Here's a nice infographic on the "Must Haves" on LivingSocial for Q3.
Image by elycefeliz via Flickr
The reasons to start a business are many and varied. In my experience, the CEO's that pitch us have one of three goals; they want to win or they want to make a lot of money or they want to change the world. So which CEO's tend to deliver the greatest returns?
Maybe not who you'd think.
Changing the world is consistently the best way to create value.
People whose aim is to win tend, over time, to reduce the scope of the game to one that is winnable. So rather than ambitions being large or goals getting bigger in impact as it progresses, this CEO's enterprise tends to narrow or shrink. And winning is often benefits a smaller and smaller group of people in this scenario. (Even if that means not winning for the investors) Winning is more important than the people so throwing some over board hardly matters.
A primary aim of making a lot of money introduces a whole gamut of decision influencers. Most of those influencers promote short cuts and borderline decisions. Yes, making money is the central point of an enterprise in a capitalist system. But trying to do so without creating value is akin to running a scheme.
People who seek to change the world create the greatest value. Value for themselves, employees, customer and investors. It is isn't about limiting the scope to "win" or taking short cuts to a great payday. It is about changing the world -- which is the biggest scope and doesn't support any short cuts. And changing the world requires a big idea that is well executed whereas winning or making a ton of money don't always require those in practice.
So you might ask, what about VC's? Do they want to make a ton of money, win or change the world?
Yes. Yes, they do.
Here is the job listing that we will be promoting beginning next week to fill a new position. If you or someone you know has an interest, please note the email address at the bottom of this post.
Grotech Ventures, a leading, national venture capital firm headquartered in Tysons Corner, Virginia near Washington, D.C., is seeking an Associate to join our highly successful investment team. The Associate will be expected to hit the ground running, taking a proactive role in deal flow creation through networking and actively participating in venture/startup related events; conducting pre-investment due diligence, financial modeling and deal structural analysis; researching new potential investment areas and companies; and ultimately helping execute and manage the firm’s investments. The Associate will have the opportunity to get involved in every aspect of the investment process from sourcing to executing transactions to portfolio management.
Candidates should have prior experience in investment banking, venture capital, private equity, management consulting, or a broad-based role at a technology company or startup. The Associate position requires strong analytical capabilities, financial modeling proficiency and excellent written and oral communication skills.
Compensation commensurate with experience. Resumes should be sent to Jennifer Ports, firstname.lastname@example.org.
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Both LivingSocial and Groupon took the big leap and made the big investment into Super Bowl television advertising over the past weekend.
Image via CrunchBase
Given the multi-million dollar table stakes, this wasn't a small decision for either company. And with the massive audience watching the ads, it was a significant moment in each company's history and brand development. And, ultimately, both companies succeeded at communication and definition of their company brands with their advertisments. I suspect a broad swath of America has much better understanding of LivingSocial and Groupon and their respective values today.
In fact, both LivingSocial and Groupon took some risks with the ads. I won't speak to the content of these ads but it does strike that they are emblematic of the need for entrepreneurs to continually take risks. Even, or especially, when the stakes are highest. Which isn't any different than when starting out a company. It is worth noting, that it never gets easier for the entrepreneur as the stakes get larger. But it does get more rewarding when it works out. Which is another way of saying that it never gets boring and that is one of the reasons why the entrepreneurial experience is always an adventure. Kudos to both management teams to putting themselves out there.
Groupon's Lead Ad
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Amateurs talk strategy; the professionals focus on tactics; and superstars concentrate on culture.
Superstars focus on culture because a company’s culture will determine if the company will successfully execute its strategy and tactics. A company’s culture is a statement of its values that influences all actions and every decision associated with the execution of strategies and tactics.
Company culture isn’t group think as much as it is identification of valued behaviors and common beliefs. This identification is informative to every employee -- every day. Many successful business people believe that culture is the basis of everything their employees do.
The recent success of Zappos is a result of the company being defined by its culture and succeeding on the basis of that culture. Tony Hsieh, CEO of Zappos, is famous for stating that “if you get the culture right, most of the other stuff — like great customer service, or building a great long-term brand, or passionate employees and customers — will happen naturally on its own.”
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Tony clearly believes in a “culture first” approach.
For everyone else who intends to start a business from scratch and succeed, you need to have a handle on culture creation and culture support. If you create the right culture, it can enable you to succeed even when strategies flail and tactics fail. Culture will enable employees to do the right thing.
How do you do this? Define your values clearly, realize that little things can mean a lot, and always reinforce your words with actions.
Define your cultural values and live them
What do you value? What behaviors does your company reward? Would you like employees to help customers or “surprise and delight” them? Is it desirable for employees to work well together and “recognize others”? Defining cultural values is to specifically describe the behavior and/or goals of the organization within a context of broad principles.
Since your cultural values must be useful to employees, they must also be definitive terms. Company values shouldn’t be solely aspirational. Don’t suggest that employees “strive” to do something. Everyone has a different definition of striving for that matter. Your values must be results oriented to be useful.Think “make,” “achieve,” and “deliver” rather than “demonstrate,” “show,” or “lead.” Employees want to do the right thing but in many instances aren’t sure what that right thing is given the circumstances.
Once you have defined your organization’s cultural values; you have created a framework that informs all employees. Your declared company values provide insight during those oh-so-frequent moments when an employee is faced with an unanticipated situation. I recently responded to a Facebook ad that promised a $50 instant credit for a first purchase at Bonobos. I bought a pair of pants and due largely to a credit card snafu was credited twice for the $50. I called Bonobos to rectify the double credit and the customer representative said “Hey, we can’t fix that in our systems, thank you so much for calling, you need to consider the extra $50 a bonus.” (Shout out to Bonobos Ninja, Tim MacGougan ) What?? I suspect that Bonobos informs it employees to “delight” customers rather than “satisfy” them. That cultural bias will win you customers for life as Bonobos did here with me.
Honor employees very publicly and demonstrate when they have values
If you want employees to champion the values; make a point to publicly and materially reward those employees that exhibit the company’s values in their actions. This will benefit all employees. Google is famous for providing six figure bonuses to team members responsible for major innovations. If you value innovation within your culture, reward it generously to foster the desired behavior. If you value delighting customers, reward that behavior when you see it. Positive reinforcement is a strong motivator. Put your money and your recognition behind your values.
