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One lender uses sophisticated algorithms--and any online dirt it can find about your company--to determine credit risk.
The amount of stored digital information that companies, researchers, and others can mine is growing exponentially and is nearly impossible to fathom. In the book Big Data: A Revolution That Will Change How We Live, Work and Think authors Viktor Mayer-Schönberger and Kenneth Cukier maintain that in 2013 the world's collection of data amounts to around 1,200 exabytes. "If it were placed on CD-ROMs and stacked up, they would stretch to the moon in five separate piles," say the authors. "The amount of stored information grows four times faster than the world economy, while the processing power of computers grows nine times faster."
What does this have to do with you and your company? A great deal if you want to get a loan.
The Big Data Back Story
Every digital act you make is stored--think Tweets or Facebook likes or what you buy on Amazon or what you search for on Google not to mention your online bank account, your credit card transactions, and even where you are based on your cellular transmissions. An interested entity with the resources to do so can create profiles that pretty accurately portray who you are as a person.
For small businesses it's the same thing. Your digital cash flow, whether or not you've had property foreclosed upon, what others are saying about your company online and more can be tracked, aggregated, and analyzed so that conclusions can be drawn.
Mayer-Schönberger and Cukier talk about how the ability to analyze billions of data points instantly has huge implications for society. There are cool things like Google's ability to show in real time where the flu is breaking out based on the terms people use when they search the Internet. But big data also ushers forth not-so-great implications, such as the fact that privacy is pretty much dead in the water.
Prediction is another side of big data, one that's either injurious or invaluable, depending on your perspective.
"[A]lgorithms will predict the likelihood that one will get a heart attack (and pay more for health insurance), default on a mortgage (and be denied a loan), or commit a crime (and perhaps get arrested in advance)," they write.
Getting a Small Business Loan
"Minority Report" and "Person of Interest" foreshadowings aside, one company says it's using big data to help small businesses.
If you own a restaurant, auto repair shop, nail salon, dentist office, or any kind of Main Street small business, borrowing money from a bank can be tough. After the recession many of them largely stopped issuing small business loans so if you need money to buy equipment or inventory it means either taking out a personal loan based on your FICO score or using a credit card.
There's another option, and one that's growing in popularity with both business owners who need a loan as well as big shot VCs who want in on the action.
New York-based start-up On Deck looks at a company's digital footprint--things like bank transactions, public records, and social data such as the kinds and frequency of reviews on sites such as Google Places, FourSquare, or Citysearch--to figure out how much risk is involved in issuing a loan.
According to On Deck CEO Noah Breslow, his 6-year-old company has delivered around $500 million in capital to thousands of Main Street businesses across hundreds of industry verticals.
"We've built a platform that aggregates all that data so in some cases we integrate with different providers of data and in other cases we go out and actually harvest that data itself from the Internet because it's publicly out there but you need to extract it, aggregate it, and get it into usable form," he says. "Then when a business owner applies, we collect as much data as possible on them from all these different sources and use that to make a very efficient lending decision usually within minutes after the customer applies."
Such efficiency is one thing that led Google Ventures to invest $17 million in On Deck last month along with PayPal co-founder Peter Thiel as well as previous investors including SAP Ventures, RRE Ventures, and others that altogether have thrown $93 million into the company.
According to Google Ventures General Partner Karim Faris, what On Deck is doing is quite different from how traditional banks underwrite loans.
"It's unique in both the data signals and data analyses that they take in and also really more mundane stuff like the process they use to underwrite loans," he says. "The ability to get it done within days versus weeks or months is actually no small feat and a significant benefit to the business. If you can get a loan within a few days versus months that could be the difference between life and death for a business plan."
But Does It Work?
The numbers say so: Breslow says On Deck has achieved 117 percent compound annual revenue growth since 2007, will double its employee head count to 300 by the end of year and is opening branch offices nationwide.
Breslow says On Deck's credit scoring algorithms are on their fourth generation. Part of the magic of its intellectual property involves how it is able to factor in the intricacies of individual verticals.
"We [are] underwriting 700 different industries that we have in our loan portfolio so we have to understand how a doctor is different than a restaurant and how that's different than a plumber or how that's different than a light manufacturer. They're all different kinds of businesses with different credit profiles, different cash flow, different margins," he says.
Breslow says On Deck loans are typically three to 18 months in length, require at least one year of business history, and are ideal for businesses that have a lot of small transactions. They're less than ideal for contractors or consultancies that don't get paid frequently or for tech start-ups or other companies that are focused on R&D.
Most small business owners believe digital theft won't happen to them. They're wrong.
Could your company be putting customers and employees at risk of identity theft? Most small business owners would answer no. They'd be wrong. "In general, we see a sense of invincibility among small business owners," says Matt Cullina, CEO of Identity Theft 911, which provides identity theft prevention and recovery services. "They know data breaches are happening, but they don't think it's going to happen to them."
Of course, small business owners also face another challenge: With money tight, and simply keeping the doors open a top priority, many feel they can't afford to invest in data security even if they want to. That's a perfectly legitimate concern. But the good news is there are things small businesses can do to up their data security without much expense. Start with these four steps:
1. Don't store more personal data about employees or customers than you need.
Most companies view data as an asset, which it is. But it's also a liability, Cullina says. If your security is breached and an outsider gets access to your customers' or employees' data, every bit of personal information you have--names, addresses, birth dates, place of birth, and so on--makes it easier for a hacker to sneak into their online accounts.
"A lot of times we collect information just because we can," he says. "Don't take in sensitive data unless you absolutely need it to run the business. And have a destruction policy for when you don't need it anymore."
2. Train employees to treat personal data appropriately.
Though the risk of employees stealing or misusing data is something to watch for, the biggest cause of data breaches is simple error by people who meant no harm, Cullina says. "Simple training would have saved those companies a lot of embarrassment," he adds.
The idea is to teach employees to treat customer and employee personal information as a valuable asset and protect it in much the same way they might protect your company's bank account access or trade secrets. "Make your employees stewards of that information," Cullina advises.
3. Talk with vendors and contractors about how they protect your data.
"Any kind of support people--website designers, people who set up payment processing--all those connection points can create vulnerabilities," Cullina says. One small business he worked with suffered a devastating data breach in which all employee data was exposed, including Social Security numbers. When Identity Theft 911 staff analyzed the breach, they discovered that the company had outsourced its IT to a vendor who did not keep it secured by updating passwords and malware protection. Eventually, a hacker got inside the company's network.
"The IT provider said that they didn't know the small business wanted that updating service, which would have cost extra," Cullina says. You need to either let vendors know that you expect them to provide data security--or make sure to provide it yourself. If everyone thinks someone else is minding the store, bad things happen.
4. Consider using encryption.
"Most data breach laws and regulations include best practices for managing data," Cullina says. "The No. 1 item--other than having firewalls in place--is encrypting data any time it leaves your company." In fact, he says, if you suffer a data breach but the data is encrypted, you likely won't have to go through the legally required notification to customers. "It's a key get-out-of-jail-free card," he says.
Getting data encrypted may not be as hard as you think, he adds. In today's market, encryption vendors may be able to provide products that can simply be added to your email applications. "It's not as complicated or expensive as it used to be," he says.
We all need to reinvent ourselves regularly. Here's how I suggest new grads--or anyone--go about it.
On May 23, I had the honor of delivering the convocation keynote at my alma mater, San Jose State University, for the Department of Journalism and Mass Communications.
Unlike most graduation speeches, mine wasn’t esoteric or philosophical. I didn’t tell the graduating seniors to follow their dreams. Nope. I told them what they--and their tuition-paying parents--really wanted to hear: how to get a job. I shared practical job and career strategies I’ve seen work thousands of times. The full transcript, and a video, of the speech is here.
My tips aren’t just for college grads. We all need to regularly reinvent ourselves, no matter our industry or level of experience. Best of all, these tips come without a tuition fee.
