Saturday, May 18, 2013

Want better support? Then make that part of your buying criteria.

I was very entertained when I read a recent blog post complaining about the crappy customer service you get from big internet companies.  The writer titled it, "Hey internet giants, you're no longer startups, get some customer service."
http://bit.ly/17LtbMC

I was entertained for two reasons.  The first is that it's quite possible for a startup to provide great customer service.  JP Etcheber, who runs customer support for us at PBworks, manages to support millions of free users and thousands of corporate customers with a team of three (highly dedicated) people.  If you build a good product, and commit to supporting it, even startups can provide good support.

But the other thing that entertains me is the fact that the same people who complain about poor support are the same people who won't pay an extra dime for better support.

Let's say you use Gmail for your email.  When something goes wrong, you might curse Google's name.  But you're not likely to find a commercial email provider.  In fact, there are no commercial email providers!  Why?  Because we're too damn cheap to pay for what is probably the single most critical online service we have.

Enterprise customers have long understood this; they're willing pay enterprise software vendors because they know that there is a throat to choke.  In fact, they know that startups might provide better support--at their scale, a single customer is far more important.  It's less likely they'll simply tell a customer to pound sand (which seems to be Google's standard practice).

At one point, I was spending $250K/year with Google, but that wasn't enough to get me a telephone support number.  You can bet that a smaller startup would be happy to give you their founder's cell phone for that amount of money!

The fact is, consumers don't value support, which means companies don't bother to provide it.  If you want that to change, you need to change your buying habits.

Forget long hours, work intense hours (H/T @rahimthedream @awesomeculture)

When I younger, I prided myself on my tireless work ethic.

When I was in high school, I worked like a maniac to set a meaningless record for earning extra credit in my English classes.  Trust me, I was already going to get an A+; all that extra credit was purely for ego purposes.

When I was at Stanford, I found a clever loophole in the registration software that let me take classes for fewer credits than they were worth.  As a result, I was able to take the equivalent of 30 units of classes per quarter (the official limit was 20, and you were supposedly only allowed to go over if you applied for a special one-time dispensation).  I did this my entire junior year (Stanford fixed the loophole my senior year) in addition to doing improv comedy and working as a peer counselor and writing tutor.  I gleefully filled out my paper planner with endless boxes to tick off, and was pleased that I was constantly busy.

When I worked at D. E. Shaw & Co., L.P., I worked 70 hour weeks, and would go into the office on weekends regularly (it helped that it was air conditioned, full of snacks, equipped with high-speed Internet access, and 2 blocks from my apartment).  I thrived on praise from my managers.

I mention all this to show that a) I'm not opposed to hard work, and b) that it's possible to work insanely hard for long periods of time without negative consequences.

But, and this is a big but, all this happened before I met my wife.  And way before I had my kids.  70 hour weeks worked for me because I enjoyed my work, and because I didn't have anything better to do.

Once I did, I came to realize that while long hours can help your productivity, intense hours are a far better approach.

For far too many, long hours are a cargo cult approach to productivity.  Just because you're in your seat, doesn't mean you're productive.  The constant Facebooking, tweeting, Instagramming, Tumblring, and other -ings are a continual distraction, as is checking your email.

I learned the power of focus when I was taking care of my kids in my office at work (an unusual but highly educational experience). Whenever Jason or Marissa went down for a nap, I went on a binge of productive work--thrilled to be able to type with both hands on the keyboard and both eyes on the screen.  I thought I had been productive during my Stanford and D. E. Shaw days; I had no idea what per-minute productivity was until I became a primary childcare provider!

Working long hours makes people feel productive.  But do you know what's even better?  Being productive.