Little things mean a lot
mazon uses old doors on sawhorses for desks. It is one thing to say we are a frugal company with a “no frills” work environment and it is another to use old doors for desktops. Amazon doesn’t need to tell employees working from old doors that they should be on the lookout for opportunities to save money. If they don’t see it on the desk in front of them, they won’t get it from any other form of communication.
Honor the culture you create in all you do, big things and small. Don’t allow the culture to push back at any of the fringes with exceptions. Understand that there will be continual resistance to doing certain things in certain ways. Or, in spite of a commitment to give back to the community, that there is a legitimate economic gain for the company NOT giving employees four hours a month to volunteer locally. Cheap hotels are often not as nice as pricier ones and the potential rationales to upgrade will be many and varied. Maintain consistency by being inflexible on the values application to all decisions.
Actions must continually reinforce words
As a leader, you must exemplify the culture and its values. If you punish failure with disapproval, you diminish risk taking. People seek approval and if you aren’t ready to continually recognize people for acting appropriately related to your cultural norms, you aren’t building the culture. In fact, you either support or diminish the culture with each every hiring decision.
You should be careful to hire people that fit within your culture. Zappos is famous for its $2,000 “quit bonus” to new employees. The quit bonus is offered to employees who are completing week one of a four week training program and stands until the end of the fourth week. If an employee isn’t interested in the company or more than a paycheck, they can take the quitting bonus and leave the company. In fact, 1% take the quit bonus. The other 99% want to be there and are committed to the company. As a recult, Zappos doesn’t have an issue of hiring employees who don’t support the company culture.
Ultimately, your company’s culture will influence every element of strategy and every tactic executed by the team on a daily basis. Without a supporting culture, strategy and tactics are somewhat meaningless. Culture doesn’t self define, however, and needs direction attention. Successful business owners envision their company culture from the start. They believe that culture super cedes strategy and tactics. Go ahead and define your organizations’ culture, then follow with strategy and end with tactics… by doing so you can be assured of reasonable execution and informed employees.
Originally published on BusinessInsider on 12-15-10.
Image via CrunchBase
Paul Sherman and the folks at Potomac Tech Wire always do a great job executing these events. They typically sell out so if you have any interest best to buy a ticket sooner than later.
I will be one of the panelists and the others will be:
Phil Bronner, General Partner, Novak Biddle Venture Partners Image via CrunchBase
Thanasis Delistathis, Managing Partner, New Atlantic Ventures
Tige Savage, Managing Director & EVP, Revolution LLC
Harry Weller, General Partner, NEA
Image via CrunchBase
Here is a link to the event overview.
And a registration page.
These non-obvious people tend to be the people in your work life who march to a different drummer. Sometimes quirky or just a little different, these folks distinguish themselves via insight or work ethic or activity. You may enjoy their company and appreciate interacting with them without fully appreciating how valuable these folks can be to your career.
These “different drummer” folks, including nut jobs, hustlers, self-promoters and geniuses, may not be your “go to” people in your work life. But if you want to rise as a star, you need a diverse network of “go to” people around you, and these folks can be especially valuable.
Success is facilitated by a network of friends and associates that provide with unique insights and timely support. If you have people in your network that see things others don’t, you will be enabled to jump a step ahead ( or stay there). You may not naturally gravitate to reliance with these types of folks, but strong relationships with them will serve you well. You will need to create ties to them, but first, you need to recognize them. Here are four unusual friends:
1. The Nut Jobs
Image by Stephen Dyrgas via FlickrOK, nut jobs may be a bit harsh as a descriptor. On the other hand, it will frequently be quite an accurate name for those people who have an uncanny knack for identifying emerging trends. These people spot the trends even before the early-adopters. (Think “pre-hipster”). They see things before they are big. And that can make most of them a little crazy to deal with as they impatiently wait for the world to catch up to their worldview. Many people claim to have this visionary insight but most people don’t have it. If you can find someone who is the real deal, make sure you build whatever working relationship is possible with them. Of course, you won’t act on every one of their insights, but you will be informed and you will benefit from their point of view.
2. The Hustlers
Hustlers work relentlessly harder than their peers. They tend to get promoted. Shock of all shocks, people who work harder tend to promoted above all others. If you want to be promoted consistently, you are going to work pretty hard too. Hustlers are easy to identify – literally, because they will be the ones starting early and staying late; and figuratively, because their contributions (and hopefully yours) are the ones that stand out.
Hustlers talk to more people.They do more. They hear more and know more than almost anyone in the environment. They are usually adept at predicting what initiatives will fly and which will fail, whose stock is on the rise and the changing of management focus.
3. The Self-Promoters
Cover of Smart People
Look, you may or may not be adept at self promotion. Either way, you need to identify and cultivate relationships with the great self promoters in your sphere of influence. Self-Promoters are an accurate barometer of the current view of success; and they provide the conventional view of any situation. The self promoter has a valuable skill set and needs a message that sells; while you may need those skills and have a message that needs to be sold.
While you can argue that self promoters are attempting to influence and direct the real time perspective of success and thus their value as a barometer is undermined, it is unrealistic to ignore their innate sensitivity to promoting things that people accept. Get to know a self-promoter and you will get to know the conventional wisdom in your arena.
4. The Geniuses
No matter how bright you are, you will encounter people who are a great deal more intelligent than you. You need to build a cadre of exceptionally smart people who can help you tackle your vexing dilemmas. The true geniuses that you encounter are unlikely to identify themselves. Most people aren’t observant
Image via Wikipediaenough to notice their light, or aren’t engaged enough to care….and geniuses know that. You need to spot them. You need to engage them. And you need to assess the types of problems that each is good at solving. Geniuses will make you smarter. And they are generally happy to have their intellect recognized by anyone.
Befriend, align yourself and otherwise connect with Nut jobs, Hustlers, Self-promoters and Geniuses to fuel and support your career. They each offer a value far greater than the time invested in the relationship. And you may find yourself with unexpected friends.
Originally published on BusinessInsider.com on 11.17.10
Image via CrunchBase
Can you get better at spotting the most promising opportunities? How do you recognize the next big thing? How does anyone know it when they see it ?
