It might be triggered by something I read, it might just come from out of the blue.

Usually, I don't have time to blog the thought right then and there. In the past, I would try to hold the thought in the back of my mind. Sadly, I'd often forget, and those pearls of wisdom were lost forever. Now however, I enter it in my iPod so I can flesh it out when I have some free time.

Between the time the thought comes to me and when I find the time to write the post, I'll play with the concepts in my mind. As I build on the initial seed of a thought, I'll often add specific points to my argument, though these points are generally a few words and mental images, rather than fully formed text.

When I finally have time to write my post, I often find myself elaborating on my original thought or outline, and including interesting links. Sometimes the process of expanding on my thought actually results in a different conclusion.

To finish things off, I'll look for a fun image to include at the top, and post a link, with punchy commentary, to my Twitter account.

Thanksgiving, Happiness, And Memory

My friend and HBS classmate Lindsey and I started emailing about her most recent blog post. The exchange ended up lasting much of the Thanksgiving holiday, and touched on optimism, the underrated virtues of melancholy, and the conundrum of memory. Here's how the conversation went:

Chris: In this morning's blog post, you wrote the following:

We like to think that life is joy punctuated with pain but it's not. Life is pain punctuated with moments of joy. The optimist in me wants to disagree with Kate about the joy/pain balance of life, but the pessimist in me senses that she is right. Perhaps it doesn't matter, really, what the equation is, as long as we appreciate the joy and it sustains us through the pain. Of course everybody's particular calculus is different, their balance of happy and sad, light and shadow individual. It's no secret that mine leans towards shadow.

I think it's interesting how our different personalities impact how we see the joy/pain balance of life. You say that you lean towards the shadow. In contrast, I'm a natural optimist with a preternatural level of happiness that my wife describes as well-nigh oblivious. And that's how most people think of optimists--as happy and possibly naïve.

Yet you're different. You're an optimist, but it seems like you feel like your optimism is mistaken. How do you reconcile that inner conflict?

Lindsey: I don't think I'm a pessimist. I think I am an optimist with a melancholy heart. A melancholy optimist. Perhaps I am misusing all of these words, but I don't wake up every morning sure that the worst case is going to happen. Far from it. I guess I do have guarded optimism, and a persistent fear of being disappointed, but more often than not that fear isn't enough to keep me from hoping.

In fact hope is something I've thought a lot about. I think it's slippery, because I do think one of the keys to joy - happiness, peace, however you think about a pleasant life - is not being too attached to specific outcomes. It is in the dissonance between those ideals and reality that a lot of sadness happens, I think. And so my question with hope is how to avoid it hitching to a very specific result ... does that make sense?

Chris: It makes perfect sense. That's the Stockdale Paradox in a nutshell. Jim Collins wrote about it in "Good to Great," which I think is one of those books that as HBS grads we're legally obligated to quote on a regular basis. Collins formulated the Stockdale Paradox based on the story of how Jim Stockdale survived the POW camps in Vietnam despite being repeatedly tortured and mistreated. The paradox is as follows:

You must retain faith that you will prevail in the end, regardless of the difficulties. AND at the same time... You must confront the most brutal facts of your current reality, whatever they might be.
The first part of the paradox is all about optimism. You have to be optimistic about life, if only because life without optimism is hardly worth living. After all, we are all going to die, and most of us will suffer horrible, debilitating, and expensive illnesses before the grim reaper claims us. The lucky ones die prematurely in accidents that bring instant death.

But a simple-minded optimism doesn't work either. The second half of the Stockdale Paradox comes into play because Stockdale noted that it was the optimistic prisoners who said things like, "We'll be out of here by Christmas" who died first, largely because the realities of the situation shattered their delusions, leaving them broken and vulnerable.

To some, it must seem like a cruel joke--without hope, life isn't worth living, but that very same life has a nasty tendency to dash your hopes.

The way I deal with it is to hope for the best, but prepare myself for the alternative. I've spent my entire career in the startup world, living on the hope that I'll be able to build a successful startup. Yet at the same time, I know that the vast majority of startups fail, and that there is decent chance that I'll go through my entire career without experiencing a life-changing "liquidity event". I've even written about the math in greater detail here:
http://chrisyeh.blogspot.com/2010/07/entrepreneurship-is-about-happiness-not.html

The other nuance is that I focus on process rather than outcome. I'm a pretty avid sports fan, and while I love to win, I know that luck plays a major role. The best we can do is to make the right plays. If the best play is to throw a long pass hoping for a touchdown, you should throw that pass, even if you know there's a chance it will be intercepted. Nobody's perfect. But if you play the game the right way, you'll give yourself the best chance to win--in sports as well as in business and life.

Does your melancholy tend to come when you get disappointing results, or when the outcome is still in doubt? I think the answer makes a big difference.

Lindsey: Two thoughts. The first is that my melancholy is more a basic orientation towards the world - in fact sometimes I think melancholy is just another way of thinking about/talking about sensitivity. I am wired in a way that makes me hyper aware of the sadness in every situation as well as the joy. And my "melancholy" is about one thing and one thing only, which is the irrefutable and unstoppable passage of time. This is so bittersweet to me that it sometimes is truly unbearable. That we won't have any of the past moments back haunts me. So I don't know that my melancholy comes in advance of results or because of doubt ... it's kind of just the backdrop against which my whole life is lived.

The second is your point about process and outcome, which I think is critical. I'm working on a memoir which is about an early 30s "crisis" in which I realized that the whole way I approached the world was flawed. I'm guided by the famous Carl Jung quote:

"We cannot live the afternoon of life according to the program of life's morning; for what in the morning was true will in evening become a lie."

But your comments about process and result, and sports, make me realize that that is another way of saying the same thing. I'd always lived focused almost entirely on the next hurdle I had to clear, the next accomplishment I had to accrue. This is a very simple way to determine your direction, and it worked well for me for years. But there comes a time in life when there is no "next thing" (I had the two Ivy League degrees, the two kids before 30, etc) and at that point that entire mode of engaging with the world collapses. In your terms, we realize that the primacy of the result falters, and have no choice but to look at the process instead.

Chris: Your sensitivity to the passage of time really strikes a chord with me. I've always been sensitive to time's one-way arrow as well. From a young age, I was very conscious of the passage of time. I remember being 11 years old and thinking, "I'm almost through my childhood. I wish I could stop time now, because I know things will never be this simple and easy again."

