The Start-up of You

I read Reid Hoffman's (LinkedIn's co-founder) new book last week, the Startup of You: Adapt to the Future, Invest in Yourself and Transform Your Career.

The thesis of the book is that everyone (from CEOs down to the lowest level employees) should view themselves as entrepreneurs.  It argues that you need to manage your career the same way an entrepreneur would manage a new enterprise.

I agree with this concept completely, and for those that haven't been exposed to this thesis, it's worth the read.  If you're already familiar with this career approach, you won't find much value in the book.  It describes the concept effectively, gives several practical tips and action items to help get you there but largely it comes off as a long advertisement for LinkedIn.

That said, there were a few valuable insights that I took from the book.  Here are two:

The first is about managing your network and asking for help/favors.  When you ask someone for something like advice or an introduction, try hard to give that person something first: a link to an article they might be interested in, an insight you picked up that might help their business, a connection or recommendation that might help them do their job better.  Also, give them some thoughtful and insightful context on what you need.  Once you've done this, then ask for the favor.  Give them a "gift" before you ask them for help.  This is a neat approach to managing your network.

The second is about risk.  The book cites a Neurophysicist that explains that to keep our ancestors alive, Mother Nature evolved a brain that routinely tricked them into making three mistakes: overestimating threats, underestimating opportunities, and underestimating resources (for dealing with threats and fulfilling opportunities).  This caused our ancestors to be very good at avoiding dangerous tribes or animals that could kill them in favor of seeking out opportunities for more food or shelter or resources.  While this was a practical approach at the time (they had to avoid death), this instinct is far less applicable to the world we live in today; a bad investment or a poor career decision isn't going to kill us.  The book encourages the reader to keep this instinct in mind when navigating your career and to try to resist it.  You're likely vastly overestimating the risk and potential pain that could come from most career decisions.

In short, the book is a fairly engaging and quick read and the message is spot on.  If this is new concept for you, I'd definitely recommend picking up a copy.

8 Years of BlackBerry

I've been a loyal BlackBerry user since 2004.  Since then, I've had six of them (see photo below).  I finally made the decision to switch over to the iPhone 4s this month.  The iPhone is a significantly superior product.  The operating system is much slicker and the apps are phenomenal.

Apple's App Store took the PDA marketplace to a place that RIM never imagined it would go.  As evidence of this, the last BlackBerry I bought didn't even come with the BlackBerry app store installed.  You had to go out to the web and do a tedious installation process to start buying apps.

All of that said, I'm one of the few that believes BlackBerry is here to stay (though it may require an acquisition by a larger player).  The new BlackBerrys are superior devices for corporate users and more and employees are requiring a mobile device for work.  And the lack of a keyboard puts the iPhone at a nearly insurmountable disadvantage as an email device (email is the most used app for corporate users).  

I don't think it's implausible that most corporate users will have a work device (BlackBerry) and a personal device (iPhone or Android); just as most corporate users have a work computer (very often a PC) and a personal computer (very often an Apple). 

Regardless, BlackBerry is up for a big fight.  And it'll be an interesting one to watch. 

Stop Stealing Dreams

Seth Godin just released his free ebook titled, Stop Stealing Dreams. It's an excellent book. I highly recommend reading it and passing it onto your friends -- especially those that work in education. It's basically a series of blog posts so it's an easy read. Here are some lines from the book that I liked the most:

Our current system of teaching kids to sit in straight rows and obey instructions isn’t a coincidence—it was an investment in our economic future. The plan: trade short-term child-labor wages for longer-term productivity by giving kids a head start in doing what they’re told.

Large-scale education was not developed to motivate kids or to create scholars. It was invented to churn out adults who worked well within the system. Scale was more important than quality, just as it was for most industrialists.

Every year, we churn out millions of workers who are trained to do 1925-style labor.

Are we going to applaud, push, or even permit our schools (including most of the private ones) to continue the safe but ultimately doomed strategy of churning out predictable, testable, and mediocre factory workers?