If you’re like most people, throughout your life a few great opportunities will land on your doorstep. And again, if you’re like most people, you’ll ignore these rare opportunities because you won’t recognize them as great chances for success.
Don’t feel bad; even people in the opportunity recognition business – including prominent venture capitalists – miss out on great opportunities. Bessemer Venture Partners has an “Anti-Portfolio” on its website of prominent successful companies that they chose not to invest in.
Bessemer is a long time, successful venture capital firm which passed on Apple, Google, Federal Express (multiple times), Intel, and Paypal. Everybody misses a few, no one gets them all. The Bessemer Venture Partner firm approaches these missed opportunities with maturity and grace (probably at least in part because missing isn’t their predominant pattern). They have a lot of hits in their history, more hits than misses overall, which is the foundation of their success.
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We all build success from our realized opportunities. And we all strive for more hits than misses. If you can do better than average at recognizing the opportunities in your life, you might truly prosper. But how does one build opportunity recognition ability?
I argue that internalizing four concepts about the nature of opportunity can markedly improve your recognition skills. These four concepts are:
1. It won’t be perfect
The ideas that will develop into great opportunities tend to be fully thought out when you hear them. But they aren’t perfect. Not at the beginning, in the middle or at the end. Your ability to see the imperfection shouldn’t blind you to the larger possibilities. In my venture capital firm, when we hire new,(typically younger people), into the business, we are accustomed to the newcomers hating every deal. They are smart enough to see the imperfection but not yet experienced enough to be confident accepting that the imperfection doesn’t define the opportunity. Endeavor to see the opportunity in spite of the imperfection of the current presentation.
Does it sound like it could be a big idea? If no, don’t bother looking any further. But if the answer is yes, accept the reality that there will be obstacles between the current moment and achievement of the imagined goal.
Regardless of the obstacles and imperfections, great opportunities are usually well thought out. Which is to say, that someone or a team of someones is thinking through every aspect of realizing the opportunity. They may not have all the answers for every challenge that must be met, but they are thinking about everything.
2. The future is built with today’s tools not tomorrow’s tools
The great innovations of tomorrow are usually built with today’s technologies in new combinations. You would be mistaken if you think true “invention” is the source of innovation or the typical great opportunity.
Many people seek a technological breakthrough or outright marvel as proof of the existence of opportunity. (And sure, sometimes break troughs and marvels are proof of opportunity), but many great opportunities are not driven by a breakthrough as much as a re-packaging or a better combination of advances. Apple’s iPhone is the migration of a friendly operating system onto a smart phone and the Apple iPod series is built from broadly available components.
For that matter, don’t focus your evaluation of an opportunity on what’s missing like the big technology step forward or novel process. Look at what is present today. Because the big breakthrough is rare, and you must focus on what’s present.
3. Appreciate the evolution of previous failures
Failed attempts at an idea are more a testament to the value of the idea rather than a repudiation. In fact, most great opportunities aren’t realized on the first attempt of an idea’s execution but rather as the perfected evolution of previous failures.
When Youtube.com got going in the summer of 2005, it had no less than 30 comparable competitors. Failures in the video sharing website genre go back to ZoomCulture.com in the fall of 1999. YouTube perfected their formula by making videos easy to upload and discover; but more importantly, by allowing other websites to embed the videos, Youtube broke through to widespread distribution. And with wider distribution, Youtube became the winner.
eBay was one of dozens of online auction sites with comparable functionality in the late 1990’s but yet it was eBay who emerged to lead a massive new category. eBay succeeded by solving the initial buyer trust issue with a feedback system. That feedback system enabled eBay to succeed as the online auction leader over auction sites with arguably better technology. They perfected the model.
In order to fairly assess an opportunity, you must examine the causes of preceding failures.Early video websites failed, in large part, because people had limited bandwidth. If the underlying cause of failure isn’t applicable any longer, the idea may be poised to succeed.
4. Timing can be everything
The single most powerful question you must ask yourself about an opportunity related to timing. Is right now the right time for this idea? There are a lot of great ideas that don’t become great opportunities until the time is right for them.
Interacting socially online with people of common interests or social circles has succeeded repetitively. The current social networks are simply the most successful. The current social networks reached a point of critical mass, for example, when there was nearly ubiquitous Internet access AND widespread personal usage of the Internet. If most of your friends aren’t online frequently, a social network is of limited utility.
Facebook wasn’t the first social network and neither was MySpace. I invested in an online site for a teen audience to create their own online space with email, music and status sharing in 1996. It was called Myroom.com and…. it wasn’t the right time. The idea of a social network can probably trace itself back to the original computer bulletin boards. A major factor for Facebook success was the timing.
You will find analogous failures for every opportunity you ever consider deeply. If you can’t comprehend why they failed, you will be ill equipped to evaluate the modern day equivalent. But the truth is, thanks to accessibility of people and their stories, you usually can find something, somewhere wherein the founders detail those causes.
In my thirty year career, I have encountered five great opportunities and recognized three of them. In your career, in order to do better on the final accounting of opportunities vs. recognition; you must first recognize the opportunities … and they don’t always show up gift wrapped. Taking these truths into account, you should have an improved ability to know ‘em when you see ‘em.
Image by asvensson via Flickr
For an entrepreneur, the truth related to opportunity, market, product, and customers is a constant pursuit. The truth, however, is fungible. Things change and if you want to succeed as an entrepreneur, you need to match the moments of truth with appropriate change. Discovering the truth about your business, or your customers or your marketplace is one side of the issue. The other side of the issue is avoiding false beliefs.
So, where will you encounter mistruths? Fom people who provide false statements, beliefs or assumptions in the form of opinions or advice. It is a fact of life that people will mislead you on occasion. Some people will intentionally mislead you, and others will inadvertently mislead you. Some people will do it all the time and others will do it only sometimes. Either way, a person’s intention is irrelevant if you are ultimately misled or make decisions based on faulty information.
If you want to do well with your business, you’ve got to be superior at spotting nonsense and recognizing crap when you hear it. Strive to develop a well-honed B.S. meter. Without one, you waste time and squander opportunities. With one, you avoid time wasting tangents, useless fire drills and other time sinks.
If want to enhance your B.S. spotting skills, you should do the following six things.