1. Go out on a limb
In my college senior seminar class, we prepared for the real world by writing a cover letter and resume for a hypothetical job. I found a marketing coordinator position that requested three to five years’ experience, but I’d only done a single summer internship. I sent my cover letter and resume anyway. Surprise! The company hired me part-time while I was still a senior, and then full-time after graduation. For my fellow students, it was a 15-point assignment. For me, it was the beginning of a career in Silicon Valley.
The takeaway? Apply for everything. It costs nothing. Job descriptions are wish lists. And companies love people who are willing to put themselves out there.
As former President Jimmy Carter says: “Go out on a limb. That’s where the fruit is.”
2. Answer the frickin’ door!
Two years ago, I was asked to speak at a Student Leadership Conference, and made an offer to the audience. If a student would give me his or her name, email and major, I’d match him or her with a professional mentor from my personal network. For free.
One hundred students gave me their info. My team and I matched each student with professionals in similar career fields. We sent each student his or her mentor’s contact information and told them they were responsible for initiating contact.
Out of 100 students, how many do you think followed up with their mentors?
Everyone wanted the golden ticket-;but nobody bothered to unwrap the Wonka bar. How many golden tickets do you think you’ll get in your lifetime? It doesn’t matter how busy you are. Or how intimidated you may feel. When opportunity knocks, answer the frickin’ door!
3. Make a sweet impression
My son, Adam, attends college in Los Angeles and wants to break into the entertainment industry-;along with everyone else in L.A.
In his freshman year, a Hollywood producer spoke to one of Adam’s classes. Afterward, Adam walked and chatted with her-;and learned they’d both worked at Baskin-Robbins and shared the same favorite ice cream flavor: peanut butter & chocolate.
The producer promised to connect Adam with a friend who owned a Hollywood talent agency for dancers and choreographers. He emailed to follow up and she kindly made the introduction. Adam got the unpaid internship at the dance agency. But that’s not the best part of the story.
After his first week at the internship, Adam bought a styrofoam ice chest, took a taxi to Baskin-Robbins, loaded the cooler with pints of peanut butter & chocolate ice cream, and delivered it to the producer’s office with a handwritten thank-you note. Total cost? About $50. Net value? Priceless.
Adam’s unpaid internship is now paid, and the agency sent him to work in their Broadway office in New York for the summer. Even though he’s just finished his junior year, they’ve already offered him a full-time talent agent job when he graduates.
People work with people they like, so pay attention and look for common threads with others. Then exceed expectations. That’s how you make a sweet impression-;to get that first job and excel throughout your career.
4. Work on your network
Your career depends less on what you know than on who you know. Don’t just connect with people you already know on social media. Reach out to people who know other people with opportunities. I’m getting resumes from friends of my kids, and I always take the time to reply. Buy a professional outfit and go to networking events where you can get face-to-face with professionals in your field. Then follow up.
If you don’t have a LinkedIn profile, whip one up NOW because employers like me will creep there first, and go to Facebook second. Your LinkedIn profile is accessible to millions of potential employers, while your resume goes to one person at a time (if you’re lucky). And if you’re on Facebook, get rid of those pictures of you downing tequila shots. Don’t post anything you wouldn’t want a potential boss to see.
5. Sweat the small stuff
I still see public relations spelled with a heinous typo on resumes. Try the word “public” spelled without the “L.” Yup. Would you believe there are 49,805 professionals on LinkedIn who’ve listed a job title as “Principle” instead of the correct “Principal?” Try it! Spell-check isn’t going to save you from either of these gaffes.
To be taken seriously as an educated, reliable professional, read and reread everything. Get fanatical about accuracy and integrity in all that you write, shoot or post.
And it’s game over if you spell my name or company name incorrectly.
6. Be a tiny bit braver
The economic news is getting better. The housing market is rebounding. The stock market recently reached a new high, followed by the S&P 500. Companies are hiring again. But in any job market, competition will always be fierce. Employers will always be picky.
It’s okay to be scared. I’m still scared every day. Deep down, I’m still the insecure girl who never dreamed of being a convocation speaker, writer for a global publication, or president of my own company. But when I’m scared, I know I’m still learning. Still growing. Fear is a great motivator. It gives you direction and focus.
I’ve found my passion for connecting and empowering people in their work and life. I get to do it with people I love and laugh with, every single day. And I had to create that from nothing. There was no template. If I can do it, you can too.
Just be a tiny bit braver tomorrow than you are today. In work, and in life.
Of course you put your best foot forward when courting investment. But there are good reasons to be a bit more transparent, too.
I suppose it’s only natural for an entrepreneur to be a little nervous before meeting with a potential backer for his or her company. But the result of that nervousness, often, comes off as fairly unnatural.
Many times, when entrepreneurs begin meeting with investment partners, they feel inclined to display a certain bravado that they think conveys confidence -- confidence they don’t necessarily have. The hope, I suppose, is that doing so will maximize their valuations.
The reality, however, is that most VC firms are made up of former entrepreneurs who are empathetic to the development that first-time founders naturally go through as they build their companies. And, contrary to popular belief, we’re often open to, and excited about, helping advance that development.
That help often takes the form of operational value-add services aimed at helping a company build and execute certain initiatives more efficiently. These are often initiatives that are critical if a company wants to scale successfully. For the most part, such help is offered in the context of collaboration, not dictatorship.
Why Pre-Investment Transparency is Critical
Of course, forging a collaborative investor-investee relationship requires entrepreneurs willing to ask for help and investors willing to provide it.
Truthfully, no entrepreneur, nor the VCs who invest in them, knows everything. But that doesn’t mean it’s a good idea to create a false image to the contrary when you’re courting investors, or to choose a hands-off VC just for the sake of avoiding an operational takeover.
Instead, I always advise entrepreneurs to simply be themselves during pre-investment meetings with potential VC partners. Reveal your strengths and weaknesses, and be very open about where you will -- and won’t -- need their help. That transparency is critical for several reasons:
• It will create an environment of trust and collaboration
• It allows your investors to focus their energy on the operational areas in which they can add the most value
• It forces everyone to put their cards on the table and opens critical lines of communication that will be necessary post-investment
Once an investment is made, a company and its VC become symbiotically connected, and both parties must be willing to work together to achieve a shared set of goals and aspirations.
In that way, partnering with a VC who’s capable of providing insight and expertise can be hugely valuable. The more your VC is aligned with your vision and engaged in executing initiatives that will help you achieve it, the better your chances are of deriving value when and how you need it.
Pre-investment transparency is also critical to weeding out investors that aren’t a cultural fit for your business. By engaging potential VCs in operational and value-add discussions, you can acquire a better understanding of how each investor thinks and how they might help.
How Much Help Do You Really Need?
The answer to that question depends on your company’s needs, skills gaps, and goals, and no one understands those things better than you.
That’s why it’s critical to proactively engage your VC as you run into issues. Even if your investor can’t help you, he or she will at least be aware of your problem and might be able to find the help you need externally. Revealing problems as they happen also keeps your VC in the loop and mitigates the painful experience of blindsiding your investors with months-old bad news.
It’s also perfectly acceptable to let VCs know when they are overstepping their bounds. Doing so establishes critical parameters, encourages VCs to re-focus or preserve their energy, and allows you to leverage your investor’s expertise only when it’s needed most.
A VC is Not Just a Rolodex
When entrepreneurs accept an investment from a VC, they very often do so hoping to tap into that investor’s network. What founders need to realize, however, is that the value of a Rolodex is short-lived, and it tends to be at its apex in the first year of an investment.
After that, the ripple effect begins to fade. And, if you chose a venture firm based solely on the breadth of its network -; failing to consider the additional value that investor could bring and its cultural alignment with your business -; you may regret ever signing your term sheet.
That’s especially going to be true if your VC begins to ignore you or starts to second-guess every decision you make.
A new study suggests that negative emotion may actually be a pretty good launching pad for creativity.
Creativity is mysterious and difficult. If you have tasks on your to-do list that require a creative spark, perhaps you’ve been putting them off, waiting to get in a mellow mood or for inspiration to strike.
But a new study suggests you may have been making a mistake waiting around for the right mindset to start your creative project. Bad moods can actually improve creativity, the series of studies by three European professors suggest, at least if the negative emotions come at the start of a work session.