There are so many examples in the mainstream news of companies not adapting and failing as a result (Research in Motion and Kodak are a couple of the most recent examples). The markets change, competitors take market share and the companies that don't adapt fail and fail fast.

There's no secret here. In fact, I would bet that most school administrators and politicians could explain exactly why Research in Motion is failing. But our schools -- possibly our most important public institution -- are doing exactly what RIM did, and to some degree are experiencing the same fate.  

Managing Up

I gave a short talk a few weeks ago on some of my thoughts on being effective at managing up.

 Managing up is critical.  Bosses want to be assured that you care, that you're getting results and that you're contributing to moving the business forward.  With that in mind, here are the three tips I gave on managing up:

1.  Have a Point of View.  That is, have an opinion, hopefully a strong one, on how you should grow your business, both for your group and the company as as whole.  You may not get your way, that's life, but you should always have a point of view.  Be interested and passionate and opinionated.  Don't be annoying and try to push all of your ideas through but have an opinion and advocate for it.

2.  Drip Your Insights.  I like to say that "insights are just as important as results".  Obviously results are what everyone wants and they should be the primary tool for measuring success or failure.  But when you get results, you should be able to tell your boss exactly how you did it.  You should have insights that are repeatable and scalable.  Of course, the opposite is also true.  When you're not getting results, you should be able to tell your boss exactly why.  It's ok to not get results in the short term if you're showing that you're making massive gains and getting smarter every day and closer to success.  As you gain these insights, be sure to "drip" them to your team, your clients, your boss.  Send emails, share them in meetings, write them on a whiteboard.  Sharing your development and how you're getting smarter is critical to managing up.  Show that you're obsessing over figuring out how to hit your goals.  And that you're getting smarter everyday -- when you're getting results and when you're not.

3.  Build Trust.  This one is the hardest and I'm reluctant to give too much advice on how to build trust.  People do it in their own way and you should build trust with your boss in a way that works for you.  But one thing that's clear is that you're never going to be the lynchpin in your organization if you aren't trusted.  One way I've built trust in the past is to effectively walk the fine line between being a complainer and being a trusted advisor that speaks up when it's needed.  In short, you have to learn to not sweat the small stuff.  Your boss has a lot to worry about -- likely a lot more than you.  Taking problems on yourself and not complaining upstream makes your boss's life easier.  But, when a problem is important enough, raising it up the ladder is also critical.  When you've proven you can balance what's important and what's not your boss will be inclined to shift the more important projects in your direction.

You're Going to Spend More than $2 Million on Health Care in Your Lifetime

Yesterday when writing about David Goldhill's piece on health care in the Atlantic, I noted that he noted that the average American will spend $1.77 million on health care in their lifetime (this includes their employer's contribution).  This is an astounding number.  I thought I'd do my own math.  And when I did, I actually got a number slightly higher than Goldhill's.

Here's my math.  Assume you start paying the average family health insurance rate of $12,000/year beginning at the age of 26.  You continue paying that rate until your death at, say, 85.  Assume the cost of health care increases at a rate of 3% per year.  Using the future value function in excel, that's a total of $2.02 million in health care payments over the 60 years that you're paying for health care. And keep in mind that this assumes that the rate that health care costs are rising is only 3%.  Given the increasing cost of health care over the last several years this is a very conservative number.  If health care costs continue to increase at their current rates, we could be paying twice that amount.

Some Health Care Insights

David Goldhill had a great and very long piece on health care in the Atlantic a few years back titled, How American Health Care Killed My Father. The premise of the article is that Goldhill's father catches a hospital-borne illness while in the hospital that eventually leads to his death.  Goldhill argues that had America had a consumer-centric health system in place, his father's death may have been avoided. I don't feel like diving in the consumer-centric argument today.  But there were a series of excellent insights that I took from the article that I want to call out.  Regardless of where you land on this issue, it's an excellent read and you should read the whole article when you get a chance. In the meantime, here were some of the most interesting insights for me:

