You Want Disruption? Can You Handle it?

johnny cashI’m on a panel tomorrow at the Mobile Future Forward event in Seattle. The panel discussion is on disruption, which we met on Friday to discuss over a quick conference call.

I actually don’t think a lot about disruption, which is not to say I don’t look for it. I just try to avoid being disrupted because you never realize the extent to which it’s happening until it’s already happened. The corollary to that is you really can’t plan on making it happen either.

This is why I don’t think about disruption. The great case studies for disruption in our business are all a result of executing really well against an idea that was well conceived and not impaired by compromise. Disruption happens when you don’t have anything to lose, and in every case disruption is the result of bringing together extraordinary people unified by a sense of purpose. Put another way, disruption is not a strategy, it is a consequence.

Encumbent players in any market NEVER disrupt the market they are in. They have too much to lose by leading the way to a new normal and insist on compromise as a core value. You have all seen this happen a million times, new products that threaten the status quo are nipped and tucked in ways that take everything potentially special away from them. There is a civility in these efforts that precludes them from breaking out… they may be successful but they won’t be disruptive. Transformation is not disruption.

You want disruption in your business? Hire the right fucking people! Search out combative, difficult, and argumentative people who care in a very personal way about the vision and purpose of the effort. Teams are messy because people themselves are messy, don’t risk a mediocre outcome by hiring people who excuse mediocrity and have toned down their passion in order to fit in. Hire people who won’t compromise.

Not compromising is not the same as not changing your answer. Wendy Lea once gave me an unintended compliment that I cherish to this day when she said “you are so damn stubborn… (and after awkward moment of silence) but I’ve seen you change your mind on big things.” Of course, if you get new information that supports a better direction than you originally pursued, change your mind. There are no prizes for who is the purest and most dogmatic, therefore changing your position in support of the common purpose is not only practical, it’s being smart.

Here’s what I’m looking for in the people I want to hire:

  1. They take things personally: Success and failure isn’t a clinical, sterile outcome. It involves emotions and sense of caring that goes beyond a job.
  2. Relentlessly curious: Want to infuse new thinking and approaches in any effort? Seek out knowledge in the unlikely of places, talk to people who have already done it, and don’t be afraid to share the random.
  3. Direct and confrontational: Don’t mix words, say what you think and don’t waste anyone’s time by waiting. If something is borked, call it out! If something is working, shout it out and do more of it.
  4. Laugh at themselves: Humor is a powerful antitode for tension, even more so when it is directed at yourself. This ain’t bean ball and even though it’s a tough, high stakes business that asks a lot of people, we can still have fun doing it.
  5. All the usual stuff: Smart, experienced, hungry… yeah, all that, but the inescapable fact is that there are a lot fo smart, experienced, and hungry people. These three attibutes by themselves are no indicator of future success.


Customer Experience: The Little Things Edition

I took my children to In-N-Out Burger for lunch today and before we left I wanted to wash my hands. Lunch was enjoyable, the staff was pleasant, and the overall experience was up to their usual standard but the one thing I really noticed was how much paper the automated dispenser gave me when I finished washing my hands.

We have all had the experience in a public restroom where you do the hand wavy thing in front of the red dot and about 3 inches of paper spits out. so you do it again, and again, and yet again before you get enough to complete the drying part of the operation. It is obvious why businesses do this, they 1) never bother to adjust the machine when it is installed, 2) think they are going to save money on paper towels under the belief that we are too stupid to get the machine to give us more paper, and/or 3) just don’t care.

In-N-Out pays attention to the small details because they give you enough to dry off and it is representative of their entire operation, the small things add up and impact your overall experience. It may just be a burger and fries but they have set a standard for fast food that others covet so the next time you think something is too small to care about I would urge you to think about washing your hands.

The Glass Half Full CEO

Britain’s financial markets regulator undertakes an admirable amount of satisfaction surveying, the results of one such survey were released this week. All things considered, this is not the FSA’s finest hour.

Just one in 10 companies rated the FSA highly in terms of offering “value for money,” according to the survey, published today.

[From U.K. & Ireland]

Back in July, another survey revealed that firms found the FSA to be “granular” and “process oriented” instead of being concerned about outcomes of regulatory processes.

Adding insult to injury, a panel convened by Parliament recently found that the FSA had “systematically failed” in it’s oversight of Northern Rock, leading to the government takeover of that bank which even today ranks as one of the largest bank failures in history.

Despite overwhelming disapproval of the FSA from every corner, check out what the CEO had to say in response to the survey results:

“The Practitioner Panel survey is an important tool for the FSA to understand how regulated firms perceive and experience us, and I am particularly encouraged to see the findings show that firms are more satisfied when they have more contact with the FSA,”

Maybe we can recruit him to run one of the car companies Congress wants to take over.

Tribune Co Bankruptcy UPDATED: Black Monday — Tribune Co. Files for Bankruptcy

I looked back at what I wrote when Zell first announced the deal to buy the Tribune Company. I was cautious at the time to not offer an opinion about the sanity of a newspaper company at that time, instead focusing on the fact that the guy staked the entire deal with $315m of his own money, quite a small amount of the $8b the total deal was worth. So basically, Zell won’t “lose billions” on this because he didn’t have billions at risk.

Clearly the bankruptcy is focused not on stemming cash bleed out but restructuring the big pile of debt they have on top of them. The ESOP will lose but apparently the pension fund is overfunded so it’s starting to look like an airline bankruptcy.