The trio took two approaches to come to this conclusion. First, they asked around 100 creative professionals to keep diaries of their emotions and productivity. While happiness at the end of the day was linked with increased productivity (who wouldn’t be happy after getting a ton done?), being in a bad mood at the start of the day was associated with even higher productivity. Why might that be? The British Psychological Society’s Occupational Digest blog explains one possible explanation:
The narrow, alert focus on issues can be useful by focusing on things that are in need of a solution and spurring motivation to act on these; previous research does suggest that negative emotion can lead to more persistence in problem solving. Once this focus has been set, allowing the negative emotions to slide away and positive emotions to explore the possibility space is a good recipe for getting to innovative solutions.
Grumpiness, in other words, helps you focus on problems and get down to business, but as you dig deeper into a problem, hopefully, that negativity subsides, leaving the mind more free to roam. To test this model of emotions and creativity, the researchers asked another group of study participants to write about either a neutral or positive event in their lives before completing a brainstorming task.
"Those who were tasked with articulating an unpleasant instead of a neutral experience ultimately performed better the brainstorming task, producing more varied and unique ideas. This happened even though the negative state had no function in focusing their attention on anything related to the creative task, which suggests the better performance was due to entering a more suitable cognitive mode," reports BPS.
More research is needed, the authors note, to determine how negative and positive emotions affect creativity on different time scales (does it matter if you’re grumpy for five minutes or an hour?) but there is an immediate takeaway for entrepreneurs: forget waiting around for the perfect mood for innovation and try to use your less that cheerful moments as a springboard for getting started on creative projects. You may not only improve your mood, but also come up with better solutions for your business.
Do you need to be in a certain mood to be creative?
Bossholes drive away talented employees and cost your company money.
A bosshole is a combination of a boss and, well, an anal sphincter. Bossholes are workplace bullies who yell at the drop of a hat and generally make their employees feel tired, lousy, and unappreciated.
Here are his suggestions to ensure your inner jerk isn't making you (and your team) less effective:1. Understand the Financial Risk
Bossholes cost companies revenue and profit--big time. "Bossholes drive away talented people and force otherwise useful folk to follow around after and clean up the emotional messes they leave," explains Sutton.2. Monitor Your E-mail
E-mail is what Sutton calls an "emotionally thin" media that tends to magnify negative emotions. In an e-mail, anything you write that's insensitive or seems angry is likely to deeply offend or wound. So think before you click the SEND button.3. Cultivate Reality Checkers
Assign your more reasonable employees to be "bosshole monitors." Link their performance evaluation to telling you when you've blown it. Or maybe offer to pay $20 to anyone who points out when you've been a jerk.4. Exercise Some Self-restraint
When you get angry or find yourself focusing too much on performance and too little on the human needs of your team, cultivate and practice emotional detachment from your own sense of frustration.5. Get More Sleep
Even if you're maniacally-driven to succeed, you still need your sleep. "Sleep deprivation can turn even a great manager into a grumpy, intolerant jerk," says Sutton. It will also completely ruin your health.6. Work Reasonable Hours
Every IT manager knows that running a computer center constantly at 100 percent capacity eventually results in system failure. Why would you expect a human being to react any differently?7. Make Your Atonement Public
When you've chewed out employees or thrown a tantrum (both common bosshole behavior), publicly apologize and make it clear that you don't consider that behavior acceptable.8. Dump Bosshole Underlings
Google statistically measures whether its managers are acting like bossholes, according to Sutton. "When Google identifies bossholes, the company sends them for re-education, and if that doesn't work, they're fired," he explains.9. Protect Your People
If your customers treat your people like dirt, drop them as customers if possible. If there are bossholes in other groups in your firm, limit your team's exposure. Give some extra "combat pay" to employees who are forced to cope with bossholiness.
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What began as a social gathering for like-minded entrepreneurs and VCs has evolved into one of the Valley's most dynamic accelerators. Meet the man with the connections, Saeed Amidi.
When international entrepreneurs want a shot at Silicon Valley stardom, they call on Saeed Amidi.
The angel investor is the son of Amir Amidi, who owned the Medallion Rug Gallery where fellow VC Pejman Nozad famously built up his contacts. And his ties to the tech hub span 35 years. As co-founder of the investment firm Amidzad Investments, Amidi has the expertise and deep pockets to show for it.
Since 2006, Amidi's passion project has been Plug and Play, an international network that's accelerated 1,200 start-ups and collectively raised more than $1 billion in venture capital. Last year, the organization made 62 investments, while helping 150 start-ups from Silicon Valley and another 100 from abroad find resources and make connections.
Helping foreigners get their foot in the door is perhaps what Amidi, an Iranian exile, does best. During their time at Plug and Play, which Amidi describes as a sort of "start-up university," ambitious entepreneurs learn the ropes of launching a business from those who know it best: veteran VCs and serial entrepreneurs. The most promising start-ups get to pitch during Plug and Play's Expo Event, which wrapped up last weekend.
Plug and Play vies with the likes of Y Combinator and TechStars for talent, but it boasts a fair share of big names on its roster: Lending Club, which has funded $1.6 billion in consumer loans, and Zong, a mobile payment start-up founded by PayPal President David Marcus that sold to eBay for $240 million. What's more, Plug and Play has become synomous with "international talent," not a small feat in hyper-competitive tech land.
I spoke with Amidi by phone about what makes a great pitch, why he loves nurturing start-ups, and why the Silicon Valley bubble isn't going to burst in his lifetime.
How did Plug and Play get started?
We started by investing in companies that were leasing space from us, like PayPal and Andy Rubin's Danger. For 12 years, we used to invest for fun and then Plug and Play got started about seven years ago, in 2006.
Did you always have an international focus?
The main objective for me is finding a great investment. We found the companies that are in Palo Alto are already connected. They didn't need our help as much as the companies that may be just as good but are not in Silicon Valley. We love to participate in the seed round, but more importantly, we like to be part of their success. It increases the value of our investment.
What compels you to invest in a start-up?
It's the passion, the intelligence, and the team. If I like the team and feel they are brilliant and passionate, I don't even care about the idea. The second thing is what idea they are going after. Is it something that can scale? Something that is missing in the market? This is much easier to do with a serial entrepreneur, but a lot of the entrepreneurs we work with are first-timers, so you have to check out what they are focusing on. Can it be a big business?
We see what they have done in the last three, six, or twelve years. If they haven't put in a lot of sweat equity and don't have a product or prototype, we tell them to come back later when they do.
Tell me about the environment at Plug and Play.
We host 300 companies in one building. If a start-up is local, they stay with us for two years. If not, they stay for three months. They go through something called start-up university, where we show 20 case studies on average from 20 entrepreneurs who have gone on the same journey before. It's done professionally and casually. The entrepreneurs who stay three months meet about 20 other entrepreneurs who have raised money, exited, failed, and can explain why they've failed. Most of what they learn, they learn from other entrepreneurs.
Where do they stay if they're international?
We got a couple apartments years ago, but it was too much of a headache, so now I tell them, "You're the entrepreneur, figure it out. Rent a room from AirBnB or Craigslist."
What's your typical day like?
My goal every day is to meet with four startups and then I usually like to have a meeting with one or two investors. That translates to one investment a week. Each company we're looking at is in a different stage.
Why is Silicon Valley so valuable to entrepreneurs?
Some people were worried during the downturn that Silicon Valley might lose its charm, but I really think that if you want to be serious about being in movies, the best place to be is Hollywood, and I feel the same way about tech innovation start-ups. You have to be connected to Silicon Valley.
I have an accelerator in Valencia and another in Berlin, and you can build a great company just about anywhere. But I urge entrepreneurs to be connected to Silicon Valley, because I think the culture that is here, the investors that are here, as well as all of the success and failure stories that are here is like a crash course in entrepreneurship.
Is Silicon Valley on the verge of another bubble?
No, because I see a lot of companies with real business models. B2B is coming back really strong, and if you take most of the world's corporations like Walmart, its labs are here. Even Amazon has a big technical center here. Groupon has a very big office here in Palo Alto too. No matter what Silicon Valley becomes, the heart of innovation of the start-up world--at least in my lifetime--will be here.