• 100k people die every year from infections acquired while in the hospital
• the U.S. government spends almost 18 percent of our GDP on health care
• we spend 8 times as much on health care as we do education
• health insurance is a unique type of insurance in that it pays for all of our health care expenses, as opposed to just catastrophes
• this is the equivalent of paying for our gas with our auto insurance or our electric bills with our homeowners insurance
• most pregnancies are planned and known about many months in advance, yet they're financed the same way we finance an unexpected catastrophe
• the result of this unique insurance coverage has contributed to high costs; the average consumer could care less about the price of even the simplest procedure
• group health insurance was introduced in 1929
• employer based insurance grew significantly during WWII, when wage freezes prompted employers to expand other benefits as a way of attracting workers
• by 1954 most people still didn't have health insurance but that's when Congress passed a law making employer contributions to employee health plans tax deductible without making the resulting benefits taxable to employees.
• this led employer funded health insurance becoming by far the most affordable option for financing any type of health care
• for every two doctors in the U.S. there is one health insurance employee
• in 2007, the average health care insurance cost 12k per family up 78 percent since 2001
• the average American will pay 1.77 million dollars for health care, assuming growth rate of 3 percent a year, from age 26 to age 85
• hospitals may be shifting costs inappropriately to the ER to show the losses/investment they're making in charity care as most ER services aren't paid for
• when looking for an MRI he learned that prices vary widely between hospitals and that some hospitals wouldn't quote a price until the service was actually ordered
• some hospitals won't quote a price unless the patient is uninsured or is seeking financial assistance
• it's odd that it's been such a struggle to get medical records online, but that the billing for services that are included in that health record is all online and extremely sophisticated
• an individual would typically pay 2.5 times what an insurer would pay for the same treatment
• the price of LASIK treatment, an uninsured procedure, has nosedived over the last several years because it is subject to the forces of competition.
• conversely the price of an MRI hasn't changed, it's paid for by insurers and Medicare and thus not subject to traditional market forces that would make them less expensive
• the government has proposed investments in electronic health records of $50 million, only 2% of the health care industry's revenues
• but who's to say that doctors will adopt them, most of the benefit of this would go to patients, not providers, and patients aren't the real customers, insurers and the government are
• the bill for his father's five week stay was $636k -- $5k per night for the room, $145k for drugs, $41k for respiratory services,
• his family's share of the bill was only $992, the rest was paid for by Medicare at some huge discount

Sleep

Bill Maher made a great point the other night on his show.  He pointed out that that it seems that when relatively young celebrity deaths are drug related, it's most often partially caused by some kind of "downer", i.e. sleeping pills.  Whitney Houston, Michael Jackson, Anna Nicole Smith, Heath Ledger; all of them died from complications related to sleeping pills.  I looked back a few years.  Elvis Presley, Marilyn Monroe, Jimi Hendrix -- same thing.  The list goes on and on.

Celebrities with lots of fame and fortune are able to control nearly everything in their lives; what they eat, where they live, when they work, who they spend time with.  They control everything.  Except one thing: sleep.  

So it's not hard to understand why celebrities turn to pharmaceuticals to put themselves in control of the one thing in their lives that can't be controlled.

This is a scary reality, particularly as sleep aids such as Ambien and Lunesta are becoming more and more popular and readily available.  And it's not just celebrities that are trying to control their sleep.  These drugs are becoming a normal part of lots of people's lives.  The Today Show recently reported that 30% of women use some kind of artificial sleep aid.

One major danger associated with these "downers" is that users build up a tolerance and quickly need more and more of the drug to experience the same effect.  So even if the drug isn't technically addictive, the users become addicted anyway and have to ingest more and more to get to sleep.  So the use of these drugs can turn a minor sleep problem into a serious sleep problem.  Combine the use of these drugs with more common sleep aids -- alcohol or over the counter products -- and they can cause serious health problems.  They can quickly depress brain function and the central nervous system leading to unconsciousness, respiratory failure and death.  