Determine the speaker's self interest
Whenever someone is presenting a point of view, you owe it to yourself to consider how their opinion might correlate to their own self-interest. After all, there must be some reason they have to make the argument to you in the first place. And that reason more likely correlates with their own self-interest than with yours.
I started my business career with the naïve assumption that if I worked hard, kept my head down and contributed well as a team player, I would get noticed and promoted by upper management. You can imagine my shock when I realized that some of my peers chose means other than hard work and valid contribution to pursue recognition and promotion. These folks, ( let’s call them rat bastards), sought advancement via self-promotion, empire building, bandwagon jumping and good old fashioned back-stabbing. What I didn’t originally anticipate was how many rat bastards ( which is ultimately a term of affection) I would encounter along the way. I also underestimated their effectiveness. Nor did I have any tactics to handle them.
By the time I became a CEO, I was able to identify and remove rat bastards or at least shut down their activities. If you’re lucky enough to work in a company where political behavior is frowned upon, the culture will probably declaw these folks. If you’re not, you need to learn to cope with these folks and their maneuvers.
Now, a little self promotion or well-timed politicking may sometimes be a powerful additive to your work efforts. But if self promotion doesn’t come naturally to you, you need to counterbalance the rat bastards without sacrificing your integrity or becoming one of them.
So here is a quick view of some of the rat bastards (“R.B.’s”) and how to handle them. These are some practical yet relatively innocent counter-measures for some typical rat bastard behavior.
The Self Promoting R.B.
Who they are:
Barnum the Rat Bastard is adept at using all media and messaging available to amplify his or her successes, contributions and achievements. The level of achievement or degree of difficulty associated with any success isn’t a primary concern. The primary objective is the communication to a targeted audience for the purpose of inflating perceived value of the self promoting R.B. While you may be toiling away and hoping for mere recognition of meeting significant milestones, this isn’t part of the paradigm of the self promoter. The self promoting R.B. promotes often, loudly and without discernment.
How to deal with them:
As a practical matter, you can’t say or do anything contrary to R.B.’s self promoting messaging regardless of how overblown it is. Instead, you need to re-amplify the message as much as possible. If the self promoter sends out an email trumpeting a personal/organizational achievement, embellish the claims and expand the distribution by forwarding the email to a broader list. Don’t re-amplify every message mind you, but only those messages that are the most transparently self promotional. Yes, there is some downside risk in re-amplification but the upside is that the self promoting R.B.’s credibility typically suffers because anyone broadly understood to be a self promoter ends up with a credibility issue.
The Empire Building R.B.
Who they are:
Julius Rat Bastard, the grabber of headcount, budget and all manner of territory for means and to ends unclear even to himself. For this R.B., the only point that matters is building the kingdom. This R.B. operates with the presumption that more resources equates with more value and importance. There isn’t an evaluation on Julius’ part about making the sum greater than the total of the parts; Julius is just focused on making the sum as big as possible by acquiring more parts.
How to deal with them:
To slow Julius R.B. down in the long term, you need to be “helpful” in the short term. First, take all your marginal performers, known troublemakers and general pains-in-the-neck and get them into a single functional group. Then, task that group with something that either appears to or does overlap responsibilities with a group working within Julius’ organizational functions. This will prompt an irresistible temptation for Julius to petition upper management for the transfer of your troublemaker group into his domain. When the discussion inevitably arises, you agree to the transfer of this function and it’s associated group to Julius R.B. In one move you have reduced your management headaches while transferring them to a place where they can do you some good; and you appear to be a great team player. That can be the end of it. (On the other hand, you may choose to comment on how poorly the group is faring after the move and state that you never had any issues with the team. But that would be perilously close to rat bastard behavior.)
The Bandwagon Jumping R.B.
Who they are:
Like a newly converted 2010 Miami Heat fan, this R.B. will align himself with any obvious winner. Using revisionist history and creative story line gerrymandering, this R.B. can trace his role and contribution into every organization success. In order for him to do this, the Bandwagon jumping R.B. has to constantly monitor people’s perspectives on the status of many initiatives. In order to jump on the right bandwagon at the right time, he must always seek association with potential successful bandwagons.
Image via Wikipedia
How to deal with them:
Your mission is to simply tout the likelihood of successful outcomes for every initiative you’re aware of. Occupy the bandwagon jumping R.B.’s time by recommending initiatives and projects. Help this R.B. claim involvement or create tenuous relationships with many looming victories. The farther afield geographically, organizationally, or functionally the better, as the gravitational pull of any bandwagon is powerful to this rat bastard. And since there won’t be much intellectual honesty about the association or involvement, you can leverage the pull of many bandwagons across a broad array of activities.
The Back Stabbing R.B.
Who they are:
Richard Hatch of the original “Survivor” TV show comes to mind. Sure, you may not know who they are as you won’t hear their musings, statements and mistruths until after they’ve back-stabbed. In my experience most back stabbers are the toughest R.B.s to spot. Some will be your “friend”, most won’t bother with the charade. These are R.B.s who operate in the shadows, making private derogatory comments and accusations that can torpedo your credibility and success.
How to deal with them:
The only proactive method for dealing with these R.B.s is to spot them before they have the (next) chance to backstab. Spotting them is critical to diffusing their effect. Unfortunately, you will probably identify one only when a manager or someone trusted approaches you to validate one of the R.B.’s statements. However, if the R.B. has simply declared that you are an idiot, you won’t likely be provided with the opportunity to address the statement – and spot the back stabber R.B. As a manager, if someone (the prospective back stabber R.B.) tells you a colleague is an idiot, you can respond in one of two ways IF the accused “idiot” is on your team or under your management level First, ask “Does he know he is an idiot?”, and second, declare “If not, let’s get him in here and let him know – or at least let him know you think that. Let’s get this on the table.” Sure, there are real idiots out there. But it is better to deal with these things head on as a manager. This technique keeps you in the management role and “outs” the back stabbing R.B.
If the accused “idiot” is a superior. DO NOT ENGAGE. The Back stabber R.B. will take any conversation (even one-sided) about a superior and put your name on the statements that occur in the conversation.
