Success at Work

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On Friday I was asked to walk a small team through some of my thoughts on what makes individuals successful at work.  After the session the team was asked to send me their key takeaways.  There were some interesting trends in what they sent back.  I'm posting their takeaways here – in their own words.

  • real failure is highly valuable
  • strive to be the lynchpin
  • make boss’s job easier
  • always bring energy and positivity
  • insights are just as valuable as results
  • consistent habits are important (going to the gym at the same time everyday)
  • always add insight, value, be interesting
  • biggest takeaway – the importance of becoming a “lynchpin” for the company, and for your boss.
  • results and insights are equally important; always search for insights on how to improve next time, even if the results aren’t really there this time
  • in conversation, try to make the majority of it insights; always aim to add helpful/interesting things to increase value
  • simplify the goal; break it down into more achievable parts
  • 3 things that ensure added value: be good at what you’re doing, like what you’re doing, and make it worth paying for
  • become the lynchpin – work towards becoming indispensable to my boss
  • reflect on the work that I have done and think about whether or not someone/something else can do the same or better at a lower cost
  • simplify the goal – this will allow me to focus and create a clear path towards actually achieving it
  • communicate with insights not empty words – always think about how I can add value to a conversation rather than just fill in space
  • key to career growth isn’t necessarily being the smartest/ most intelligent person. Core values such as Trust, Collaboration, and willingness to work towards manager’s goals are some of the key attributes that help in career growth.
  • always remind yourself to be on the learning curve – to better yourself + add value to the company
  • always ask yourself – Why am I best suited to do the job that I am supposed to do? What can I do to better myself in order to do that job better?  If you don’t know the answer to both these questions your career path is probably not on the right track

Some Thoughts on the Super Bowl

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Being from the Boston area, I'm a pretty big Patriots fan.  So watching last night's game was miserable.  Though, being objective, I have to admit it was a great game to watch.

A few things came to mind while I was trying -- unsuccessfully -- to get some sleep after the game.

Rob Gronkowski's ankle injury had a huge impact.  When a big tight end can't make quick lateral cuts, it's almost impossible for him to be an effective receiver.  Brady's interception was clear evidence that Gronkowski's ankle had an impact.  I don't recall ever seeing a linebacker defending a receiver that far down the field.  The ankle injury allowed a slower defender to cover him and freed up the corners and safeties to cover the Patriots’ receivers.

On the last drive of the second quarter, Brady ate up the Giant defense with his typical quick, short passes.  He was 10 for 10 on the 98 yard drive, virtually neutralizing the Giants' pass rush.  The Giants made a big adjustment at the beginning of the second half by rushing only 3 linemen; putting one man on Gronkowski and a tight zone on the rest of the receivers.  Brady had plenty of time to throw but nobody was open.  The Patriots couldn't adjust to the new scheme quickly enough and as a result could only put up 7 points in the second half.

Making quick adjustments is critical in business and sports.  The game you’re playing in today is going to be much, much different in six months or a year.  

Check out James Surowiecki’s New Yorker column this week on RIM and the fall of the BlackBerry; a company that, much like the Patriots on Sunday, couldn’t adjust until it was too late.

My Favorite Interview Question

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This changes over time, but here’s my favorite question to ask a job candidate:

How do you see yourself adding value to a company?  That is, when you get a job, a company is going to invest in you and pay you (hopefully a lot), so, ideally, what would you like to be doing on a weekly, monthly, quarterly basis to ensure a high return on that investment? 

Typically, you can learn several things from their answer:

  1. What they like to do
  2. What they’re passionate about
  3. What they’re good at
  4. What differentiates them
  5. How they see themselves fitting into an organization 

Of course I would never qualify or disqualify a candidate based on the answer to one question, but the answer to this question usually tells me a lot.

The Razorblade Strategy

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Yesterday I wrote about how I'm long on Amazon. One of the reasons is that they’re in the process of aggressively implementing the Razorblade Strategy.  The Razorblade Strategy is when one item is sold at a low price in order to increase sales of a complimentary good.  It was made famous by Gillette -- they sell their razors for next to nothing and the blades at a high premium.  This creates a profitable recurring revenue stream, and recurring revenue is generally better than one-time revenue.  Printer companies also do this very well.  Printers cost almost nothing and Hewlett-Packard, as an example, makes nearly all of its profits on the sale of the toner (again, recurring revenue).  I remember reading that one ounce of HP print toner costs more than one ounce of Dom Perignon...

The price of Amazon's Kindle has nosedived over the last several months -- you can get one for $79.  Rumor is that they’re even losing money on manufacturing the devices.  They're hoping that by lowering the price more people will buy a Kindle and then buy the profitable digital media to put on the device.  This is a perfect example of the Razorblade Strategy at work and exactly why I believe they’ll compete well against Apple in the digital media space.

Typically, the major risk involved with the Razorblade Strategy is when the price of the complimentary good falls.  But with Amazon's scale and dominance in media there's relatively little risk for them there.