When I was a freshman in college, I remember staying up all night the final day before they kicked us out of the dorm, wanting to squeeze out every last drop of time, knowing that we'd never be assembled as a group again. I'm always reminded of a line from the Eagles' "Take it Easy."
We may lose or we may win / But we will never be here again.

I find myself saving the artifacts of my life--old ticket stubs, worn out t-shirts, even holiday cards. My wife is far less sentimental and tosses them in the garbage immediately. I like to keep them as talismans which allow me to travel back in time via memory. I've been blessed or cursed with a near-photographic memory (it sure came in handy when we were in school together!), which means that simply looking at a ticket stub can recall an entire evening. I'm afraid to throw things out because without them, I might now be able to call up those memories.
It might be that this hoarding of memories explains how I'm able to escape that melancholy. By putting the symbolic weight of my memories into external objects, I'm able to forget about the ticking of the stopwatch. What kind of tricks does your memory play on you?

Lindsey: I've thought (and written) about memory a lot. What strikes me, as I run through my own most prized and cherished memories, is how often they are not from the Big Days but, in fact, from the most mundane, regular days. How the things I hold most dear are often things that happened in the grout between the tiles of life's big experiences. I can think of times in my life, very few, where I have been utterly present and simultaneously aware that I'm living something formative, special, important. Mostly, though, it's after the fact that I realize how moving or powerful an experience was, and then I find myself wishing I had been more conscious as I lived it.

I'm fascinated by the way that the mind curates our memories, and by why it is that we remember what we do (and how). Anne Beattie has a beautiful line that I think of often: "People forget years and remember moments." This truth, and the pattern that I can now recognize in how my most meaningful experiences are often cached in very ordinary experiences, both contribute to my almost-obsessive focus on trying to be more engaged in, aware of, and present to my own life. If I am not even paying attention to the mudane, there is no hope I will be able to see the magic.

Chris: I love the last sentence. In some sense, we all walk between Scylla and Charybdis when it comes to our memory. On the one hand, we must be present in the moment, or we'll miss those special moments. On the other hand, we build our memories of those special moments like an oyster builds a pearl--with layer after layer of remembrance and rumination. Just think of how many times you've told your favorite stories from childhood--each retelling or reconsideration adding another shiny layer of nacre to that tiny seed of memory.

Focus too much on critical interpretation, and you'll lose the plot. Your Marxist interpretations of the hidden Maoist economic agenda behind "Garfield" shouldn't cause you to forget that it's about a fat cat who likes lasagna (even if that lasagna symbolizes the Sacco and Vanzetti case and its impact on Roaring 20s attitudes towards socialism).

Live in the moment without self-examination, and you'll lurch from event to event without a connecting thread or larger narrative.

We began by considering whether life is pain punctuated by joy, or joy punctuated by pain. Perhaps the answer is that it could be either...and that our lives consist of the process of writing that narrative for ourselves.

***

Lindsey and I are both proud members of the HBS Class of 2000. You can find more of Lindsey's writings here. She is currently working on a book.

Wednesday, November 24, 2010

Why The Enterprise Lags Consumers In Adoption

Another brilliant insight from Rob Koplowitz of Forrester:

"Everyone who uses a consumer product like Twitter is there voluntarily. And if they decide to drop out, it doesn't impact anyone else.

In the enterprise, Joe in accounting might not see a good reason to participate. Yet if his input is critical, your initiative won't succeed without him."

Many people look at the runaway success of products like Facebook and Twitter and wonder why enterprise vendors are so terrible at building products that people want to use. But if you think about it, Facebook only has about 500,000,000 members--that means less than 10% of the company (i.e. humanity) has chosen to adopt the platform. Time to fire the CIO who made that buying decision!

Thursday, November 11, 2010

How To Use Humor To Enlighten

As always when I'm at the Enterprise 2.0 conference, I find myself hanging around with the delightful Marcia Connor of the Altimeter Group. In between gossiping about industry scandals and debating the best color for Eileen Fisher slacks, Marcia shared a powerful insight.

It's no secret that I enjoy making people laugh, especially when I give a talk. But I've wondered if my urge to be funny helps or hinders getting my point across. Marcia, who started her career as a neuroscience researcher, provided a nuanced and scientific answer:

"Laughter is a higher-level brain function. When people laugh, it activates their brain and primes them for learning and change. If you want to get the most out of being funny, take advantage of laughter by immediately following up with your key points. You'll never have a better chance to teach, persuade, or enlighten."

Tuesday, November 09, 2010

The True Way To Measure E2.0 ROI

As Enterprise 2.0 continues to evolve, the one question that continues to go unanswered is how to measure ROI.

The question came up again today at an E2.0 "town hall" at the Enterprise 2.0 conference.

My response wasn't popular, but I think it's worth repeating:

If you can't sell more, buy less, or fire somebody, you're not getting real ROI.


In private, a number of folks complained to me that Enterprise 2.0 has been too ethereal in the past. Perhaps this is why there seems to be a grassroots movement to rebrand the topic as "Social Business." Yet simply saying that something (a technology? a movement?) addresses real business problems doesn't make it so.

Dig underneath the surface, and "Social Business" still seems to be about things like discovering expertise inside the company, or boosting employee engagement.

One argument that came up at the town hall (and was more popular than mine) was that deploying Enterprise 2.0 technology should be thought of as a cost of doing business, much like email or telephones.

Much as I wish this were a commonly accepted fact, I suspect that this is a) wishful thinking, and b) not likely to go over well with your 2011 Budget Committee.

I keep coming back to a simple principle articulated by the pragmatic philosopher William James: "A difference that makes no difference is no difference."

If Enterprise 2.0 has a business impact, it will show up in business results, e.g. net income. The impact might not show up immediately, but if it's there, it will show up eventually.

Enterprise 2.0 has been around long enough that we should be able to detect its impact, much like astronomers can detect the presence of extrasolar planets by observing their gravitational effects.

Nor are the necessary experiments and observations hard to find. We have numerous case studies of large enterprises that have adopted E2.0 products broadly across the enterprise. Alcatel-Lucent's E2.0 platform reaches 45% of all employees. 80% of Booz employees logged into their internal social platform last quarter. The list goes on.

We can examine the financial results for these companies, and compare before and after. If the recent economic crisis makes such temporal comparisons difficult, we can compare E2.0 adopters with comparable companies that didn't try the tools.