Once the back stabber R.B. is identified you can call him out in a number of ways. If you hear anything suspect, you can make statements like “I can’t believe anyone would say that….” or “WHO did you hear that from?” or “Gosh, it sounds like you’ve been listening to “Back stabber R.B.” Make sure you circle back to Back stabber R.B. to make him aware of your comment. Back stabbers are a form of bully, just much less direct. And bullies and back stabbers don’t like folks who strike back or have their number.
The presence of political behavior demonstrates the absence of management. If you are now or ever will be in a position to extinquish it within a group, there are few things as beneficial that you can do for your team’s well being. Until the day when you are in a position to vanquish this behavior, there’s no rationale, valor or redemption in accepting these behaviors or failing to handle these rat bastards.
Originally published on Business Insider's Strategy Section on 10/14/10.
Image by Venn Diagram via Flickr
Here they are:
10. Inadequate Focus
When everything is a blank piece of paper, there is an unlimited set of possibilities. The great dual-edged sword of the start up experience is freedom. The freedom exists to pursue anything or everything. Success, however, is a function of focus. Start ups that don't focus in early and completely upon a target customer/solution/market/etc. will fail. Sure, you can build a technology or a product that is useful to many individuals or companies or industries. But to succeed, you have to pick a specific set of individuals, companies or industries that your technology or product helps and focus intently on them. With an industry focus, for example, the second customer sale is easier than the first, and the third sale easier than the second, etc. If Marriott is a customer, for example, then Hilton or Gaylord knows immediately that a respected competitor has "validated" your product. Another customer from another industry just wouldn't provide Marriott with that same validation.
9. Substandard Product
In the 80's, the statement was "perception is reality". This reflects the power marketing once had to influence prospects about a product. Today, reality is reality thanks to the availability of user reviews of everything. Previously, you could achieve the perception that your offering was superior with a less than stellar product via creative marketing or sales muscle. Some companies grew well with vaporware. Those days are over. Now, the product has to be great. Not kind of great, or great in certain lights, but great in the opinion of knowledgeable users. Oh, that's the other thing, the world is now full of knowledgeable users - who want great products. Not products with great marketing, sales or positioning.
The commitment to create a great product is central to a successful start up's DNA. It permeates all thoughts, actions, plans and attitudes. If it doesn't, the product isn't going to be great. If the product isn't great in today's market, the start up is ill equipped to compete and is unlikely to survive.
8. The Value Proposition isn't Understood or Valued
The solution the start up offers must solve a problem that is acutely felt by whoever has it and the solution the start up offers must be recognized as the appropriate answer. In life science investing, for example, the target market question is in two parts. First, how many people have the condition or disease that this treatment addresses. Second, how many with the condition seek treatment. The market is the subset that desire a solution.
If the target market doesn't understand what it is or what it does or why they might want it, the start up will not make it to its happy place. Yes, something can be a great shampoo, floor wax and dessert topping but what it can do or how it can be used is the seller's perspective. But it will never sell on the basis of being good at any of those things, it will only sell for what it is great at doing from the customer's persepective. The buyer's perspective is not all it can possibly do, but the one or two things it will do for them and do for them better than anything else.
7. Salespeople determine Target Markets
It is unfair to ask salespeople to define target markets. The job of truly understanding the market segmentation and customer profiles is a broad responsibility across a start up. Many start ups task their limited sales force with solving this question on a "trial and error" market segmentation, where they call lots of people and report back on what they hear. The result is unscientific to the point of being completely unreliable. The right people have to be asked the right questions to determine the best prospects with the greatest need and perceived value for the solution. Only when the target profile is developed can salespeople deliver real value.
You need to position salespeople to win by defining the prospect clearly. Salespeople are often talented hunters but, for maximum efficiency, they need the prey to be carefully defined for them. If you say, "Go shoot rabbits", without further definition of rabbits, salespeople will shoot at everything that moves, declare them all to be rabbits, and argue that whatever they hit is proven as a "rabbit". It wastes time and won't secure customers that can be profitably sold and serviced on a scaleable basis.
Even given an infinite amount of time, most salespeople won't hone in on the best target customers. It isn't their skill set. Salespeople are great at determining fit of a solution to a customer's needs. Do them a favor by eliminating as many suspects as possible. Then, they can focus on fit, budget and compelling action. More will be sold as a result.
6. Wrong Timing
Being early to a market is a slower death than being late to a market. Either way, if the timing of the offering is well off of the market opportunity, failure is highly probable. It is easy to get timing wrong. Most Venture Capitalists have stories of great ideas that suffered from nothing more than abysmal timing.
If you have ever surfed, you know that once you see a big wave, you have probably missed it. Timing the great wave is about properly anticipating it within the context of many waves. By the time the success of a Groupon or LivingSocial is widely recognized, the opportunity to ride that wave is long gone.
You can also be too early. Even with a great product and a well defined market, timing is critical. I led the creation of a product called MyRoom.com in 1997 as an online private space for teenagers where they could create their web space, invite friends, have an email address, and enjoy a customized radio station. It was well executed, and way too early. If the company's market timing is way off, the start up won't often live to see its day in the sun.
5. Not Enough Experimentation
You cannot understand too much about anything related to a start up's progression. The rapid assimilation of the truth is a competitive advantage for a start up. All things being equal, in a competition the faster start up to get to the truth wins the race. At the end of the day, everything will be known by pretty much everybody. Before that point, a better understanding of key customer insights is a competitive advantage. A management team that prides itself in being "smarter" about customers without being data driven for its "intelligence" gets beaten by a team with better data -- nine times out of ten.If the product and key processes aren't continually perfected with feedback and testing, the start up doesn't have a chance. If you don't get into a mode of test and refine cycles, you won't arrive at the processes, product, support and understanding necessary for growth. The start up that relies on its own wisdom consistently over the results of dispassionate customer dialogue and testing is screwed or soon will be.
4. Low Urgency
Consistent with the previous point, every start up is in a race against time and insolvency. Show me a start up management team that isn't moving like its hair is on fire and I will show you failure in the making. When the team doesn't keep a fast pace, they fall behind in everything. When they fall behind in everything, there is no amount of money or cleverness that will close the gap between them and their faster moving competitors. There is no functional equivalent to a time machine, time lost is time gone.