Marissa Mayer is on the verge of completing 14 Yahoo acquisitions in just six months. Will she reinvent Yahoo?
With Marissa Mayer at the helm, Yahoo is on an acquisition tear.
One month after the company's $1.1 billion acquisition of Tumblr, AllThingsD reported yesterday that Yahoo is in talks to purchase Xobni, an address book app, for $30 million to $40 million. And today, news surfaced that the company is also about to acquire Qwiki, a popular video sharing app, for close to $50 million. If the two deals go through, Yahoo will have publicly acquired 14 companies in 2013; by comparison, last year it bought only two companies, and, in 2011, three.
No Surprise, But What's the Strategy?
When Marissa Mayer took over as Yahoo's CEO in late 2012, one of her first stated missions was to sniff out potential acquisitions in order to turn Yahoo back into a growth company. And with $1.2 billion in cash on hand--even after the Tumblr acquisition--she has room for several more big purchases before 2014.
"We're looking for smaller-scale acquisitions that align well overall with our businesses," Mayer said on a shareholder conference call in October 2012. Ken Goldman, the company's CFO, chimed in saying, "Our primary objective as a new management team is to leverage our assets, competitive strengths, and available resources to transition this company from financial stability to a growth business."
What's puzzling to me, though, is the strategy behind these acquisitions on a whole.
In just six months, Mayer the 14 deals have been spread over a wide variety of areas. You have to wonder if Yahoo is just shooting from the hip at this point, hoping that at least one brings in new revenue. Even though Yahoo is beating Wall Street profit estimates, its core advertising business is suffering, and it's clear that Mayer is looking for some way to make money.
That said, two loose themes emerge from Mayer's deal-making moves, but I'm skeptical about both.
Building Out Mobile
Yahoo has an impressive 300 million mobile users, but that's about half Facebook's mobile user base. Mayer has been vocal about aggressively trying to capture a larger mobile audience. Last month, at the Wired Business Conference, Mayer said that the biggest goal right now is to have "Yahoo persistent on every smartphone, tablet, and PC for every Internet user."
Of the acquisitions Yahoo has made so far this year, several were focused on expanding mobile capabilities, including Summly, a news app; Loki Studios, a gaming start-up; aLike, a recommendation app; and Ghostbird software, a photo app.
Anecdotally, it seems Mayer is ready to attract the best mobile talent, too. Reports The Post:
"Employees chosen to work on the all-important mobile mission are given the coolest and latest laptops, the best, most recently redecorated offices and prompt access to Mayer's office, according to interviews with several Yahoo insiders."
But mobile expansion will be tough for Yahoo, even with a slew of upstarts and new thinkers in the space. Unlike its competitors like Facebook and Google, Yahoo never made the leap into hardware--which will make Mayer's hope to be on every device all the more difficult.
Making Yahoo More Social
Clearly Mayer's other big bet is to revitalize Yahoo by making it more social. Some were skeptical about Mayer's $1.1 billion acquisition of Tumblr--which only had about $13 million of revenue in 2012--but it's apparent Mayer sees the company as a vehicle to tap into one of the most active social platforms on the Web, along with a somewhat different advertising model.
As Adam Rifkin writes:
"In some ways, Tumblr is actually Facebook 2.0! As Facebook has become a real-life social network infested with parents, co-workers, ex-friends, and people you barely know, Tumblr has become the place where young people express themselves and their actual interests with their actual friends."
But Yahoo's foray into social will be fraught with challenges. Tumblr's core demographic is the 18-to-24-year-old bracket, a notoriously fickle cohort. Yahoo's other "social" purchases--like its January 2013 acquisition of Snip.it, which lets users collect articles--don't have much to do with Tumblr.
It's too early to see if Mayer's acquisition strategy will pay off, and Mayer knows it'll take time to see if the deals deliver material results to the core business. As she said on an April 2013 shareholder call:
"Overall, I have been very pleased with how well our talent acquisitions have integrated into the company. You'll see many of the contributions come to life in our product experiences over the next few months. So stay tuned."
The one thing your sales team needs to improve? Explaining, says Lee LeFever, founder of Common Craft. Here's how.
People rarely buy products they don't understand, so it's a salesman's job to explain them. But what if your explanation is so organic it's pointless?
Perhaps you suffer from the curse of knowledge--knowing so much you explain things in ways no one grasps.
Revisiting the basics of explaining can help, writes Lee LeFever, founder of Common Craft, in The Harvard Business Review. Here's an overview:
Focus on why.
Make sure your team knows exactly what your product or service does for customers. "By answering the "why" early on , you create a foundation for understanding on which to build more complex ideas," says LeFever.
Simple trumps clever.
"Fancy vocabulary and extensive background information might impress customers--but, more likely, will just confuse them," he says. Instead of trying to impress people with how smart you are, make them feel smart by building their knowledge.
Explain the forrest, not just the trees.
Customers must understand why your product exists and how it can help them. Make sure they get the big picture before going into detail.
The antidote to confusion is less information.
It's tempting to bombard your customers with information, but that won't help someone who's confused. "Don't add detail; come back to one of two big ideas you know they'll understand" LeFever advises.
Tell a story.
"If you think stories are for campfires, not your state-of-the-art product, then you're forgetting that your audience is human," LeFever says. "Stories provide a way to see how a product works in the real world, with real people."
Don't be condescending.
"No one likes to be talked down to, and if you approach explanation with the wrong attitude, it can be destructive," LeFever explains. Assume your customers are as smart as you, just not as informed.
The NSA isn't about to stop snooping on you anytime soon, but there are ways to throw them off your trail. Here are some tools to help you go private.
Revelations of NSA surveillance have shaken the nation, but while many of us would love nothing more than to toss our phones out the window and avoid well-trafficked search engines like Yahoo and Google altogether, the government seems intent snopping on Americans whether they like it or not.
Sometimes that's not a bad thing--but often it is. As blogger Sarah Downey writes, one of three things can happen when your data falls into a corporation's lap: Your privacy may be breached like the customers of LivingSocial; the company might use it in a way that makes you uncomfortable and/or violates your privacy; or the government may use it, courtesy of the NSA and PRISM.
To help you sleep better at night, here's a roundup of tools that can help you go private.Mobile
TextSecure is an open source app that encrypts text so that no one can read it. Just keep in mind both the sender and respondent must use it in order for it to work. Also, while the content will be secure, your messages' destination will not. As a bonus, the app can encrypt old messages.
Designed by the makers of TextSecure, WhisperSystems, RedPhone features end-to-end encryption for calls, meaning no one can decipher your chat from beginning to end. RedPhone also forgoes assigning private numbers, so you can stick with the one you know and love. Calls can be placed via Wi-Fi or your mobile data plan.
Using Tor, a free software and open network that blocks out surveillance, Onion encrypts web traffic, so no one can pinpoint your IP address. The browser also hides what platform you're on, be it tablet, cell phone, or desktop.
Another Tor app, Orbot encrypts traffic by bouncing signals, much like a sped-up game of Pong. Created by The Guardian Project, Orbot proxies traffic so what you're clicking stays under wraps.
SilentCircle keeps companies from accessing unencrypted calls, messages, and emails. Though it's open-source, its code is audited to prevent back doors or loopholes. You can use it on Android or iOS platforms.
Similar to Snapchat, this one-year-old app offers "military-grade encryption" of texts, pictures, and audio messages using a key that's unknown to the company. Wickr promises not to collect personal information, call logs, or location data. Its messages also self-destruct.Desktop
Unlike Google, DuckDuckGo doesn't store IP addresses. The partially open-source search engine is now available on several desktop and mobile platforms, including iOS.
Ever watch a CSI episode and hear the tech guy exclaim that the suspect's signal is moving? That movement is Tor. The network bounces traffic across computers so sites can't determine their origin.
For those not on Tor, there's Onion Pi. Combining Raspberry Pi's microcomputer, USB Wi-Fi adapter, and an ethernet Cable, Onion Pi creates a small, potable private access point that directs traffic through Tor's larger network.