Amazon should race as fast as they can to get a Kindle in the hands of every consumer.  Good execution of the Razorblade Strategy, and a price of $79 versus Apple’s cheapest iPad at $499, is a critical and promising step in that direction.

The Big 4 Internet Companies

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Someone asked me the other day if I could only invest in one of the Big 4 internet companies (Google, Facebook, Amazon and Apple), who would it be?  I didn't even hesitate: my answer was Amazon.

Without doing a true valuation analysis (I plan to do one in the coming days), here's my simple reasoning:

Facebook: overvalued due to the hype and enormous amount of un-monetized users; my sense is that with the lack of a coherent, long term revenue strategy the public markets will bring their valuation down to earth a bit when they IPO.

Google: using Warren Buffet's investment thesis of "only invest in what you know", I'm afraid of Google.  They're in too many businesses where they haven't been successful, and in too many businesses in general for me to wrap my head around.  I don't like to invest in what I don't know.  Google now has such a wide array of products that they have a website titled "what do you love?" where you can search any word -- any word -- and they'll come up with a listing of products that serve that word.  Try it and you'll see it what I mean.  They're in a lot more businesses than many conglomerates (GE is down to thirteen).  I'm not saying there isn't upside for Google, but their business is much too difficult for a casual investor to grasp.

Apple: I haven't read the Steve Jobs biography yet but I've read enough excerpts and heard enough interviews about him and it to know that he was the heart and soul of that company.  The company succeeded when he started it, crashed when he left and came back like wildfire when he returned.  See a post I wrote about his success a while back.  Surely his unfortunate passing is built into their share price at this point, but there are certainly enough reasons to believe that Apple's outrageously impressive growth curve may have peaked.  And without Jobs at the helm, they're tough to bet on.

Amazon: a fantastic management team with a long, long track record of success competing in a variety of synergistic verticals.  Amazon is steadily entering businesses that they are setup perfectly to dominate -- self-publishing being one of the most promising.  They've finally smartened up and have reduced the price of the Kindle massively, setting them up nicely to dominate digital media alongside Apple.  Amazon is so well run and at the early stages of so many fast growing businesses that I think it's a no-brainier to put my money behind that team.

So there's my very amateur, 100,000 foot view of the Big 4.  I'm planning to write a post on valuations (including those of the Big 4) in the coming days so more on this topic soon.

A Sales Pipeline & Process for Startups

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The other day an entrepreneur was asking me how to best setup and monitor a sales pipeline and process.  I thought I'd post my answer here.  Three simple steps: Step One: Setup Stages.  I like to use these six:

  1. Qualified: you've identified the right individual to speak to
  2. Meeting Set (with right individual)
  3. Meeting Held (with right individual)
  4. Proposal (your proposal has been received by the prospect)
  5. Verbal (prospect has agreed to the terms of your proposal)
  6. Closed Won (signed contract received)

Step Two: Identify your "conversion angles" for each stage of the process.  That is, what are the secrets to getting the sale from one stage to the next?  For example, to qualify a lead it might mean identifying the person's job title and name by using LinkedIn or Hoovers.  To get an opportunity from verbal to close it might be putting a product launch date on the IT team's calendar or a price break in return for a quicker close.  Putting conversion angles for each stage down in writing is critical -- start with at least two angles for each stage.

Step Three: Identify the bottlenecks.  Look at last quarter or even the current week (if you have enough opportunities) and place them in the appropriate stage.  Identify which conversions are working and which are not.  See the sample analysis below:

Based on this analysis, here's what's working and not:

Working: Qualifying Leads, Holding Meetings that get set

Not working: Setting meetings, Sending proposals out of meetings

With this information the team can dive into the details of these conversions to find out what's slowing the process down.  Is it effort?  Is it resources?  The angles?  Are some team members converting this well and others not?  When this converts quickly, what are people doing?  Are there specific segments of clients that are converting better than others?  Why?  Dive into the problems with these conversions.  To add a layer of complexity, you can add a column showing the number of days that opportunities are in each stage.

This kind of analysis is valuable as a one off, but it will be even more valuable as time goes on.  Managers can look at how these conversions are changing week over week or month over month.  Relative data is always more valuable than a snapshot in time.

Even with a good sales process, there can still be holes that need to be patched.  Different reps may interpret the stages differently or you may need to add steps to the process to have more transparency.  To deal with the potential holes in the process, in parallel, I like to monitor what I call "tipping points".  Tipping points are pieces of information, insights and actions taken by the prospect that increase my confidence that the deal is legitimate and moving at the right pace.  Tipping points are crucial to keeping a sales team and a sales process on track.

This post is already getting a bit long.  I'll write a post on tipping points in the next few weeks.

Employee Promotions & The Peter Principle

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Recently I made the following comment on a blog post:

I recall watching an interview with Bill Gates.  The interviewer asked him what was the biggest mistake he made when he was building Microsoft. Because I admire Bill Gates enormously, I was on the edge of my seat to hear his answer...

His answer: the biggest mistake he made was assuming that their best engineers would also make good managers.

Of course it's intuitive to promote the best tactical performers but given how often this fails I'm amazed at how companies -- big and small -- continue to use this approach.