There are legitimate reasons and times to move slowly and carefully. And it is difficult to know when patience should outdo urgency. To stay appropriately urgent, start up management teams must assess the rationale for going slowly. If critical data points are imminent, it is usually worth waiting. If the desire is to perfect something prior to launch, it is usually not worth waiting. Your team must accept that the perfect is not the enemy of the good. Many times, good will be good enough because failing to act is failure. There just isn't time for inaction. A management team that tends toward slower response to opportunity and challenge will create cumulative damage to the company's standing.
3. Total Random External Events
Stuff happens and sometimes that stuff is both random and devastating to a start up company. Many start ups fail for reasons beyond their control. Any start up making reasonable head way in the summer of 2008 with a product for the larger financial firms, including Wall Street, Large Banks or Mortgage Companies, knows this well. Sometimes things are "overcome by events" and fail as a result.
A start up can do almost everything right and still fail because of external events. So can large companies for that matter.
2. Poorly raised or managed Capital
This isn't just about the health or receptiveness of the capital markets, the company must either make do on the capital it has OR get more capital. Success requires more capital than failure requires. It isn't necessarily about the underlying growth or lack thereof, but moreover, the management of the capital available to the business. If enough money isn't raised or care is not exercised over what resources are available, then the money needed to survive isn't there. And the game is over.
Picture a growth market where companies are trying to gain marketshare while attempting to re-define a market of five players down to the two "winners". The availability of capital and access to it will have a disproportionate influence on the outcome. Or imagine alternatively, a down market where the stewardship of capital will determine the survivors.
Start ups need a capital strategy for well-being and growth. Many start ups fail due to lack of a sound capital strategy.
1. Unwilling or Unable Management
Start ups most commonly fail because their management isn't willing or able to make them succeed.
Getting start up successfully launched can be hard. Sometimes they can be nearly impossible to make succeed. In practice, it is far more likely that management is unwilling than unable to make a go of something. Many a management team backs off when they realize how long and difficult the road to success is going to be for their company. They will simply say, "This is too much". Which is true for them. It is entirely fair for them to admit.
Is too much for anyone? Maybe. Sometimes it is too much effort and time for little prospect of return. Sometimes, it is just too much for a given management team. Other times, the start up fails because it is beyond the abilities of the assembled team. This is less frequent in my experience. A management team that is willing but lacks ability will renew itself with deletions and additions. By comparison, a management team lacking in determination isn't situated to fix that or even motivated to fix it.
This post was originally published by BusinessInsider.com on September 3rd, 2010. Here is the link
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In my career I have laid off or
fired hundreds of people. It was never a matter of pride by any means; I
lost a lot sleep prior to taking people out of jobs that they didn't deserve to
lose. It was never easy and I didn't enjoy a minute of it.
If I could have ever avoided the job of being the person to let people go, I would have, but it was ultimately my job responsibility. On occasion, I had some satisfaction dealing with people who weren't exerting appropriate effort or behaved badly toward co-workers. It was something that had to be done and unfortunately, for me, I was often the guy tasked to do it.There were plenty of tears, angry words and often, and completely stunned silence. Questions, accusations, allegations and refutations were all commonplace in these discussions. I found that the most deserving of separation employees were frequently the most shocked and upset. The least deserving were more rationale and accepting. Maybe they had better prospects for another job and knew it. But, those run-of-the-mill separations aren't the ones that I really remember. The separations I remember are the ones where people's responses weren't entirely what I expected.
Here are few that stand out:"Not Again?!?"
I let a man go once who responded in a completely exasperated manner. He started with "Not again, I am so sick and tired of being fired. This is the third job in a row." I asked him about his opinions and insights into why this was the case. He had none. He had a good resume and he interviewed very well. He went to work for Microsoft and rumor had it that he was one the first people ever fired from Microsoft. So, I lost track of him at 4 in a row.
"You guys haven't been clear
I had to let go an employee who just didn't do anything well. He was "too heavy for light work, and too light for heavy work". On one hand, all tasks were in a "Goldilocks" fashion not right for his skill set. And on the other hand, there was no amount of instruction adequate to inform him to his satisfaction of his duties. In the 18 months I worked with him, I tried him in 7 different jobs. No matter what, it wasn't the right fit for him, he failed completely at each of them. He attributed it to my failure to explain in excruciating detail all the tasks expected within the position. He was completely indignant at being let go and wanted a shot at an 8th position.
"But my other credit cards didn't have enough room to pay for the wedding"
I had to fire an employee who put her entire wedding on her Corporate American Express. By the looks of the billings and my conversation with the employee, it really sounded like a nice wedding. And paying for things, isn't that what credit cards are for? Her point of view was that we had given her the credit card to use and she had used it. And besides, her other cards were maxed out.
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"I had to smoke the pot in the parking deck, I rode the bus that day"
I had to fire an employee who chose
to smoke pot under a closed circuit camera at client site garage. I
asked, during the firing process, "Why smoke pot at work in front of a
camera?" His answer was that he had taken the bus to work that day
and couldn't smoke in his car on the way to work. " Yes, of course,"
I said, "but the whole camera thing?" He response was that he was in
kind of a hurry.
"I wanted to dress appropriately, so I look like an 18th century widow"In one spate of layoffs, I had to travel to 6 cities to layoff 20% of the staff in each city. By the time I had completed three cities, the employees in cities 4 through 6 were pretty aware of the meaning of my trip. Added to this was that the employees who were to be laid off were scheduled for a "meeting" with me. In Seattle, the employees to be laid off responded with flair by showing up in costume. My favorite was a young lady in dressed completely in a black, multi-layered taffeta dress complete with a veil a la' colonial Mexico. Black long sleeve gloves completed the ensemble. It was really impressive. We chatted about how she had put it together and where the various pieces -- dress, veil, gloves, shoes -- had been found. I told her I hoped she could use it again for Halloween or something. Then, as nicely as I could, I fired her.
It is never easy regardless of supporting circumstance to let someone go. Even when they might really deserve it. But the process of laying someone off or firing them is always memorable for both parties.
This article was originally published on BusinessInsider.com on 8/30/10. Here's the Link.
Image by Daniel Waisberg via Flickr
(This post was originally published on Business Insider int the War Room section)
A great deal has been written about the so-called 1-9-90 Rule and user behavior in Social Media.