I'm obviously not a physician.  And I recognize that when used properly sleep aids can impact people very positively, and they're probably very appropriate for patients with more serious sleep issues.  But sleeplessness is not caused by a lack of Ambien or any other drug.  It's caused by other factors.  Treating those factors, rather than covering them up with pharmaceuticals seems like the best bet to me. 

The best advice I've ever been given to cure sleeplessness is to simply stop trying to sleep.  Get up, read a book, write something, clean your kitchen.  Distract yourself from the thought of sleep and your body will most often get you back to bed when it's ready.  In the short term, this approach may lead to some sleepless nights and yes you'll have to give up some control.  But it's far safer than the artificial approach that seems to be taking so many celebrities before their time.

What's Driving Increasing Healthcare Costs?

A while back I read a great article on the health care cost crisis in the New Yorker by Atul Gawande.  The article is titled, The Cost Conundrum and I took some time to read it again today.  It's a long one.

It's so insightful that I thought I'd do a short post to call out the key points.  If you have any interest at all in health care I'd highly recommend giving it a read.

The article starts after Gawande learns that McAllen, Texas is one of the most expensive health care markets in the country.  In 2006, Medicare spent $15k per enrollee in McAllen, almost twice the national average.  

Gawande visits McAllen to find out why costs there are so high.  The answer is surprisingly simple and is outlined in this excerpt.

Health-care costs ultimately arise from the accumulation of individual decisions doctors make about which services and treatments to write an order for. The most expensive piece of medical equipment, as the saying goes, is a doctor’s pen. And, as a rule, hospital executives don’t own the pen caps. Doctors do.

He finds that doctors in McAllen are using their pens a lot.  They're more entrepreneurial and profit-minded than their counterparts in other markets.  And as a result are prescribing far more health care than an average market like El Paso, which is just a few miles away.

In 2005 and 2006, patients in McAllen received twenty per cent more abdominal ultrasounds, thirty per cent more bone-density studies, sixty per cent more stress tests with echocardiography, two hundred per cent more nerve-conduction studies to diagnose carpal-tunnel syndrome, and five hundred and fifty per cent more urine-flow studies to diagnose prostate troubles. They received one-fifth to two-thirds more gallbladder operations, knee replacements, breast biopsies, and bladder scopes. They also received two to three times as many pacemakers, implantable defibrillators, cardiac-bypass operations, carotid endarterectomies, and coronary-artery stents. And Medicare paid for five times as many home-nurse visits. The primary cause of McAllen’s extreme costs was, very simply, the across-the-board overuse of medicine.

Doctors in McAllen are more likely to pursue referral fees from other health systems, be shareholders in their own practices and be involved in other business ventures.  More procedures means more revenue and more money in their pockets.

Gawande argues that the solution to higher cost markets doesn't lie with the payer issue, as most politicians seem to argue.  Regardless of who's paying, when doctors in certain markets are prescribing increasing amounts of care, the cost problem doesn't go away.  Instead, the solution, he argues, lies in the promotion of systems like that of the Mayo Clinic.  

The core tenet of the Mayo Clinic is “The needs of the patient come first”—not the convenience of the doctors, not their revenues. The doctors and nurses, and even the janitors, sat in meetings almost weekly, working on ideas to make the service and the care better, not to get more money out of patients. I asked Cortese how the Mayo Clinic made this possible.

It pooled all the money the doctors and the hospital system received and began paying everyone a salary, so that the doctors’ goal in patient care couldn’t be increasing their income. Mayo promoted leaders who focused first on what was best for patients, and then on how to make this financially possible.

The Business Model Test

A simple way to think about the viability of a new business idea is to use the logic test and the economic test:

1. The Logic Test: does the business make sense?  Is it easy to explain the value it will provide and how it will make money?  You can't understand its viability if you can't understand these things.
2. The Economic Test: once you've established that the business idea makes sense, now consider whether it can work profitably.  Space travel is a good example of a business that passes the Logic Test but not the Economic Test.  Certainly there would be a lot of people that would like to travel to space for the weekend, but with the current technology it simply can't be done profitably.  Kozmo.com -- the famous dot-com bust -- that promised free, one-hour delivery of things like CDs, DVDs, candy and magazines is another example.  It's just not possible to deliver a pack of gum to someone within an hour at a profit.