P.S. For more on how I keep myself productive, check out my post on the Pomodoro technique:
http://bit.ly/113I6sO

P.P.S. This post was inspired by this Michael Simmons article in Forbes, which quotes my friends Rahim Fazal and Dave Kashen:
http://onforb.es/13wCKbD

Why I hate acquihires (unless I'm doing the selling)

The always insightful Mark Suster recently tackled the subject of acquihires--the practice of large companies buying small startups simply to acquire their people.  Mark lays out an excellent argument for why the acquiring companies are actually losing out when they make acquihires:
http://bit.ly/10Cn0WP

"You have been at Google, Salesforce.com, Yahoo! for years. You have worked faithfully. Evenings. Weekends. Year in, year out. You have shipped to hard deadlines. You’ve done the death-march projects. In the trenches. You got the t-shirt. And maybe got called out for valor at a big company gathering. They gave you an extra 2 days of vacation for your hard work.
And that prick sitting in the desk next to you who joined only last week now has $1 million because he built some fancy newsreader that got a lot of press but is going to be shut down anyways.
What kind of message does that send to the party faithful who slave away loyally to hit targets for BigCo?
I’ll tell you what is says.
It says if you want to make “real” money  - quit."
I couldn't agree more.  Acquihires create incentives for a host of undesirable behavior.  It's not just the fact that you're encouraging people to quit--it's also that you're sending the message that the hard work of serving customers in a real business--what creates the actual value in the economy--is a job for unambitious suckers.  Far better to focus on building sexy demo products and collecting an acquihire bounty.

But there's an even worse problem--acquihires contribute to the startup industry's problems with truthiness.  Every time I see an acquisition announced on TechCrunch, it's full of compliments and congratulations.  Yet the simple fact is that unless a price is announced, the acquisition is just an easy way for investors and entrepreneur to sweep failure under the rug.

Many people would be amazed to learn how many "successful" people are actually failures, at least in terms of the return to their investors.  But investors have no incentive to disrupt the game--investing in failures hurts your reputation and your fundraising.  Better to keep quiet and play along.

The result is that our entire culture is built on evading the truth.  We like to criticize the financial services industry for dishonesty, yet we're guilty of much the same.

That being said, I've signed off on a number of acquihires of my portfolio companies--better to get something back, rather than lose all the money.  I guess my honesty has a price too!

The best way to harvest value is to create it

These days, many people have a negative view of business.  Think of Occupy Wall Street, for example.  That negative view is even starting to impact the startup world.  I'm seeing more stories about how so many startups are creating me-too products that don't solve real problems.

There is a solution to this negative view, and curiously enough, it's also the best road to profits.

I firmly believe that the best way to harvest value is to create it.

And there's even science behind it.

Professor Adam Grant of the Wharton School has a new book out, "Give and Take."  Grant's research shows that contrary to our belief that nice guys finish last, the people who focus on giving do better financially than those who focus on taking:
http://bit.ly/10ZjJCs

"Grant: In one of my own studies, hundreds of salespeople completed a questionnaire on their commitment to helping coworkers and customers, and I tracked their sales revenue over the course of a year. I found that the most productive salespeople were the “givers”—those who reported the strongest concern for benefiting others from the very beginning of their jobs. They earned the trust of their customers and the support of their coworkers. Similar patterns emerged in a number of other fields, and before long, I had many data points showing that the most successful people in a wide range of jobs are those who focus on contributing to others. The givers often outperform the matchers—those who seek an equal balance of giving and getting—as well as the takers, who aim to get more than they give."
The key is that human beings have evolved as social creatures.  We aren't purely Homo Economicus, always maximizing for short-term gain.  Evolution has shaped us to collaborate with our fellow man--and to punish those who cheat.  In lab tests of "The Ultimatum Game," one subject is given $10 and told to offer as much or as little as he wants to the second subject.  The second subject then either decides to take the offer or reject it.  If he rejects it, both subjects get nothing.

Economically speaking, it's irrational to reject any offer above $0.00.  But subjects consistently reject any offer less than $2.50.  We believe in fairness so much, we're willing to hurt ourselves to enforce it.

Occupy Wall Street and startup critics are about fairness.  Few begrudged Steve Jobs his wealth because he created even more value for his customers.

Seek first to give (create value) before you take (harvest value).