The conventional experience is that 1% contribute a lot of content and participate frequently, 9% contribute from time to time and 90% don't contribute or comment.
This is all true at any moment in time. It fails, however, to account for changed user behaviors over time.
As such, the 1-9-90 rule provides to be of little real guidance about how to make money in Social Media. If it tells us anything at all, it is that people should make whatever money they can by simultaneously driving the 1% of heavy duty contributors to create while monetizing the other, mostly passive, 99% by whatever means available -- predominately low cost per impression advertising.
This doesn't work very well for most people running websites. It sub-optimizes revenue in a fundamental way.
The key to making money in Social Media is to monetize the right segment of the audience. First, though, one needs to view the segments by something other than their 1-9-90 participation.
The highest value audience segment has participation that changes over the passage of time.
Here's an alternative view, one that is key to realizing profit from social media. I break the audience into four segments, that don't correlate perfectly with the content contribution break out of 1-9-90. They are Catalogers, Discoverers, Influencers and Lifetime Lurkers.
Catalogers seek an online home for their information and knowledge.
In the view of the 1-9-90 model, they start in the 1 percent of heavy
contributors and migrate over time into 9 percent and maybe into 90
percent. They are the highest value audience, but more on that in a
minute. They are doubly valuable because they build the web site
initially with content contribution AND return to it loyally even after
they have completed the cataloging process. They are also the user with
the most personal sense of ownership, deepest relationship with the web
site and willingness to buy premium services, subscriptions, etc.
Catalogers are commonly mistaken for a formerly valuable audience member
(i.e. they used to contribute and now do not) under 1-9-90 instead of
the most currently valuable member.
Discoverers want knowledge and insight. They arrive in large numbers and leave in large numbers. They are the locust swarm that has been moving from web site to web site since the early days of the Internet and its' wooden CPU's. They may derive the greatest value from the information and are the least inclined to pay for it. They are a tempting audience. But it is folly to pursue them. They don't want to pay, they have never paid and they are not going to start paying now. And they are leaving soon and are unlikely to return, there may be other locusts but not the same ones. It is tough to monetize any audience that perpetually refreshes itself. Restaurants and web sites need their loyal, paying customers. The Discoverers are not inclined to be either loyal or paying ever.
Influencers want to demonstrate knowledge and influence others. They correlate well with the 1% in terms of activity but generate little meaningful content. They derive psychic reward from expounding and demonstrating expertise. Yes, they comment a lot but like the discoverers, they tend to take more from the site than they provide to it. They do provide animation and an organic liveliness to a web site operation but don't much impact the catalogers or discovers who will dismiss them by and large. But one must distinguish between contributing to the web site's knowledge and information and commenting on it. Value for the site owner is derived infinitely more from thoughtful and well crafted contribution than comments.
The Lifetime Lurkers have begun and will end their relationship with a website as lurkers, having never been a Cataloger, Discoverer or Influencer. And, yes, there are a lot of them. And, yes, lower cost impression advertising is probably the best way to monetize this group. But if you follow 1-9-90 Rule, you will lump the high value Catalogers into the Lifetime Lurkers category and never realize your revenue potential. I wouldn't disparage Lifetime Lurkers in any way. They pay the bills after all. But they aren't the key to making money in Social Media regardless of conventional wisdom to the contrary. Though that wisdom is in itself flawed by defining the group to be much larger than it really is.
Many people perform different roles with websites over time based upon subject and individual passion. We are complex beings after all. If you want to succeed at monetizing an audience in Social Media or User Generated Content, viewing the roles people play and the changing nature of those roles is a starting point.
Find your Catalogers and find ways to create more Catalogers; they are the key to making money in Social Media.
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(This post was originally published on BusinessInsider.com. Become a Thought Leader )
Five hundred or five thousand twitter followers will not buy you a cup of coffee in America. Followers at work, by comparison, will propel your career and assist your rise up the corporate ladder.
When top executives look within their company to identify the people they wish to promote or hand additional responsibility, they look for people who others will follow. Executives want people who are already followed within the organization. But leadership qualities alone won’t get you ahead.
There are many kinds of leaders. But the leaders who get promoted are the acknowledged thought leaders within a company -- they're the informal leaders people are already following.
Sure, strong managerial skills and/or superior competence within your scope of responsibility is helpful. As is being a hard worker. But those attributes are ultimately table stakes, as everybody in the game has them. To rise above the fray, you need to demonstrate the type of leadership that generates respect and recognition from upper management. The same type of leadership that creates followers within the organization.
So how do you create followers? How do you become a recognized leader? One key is careful development and measured demonstration of thought leadership.
Here are some ways to develop such leadership, as well as a few tactics for demonstrating the skill.
Become a subject matter expert
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Go beyond competence in your job: develop subject matter expertise of interest to a broad swath of your organization.
Examples would include your own company’s products and their primary uses, the competitor landscape, key operating metrics, or industry trends. Take the time to read and analyze the posted reports of public companies, listen to free podcasts of industry experts, watch posted videos of key executives' speeches, read whatever whitepapers you can get your hands. All the information necessary to transform you into subject matter expert is available to you. The bulk of it is free.
To avoid prompting defensiveness, make sure that your interest is characterized as professional interest in a subject that will make you a better corporate contributor; and second, offer your insights first to anyone who may be threatened by your knowledge.
Demonstrating deeper and more current knowledge is the nature of subject matter expertise
Everybody dislikes a faux expert. Make sure you really know what you are talking about.
Having achieved your expertise, you will be progressively and regularly surprised by the people who seek you out. At the end of the day, there may be others who are tasked to know some of this stuff. But, if someone’s neck is on the line for a decision, they'll find the people who really know. And that will be you.
Increase your relevance
Make sure others know about your expertise. Offer information freely
and widely to anyone you think may benefit from it. They will react,
respond and follow you if the information is valuable to them.
Enable others to trade and leverage the information you have developed with concentrated diligence. Don’t worry about attribution. Either way, consumers of your information and expertise are following your lead and that is far more significant. If the organization comes to rely on your expertise with regularity, well, you have established yourself across departments and among peers.