Like many others on this list, OTR offers end-to-end encryption. Since it's an extension to regular networks, users will need to download supporting software such as Adium for iOS and Pidgin for Windows.
This open-source software will keep the conversation top secret.The Cloud
This open-source app encrypts files before they go to the Cloud and is available on Android and iOS.
When all else fails, download InTheClear, a suite of applications that wipes data clean with just one swipe.
Jazz musicians are agile and dynamic. They are gracious--but not shy. Here's what you can take from the stage to the board room.
Some people would introduce me as a venture capitalist, since I run a venture firm in Detroit. Others might reference me as an entrepreneur, given that I've founded four technology companies. I guess these people wouldn't be wrong in their verbiage, but it's not an introduction I prefer.
Instead, I'd rather be deemed a jazz musician. After decades of training, countless hours of practice, and a whole host of gigs nationwide, jazz is my passion--and its something that has benefitted all other aspects of my life tremendously. While on the surface it would seem that jazz musicianship is the polar opposite of running a business, the two practices are linked in numerous ways.
Just as you'd learn a great deal from a trusted advisor, so too can non-traditional sources help you to expand your knowledge base. Jazz musicians are agile and dynamic, carrying their group's song and themes through the diversified landscape to the end. Quite frankly, I don't know anyone better to provide leadership advice than a professional jazz player for this very reason. Here are some powerful takeaways I've picked up along the way from incredible musician leaders--let these lessons shine at your business, and your cube will get a lot swankier.
1. Playing it safe gets you tossed off the stage. Some executives would say that in today's turbulent economy, takings risks isn't wise. If you don't take risks you'll never excel. Playing it safe all the time becomes the most dangerous move of all.
2. There are no do-overs in live performances. For every hour in a "performance" setting, you should spend five hours practicing. Athletes do this, musicians do this--muscle memory is no different in the board room, in front of a new client, or with your team. So why aren't you doing this?
3. Listening to those around you is three times more important than what you play yourself. If you're the one talking all the time, you're not learning anything. Listen, absorb what you hear, and use the information to make a conscious choice about whatever you're facing.
4. There's a time to stand out as a soloist and a time to support others and make them shine. You rocked a project--nicely done. Praise is well-deserved. However, as a leader, it's more likely the case that your team members rocked a project, together. Susie was on top of her game with the slide deck? Tell her--and tell the client. Johnny couldn't have articulated the challenge to the press any more astutely? Refer back to his commentary as a stellar example. When you can share the wealth, everyone wins.
5. Expect surprises and adversity, since jazz (and life) is about how you respond and adapt. If running a business was always smooth sailing, everyone would do it. That being said, the old adage explains that "a smooth sea never made a skilled sailor." Anticipate hurdles and maximize your team's effort to jump over them.
6. Know your audience. If you're playing for a group that's looking forward to something slow and calming and you get on stage and play a wild and crazy, upbeat riff, nobody will dig it--even if it's a well-crafted piece. Your customers are the same. If you're not working to provide them with something they want and need, you're doomed to fail.
7. It's always better leaving people wanting more, rather than less. Of course as you live and breathe your business, you have a visceral urge to share every piece of minutia with anyone who asks. Don't. Instead of pouring it all on at once, give people a teaser, so they crave the next bit you explain. In similar fashion, don't try and launch 15 products at once for a new line; start with one or two to get people begging for more.
8. The best leaders are those that make others sound good. Big band leaders bring out the best in their troupes--during a sax solo, his job is to make sure the drum line supports the sax player with a quality backdrop to make the riff shine especially bright. Are you putting these pieces together on your team? Where could someone excel that they're being held back? Shatter those boundaries and encourage creativity to soar.
9. Pattern recognition is easier than raw genius. If you drive the same way to work every day for a year, you're bound to learn about--and avoid--the pothole on Main Street that you pass each time. Jazz is no different; if you've played combinations countless times, it becomes second nature to pair new things together based on previous patterns. So too in business, seasoned executives and professionals have seen so many types of people, deals, projects, and processes, so it becomes much easier for them to avoid these proverbial potholes, rather than having to start from scratch every time.
10. Shy musicians are starving artists. If you're playing a gig, you get paid when there's butts in seats, so you can't be shy in telling people about the upcoming show. Why haven't you been this bold in your new product launch? Are your employees evangelical about your company's culture? Are your vendors singing your praises?
11. Keeping it new and fresh is mandatory. Jazz has its roots in real-time, collaborative innovation, just like the act of starting and growing companies. If you're not actively seeking new challenges and ways to expand your horizons, you are automatically falling behind.
Legendary jazz pianist Dave Brubeck put it best, and his words resonate not only on stage for musicians but also in life for business leaders. As he so eloquently described it, "There's a way of playing safe, there's a way of using tricks and there's the way I like to play, which is dangerously, where you're going to take a chance on making mistakes in order to create something you haven't created before."
Start-up VCs get all of the attention, but Fortune 500 companies might make better investors for your start-up.
Venture capitalist Fred Wilson is not a fan of corporate capital; he said as much during one of Pandodaily's fireside chats in New York last week.
Wilson was served a rebuttal on Tuesday, however, at Bloomberg's Next Big Thing Summit in Half Moon Bay, California. Panelists from four corporate investment firms sat down with Bloomberg reporter Douglas MacMillan to set the record straight. Corporate capital provides a few things traditional VCs can't offer, they said.
Here are their five reasons to consider--or reconsider--a corporate investor.
They're already stakeholders.
Corporate investors have a built-in motive for supporting innovation within their sector: It strengthens their own business ecosystem, according to Citi Ventures CIO Deborah Hopkins. This may seem contradictory to the notion of free market competition, but Hopkins explains that industry innovation actually helps existing companies more than it hurts them.
The payment processor Square, for example, could be deemed "disruptive to our own business" says Hopkins--yet Citi has invested heavily in the start-up. Why?
"We're not focused as much on financial return as on strategic return," Hopkins says. "What we get back [from Square] is first-class learning from an exciting entrepreneur."
They have awesome resources.
According to Hopkins, corporations have one major asset that traditional VCs lack: a customer base.
"That's the golden ticket," she says. "Unlike a VC, we can help [start-ups] scale."
An existing network of customers can provide young companies with the low-risk setting they need to test and develop a winning product, says Comcast Ventures managing director Michael Yang--which is good for both the parent investor and start-up. According to Yang, corporate investors see start-up partners as an opportunity to innovate (read: make riskier decisions) while offering those start-ups the benefit of a safety net for product development.
They have friends on both sides of the table.
Corporate VCs are well connected; they rub elbows with both traditional VCs and other key players in their sector. So, they can connect you with their customers or colleagues, and additional funding, according to SanDisk Chief Strategy Officer Sumit Sadana.
In addition to making the most of their corporate network, says Sadana, SanDisk tries to keep its portfolio companies' best interests at heart. "We could do a right of first refusal," he says, "But we try not to do that. We bring them to customers that we have good and deep relationships with."
"We don't believe in pushing exclusivity at all," echoes Hopkins. "We see it as counter to being the champion of these companies. [Instead] we built partnerships with other VCs who bring us companies... because of our way of working alongside them."
They're not focused on your IPO.
"For a VC, going public is the end. For corporate [investors], it is a means to an end," says Heidi Mason, a managing partner of the Bell Mason Group. She adds that the "end goal" of most Bell Mason investments is a portfolio company's growth.
"We have an opportunity to break the [traditional investment] cycle... and completely accelerate the impact [we] have in an emerging ecosystem," she says.
Superman as an entrepreneur? Not exactly, but you just may walk away from "Man of Steel" with inspiration for your business.
Over the weekend my wife and I and a friend saw Man of Steel--the latest reboot of the Superman franchise. Note: Spoilers below! If you haven't seen the movie yet, you might want to stop reading. But then again, it's Superman. You probably know the story already.