A few days later, I came across a theory known as the "Peter Principle":

The "Peter Principle" states that in a hierarchy every employee tends to rise to his or her level of incompetence, meaning that employees tend to be promoted until they reach a position at which they cannot work competently.

It's easy to see how management allows this to happen in their organizations.  If someone performs well it's only logical that they go onto the next step in their career path.  But of course it's extremely dangerous for companies to operate with a bunch of employees that can't do their job well, much less competently.

The solution to this, I believe, it to shake up the old fashioned "career path culture" and build a culture that values the "do'er" and not the manager.  To promote this type of culture, companies should setup formal incentive systems that reward the employee without promoting them into management.  Incentives can include:

  • Salary, bonus, equity increases
  • Allow them to work on the coolest projects or largest accounts
  • Allow them to work on exploratory or strategic projects
  • Let them work side by side with senior management and/or the CEO
  • Give them the best mentorship and training

Most cultures, especially in large companies, value the managers -- employees want to be "in management".  It's critical to setup values and formal systems that disrupt this type of culture to avoid mediocrity and the dangers of the Peter Principle.

A Viral Marketing Framework

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Uzi Shmilovici had a good post on Techcrunch yesterday on the 8 different ways one can do viral marketing.  I’ve written in the past how I don’t believe you can “do” viral marketing. But I do believe you can do a few things:

  1. Build a product or service with ‘network effects’ so people are intrinsically inclined to tell their friends: (e.g. the telephone has a network effect because it’s a worthless product if your friends don’t use it -- it's naturally viral)
  2. Build a product or service that’s so awesome that people are inclined to spread the word
  3. Make it really easy for people to spread the word about your product or service
  4. Use gimmicks to get people to tell their friends.  I don't mean 'gimmick' in a bad way but there are tactics you can use that give you a temporary bump in new customers.  Though they're not truly viral marketing activities as the increase in customers doesn't continue to spread past a few degrees as a real virus would

That said, Uzi's 8 ways of doing viral marketing are interesting.  I'd encourage you to read his post before reading on.

To help me think through his approach, I've applied his 8 methods to my framework above and included an example of each:

1. Network Effects

(1) Inherent Virality – your friends must use the product for it to work (example: the telephone)

(2) Collaboration Virality – the product is more valuable if your friends use it (example: Amazon’s ratings & recommendations system)

2. Make an Awesome Product or Service

(8) Pure Word of Mouth Virality – people tell other people because the product is awesome (example: most of Apple’s products)

3. Make it Easy to Tell People

(3) Communication Virality – include your tagline with the product (example: tagline in Hotmail’s email message stating, “sign up for a free Hotmail account”)

(5) Embeddable Virality – include a link back to your product in your content (example: link to Youtube in embeddable Youtube videos)

(6) Signature Virality – include a “powered by” link even in white labeled products (example: Intel logo on laptops)

(7) Social Virality – allow users to broadcast that they’re using your product through social networks (example: Turntable.fm forcing users to attach their account to their Facebook account)

4. Gimmicks

(4) Incentivized Virality: give users a benefit for telling people about your product (example: Living Social’s me+3 = free promotion)

As I've said before, viral marketing should be a mostly passive activity -- it's an output of building an amazing product or service.  So while all of the above are worthy activities, most of your energy should be spent building that amazing product or service that people can't wait to tell their friends about (see #8 above).

Managing Email

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I posted my approach to managing email in the comments of A VC the other day, thought I'd post it here as well.  I'd love to make the switch over to Gmail at some point, but right now it doesn't jibe well with my approach to emailing.

  • using Outlook
  • setup as many junk mail filters as possible so most email doesn't make it to my inbox in the first place
  • go through my inbox every night and either delete, respond and delete or file it in a folder or leave it in the inbox to do later (often I don't get to every night but I do it at least a few times a week)
  • this leaves me with an inbox full of important emails that I need to address at some point
  • many of my colleagues keep thousands of emails in their inbox (important and unimportant), I don't know how people can manage it this way
  • my strategy centers around good spam management and the "delete" button, I spend a lot of time deleting
  • Gmail doesn't make sorting or deleting emails easy, you either have to check a small box with your mouse or use an awkward keyboard shortcut that is slow and unreliable
  • in Outlook it's easy to sort emails by sender or subject line and it's easy select multiple emails to delete, and you can just hit your keyboard's "delete" button and they're gone 

Emailing is a pain but it's the best system we have, for now.  I've read that several companies have committed to phasing it out over the next few years.  That should drive some much needed innovation in the way we communicate at work.

Touchpoint Frequency Graphed

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A couple weeks ago I wrote about Touchpoint Frequency & the Attention Asset.  In short, if you touch a client or prospect too often with communications that are of poor quality, you will deteriorate the value of the attention you've built with them. I built the graph below to illustrate this concept.  The idea is to walk that fine line of communicating extremely high quality messages with the right frequency.  I believe that you can communicate every day, as long as the message is of high enough quality.  The challenge is staying on the blue line...

Touchpoint graph
Touchpoint graph