And that doesn't even count the thousands and thousands of departmental pilots that could be used as experimental data.

This analysis won't be easy. It's easy for me to make my arguments, but you don't see me rushing out to perform the painstaking research that would be required to reach a provable conclusion. That's hard work!

But that hard work might be the very thing that helps make Enterprise 2.0 a mission-critical part of every enterprises' IT portfolio.

P.S. @RonTeitelbaum pointed out on Twitter that I'm leaving out improvements in employee retention and improved efficiency. I disagree--if those improvements occur, they should have a bottom line impact. Improved retention should reduce recruiting and training costs. Improved efficiency should allow you to reduce staff, or generate more business by diverting resource savings to selling and serving new customers.

Sunday, November 07, 2010

Why You Shouldn't Care What People Think

Remember what you were doing 10 years ago? Remember all the things you did to impress others?

Seems pretty silly now, doesn't it?

That's how you'll feel about your current concerns in 2020.

(Inspired by this thread on Hacker News)

Wednesday, October 27, 2010

Wanted: CEO for Revenue-generating Education Startup

One of the companies I've helped get off the ground has a problem which might just be a great opportunity for you.

After building out the vision and product, and getting it into the hands of thousands of paying users, its founder has been called up to active military service.

Now we need to find someone to step in as CEO.

The company is bootstrapped and generating revenues. The focus of the new CEO will be on sales and marketing execution.

The ideal candidate will be based in the Bay Area or Boston.

If you are interested, email hr at wasabiventures dot com.

The True Meaning Of Customer Value

So often, we think about customers from an MBA perspective.

Segments.

Churn.

Life-time value.

But when we think about value, we think about their value to us as businesses.

We need to turn it around and think about how we can add value to their lives.

Only if we add value to their lives will they be willing to share that value with us (i.e. pay us).

To be successfully selfish, be selfless.

(originally a comment on this post from Paul Greenberg)

Tuesday, October 26, 2010

What Entrepreneurs Can Learn From Baseball

With the 2010 World Series about to begin, a lot of attention has been focused on Texas Rangers pitcher Cliff Lee, who has been historically dominant in the playoffs over the past two years.

Only two pitchers in history, the Dodgers' Sandy Koufax and the Giants' Christy Mathewson (both Hall of Famers who are considered among the greatest that ever played), have a better postseason ERA (earned run average--a measure of pitching effectiveness).

What makes Lee's success even more interesting is that he doesn't have a remarkable fastball. At 91 mph, his fastball is middle-of-the-pack (Reds pitcher Arnoldis Chapman hit 105 mph on the radar gun this year, and other elite pitchers such as the Tigers' Justin Verlander throw anywhere from 95-98 mph).

Here's what a recent article had to say:

Texas reliever Darren O'Day refers to Lee as a "technician," because he never, ever strays from his approach no matter how many runners are on base or how stressful the circumstances. While many pitchers feel an adrenaline rush in big spots and react as if they're in a high-speed chase, Lee is able to control his emotions, maintain his mechanics and continue to tool along at 5 mph over the speed limit.

Entrepreneurs can learn a lot from Lee's example.

Nor should it be surprising that we can learn from baseball; think about how often you hear talk of singles and home runs. Now it's time to push the analogy further.

In the hype-driven world we inhabit, it is very easy to get caught up in our surroundings, whether in the form of TechCrunch articles, tweets, or panicked emails from users or investors.

The constantly growing inbox (and Facebook newsfeed...and RSS reader...and Twitter feed...) practically demand immediate, dramatic action.

Yet in my experience, I'm more likely to get good results from maintaining a calm, disciplined approach. Reach back to throw harder, and I'm likely to miss the strike zone. In the business world, this means jumping from initiative to initiative, and spending my energy on worry.

Personally, I don't believe in worrying. As long as I keep making the right pitch, I'll live with the consequences. Doesn't matter whether it's the start of the game, or bases loaded with a full count in the bottom of the 9th.

Define your own approach.

Focus and make your pitch.

Don't waste your energy on worry or agitation.

Follow these baseball lessons, and you'll be more likely to succeed.

P.S. If anyone wants to bribe me with free World Series tickets, you can get them on StubHub for $450.

Wednesday, September 29, 2010

Did Peter Thiel Make The Single Best Investment In History?

In 2005, Peter Thiel paid $500,000 for a 10% stake in Facebook.

Today, with Facebook's estimated value topping $33 billion, his stake is worth between $2-3 billion. That's a 6,000x return on his capital in 5 years.

I'll put it this way--if you made a $250 IRA contribution in 2005, it would have to be worth $1,500,000 today to match that return.

I never thought I'd see a better return than Google. Sequoia and Kleiner Perkins paid $25,000,000 for a 20% stake in Google.

At its IPO, Google was worth $27 billion, making that 20% stake worth $5.4 billion. That's a stunning 216x return but still more than an order of magnitude short of the return Peter Thiel would earn if Facebook went public today.

From what I can tell, that one deal was the single best investment in history.

Friday, September 24, 2010

Speak Up If You've Been Helped By "Superangels"

What disappoints me most about the entire "AngelGate" affair is the willingness of entrepreneurs to believe the worst of the very people who have been working so hard to make starting companies easier.

Have people forgotten what it was like to raise money before the rise of the "superangels"? Searching desperately for angel investors, or trying to pitch VCs before traction?

Like Mark Suster, I sit on "both sides of the table". I'm an investor, but I'm also an entrepreneur, and thanks to my work as an unpaid advisor, I might very well help an entrepreneur negotiate a funding round in the same day I'm negotiating one of my own investments.

Like any entrepreneur, I complain about the cluelessness of investors. Like any investor, I complain about the cluelessness of entrepreneurs. But even though we're on both sides of the table, fundamentally, we are all on the same side. We want to change the world (and make money in the process).

I'd call on all the entrepreneurs who have been funded to make their voices heard--what do they think of the men and women they've been working with these past few years? While I agree with the point of view that this is a worthless sideshow to the real Silicon Valley, now that good men are being dragged through the mud, we need to speak up.

Angel, VC, entrepreneur--we're all jerks at times. And even if we weren't human, the fact that our interests conflict (investors want to buy as much of the company as possible for their money; entrepreneurs want to sell as little as possible) would cause friction. But the answer is to work to soothe those frictions, not exacerbate them.

