Tuesday, January 11, 2011

Competence Kills

Competence isn't a bad thing, but it's no longer enough.

Maybe there was a time when you could build a successful life based on "pretty good." But those days are gone, along with three martini lunches and wearing hats all the time.

Pretty good works in a stable environment because of the principle of leverage.

In finance, if an asset guarantees pretty good returns, you can lever up your investment with borrowed money to generate outstanding returns. Of course, if the returns go south, the leverage will also generate disastrous returns--witness the housing bubble.

The same applies to hiring in business. If you know that each person you hire will generate so much in increased value, you can hire a lot of pretty good people and boost the value of your firm. But just as with the housing bubble, if the returns on people suddenly drop, you'll experience the downside of leverage.

Environments today are more volatile (read: unstable) than ever. And in a volatile environment, you're better off with either amazing or awful than with pretty good.

That's how the VC model works--we don't invest in pretty good companies and hope they'll generate pretty good returns; we invest in potential game-changers that will either blow up (in a good way) or blow up (in a bad way).

You're better off focusing on being amazing at a few things (and be willing to live with being awful at others) than trying to be pretty good at everything.

There's a reason why NFL kickers don't bother practicing their tackles--I'd rather have the world's greatest kicker who's a bad tackler than a pretty good kicker who can really lay someone out.

The funny thing is, this is such a universal principle that it applies to dating as well. The folks at OK Cupid have conducted an analysis that shows that having men think you're "cute" actually reduces the number of men who approach you. It's much better to have 7 men rate you as a "10" and 3 as a "0" than to have all 10 rate you a "7". As a result, your goal shouldn't be to maximize your average attractiveness--it's to maximize your differentiation. Here's what the authors of the study had to say:

As you've probably already noticed, women with tattoos and piercings seem to have an intuitive grasp of this principle. They show off what makes them different, and who cares if some people don't like it. And they get lots of attention from men.

Substitute your startup for that hypothetical 20something with a tramp stamp and ask yourself, "Where can we focus our efforts to be amazing? Where can we defocus our efforts and live with being awful? And why do men like nose rings so much?"

Monday, January 10, 2011

Why I'm 10X As Influential As Ashton Kutcher On Twitter*

It's all a question of influence intensity.

Of course Ashton Kutcher can influence more people than I can--he has about 2,500 times as many Twitter followers. But I have more influence over my average follower than he has over his.

The average Ashton Kutcher tweet generates 12,500 clicks on Bit.ly--that's quite a bit of influence.

Meanwhile, the average Chris Yeh tweet generates only 50 clicks on Bit.ly.

But notice--while Ashton has 2,500 times as many Twitter followers as my meager 2,874, he only generates 250 times as many clicks.

In other words, I'm 10 times as influential for my followers as Ashton Kutcher is for his.

Now all this might seem like a casual exercise in linkbait (which it is) and semantics (which it is). But there's an important point here.

Do you think it's easier to get 250 people like me to tweet about your company/cause? Or to find a way to get to Ashton?

In the world of Twitter influence, we get so wrapped up in the big numbers that we may neglect the small ones which actually give us a better chance to drive meaningful results.

(My post was inspired by this post from my friend Miguel, who actually *did* manage to get a tweet from Ashton Kutcher. Go Miguel!)