Afterward, as we left the theater, my mind wandered to what the movie had to say about entrepreneurship. (It's a sickness. I can't stop thinking like this. Maybe you can relate.) Nobody actually starts a business in Man of Steel, but the movie is as much about leadership, integrity, and gathering teams to achieve a worthy goal as it is about action and explosions. In other words, it has a lot to do with the best principles of entrepreneurship. Here are my top takeaways:
1. Familiarity (Sometimes) Rules
Almost everyone who goes to see Man of Steel knows pretty much what's going to happen. No joke, my three-year-old nephew told me the entire Superman origin story a few weeks ago, complete with references to "Kwypton" and "Superman's daddy, Kal-El." (I think he's a bit confused. Jor-El is Kal-El's father, and it's Kal-El who later becomes Superman. But still, not bad for a three-year-old.)
Despite that familiarity, Man of Steel pulled in $128 million in the U.S. last weekend. Not bad for a cartoon character who made his debut in 1938. Lesson: It can sometimes be better to put a new twist on an old idea, rather than make up something new out of whole cloth.
2. If Trust Doesn't Quite Trump Everything, It Comes Close
Kal-El (aka Clark Kent--interestingly the film manages never to refer to him as "Superman") starts out angst-ridden, unsure of where he's from. Just as he figures it out, his Kryptonian father's nemesis, General Zod, shows up. Zod demands that Kal-El surrender in exchange for Zod sparing the Earth--and Kal-El almost gives in.
What stops him? It's all about trust. First, he realizes that Zod isn't trustworthy. Then, the fact that Kal-El was willing to sacrifice himself for Earth helps the humans learn to trust him. (As Kal-El reminds a still-skeptical general at the end of the film, he grew up in Kansas!) The more loyalty he shows to humans, the more they slowly develop trust in him, in return.
3. It's Not What You Say; It's What People Hear
You know the giant "S" on Superman's chest? It's not really an "S." Instead, as explained at least twice in Man of Steel, it's a Kryptonian symbol meaning, "hope." That's nice. But on Earth, as Lois Lane reminds Kal-El, an "S" is an "S" is an "S." 'Nuff said.
4. Focus, Focus, Focus
Kal-El has super-hearing and super-vision--and man-oh-man, is he ever distracted as a result. As a kid, this nearly pushes him near the edge. It's only after his mother teaches him to focus on one sound or sight at a time that he can retain sanity and function. When Zod and the other criminal-refugees from Krypton reach Earth, they have the same problem, except that nobody has ever taught them to focus their senses. Result? They're overwhelmed with sights and sounds, and unable (temporarily) to function.
Sound familiar? Distraction is driving us all crazy and it can be killer in business. Learning to focus is key. (As I wrote this column, this realization almost made me close a few of the dozen tabs I had open on my browser, shut off my phone, and maybe even turn down the sound on the Boston Bruins Stanley Cup Finals game I was watching. Almost.)
5. Make the Customer Comfortable
At one point, Kal-El surrenders to a group of humans despite knowing that they plan to turn him over to Zod. When Lois Lane subsequently expresses surprise that he allowed the humans to handcuff him, Kal-El tells her it's because it was important that they feel safe around him. (Even though Superman needs handcuffs like a fish needs a bicycle.)
Sometimes people (read: customers) insist on things that don't cost you much, but make them feel more comfortable. If you want them to deal with you (or try your product), go along with the gag.
6. Negotiating is a Super Skill
There's a lot of action in Man of Steel, but at the same time there's a heck of a lot of negotiating. Jor-El tries to negotiate with the leaders of Krypton before their planet explodes. General Zod tries to negotiate with Jor-El, and then eons later, he tries to negotiate with Kal-El. Kal-El tries to negotiate with Zod, and then the U.S.-led military. Eventually, he and Lois Lane negotiate an interstellar love connection.
What does it all reinforce? Well, without getting too deep, each time negotiations fail and the scene turns to action, it follows a character who has been pushed all the way to the brink. Nobody ever mentions the phrase, but Man of Steel is filled with some tough negotiators who have clearly identified their best alternatives to a negotiated agreement.
7. You Can Easily Hide Forever, Just By Wearing Glasses
This one's tongue-in-cheek of course. Most renditions of the Superman story suggest that Kal-El can blend in with humans simply by donning Elvis Costello specs--and maybe stammering a bit around Lois Lane. Man of Steel takes this idea to extremes. It's kind of cute to see a Superman movie subscribe so blatantly to the "ugly-pretty-girl theory" of Hollywood flicks.
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The seasoned VC says Silicon Valley will remain a tech hub for years, but Silicon Alley, with its focus on content, is paving the way for exciting changes.
That's why his firm is changing its name.
"I think it's a bit rich that we go around to entrepreneurs and say markets are being disrupted, you need to change," he said during the Venture Forward Conference in New York on Tuesday.
The new moniker, which he wouldn't disclose at the conference but plans to unveil next week, will be the first such change for GRP in 17 years. It's meant to reflect GRP's renewed focus on transparency and investment in infrastructure--two things entrpreneurs say they want.
The idea came after polling a group of entrepreneurs, who also said they look for operational experience, industry insight, marketing help, and people who can bring capital to the table from their VC firm. Since all those encompass what GRP does, "We felt we needed a name that would represent all those things," he said.
When asked how hard it's been to do business "so far south of Silicon Valley," Suster acknowledged the challenge, but pointed to markets outside of the tech hub.
"Silicon Valley will always produce the biggest hits; it will always be the tech ecosystem for the foreseeable future," he said. "But there are market conditions that make it easier and better to build outside Silicon Valley."
Focusing on software-based start-ups has proven this: Many things which revolve around the Internet--content, commerce, and communication--aren't dominated by the Valley, he found.
"Commerce is something great trading cities like New York, Chicago, Los Angeles have always done well," Suster said. In terms of content, "New York has a significant advantage there." And communication has strongholds in Washington, D.C., Kansas City, and "of course, New York. That's why we've seen companies standing out more."
Businesses in all kinds of industries are going mobile and bringing their goods directly to customers.
Mobile may be the new thing for businesses, but there's an old way to put a twist on the concept. Pack your business onto a truck. Although food trucks now have a reality show, forgoing a permanent home for a business and taking it onto the road isn't a new concept. But it might be one your company should explore.
Food trucks in their original incarnation--commissary trucks that brought coffee and bad food to locations like construction sites--have been around for many decades. So have trucks to replace automobile glass or wash and detail vehicles as well as vans that bring mechanics tools out to auto repair shops. In a way, plumbers and carpenters have done the same thing, bringing equipment and supplies to the customer's location.
But the concept of putting a business on a truck is beginning to expand. Over the last three or four years, fashion trucks have become... fashionable. The people behind The Fashion Mobile of Minnesota used to own a store but found that buying a used truck off Craigslist cost about the same as one month of rent.
There are trucks for all kinds of businesses: hard-to-find shoe brands, a record shop, kitchen and home goods, and vintage clothing. The Original Mobile Barbershop Co. is not the only one with chairs on wheels. Heck, there's even a site where people buy and sell used pet grooming vans.
The principles are sound. You bring a business out to the customers and provide convenience. At the same time, you intercept people outside of their normal shopping routine and get more attention. Overhead is much lower, though you do have to work through the logistics of permitting and legal parking to do business on the road and avoid tickets.
So what are some other businesses that you could do out of a truck, or with a vehicle as a supplement, going to the customer? Here are some ideas:
- photography studio
- nail or hair care
- massage or physical therapy
- business consulting
- financial services advisor
- wedding planning
You could bring samples and services to a B2B client and ship afterwards. Insurance firm? Send the truck out to an office building where you've already made arrangements and workers can consult. Combine a truck with an existing business and the ability to schedule appointments and look at product on a website and the possibilities grow. Is it time that your business hit the road?
Great research doesn't always lead to great medicine -- and sometimes forming a company can actually get in the way.
Say you’re a healthcare entrepreneur. And say you meet a brilliant immunologist at the American Society of Clinical Oncology conference, and she has very exciting data demonstrating full tumor regression in a genetically engineered mouse model of human breast cancer. It’s clear that she has discovered a critical step in cancer development that could be a great new drug target.
Time to license the intellectual property, right? Get this scientist onto the board of your new start-up, then turn her research into a treatment and, of course, profits.
Actually, that’s probably not such a great idea.