As I've said before in a previous post, follow the money. Who benefits from all this? If you can answer that question, you'll have a better shot at penetrating the real conspiracy.

(Originally posted as a comment to this excellent post by Mark Suster)

Thursday, September 23, 2010

Do Companies Serve The Founders Or Vice Versa?

The classic story of nice guys who can't sell against cutthroat competitors is a perfect illustration of the fundamental dilemma most founders eventually face:

Does the company serve the needs of the founders? Or do the founders serve the needs of the company?

If you're lucky to be in business long enough, you're going to discover that many times, what the business needs and what you're comfortable doing will often diverge.

At that point, you may have to choose between your own comfort and the company's success.

The tough part is that there's no guarantee that sacrificing your own comfort will work. And that's especially true if you do something like hire a new VP Sales without learning for yourself how the sales process actually works.

After years in the business, I've learned what I can and can't do. I've teamed up with a VP Sales who knows how to sell. And I know when to ask questions, and when to get out of the way and let him go for the kill his way.

(This post originated as a comment on Steve Blank's blog)

When Angels Fight, Silicon Valley Loses

The latest round of developments in the so-called "AngelGate," including alleged leaked emails and Twitter fails appears to indicate that the situation is more substantial than I thought. As a result, I'm forced to do something unusual--write a blog post without making any jokes.

I've co-invested with Ron Conway; I've co-invested with Dave McClure. I've always felt that both of them have entrepreneurs' best interests at heart, and work hard on their behalf.

If this "AngelGate" represents a rift between them, this is bad news for the entire ecosystem. The last thing any of us--angel, VC, or entrepreneur--need is a conflict that will get in the way of what we're all trying to do: Create great products and build great companies.

I'll admit to enjoying what I thought was a fake publicity stunt; if it has turned suddenly real, I feel guilty of contributing to the sideshow.

This is Silicon Valley, not Monday Night Raw. Let's leave the chair-throwing and double-crossing to Vince McMahon, and get back to work.

P.S. And if this is a publicity stunt, this time you really took it too far guys.

It's fun to generate faux controversies and rack up pageviews and comments, but not when it impacts people's reputations and relationships.

I thought we ran Valleywag out of town for a reason.

Tuesday, September 21, 2010

Yes, There Is A Superangel Conspiracy.



I have a confession to make.

There is an angel conspiracy.

It dark, it is devious, and it is far-reaching.

The conspirators number amongst them many of the top people in the Valley, including angels, VCs, lawyers, and yes, even journalists.

We have joined together despite our differences and conflicts for a single, sinister, self-interested purpose.

To get your attention.

* * *

When unraveling any crime, you should always follow Deep Throat's first principle: Follow the money.

Words may lie. Deceptions abound. But the money trail leads inevitably and inexorably to the truth.

And the truth is that we've all conspired together in the rise of the superangels for our own selfish reasons.

The motivation on the part of the superangels should be fairly transparent to all--the more attention they get, the more they benefit, both in terms of dealflow and the ability to raise funds from limited partners.

Don't think its a coincidence that the increased focus on angels was followed almost immediately by many of those same angels raising small venture funds.

The motivation on the part of VCs is a little subtler; the supposed Superangel vs. VC conflict (which I freely admit I played a part in promoting) provides cover for the fact that for the most part, angel investing activity helps venture capital by creating more companies that will eventually require VC investments.

The increase in funding and company formation also helps entrepreneurs (who have access to more capital) and service providers (who have more potential customers).

Finally, some of the most eager participants have been the journalists. As the old saying goes, "If it bleeds, it leads." Nothing generates pageviews like conflict and scandal. TechCrunch has been profiting from these manufactured kerfuffles more than anyone. TechCrunch was the first to promote the superangels; now it's the first to turn on them.

Yet the part about this conspiracy that should scare you the most is that even this backlash IS ALL PART OF THE MASTER PLAN.

What could generate more pageviews than tantalizing rumors of a shadowy conspiracy? Heck, what is this essay but yet another blatant attempt to capitalize on the American public's never-ending appetite for TMZ-like scandal?

* * *

In the end, the claims of a superangel conspiracy don't pass the Deep Throat test. TechCrunch reported that ten prominent superangels met in San Francisco to collude in driving down valuations, shutting out VCs and new angels, and quashing the use of convertible notes.

Mike Arrington stirred up the controversy (masterfully, I might add--I admire the work of a true virtuoso!) by using some key buzzwords: Collusion (and its hint of corrupt, smoke-filled rooms), and saying that the group accounted for "nearly 100% of early stage startup deals in Silicon Valley."

The truth is, both of these claims are laughable.

Even if the top 10 superangels wanted to collude (and knowing many of the folks who might appear on such a list, I doubt that any of them would participate in something they felt unethical), they lack the market power to do so.

When Major League Baseball's owners colluded on player salaries in the 1980s, it was easy for them to maintain control of the cartel since they had a monopoly, and only needed to control the actions of the 24 different owners.

Superangels simply don't have that kind of power.

Let's assume that each of the 10 alleged conspirators possessed a $50 million fund (which I guarantee is not the case). That's $500 million in total funds. Assuming those investments were spread over 5 years, that's $100 million per year in investments.

If the conspirators contributed $500,000 to the average seed round, that's still only 200 deals per year.

The SBA estimates that there are about 500,000 angel investors in the United States, and that they invest about $20 billion per year.

The alleged conspirators only represent 0.5% of the annual angel investing activity in the United States.

Even if we assume that Silicon Valley seed rounds only account for 10% of angel investing in the US, the pot controlled by the alleged conspirators only represents 5% of the local market.

I'm not saying that angels don't wish that valuations are lower (I certainly do). But there simply is no way that such a conspiracy could be effective, given the economics of the market.

As Deep Throat would say, "Follow the money." And in this case, the money leads to one inevitable conclusion: We are all part of the superangel conspiracy.

Monday, September 13, 2010

Is Social Media Marketing A Crock?

I recently had the pleasure of attending a dinner for startup VPs of Marketing. I had a great time chatting with peers and laughing about the unrealistic demands we all face. "Get me in the Journal and fill the pipeline--but don't spend any money."

The most interesting and worrisome aspect of the evening was the amount of time we spent talking about social media marketing. Almost every VP I talked with wanted advice on how to do social media marketing. (By the way, if you get a chance to invest in HubSpot, do it. It was the one tool everyone agreed you should buy. Dharmesh is going to make a mint.)

