Saturday, April 23, 2011

Little Bets = Greatest Hits Of The 2000s

I've just completed reading Peter Sims' new book, Little Bets. I'll admit that I'm horrendously biased because 1) Peter is an old friend, and 2) he quotes me on page 75 of the hardcover edition, but I think that Little Bets is a great book.

(Apparently the world agrees; Amazon has 17 customer reviews for the book and each of them is a 5-star review)

The best way I can describe it is to say that Peter has done an outstanding job capturing nearly all the best ideas from the past decade and tying them together in a single, easy-to-read volume.

At first, I wasn't sure how much I'd learn from the book. After all, I've been steeped in these ideas for decades. I *was* a Stanford product design student before the term "design thinking" became popular. I was privileged enough to hear a lecture from Jim Collins *before* he wrote Built To Last, and I actually interviewed both Clay Christiansen and Hank Chesbrough when I was writing for the student paper at HBS, where I was also in the same section as Fran Johansson.

In other words, if all Peter had done was collect together ideas from other thinkers, I'd be the perfect reader to call BS. (Confession: If I hadn't liked the book, I would simply have avoided giving it a review or blogging about it. Call me an intellectual coward, but I'd rather remain silent on a book than hurt a friend's feelings.)

But Little Bets is so well-written that it transcends summary and becomes a true synthesis of ideas. Here's an example--take a look at the table of contents for the book:
1. Big Bets Versus Little Bets
2. The Growth Mind-set
3. Failing Quickly to Learn Fast
4. The Genius of Play
5. Problems Are the New Solutions
6. Questions Are the New Answers
7. Learning a Little from a Lot
8. Learning a Lot from a Little
9. Small Wins
10. Conclusion
Each chapter covers a single key concept, and each concept flows easily into the next. And while many aspects of the book seem Gladwellian (a focus on anecdotes, wide ranging examples from standup comedy to counterinsurgency), Peter's authorial voice is restrained and elegantly spare, which make personal touches even more effective--like the example of how a conversation he had with the late, great Tim Russert (a family friend) led to Russert being the first TV journalist to get Barack Obama to acknowledge his interest in running for the presidency in 2008.

The cherry on the sundae is the great care Peter takes with the conclusion and the "Further Reading and Resources" section. As you may know, I often write outlines of the books I read; I find it's hard to remember the salient points without a concise summary.

I'm not going to bother for Peter's book. His table of contents and conclusion do the job for me. Here, for example, is a brilliant paragraph from the conclusion that summarizes the book:
Invention and discovery emanate from being able to try seemingly wild possibilities and work in the unknown; to be comfortable being wrong before being right; to live in the world as a keen observer, with an openness to experiences and ideas; to play with ideas without censoring oneself or others; to persist through dark valleys with a growth mindset; to improvise ideas in collaboration and conversation with others; and, to have a willingness to be misunderstood, sometimes for long periods of time, despite conventional wisdom.
On top of that, his "Further Readings and Resources" is better than any I've read. He lists 42 different books, complete with a one-paragraph explanation of each, as well as as 13 Twitter feeds to follow. Half of the books he lists are books I've read, almost all of which I consider classics. The other half will be jumping to the top of my list of books to read.

I don't buy a lot of books. In fact, one of my strangest and most distinctive habits is that I almost always buy a book after I've read it (my reasoning is that I should only buy books I *know* will be worth it). While I received a free review copy of Little Bets, I wouldn't hesitate to buy a copy for any friend who wanted a masterful introduction to the world of innovation and ideas.

Friday, April 22, 2011

If you don't have time to explain, you're not decisive, you're unfocused

One of my pet peeves when it comes to management is when someone tells me, "I'm sorry, but I don't have time to explain."

When that happens, I think that person has been watching too many action movies. If you're on the run from a secret government conspiracy, you probably don't have time to explain your actions. But the same doesn't usually apply to your upcoming marketing campaign or product release.

In the startup world, it's rare to have assembly line workers who are just supposed to do as they're told. (as a side note, the Toyota Production System has already proven that even assembly line businesses are better off with engaged workers who focus on process improvement)

We hire smart people, and give them a lot of freedom. That's one of the main reasons that startups run rings around their clumsy competitors. But the only way people will be able to contribute is if you give them the big picture.

Conveying the big picture takes explaining, which takes time. And because speed is so important, we often begrudge this time. But skipping explanations is a false economy.

Skipping explanations will put you in a death spiral of micromanagement. The less you explain, the more you will have to specify future actions. Eventually, you simply run out of time (and employees).

If you feel like you don't have time for explanations, that's probably a sign that you're unfocused. Get a few crucial things right, make sure your entire team understands those things, and rely on their judgement to get the lesser things right.