Here’s why it’s not the right time to pull the trigger - and why it may never be:
1. Most early science will not lead to drug candidates that pass feasibility and toxicology requirements to qualify for human trials. Human biology is complicated, and no one can predict what will or won’t work.
2. Once you raise money and recruit co-founders, you’re in the business of convincing them that you will be successful. No matter what. In so doing, you incentivize scientists to design experiments that will support your business plan. This corrupts the conduct of the most important testing and encourages your scientists to generate ‘good enough’ data - good enough to keep the funding rolling in.
3. Capital that could be going directly into research will instead be spent on the all-too-familiar costs of doing business: salaries, attorneys, accountants, boards of directors, etc.
4. As all these parties become more invested in the success of certain experiments and approaches, the less willing they become to admit it when things-;even small things--inevitably go wrong. Dismantling a team and a company is difficult, and it isn’t any fun.
5. Even the best outcome - generation of a compound that achieves Investigational New Drug status- carries a burdensome economic sidecar. To generate attractive returns for your earliest-stage investors, you have to begin recuperating not only your company’s scientific investment, but also the general and administrative costs, which have probably eaten up one-third to one-half of the total capital invested. And the road to a marketable drug has just begun.
6. In the pursuit of ‘good enough,’ it’s likely that your team has passed over other approaches that may have led to better drugs. Now that capital is gone.
Can you tell that I’ve seen this movie a few times? Here’s when you might consider investing:
1. When the science has become a platform--a fundamental new approach to generating many new drugs. Now you’re jumping into something that’s more akin to an engineering start-up.
2. When a bonafide drug molecule (better, several) has been advanced to the human trials stage. This is still a high-risk investment, but at this point your ultimate buyers - the pharmaceutical companies - will be lining up to partner with venture capitalists and entrepreneurs to co-invest. That greatly raises your chances of profitable success.
In medicine, forming a new company around early science can easily produce a misalignment of incentives and waste precious capital. Early-stage biomedical assets should be managed and tested as a portfolio of ideas with no bets or promises placed on any single one. This will allow the unbiased pursuit of the projects that survive rigorous vetting and testing, all the way through to drug molecules that are ready to be used in the treatment of actual disease.
Nobel-prizewinning physicist Richard Feynman was an eccentric within the scientific community. But he sure got a lot done.
In the book, Surely You’re Joking, Mr. Feynman!, Richard Feynman, a Nobel Prize-winning theoretical physicist, relates a story about an ant he found near his bathtub.
Instead of squishing the bug, Feynman put some sugar out for his visitor and used a colored pencil to track the ant’s march back to its nest. When another ant emerged to collect more sugar, Feynman tracked its movements as well. Feynman soon discovered that the ants used each other’s trails to find the pile of sugar he’d left out. He also learned that the ants continually improved the route from the sugar to the nest over time.
Tracking ants all day with colored pencils doesn’t exactly seem like a productive exercise. But for Feynman, that was never a consideration. He let his curiosity guide him. He was always ready to tackle questions that interested him with focus and care.
For Feynman, productivity was less about work and more about exploring problems that intrigued him.
Leaders, entrepreneurs, and anyone who strives to do more can learn from Feynman’s unique way of working.
1. Don’t worry about what others are thinking
Feynman was an eccentric within the scientific community. He frequented strip clubs, drank heavily for a spell, and taught himself to paint. He never let the judgment of others get under his skin or unnerve him. He was content to follow his own course and do as he pleased.
He wrote, “You have no responsibility to live up to what other people think you ought to accomplish. I have no responsibility to be like they expect me to be. It's their mistake, not my failing.”
By adopting this attitude you free yourself from paralyzing second guesses, doubts, and uncertainty. Work in your own way and don’t let other people’s criticisms delay you.
2. Don’t think about what you want to be, but what you want to do
Feynman did his best work when his curiosity, interest, and wonder were piqued.
“Fall in love with some activity, and do it!” Feynman advised. “Nobody ever figures out what life is all about, and it doesn't matter. Explore the world. Nearly everything is really interesting if you go into it deeply enough. Work as hard and as much as you want to on the things you like to do the best. Don't think about what you want to be, but what you want to do. Keep up some kind of a minimum with other things so that society doesn't stop you from doing anything at all.”
If you do what you want to do, everything else will fall into place. If you undertake tasks you want to do first, your enjoyment will increase your productivity and enhance your focus.
3. Stop trying to be a know-it-all
Feynman accepted that he didn’t know everything and that most of the world was one big mystery. He didn’t bother trying to solve the mystery of the universe or being the smartest person. In fact, he liked not knowing things. Ignorance, and not having all the evidence, made him excited.
“I think it's much more interesting to live not knowing than to have answers which might be wrong,” Feynman said during an interview. He once commented in a lecture, “We are trying to prove ourselves wrong as quickly as possible, because only in that way can we find progress.”
Embrace your ignorance and let it propel you to new, interesting discoveries. Try to prove yourself wrong and don’t be afraid to fail.
4. Get off the computer
Feynman was able to follow ants around with colored pencils, learn samba in Brazil, and discover how to crack a safe because he enjoyed learning things that interested him. However, he avoided computers because they were distractions that dulled his ability to investigate the world.
“There is a computer disease,” Feynman tells us. “Anybody who works with computers knows about [it]. It's a very serious disease and it interferes completely with the work. The trouble with computers is that you 'play' with them!”
Obviously, computers are crucial to today’s world of work. However, it’s advisable to free yourself from them whenever possible. They can distract and limit your productivity and perhaps your creativity.
5. Have a sense of humor and talk honestly
Feynman was never one to dress up his sentences with fancy words and complex phrases. He tried to explain things clearly and with a touch of humor.
He lived by a simple rule: “The first principle is that you must not fool yourself, and you are the easiest person to fool.” The phrase speaks to Feynman’s enduring modesty and acceptance that he was no better than anyone else. His most urgent goal was to learn about the world and as such he did it with astonishing precision and productivity.
Don’t pretend to be better than others and don’t fool yourself into thinking you have all the answers. Like Feynman, be humble and talk directly and honesty.
I just dumped (and donated) 300 books. But the rest you'll have to pry from my cold, dead fingers.
Two weeks ago, I dumped more than 300 business books.
“Dumped” sounds harsh. The purge wasn’t as bloody as all that. Many were unbound galleys stamped with dire warnings not to quote, reproduce, or distribute. I’m very cautious about such matters (in accordance with the FBI’s no-exhibition rule I never watch DVDs with anyone beyond my immediate family). So I dutifully stuffed the galleys into 30-gallon garbage bags and left them for the trash guy.
The hardcovers I deposited in a book-donation bin outside the local high school. Books on startups I set aside for the prison library where I volunteer. The inmates are always talking about businesses they plan to launch when they get out--a motorcycle detailing shop, a tattoo parlor, one of those mondo vending machines stocked with pet supplies. They can’t use the Internet, and the few entrepreneurship books available to them are out of date. So I know those volumes will get a lot of use.
My own library began accumulating when I started reviewing new business titles for Inc. Before that I owned a couple of shelves’ worth: the canon, if you will. I had Porter on strategy; Bennis on leadership; Schein on culture; Senge on continuous learning; Kotter on change; Christensen on innovation; Drucker on everything. Entrepreneurship has produced a canon of its own, including Amar Bhide’s The Origin and Evolution of New Business; Jack Stack’s The Great Game of Business; and my colleague Bo Burlingham’s Small Giants. Also The Peter Principle, The Art of Demotivation (by Despair.com founder Dr. E.L. Kersten), and, of course, the seminal work of Scott Adams.
Over five years, that collection had swelled 30-fold. Publishers cast virtually all their bread upon the waters, so I receive as many as four or five titles a week. A handful I write about. A few find a place in my home office. The rest migrate down to IKEA bookshelves in the basement. Recently, my near-and-dears decided to clear out that basement to free it up for teen parties. (Apparently teenagers lose all zest for life when forced to congregate on the same floor as adults.) I was assigned the task of culling my business-book hoard by two-thirds or more.