Why did they want to do social media marketing? True, curiosity was definitely a factor, but the consensus was simple: "Because of my board."

In boardrooms throughout the Valley (and presumably the world) board members are reading magazines and thinking, "Social media is the hot new thing. And best of all, it's free. Forget the as buys, we're going to Twitter our way to profitability!"

The problem with this picture of course, is that social media isn't free. It consumes the most valuable resource of any startup--the time of its staff. And by asking marketing leaders to focus on social media, boards and investors are undermining the very people they are trying to "help".

This is not to say that traditional marketing is a paragon of efficiency. As a startup tightwad, nothing drives me crazier than free-spending VPs of Marketing. But few real businesses can be built on social media alone.

Social media is a great tool that, in the hands of a talented practitioner, can multiply the effect of your marketing. (There's a reason I like companies like Conversely and VoteJet) But social media is an amplifier. It isn't the story. Marketers still need to tell great stories. And the current craze for social media marketing threatens to confuse the story with the means of telling it. With all due respect to Marshall McLuhan, the medium is not the message.

Saturday, September 11, 2010

Paragraph of the Day: Roald Dahl's Last Words

From an excellent New York Magazine profile of one of my favorite authors from my youth:

The endings of Dahl's stories are almost always surprising, even when we know the twist is coming. This talent, it turns out, applied equally to the author's own life. In a hospital, surrounded by family, Dahl reassured everyone, sweetly, that he wasn't afraid of death. “It's just that I will miss you all so much,” he said—the perfect final words. Then, as everyone sat quietly around him, a nurse pricked him with a needle, and he said his actual last words: "Ow, fuck!"

Thursday, September 09, 2010

Education Reform At Last?

"An Inconvenient Truth" represented a major shift in this country's thinking about global warming.

That documentary took climate change from a niche concern to one of the pillars of the green movement (which, incidentally, has subsumed the environmentalist movement--when's the last time you heard anyone talk about environmentalism?--yet another example of the power of re-branding).

Now, the same documentary maker, Davis Guggenheim, is back with "Waiting for Superman," and this time he's taking on the U.S. education system.



As this outstanding piece in New York Magazine explains, Guggenheim's film follows five children and their families as they await the results of a lottery. Win, and they win a slot in a charter school that promises a better education. Lose, and they are forced to attend their local public school.

The New York Magazine piece points out a number of fascinating things:

1) The villain of the movie is Randi Weingarten, the head of the American Federation of Teachers. Yet as the article points out, Weingarten is responsible for helping push through a number of major reforms--which she downplays. It may be that she uses fierce rhetoric and defiance to provide the air cover she needs to quietly work for reform.

2) While Obama has failed the test of bipartisanship in many respects (admittedly, with an opposition party that decided bipartisanship would not be beneficial), the article points out that in education, he has defied the Democratic party's traditional allegiance to the teachers' unions (which are some of its largest donors, along with trial lawyers). It probably helps that the unions backed Hillary Clinton in the primaries. (If I were petty, I would describe that decision as the latest in a long line of bad decisions by those unions. If I were petty.)

This was actually one of my biggest hopes for Obama's presidency--that like Nixon going to China, a Democratic president with actual backbone could bring out real change.

3) While there is much call for optimism, one statistic stands out and should scare the crap out of you:

"Whereas the best public-school systems in the world—Finland, Singapore, South Korea—recruit all of their teachers from the top third or better of their college graduates, in America the majority come from the bottom two-thirds, with just 14 percent of those entering teaching each year in high-needs schools coming from the upper third. And the numbers may be getting worse. According to a recent survey conducted by McKinsey, a meager 9 percent of top-third graduates have any interest in teaching whatsoever."

Of course, an economist would point out that this behavior is to be expected. Any job with low pay and advancement by seniority is unlikely to attract the best and brightest. That same McKinsey study found that switching to merit-based pay with compensation of up to $150,000 for top teachers would increase the proportion of top college grads going into teaching from 14% to 68%.

I've long despaired that educational reform would ever happen in this country, thanks to the teachers' unions (one of my favorite whipping boys, along with Barbara Ehrenreich and Hillary Clinton). That this day may finally be at hand is a tribute to all the reformers who have worked so hard, but also to the power of storytelling.

Friday, September 03, 2010

The Unstuffed Life



Charles Dickens once wrote, "Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery." Yet while many seem to understand this principle when it comes to money, far too few demonstrate such an understanding when it comes to time.

When it comes to one's time people generally subscribe to the belief that more is more. Whether it's the jam packed schedules of today's children, or the workaholic schedules proudly shared by famous tycoons, modern life revels in being busy.

Rather than the examined life, we seem intent instead on living the overstuffed life.

Yet quality is more important than quantity when it comes to how you live your life. By filling our calendars, we turn everything into a matter of scheduling. We rush to finish whatever we're doing, never pausing to enjoy or savor, because any break just means we fall further behind.

Why do everything if that means you cannot enjoy anything? For money? A friend lamented not going into hedge funds like his other friends so he could cash out and live the good life. I simply asked, "How many of your hedge fund buddies actually retired after they made their FU money?"

My friend thought for a moment and said, "None. They're all still working."

Doing too many things, even things that you love, leads to unhappiness. Do yourself a favor and unstuff your life.

Tuesday, August 24, 2010

The Secret To Being A Low Cost, High Quality Provider

I often tell people that strategy is about making choices. If I want to be more dramatic, I tell them that it's about making sacrifices. But regardless of how I say it, I firmly believe that trying to be all things to all people is the swiftest road to failure.

So how is it that I'm writing about the secret to being a low cost/high quality provider?

We usually think of these two characteristics as being opposites. Albertson's and Whole Foods are both successful, but you'd never mistake the one for the other. Trying to provide Whole Foods quality at Albertson's prices should be a recipe for bankruptcy.

And yet, there is Trader Joe's. Fortune has done a wonderful profile of the secretive company, which I encourage you to read and re-read.

Somehow, Trader Joe's manages to provide both quality and bargains. And the grocery chain does so despite paying its people some of the best wages in the business. Full-time clerks make $40-60K/year, and store managers ("Captains") make six figures.

The secret? Productivity. And you can make that same secret work for you.

Trader Joe's can afford to pay its people more because it generates *double* the per-square foot sales of hoity-toity Whole Foods.