Tuesday, April 19, 2011

After the Fire

One of the best times for seeds to grow is after a forest fire. There's plenty of nutrient-rich ash and daylight.

The same principle applies to startups. Many times, you can find great opportunities in the wake of spectacular flameouts. Palm revolutionized handheld computing after the spectacular failure of Go. Zappos built a billion-dollar business after other dot bombs like eToys flames out.

What space do you think represents fertile ash today? Solar? Twitter clients?

Monday, April 18, 2011

Twitter's Dark Side

Because Twitter is perfect for crack-like bursts, it becomes all too easy to procrastinate the things that require more time. How many times have you told yourself you'd just check your feed for five minutes...and found yourself shaking your head an hour later?

On the other hand, if you do have the willpower to put down the crack pipe--er, Twitter client--and work on more substantive issues, you can stand out from your weaker-willed peers.

Sunday, April 17, 2011

Does Social Media make people miserable?

One of the unexpected effects of the rise of social media may be its impact on the perception of inequality.

We know that the perception of inequality can have a negative effect on happiness. Comparing oneself to others is a potent and dangerous temptation. Indeed, studies show that most people would prefer a situation in which they earned less money, but were better off than their peers than one in which they earned more on an absolute scale, but less relative to their peers.

When I was in business school, I speculated that this effect caused a lot of unhappiness. Rather than celebrating their incredible good fortune, far too many of my classmates would compare themselves to the titans of industry they read about and conclude that they could never measure up. Just because you're unlikely to match the accomplishments of a Jeff Bezos doesn't mean you should beat yourself up and call for the Prozac.

Now social media might be having this effect on everyone, not just MBA students with excessive self-regard. One of the things that has made Twitter so popular is the ability to access the (ostensibly) unfiltered thoughts of the rich and famous. We feel closer to our favorite athletes and entertainers (or in the Valley, entrepreneurs and VCs). In many ways, we feel like we have a personal relationship.

In one sense, this access has a democratizing effect, much like the popular tabloid practice of running unflattering photos of starlets shopping at the local Costco. But it also has the effect of making the rich and famous feel more like peers. And if they feel more like peers, we're more likely to use them as a basis for comparison.

It used to be that people would compare themselves to other people in their neighborhood or town. And while there's bound to be a successful car dealer or a popular local teacher, at least we could realistically aspire to similar levels of success. Athletes and Hollywood celebrities were like far-off deities. Now, that distance has vanished, causing many to wonder, "If Snooki can be rich and famous, why aren't I?"

By encouraging less realistic comparisons, social media could end up making people less happy and well-adjusted.

But the answer isn't to ban Twitter and Facebook. They're just the disease vector.

Rather, we must learn to avoid pernicious comparisons and focus instead on the intrinsic motivations that can bring us true happiness.

Raise Money Now!

I've been saying quite a bit privately, but I think it's time to say it publicly:
If you are an entrepreneur, raise money now.
It's never easy to raise money. People who say, "It's easy to raise money," usually neglect to mention the second half of the sentence, which is "if you are in a hot space, know the right people socially, and fit the Silicon Valley central casting notion of an entrepreneur (20something white or Asian male with an engineering degree from a prestigious university)."

Nonetheless, it is easier to raise money for a startup right now than throughout 99.999% of history. Thanks to the angel boom/bubble, there are numerous sources of seed financing, ranging from incubators to seed funds to plain old ordinary angel investors.

When I raised money for my first company in 1999, the only way to find angel investors was to network like a maniac. You just sort of heard about people who made investments, and the only way to get to them was via a personal introduction.

Today, a company can go on AngelList on Friday, and have a seed round wrapped up by Monday. I'm exaggerating, but only a little.

And while I think the current bubble (and the associated premoney valuation standard) is unsustainable, the amounts being raised in seed rounds simply isn't large enough to cause valuation problems down the line. If you raise $500K, even if you have to do a down round later on at a much lower valuation, the dilution will be minimal.

By the way, the last time I told entrepreneurs to raise money now? Early 2008.

When in doubt, steal

When in doubt, steal--see what others have done to be successful and learn from them.

In "Stumbling On Happiness," Dan Gilbert wrote about how humans overestimate their uniqueness. The best way to predict if something will make you happy is to ask a perfect stranger who did the same thing.

The same principle holds true for work. People have a strange tendency to start from scratch. To heck with that. The best way to be successful is to emulate* what someone else did.

If you're not influenced by what's worked in the past, you're not original, you're dumb.

* The art lies is figuring out the right twist. Obviously I'm not suggesting that you copy someone else exactly--that's both illegal and dumb. As Mark Twain said, "History doesn't repeat itself, but it does rhyme."