I expected the process would prove agonizing. Which of the four books on managing millennials should I consider the managing-millennials Bible? How many Seth Godin titles do I need to represent his oeuvre? I knew I should probably hang on to one brain-science book. But the amygdala so rarely comes up in conversation.
In the end it wasn’t so hard. Whole categories I instantly deemed expendable. Out went the parables. Out went the leadership lessons from sports and military figures. Out went the creativity books full of line drawings and white space. Out went the books laying out an author’s trademarked “system” for generating ideas or managing teams. Out went the technology books published more than a year ago. Out went the books that didn’t mention by name any actual businesses, or that merely name-checked usual suspects like Apple, IKEA, and Nordstrom’s.
My daughter suggested dumping the myriad books with alliteration in their titles. That turned out to be a surprisingly effective sorting principle.
What made the cut? Here are just a few of the titles I retained without a second thought:
The Progress Principle: Using Small Wins to Ignite Joy, Engagement, and Creativity at Work. HBS professor Theresa Amibile explains that employees are happiest and most productive in environments where they can make unimpeded progress on their work every day.
Everything Is Obvious: How Common Sense Fails Us. Sociologist Duncan Watts argues that decisions and predictions often go awry because we think we understand more about the world than we actually do.
To Sell Is Human: The Surprising Truth About Moving Others. Business author Daniel Pink takes the first really fresh look at sales in ages. Everybody sells, he explains, and getting people to buy requires softer skills than we were taught.
Good Boss, Bad Boss: How to Be the Best… and Learn from the Worst. Stanford professor Bob Sutton’s worthy successor to The No Asshole Rule. If only Sutton was director of human resources for the whole world.
The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Entrepreneur Eric Ries articulates what many of his peers have long instinctively known and launches a movement in the process.
The Power of Habit: Why We Do What We Do in Life and Business. Business reporter Charles Duhigg explicates a seemingly mundane but potent motivator. Useful for marketers, bosses, product developers, and anyone with an unused gym membership.
The Laws of Subtraction: Six Rules for Winning in the Age of Excess Everything. Innovation advisor Matthew E. May became a student of minimalism during his years at Toyota in Japan. Less is more.
Islands of Profit in a Sea of Red Ink: Why 40 Percent of Your Business Is Unprofitable and How to Fix It. MIT lecturer Jonathan Byrnes directs his waste-seeking spotlight into every nook and cranny of a business. This book is spinach: not a delicious read but very good for you.
The Wide Lens: A New Strategy for Innovation. The Tuck School’s Ron Adner reminds us that innovations--no matter how brilliant--require upstream execution from suppliers and downstream cooperation from distributors to succeed.
Playing to Win: How Strategy Really Works. Once and future P&G chief A.G. Lafley and the Rotman School’s Roger L. Martin show leaders how to make the right choices and urge them to ask this excellent question: “What would have to be true for this strategy to succeed?”
Those are just a few of the 200-or-so titles that survived the shakeout. Clearly I failed to reach the two-thirds benchmark. But I’ve promised my family that as I add new volumes to the shelves I will get rid of old ones. That means every surviving book should be glancing over its shoulder. Yeah, Wikinomics: How Mass Collaboration Changes Everything, I’m looking at you.
If you want all your employees to have the same experience at your company as you expand, don't forget about this crucial relationship.
As the founder and CEO of BerylHealth, I built a company from three employees to almost 400, and scaled a unique corporate culture along the way.
But earlier this year Stericycle, a public company, acquired BerylHealth and I was named Stericycle's chief culture officer. Now I have a much different challenge. Stericycle has 13,000 employees in 13 countries, a great financial track record, and strong customer satisfaction. But its executives have determined its future success is contingent on a renewed focus on employees.
Gauging Company Culture Today
One of my first steps is to "baseline" where Stericycle's culture stands at this point. To do this, I recently conducted the first employee satisfaction survey the company had conducted in four years.
As I reviewed the survey results and read thousands of open-ended comments, a couple of things hit me. First, Stericycle has a lot to be proud of. Its employees are loyal and hard-working, and committed to the company's success. Second, the problems and issues Stericycle employees raise are much the same as what I've always heard from the Beryl team. Whether you have a company of 13 people or 13,000, employees want what I'd call the basics.
Here's what they've said so far:
- Give me the tools and resources to do my job.
- Make sure I understand the company's vision so that I am here for a purpose bigger than my job.
- Show me that I am valued for the work that I do.
- Give me opportunities to grow.
Where a Culture Problem May Lie
As I read the survey responses, I also noticed a great range in their tenor, from those who were highly satisfied to those who were very unhappy. That told me that the culture problem for Stericycle isn't knowing what to do, but instead knowing how to do it consistently. To me, that says that a breakdown is occurring with how middle managers and supervisors are tasked with and execute on management's vision.
What's the lesson for you? As your company grows, realize that even if you do a great job of setting the vision and communicating it from the top, a different obstacle awaits when it comes down to the most important relationship in your business: the one between an employee and his or her direct supervisor.
This vicious curse can take you down if you let it. Here's how to beat it.
Anyone who has started and ran a business knows the entrepreneur's curse.
The frustrating dichotomy between never having enough spare time outside the business and the frightening reality when you do.
When I started Wild Creations a number of years ago, I lived the curse firsthand. As someone who had just come from the corporate world and was a master at leveraging vacation days with three-day weekends and long holidays, the entrepreneurial transition was challenging. I had lofty aspirations of "being my own boss" and having more freedom and independence.
Nothing could have been further from the truth.
Like any new business, it consumed every minute of spare time and every ounce of energy I had. When I actually took a few hours off, for example on a weekend to indulge in a simple college football game, the enthusiasm and pleasure of doing so were always dampened by the heavy guilt I felt for not working at the business. If we were slow enough to take time off, should I not be focused on trying to get more business?
It was a vicious cycle.
After a while, however, I learned to effectively deal with the "curse" and in fact became quite adept at avoiding it altogether. Here are a few tips on how other entrepreneurs can do the same:1. Find a Partner
Many entrepreneurs, by nature, are soloist. While completely understandable, I personally find it to be less optimal. I was fortunate to find a trustworthy partner and co-founder at Wild Creations. We had met and worked together on a USAID project overseas and discovered that we shared similar entrepreneurial aspirations. It took a number of months to establish the rapport and the trust we needed, but the patience paid off. When one of us needed time off, we could always feel confident knowing that the business was in capable hands.2. Hire Better People
If you cannot find a good partner or opt to go at business yourself, make sure to find better employees. And by "better" I mean better than you. Let's face it, the most capable and trusted person you are going to find to run your business is you, so do not compromise on selecting employees that you will trust to do it for you.3. Learn to Delegate
For many entrepreneurs (present company included), giving up control of any aspect of the business is difficult. I often compare my business to my children. As nice as it might be, turning over the responsibility to watch and protect them is not easy. It is important to understand, however, that you cannot do or control everything. Indeed, there are individuals much better qualified for particular tasks. Understand your strengths and the priorities of the business and trust the rest to your team.4. Find Your Happy Place
Like any parent, you will always worry about the business, regardless of the team you have in place. For me, I find it useful to have a "happy place" where I can go and tune out the business and outside noise. The time allows me to recalibrate, mentally, so I make certain I am focused on what is important. Whether it is a beach, a reading bench, a set of headphones, or a state of Zen, find your place and be willing to allow yourself the indulgence of "letting go," even if for a short time.5. Do What You Love
It may be a cliché, but it is spot on. Most entrepreneurs choose to start businesses to pursue a personal passion or interest but quickly get lost in the rigor, stress and anxiety of running the business. When you start to get frustrated, remember why you started your business and reclaim the enthusiasm you had before. Working tens of hours in the business then feel a little less like a chore.
The entrepreneurs curse is, for the most part, mental. It requires the ability to turn the business "on" and "off" at a moment's notice, which is completely achievable but takes practice ... lots of practice. In the end, you may not find more spare time to enjoy, but you will most certainly learn to enjoy the spare time you have.
As for me, I finally learned to enjoy my ASU Sun Devil football games ... outside the office!
Have any other tips for beating the entrepreneur's curse? Please share them below!