Trader Joe's can afford to sell its goods for less because by eliminating brands and focusing ruthlessly on 1/1oth the number of SKUs as the average grocery story, it has enormous bargaining power with suppliers.

It doesn't hurt that to suppliers, Trader Joe's is easy to work with--they pay on time, they don't charge slotting fees, and they know what they're doing.

Everything about Trader Joe's is designed to maximize productivity--of people, of shelf space, of capital--and as a result, it can afford to pay well and sell high quality goods at low prices.

(Costco follows a similar model, but they didn't have a conveniently public article to link to!)

Okay, so maybe this works for grocery stores. But what about other kinds of companies?

Nucor, America's most successful steel company, has a famous saying: "We hire the best, pay them for the work of three men, and get five men worth of work."

The key is productivity.

PBworks competes with companies that are many times its size. Yet it is able to serve millions of users and win the business of enterprise customers because its team is so productive, it can out innovate companies 10X its size.

A great software developer is 10X as productive as an average developer. If you can hire and retain productive superstars, you can have your cake and eat it too.

In the end, the secret is simple. Increase your productivity. Use those gains to deliver higher value at a lower price. Watch your business grow. Lather, rinse, repeat.

Monday, August 23, 2010

What Connectivity Will $20/Month Buy In 2020?

Ten years ago, I paid $20 per month for dialup Internet access on my desktop computer. Today, I pay $20 for broadband access on a handheld computer that fits in my pocket, has enough battery power to last all day, and is vastly more powerful than my old tower.

What do you think personal computing will be like in 10 years? A straight line extrapolation would be gigabit wireless access for streaming HD3D straight to the retinal projector of my ring computer--all for that same $20 per month.

Thank you, Moore's Law, and thank you capitalism!

Don't Be Evil = Don't Inconvenience Me

Google took a lot of ribbing for adopting the "Don't be evil" motto. But with the recent revelation that Google has been working with Verizon to undermine Net Neutrality, many feel that Google has crossed the Moral Event Horizon into outright villainy.

I'm not smart enough to weigh in on the Net Neutrality debate. But I wonder whether anyone could ever possibly live up to "Don't be evil."

I think it's arguable that Google has always been evil--from stealing Overture's business model to killing off great product after great product (Remember Etherpad?), Google has always committed "evil" acts. But we let them get away with it because, as noted philosopher Homer J. Simpson once said of another of Itchy's comic deaths, "It's funny because it isn't me."

When Google promised to not be evil, we essentially interpreted that statement as, "We'll do things that you, the general public, agree with, like facilitating the piracy of TV clips."

Sure, Google may be in a dark conspiracy with Verizon. But their real crime, at least if the public were really honest, is threatening to inconvenience us when we download our free porn.

Saturday, August 21, 2010

Are Millenials self-absorbed punks, or are we just jealous?

Are Millenials self-absorbed punks, or are we just jealous? If I had a dollar for every story I read about today's coddled, entitled youth...I'd probably have enough money for a real blog design. In other words, the topic comes up a lot, usually from geezers like me. Just check out this lengthy article from the New York Times (plaintively titled, "What Is It About 20-Somethings?") that asks whether "Emerging Adulthood" is a valid stage of life, or simply another case of secondary affluenza.

I must admit that I've been tempted to whip out the punk label from time to time, but I'm starting to feel like it's largely a matter of jealousy.

I recently heard from a young fellow I know who apologized for taking a while to respond to one of my messages. "Sorry," he said, "I've been doing a lot of promotion for a blog post, and my boss was in a bad mood."

On the one hand, I sympathize with the boss, who is probably a geezer like me who remembers when young people who worked focused on their work, rather than on growing their list of Twitter followers. But on the other hand, if I had the same opportunities, would I behave differently?

When I was 21, my main concern after work was getting a date. Only professional journalists wrote articles, and it was a busy week if I spoke with more than five out of town friends.

Now, my 21-year-old friends have thousands of Twitter followers, hundreds of friends around the world, and have been building a personal brand since they were 12. Should I be surprised that they act differently?

One geezer's self-absorbtion is another Millenial's rational self-interest. Just as we no longer expect to marry at 15 and work in the fields until we die, who is to say that the expectations of youth are wrong or even undesirable?

Heck, I know that they are desirable, because I tell people all the time, "I envy today's youth." (More specifically, I envy Ben Casnocha, but then again, who doesn't?)

Sports may be the aspect of our society that is most obsessed with and protective of the past--just look at the interminable hand-wringing debates over steroids and baseball's home run records--yet even there, the envy comes out. As Charles Barkley put it, after hearing that Dirk Nowitzki was going to opt out of a $21 million annual salary to get an even bigger contract, "Mama, why did you have to get pregnant so young!"

Ultimately, "Because I didn't get to do it!" is an unconvincing argument for why today's youth should forgo opportunities we didn't have.

That being said guys, stop living with your parents. It's seriously creepy to bring dates home when Mom and Dad are sitting on the couch.

Friday, August 20, 2010

Chuck Jones and the Power of Scaffolding


I had the great pleasure the other day to see the Chuck Jones exhibit at the Academy of Motion Picture Arts and Sciences. Chuck Jones was a legendary animator who worked on the great Warner Brothers shorts starring Bugs Bunny, Daffy Duck, the Roadrunner, and many more. He also created the classic animated specials for "The Grinch Who Stole Christmas" and "Riki-tiki-tavi."

The entire exhibit is remarkable, including various films, scripts, sketches, and even one of Chuck's Oscars (it's bigger than I thought it would be). But what really struck me were the simple sketches he made, such as the one above.

Not only are they great works of art, they are a perfect illustration of the power of scaffolding.

When we see a great work, we often think of it as springing full-grown from the creator's mind, like Athena from the head of Zeus. Yet the real story tends to be longer, messier, and much more interesting.

Take a close look at Chuck's sketch of Daffy Duck, and notice how carefully he scaffolds the drawing with various lines to help him maintain proportions and draw the best possible picture.

Not everything that you do needs to be a part of the final work--in fact, you may want to sketch some things very lightly as you experiment--but your final work reflects every thing you've put into it.

For every final stroke, ten, a hundred, or even a thousand strokes of scaffolding have preceded it.*

(*In one art school class, a professor told Chuck that every artist had 100,000 bad drawings in them they had to get past before they could draw anything worthwhile. Fortunately for Chuck, he estimated that he had already done 200,000 such drawings--his father was an unsuccessful entrepreneur who bought pencils and stationary for each new venture; when the venture inevitably failed, he would turn the materials over to his kids and ask them to use them up as quickly as possible. Several of Chuck's siblings also went on to successful artistic careers.)