Once these two tests have been passed, there are of course dozens of other factors to consider.  But I've found this framework to be helpful in discussing a new idea's viability.  

Answer to My Favorite Interview Question

Several weeks ago I posted my favorite question to ask a job candidate.  This is the question:

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? 

I thought I'd post my own answer to this question here.  For me, the answer to this question is always evolving.  But there are three critical pieces to the answer that must always be there for me.  What I want to do has to be something that 1.) I really enjoy doing 2.) I'm pretty good at and 3.) is something people will pay for now and into the future.

With that in mind, here's my answer:

I'd like to take innovative products that solve important problems and shape them and the stories around them to get them adopted into the market well before the market is ready.

Bottom's Up Management

Joel Spolsky had a great post the other day laying out his unique approach to management at startups.  I’d recommend reading the entire post when you get a chance but I’ve re-blogged some of the key excerpts below.

Most TV management is of the “command and control” variety. The CEO makes a decision, and tells his lieutenants. They convey this important decision to the teams, who execute on the CEO’s decision. It’s top-down management. All authority and power and decisions flow from the top. How could it work any other way?

This system probably works very well when you are trying to organize a team of manual laborers with interchangeable skills to sweep up the ticker tape in the street after the Giants parade BECAUSE THE GIANTS WON THE SUPER BOWL IF YOU DID NOT NOTICE.

The “management team” isn’t the “decision making” team. It’s a support function. You may want to call them administration instead of management, which will keep them from getting too big for their britches.

Administrators aren’t supposed to make the hard decisions. They don’t know enough. All those super genius computer scientists that you had to recruit from MIT at great expense are supposed to make the hard decisions. 

Think about how a university department organizes itself. There are professors at various ranks, who pretty much just do whatever the heck they want. Then there’s a department chairperson who, more often than not, got suckered into the role. The chairperson of the department might call meetings and adjudicate who teaches what class, but she certainly doesn’t tell the other professors what research to do, or when to hold office hours, or what to write or think.

And yes, you’re right, Steve Jobs didn’t manage this way. He was a dictatorial, autocratic asshole who ruled by fiat and fear. Maybe he made great products this way. But you? You are not Steve Jobs. You are not better at design than everyone in your company. You are not better at programming than every engineer in your company. You are not better at sales than every salesperson in the company.

A couple thoughts:

This is a great post.  I love the idea of flipping management on its head in a knowledge organization.  Your most junior employees are highly paid and extremely intelligent.  They should have lots of authority over how they do their jobs.  But often what works in theory doesn't work in practice.  Employees need a strong vision from the top and often need to be motivated to push through the challenges that inevitably come up.  While I agree that "management" can come from the bottom up, strong "leadership" from the top remains critical.

One final note:  I see Joel's point on this, but the analogy of a university isn't a good one.  Most universities are extremely inefficient, particularly compared to a tech startup.  I wrote a post a while back on the inefficiencies of the university system.

Pinterest

A lot has been written about Pinterest, the social photo sharing website, in the last few weeks.  Fastest company ever to get to 10 million monthly uniques.  Very impressive.  What's even more impressive is how they're monetizing these users at a very early stage with a somewhat brilliant idea.  Here's how it works:

• I post a link to a pair of sneakers that I like from say, Sports Authority, to my Pinterest page
• You see the image and click on the link
• Pinterest runs an instant query to determine whether or not Sports Authority has an affiliate program
• If they have one, the link is automatically converted to Sports Authority's affiliate link and you're sent to Sports Authority's site
• You make a purchase from Sports Authority
• Pinterest takes their commission

A very innovative (and frankly gutsy) idea.  Twitter and Facebook are probably kicking themselves for not thinking of it years ago.