Recruit your followers
Whenever someone expresses interest or respect for your subject matter expertise, ask them to “opt in” to occasional updates from you. Offer to share your material in email briefs or short presentation briefings. Seek exposure for the material, (and yourself), and always offer to provide updates to everyone you expose to the information. Warning: characterize the updates as a “from time to time” communication as “significant or important developments occur” so no one confuses you with a subscription service.
Find and follow other thought leaders
Other thought leaders in your organization will end up being promoted over time. Which means that they are the most likely to be in a position to help you now or later. Bonus: thought leaders are flat out more interesting than the average knucklehead in your workplace They have material and insights you can leverage in your job. Smart people make you smarter. Thought leaders are also easy to find by asking around. You can also find them near the company's most well thought of initiatives.
You need to find and follow fellow thought leaders so they are in position to vouch for you to top management. Remember, when it comes time to evaluate you for promotion, the people who provide input will be the leaders you know and who know you. You should proactively build this pool.
If other thought leaders respect you, they can multiply and amplify your influence
Volunteer to go wherever and whenever you can while customizing the information to the degree possible to the audience. Example: Brief the salespeople on the weak points of your competitor’s latest offerings in a way that enables them to win deals and you will have a vocal following. Take the same information with a product positioning spin to various departments in marketing and you will have new recruits. Understand that the nature of followers in the modern world is that hierarchies get jumped and circuits close in unpredictable ways.
Picture the salesperson who utilizes your insights on a high level sales call with your CEO. After the sales call, the CEO might reasonably say, “I didn’t know that about our competitor’s latest offering. Where did you get that information?” Cue: Nice comment about you. If it happens once, it is nice. It happens twice, and that’s good. The third time someone quotes you or your information to the CEO, well, you’ve added another follower. An important follower whose success is dependent upon finding and promoting thought leaders. Thought leaders like you.
Don’t waste an important insight by sending it at the wrong time or sacrifice the value of your insight by not spending adequate time packaging your product.
For most people, you will only share information from time to time and you need to make the most of each communication. Do everything you can to enable and encourage sharing of the information. You can even make helpful declarative statements like “I did a ‘deep dive’ …(you can add that it was over the weekend if this works in your environment)… into this applicable subject matter (competitor product/industry review) and noticed three material things we at OUR COMPANY should be aware of. Would you pass this along to anyone who could benefit from it? I am happy to answers any questions about my analysis....” Package your insights and package yourself. This is thought leadership in an email. The desired cycle is that the email is read, valued and forwarded on.
Becoming a thought leader requires hard, thoughtful work
The application of the developed leadership must be conscious and
deliberate. The return is outsized, however, as one gains a credibility
and respect from this type of recognition that is much harder to
develop than from superior execution of one’s job responsibilities.
If you’re willing to do the work to have greater knowledge and you package and present it willingly, you will generate a following worth “tweeting” about.
Image by bigyahu via Flickr
The statement above has been historically used to declare ascension of one king to the throne upon the death of his predecessor. Today we see many reports about the death of display advertising and the vehicles (newspapers and magazines) supported by it. But display advertising isn't dead, it just taking new forms. In the process of taking new forms, it is changing modernizing its business model and supporting new vehicles for display advertising.Just as Google revolutionized online display advertising by changing the business model from impressions to performance based (cost-per-click) pricing, there is an emerging generation of companies changing the business model and primary media of display advertising. (One of those companies is LivingSocial, upon whose board I sit, and get to see this sea change first hand.)
One area where this change in the display advertising market is visible is in online group buying. It is my belief that people often mistake online group buying as a fad. I would argue it is a far more fundamental change, a seismic shift in the display advertising market. This shift is from simple display to performance advertising. And just like in online advertising before it, this is a big, compelling shift. What makes it even more significant, is that group buying is bringing performance advertising to smaller, local merchants.
The idea of group buying, usually of coupons, where everybody gets half off at restaurant ($50 coupon foor product priced at $25) so long as 100 people commit to participate, is but one of the shifts in the display advertising market. The restaurant industry employs 12.7 million Americans in 945,000 locations — and 2010 sales are expected to reach $580 billion. Even at 5% of sales for marketing/advertising expenditures, the restaurant industry is a potent economic force.
Image via CrunchBase
The restaurant industry has historically done its customer acquisition through advertisements. The performance associated with the investment, like all display advertising, has been largely unclear. The restaurant management is never fully aware of the specific impact of the
advertising effort or expenditure. This essentially is, in a world of CPC/CPA, why display advertising is losing its market share
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Let's consider, Option 2, our restaurant owner's chooses to pursue performance based advertising via something like LivingSocial DailyDeal. (Hey, had to get that in there somewhere) LS offers the restaurant owner the following deal. LivingSocial will create an advertisement for your free of charge and promote the advertisement to its 10's or 100's of thousands of our users for 24 hours, also free of charge. LivingSocial DailyDeals will structure a deal with you, the offer/call to action of the ad, that will entice customers to buy a coupon for your restaurant. (This offer will usually coincide with the restaurant cost of goods which is around 1/3 of retail on average. The restaurant can set a minimum level of purchases for the deal to be sold so there is no risk of expending effort here unless it is worthwhile. All of which minimizes or almost eliminates financial risk)
The restaurant can set a maximum number of deals to be sold via the advertising. Just like Google adwords, by the way, which allows advertisers to cap and control expenditures. Now, here's kicker for the restaurant owner, LivingSocial will cut a check TO the restaurant owner following the ad campaign's successful run. Hmmm, for the restaurant to weigh, write a check or receive a check, write a check or receive, ok they don't get to a third consideration. Who would?
But the benefits don't end there, after the campaign has run, the restaurant owner will see numerically and obviously the impact of the advertisement (that they didn't pay to create or run) on their business in the following weeks as coupons are redeemed by customers (new and old). The restaurant owner can now advertise via Cost per Acquisition for customers without any upfront investment or financial risk. On the back end, they can see how many coupons were redeemed with a full assessment of the return on investment of the campaign. The restaurant owner can look at display advertising in a whole new way. She can drive her business with cost per acquisition rather the uncertainty of projected yield . That is a big change.
It is a powerful change. Not one limited in scope or reach to groups buying in unison.
It is bigger than that.
It is the future of display advertising.The King is Dead. Long live the King.