You could get a sense of Chuck's willingness to iterate by how little store he set on his in-progress drawings. Many of these priceless historical artifacts were covered with grocery lists, appointment times, and old phone numbers...as he worked, he scribbled down the things he needed to remember on whatever was on hand--including his character sheets!

Yet it is precisely that willingness to build and discard disposable scaffolding that allowed Chuck to create timeless works of art.

How can you apply the power of scaffolding to what you do?

Wednesday, August 18, 2010

Focus and Serendipity: You Need Both

Technology critics like Nicholas Carr often complain that the Internet is hampering our ability to think. Facebook, and even more so Twitter, exemplify this trend.

Back during the ancient days of my youth, when dinosaurs roamed the planet, and shortly after fire was invented, I would communicate with my Stanford friends over the summer by (gasp) writing letters. As hard as this may be for some of you to believe, I would sit down with a pen and paper, and write out a lengthy message, usually over several pages--hey, if you're going to go through so much trouble and pay $0.25 for a stamp (yes, stamps cost that little then), you might as well get your money's worth.

By doing so, I was tapping into an epistolary tradition that goes all the way back to antiquity, and one which still generates sales for things like "The Collected Letters of Edgar Allen Poe."

Today, however, I suspect that people keep in touch with their college friends via Facebook and Twitter, with short messages and quick quips being the rule of the day.

And while this enables more frequent and casual conversation, I can't help but feel some agreement with the Carrs of the world--something is being lost, and I don't think I'm going to feel the same satisfaction picking up a copy of "The Collected Tweets of Scobleizer." (No offense, Robert! You're a great guy, but you're no Edgar Allen Poe. Then again, what the hell did Poe know about social networking?)

What's being lost is focus. Want an example of the power of focus? Think about how much you get done when you're on a long plane flight.

The work conditions are awful--you're stuck in a cramped, far from ergonomic seat. The tray table bangs into your knees, and if you have a 14" laptop like me, it barely fits, even with my elbows glued to my sides. There's a constant drone of engine noise, punctuated by screaming babies and random announcements.

Yet I find that I can get more done on a cross-country flight than just about anywhere else.

The key is focus--that horrendous environment offers few distractions to tempt me away from the matter at hand. I'm literally belted in and unable to move, and the process of visiting the lavatory (without tampering or disabling the smoke detectors) is so arduous that I avoid it as much as possible. I have no choice but to focus.*

* This effect is so strong that I'm considering rigging up a closet as a workspace--just enough room to sit and work, no windows, no distractions. And cheap too!

And that is the truth behind Carr's argument. The Internet is a good thing. Having the collective knowledge of humanity a single search away is a good thing. Staying in touch with the people in your life is a good thing. But as my youthful letter writing and the cross-country flight effect demonstrates, sometimes constraints provide a discipline and motivation that choice does not.

But while Facebook and Twitter are bad for focus, they are very good at providing something else which is just as important: Serendipity.

Creativity and insight often come from the unexpected, and few things provide better raw material for serendipity than the massive firehoses of data that are our Facebook and Twitter feeds.

Through these tools, I can follow the activities of far more people than ever before. I've made tons of great discoveries through these tools. For example, if I hadn't set up a Conversely Twitter group for my HBS class, I never would have discovered that my old classmate Lindsey Mead has jettisoned the corporate world to focus on her writing, and is producing intensely introspective and fascinating work. After seldom speaking during our two years in school, we're now corresponding on a regular basis.

The same holds true for business as well. As my friend TK puts it, "I know that whatever I need to know or do, Chris has a contact that can help." I'm far from a professional networker. But as I've noted before, simply meeting and staying in touch with interesting people tends to produce good results. Serendipity + Persistence is a powerful combination.

And so we face a paradox; technology makes us smarter by providing more opportunities for serendipity, but technology makes us dumber by impairing our ability to focus.

As usual, the answer lies in Aristotle's Golden Mean. Both focus and serendipity have their place, and we need to take advantage of both by alternating between the two.

Friend and follow away on Facebook and Twitter, and let the stream of serendipity wash over you. But don't forget to book that flight to Singapore (or empty out that closet in the hallway) so you can refine the raw material of serendipity into something original and powerful through the application of focus. The two concepts should feed into each other as yin and yang to produce a whole that is greater than the sum of its parts.

Which reminds me...now that I've put in 30 minutes of focus on this post, time to hit Hacker News Daily for some serendipity!

Tuesday, August 17, 2010

The Happiest Man In Silicon Valley

I recently did a happiness interview with Gretchen Rubin. In case you didn't catch it, here is a link, and here are some of the highlights:

Q: Is there anything that you see people around you doing or saying that adds a lot to their happiness, or detracts a lot from their happiness?

A: The biggest thing that I see that detracts from people’s happiness is the tendency to compare themselves with others. But the subtlest thing that most people miss that detracts from their happiness is the tendency to "check the boxes" and half-ass things. As Yoda said, "Do or do not, there is no try." When you half-ass something just to say you did it, you’re putting yourself in a subservient mentality--"I have to do this because someone told me to." Decide what you want to or need to do, and then do it with all your power.

Q: Have you ever been surprised that something you expected would make you very happy, didn't--or vice versa?

A: When I introduced myself to people, and they asked me, "What do you do?" I would reply, "I am an unemployed bum." And that willingness to accept reality and acknowledge helped me recover both my happiness and my career far more quickly than anyone might expect.

Liked what you read? Read the entire article.

Why Admire LeBron? For Pursuing Happiness.

I've written at length about LeBron's unpleasant summer, but to be fair, I do want to point out a reason to admire LeBron. Here's an excerpt from an interview with a GQ reporter who followed LeBron around during "The Decision" process:

"[LeBron James] thrives, he's happiest, he does his best when he is surrounded by friends. He just didn't feel like that was happening in Cleveland. It seems pretty clear that Dwyane Wade and Chris Bosh aren't just the best talent he can surround himself with, but they're a combination of talent and friends. He's looking for camaraderie. That's the formula that has worked for him -- and the only one that has worked for him. And that comes out of his early childhood when he was completely alone in the apartment he shared with his mother, not knowing his father, not knowing when or if she'd come home. It seems to me these were formative scarring moments that created this need for constant intimate contact. It came across to me watching the documentary. It came across to me reading Buzz's book. And it especially came across to me when he was introduced to the fans in Miami with Wade and Bosh by his side. He's not just looking to win. He's also looking to be happy, and he's only happy when he's surrounded by people he cares for and trusts. He's at his best when he has his brothers in arms around him and he's at his worst when he's completely alone."

While there's a lot to criticize in how he implemented his decision, at its core, LeBron had the self-awareness to know what kind of situation would make him happy, and decided to prioritize the relationships that matter to him over money or his reputation. And that I cannot criticize.

VCs, Dipshit Companies, And Super Angels

There's been a predictable furor over the brewing feud between super angels and VCs, especially with folks like Mike Arrington fueling the fire by quoting a VC as saying, "An entire generation of entrepreneurs are building dipshit companies and hoping that they sell to Google for $25 million."

While I'm sympathetic to both sides (I have been fortunate to be involved in many VC financings, and I count both VCs and super angels as personal friends), and while I have stated that I think angel investing is going through a bubble, the fact remains that the super angel phenomenon is not just a fad, but rather a reflection of important structural factors.

The core issue is that the startup environment has changed. It used to be that the model was for companies to take VC, grow, and IPO after 4 quarters of profitable growth.

Then the dot com boom came and ruined it for everyone.

Today, IPOs are practically non-existent, which means that we all have to deal with the reality of smaller exits.

To a VC, many startups are "dipshit companies" because they can never get to a scale that will generate "VC returns"--defined as a 10X return on a $5 million investment that buys you 1/3 of the company. For that to work, you have to sell for at least $150 million ($5 million X 10 X 3) and probably more.

But for a founder with a majority stake, a $25 million exit is life changing. Hell, a $10 million exit is life changing.

Layer in the fact that VCs go for a home-run strategy that results in no money to the founder in a super-majority of cases, and it's no wonder that entrepreneurs are flocking to super angels like Dave.

One super angel I know put it to me this way: "I invested because I knew that in the worst-case scenario, Google would still buy the company for a few million just to get the founders as employees, which would allow me to make my money back."

Finally, the other reason why entrepreneurs are flocking to super angels is simple: They provide VC-style help without most of the BS. This distinguishes them from traditional angels, who provide very little help, and even more BS than the VCs.

In the old days, no one wanted to deal with angel investors. They were a pain in the ass, didn't get new business models, and were likely to cause more hassle than VCs. They were funding of last resort.

Today, super angels are the funding of first resort. They make decisions fast (in Dave McClure's case, after one meeting), they have great connections, and they don't tell you how to run your company. What's not to like?

Okay, so maybe a guy like Dave is pretty busy--a typical VC partner might have 10 active investments, Dave does that many per month--but if you follow him, you know that A) He never sleeps, and B) He's always there for his entrepreneurs.

Side note: Ironically enough, I ended up proposing what amounts to a Super Angel fund back in 2005: http://chrisyeh.blogspot.com/2005/10/confederacy-of-startups.html

Yet another case of my seeing the future and saying, "But enough about that billion-dollar idea, what's for dinner?"

Monday, August 16, 2010

There Is No Upside In Being A Jerk


The world is full of jerks. But it must be some kind of innate instinct, because there is no upside to being a jerk.

One of the first questions I ever responded to on Quora asked if being nice was an advantage for VCs. The consensus was that success trumps affability, and that entrepreneurs would rather take money from an asshole with the Midas Touch than an ineffectual saint.

But while folks seem eager to write off the benefits of likeability, they seem to overlook the utter lack of benefits for jerkiness.*

* There is one famed advantage of being a dick--at least a according to pick-up artists, who claim that putting women down is the key to making them more vulnerable to seduction. Or, as my friend Andrew (no slouch in the seduction department in his younger days) put it, "Chicks dig two things. Monet, and assholes."

Just because it isn't always a crippling disadvantage doesn't mean that superdickery is the secret to success. Unless you've got a darn good reason for being a jerk (beyond "I'm Keith Hernandez!") you'd be wise to opt for kindness.

Just this summer, we've seen two major figures, one from the world of sports, and one from business, whose jerk moves cost them dearly.

Before this summer, LeBron James was the most popular player in the NBA.

In a single one-hour TV special, he turned himself into the most hated figure in the game by breaking up with his hometown on national television and revealing himself as a raving egomaniac who was "taking his talents to South Beach," rather than simply "signing a contract with the Miami Heat."

In retrospect, perhaps the giant "Chosen One" tattoo he wore across his back was a warning sign.

When he replaced Carly Fiorina as CEO of HP, Mark Hurd was considered the anti-celebrity CEO, a guy who would place company ahead of self. And he succeeded magnificently.

When he took over, HP was a printer company with a languishing computer business. Today, HP is the world's largest technology company (ahead of IBM) with leadership in computing and services, while HP's profit and stock price have skyrocketed.

But in a shocking turn of events, Hurd was forced to resign after a scandal involving a sexual harassment lawsuit, erroneous expense reports, and an unprofessional relationship with a "consultant" who also appeared on a cougar-oriented reality TV show.

It probably didn't help his cause that personal friend (and famed philanderer) Larry Ellison leaped to his defense with a very public rebuke of the HP board.

The funny thing is, if you strip away the jerk behavior, LeBron and Mark Hurd's actions weren't enough to justify tarring and feathering.

LeBron was a free agent, and had a right to choose where to play. In going to the Miami Heat, he accepted less money and a lesser role in order to maximize his chances of winning a championship. It was the way he announced his decision--a true jerk move--that brought down the scorn of the nation.

Similarly, Mark Hurd was cleared of the harassment charges by an internal investigation, and everyone involved seems to agree that there was no sexual relationship. Rather, it was the sin of erroneous expense reports--for barely $20,000, a drop in the bucket in comparison to his multi-million dollar salary--that lead to his downfall.

I have no idea why LeBron and Hurd did what they did. I suspect that it was a mix of entitlement (how often does an NBA superstar or Fortune 500 CEO hear the word "No"?) and hubris ("I'm LeBron James!"). But I do know this:

1) Being a jerk didn't provide them with any real benefits

2) Being a jerk did lead directly to their fall from grace

So the next time you're tempted to indulge your inner Keith Hernandez, ask youself, "What's the upside in being a jerk?"