Tribune chief Zell has released a statement: “Over the last year, we have made significant progress internally on transitioning Tribune into an entrepreneurial company that pursues innovation and stronger ways of serving our customers. Unfortunately, at the same time, factors beyond our control have created a perfect storm — a precipitous decline in revenue and a tough economy coupled with a credit crisis that makes it extremely difficult to support our debt.”

[From UPDATED: Black Monday — Tribune Co. Files for Bankruptcy ]

I do find it curious that when a newspaper goes bankrupt everyone blames the economy, but when a car company is facing bankruptcy the universal truth is that it’s because they make crappy products. The truth is somewhere in the middle, in the case of car companies it’s because of product and inability to finance purchase issues, and in the case of newspapers it’s because they have gone out of their way to alienate so many segments of the market that they have no base of support, which when compounded by plummeting advertising rates and high labor costs, it all adds up to a big stinking pile of structural problems.

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Rosedale to step down as Linden Lab CEO

“The company has the type of financial performance that if it wanted to it could become a public company,” said Benchmark’s Bill Gurley, who sits on the Linden Lab board. “I certainly think at some point in the future — and I’m certainly not announcing anything new here for the next 12 months — that’s on the company’s ambition plan.”

[From Reuters/Second Life » EXCLUSIVE – Rosedale to step down as Linden Lab CEO]

What? 2007 was a difficult year for SL and 2008 is shaping up to be no better. Registration growth has slowed considerably and concurrent users to new users have likewise tapered off. Only the insiders know the financial performance and that may be indicative of why Gurley very specifically pointed to “financial performance” instead of just “performance.”

SL has always billed itself as a “virtual real estate company” yet recent history is replete with one stumble after another as they revealed themselves to be a bunch of brilliant engineers who know little about real estate, finance, and tax law.

On a positive note, SL will be soon enabling embedding of HTML objects within SL objects. I am interested in this for a couple of reasons, but primarily because this will enable us to make our widgets renderable within SL.

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People Costs vs. Stuff Costs

The fascination with Jason Calacanis as muse in this part of the tech industry is curious to me. He’s not particularly insightful while being exclusively self-serving and self-absorbed, but give him credit for being able to stoke a small brush fire with some regularity. At any rate, I don’t normally read his blog or feel much desire to comment on him, until now.

His post about how to save money running a startup is largely stating the obvious kind of stuff, such as buy your people lunch so they don’t go out and put a good espresso machine with all the “condiments”, use gmail, and skip phones. While I think one could do a lot better than Aeron chairs (I gave the one in my home office to our house cleaner, it hurt my back), I am with him on the merits of a good espresso machine (I have a Jura-Capresso S9 machine at my house.)

But it was the general sentiment represented in this tip about not hiring people who aren’t workaholics that was disquieting. At what point do you pause your quest for world domination and ask of yourself what you are doing for your employees? It’s all well and good to suggest that equity more than makes up for a thin paycheck and long hours, but what about helping young employees establish some sense of professional self and experienced ones a broader spectrum of opportunities, develop business skills, build their personal brands, and much more?

The single biggest cost in any tech company is people and the most disruptive component in the people equation is replacing good ones who leave your company. The fact is that good people always have jobs so the only way to get them is to poach them from another company. People leave their place of employment for a number of reasons, including a loss in confidence in management, greener pastures at a competitor or in some unrelated company, money (never alone a motivator, but by itself can easily become a demotivator) and working conditions.

How many people would read this post and think that any company Calacanis is involved with is somewhere they want to work? In the final equation who is to say one person’s management philosophy is better than another, but were I voting with my own time and money I would certainly not buy into the idea that only those who can work long hours and sleep under their cheap metal restaurant table/desk are the only people you want to hire (but as an aside, I am running off for a noon meeting in SF today, a Saturday…)

Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or stabucks if you’re not into it you want balance in your life. For realz.

[From How to save money running a startup (17 really good tips)]

(JN NOTE: there were some strikethroughs in the paragraph above, but it’s not clear whether they were added after the dustup that Duncan @ Techcrunch started or were they original.)

Congratulations to Dan Farber

Dan is one of the people I have been fortunate to meet and get to know over the years. He is deserving of this promotion to CNET and I wish him good fortune going forward. I really can’t say enough good things about Dan so I’ll just leave it at that!

Big news at CNET today – editor in chief Jai Singh is out, and Dan Farber, most recently the editor in chief of CNET-owned ZDNet, is taking over. In his new role, Dan will oversee the editorial content and user experience for CNET Reviews, CNET Download, and CNET News. Dan has posted a brief note about his new position on his ZDNet blog, Between The Lines.

[From CNET Changes Quarterbacks: Dan Farber Takes Over As Editor In Chief]

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Tournament Theory for CEO Pay

Interesting way to put it.

That’s because many economists believe that CEO pay is structured as it is not to spur the CEO to ever greater heights of achievement, but rather pour encourager les autres. Michael Eisner might work just as hard for $1 million a year . . . but the gigantic payoff to becoming CEO spurs those beneath him to ever-greater heights of achievement. Basically, Michael Eisner has won the employment lottery. And because the prize is so big, all of his subordinates are dutifully beavering away, vying for a chance at the gravy train.

[From Megan McArdle (February 07, 2008) – The Logic of Life: CEO Pay]

CTO Handbook — How to care for and feed your CTO

I go back and forth between thinking that a CTO can make or break a company. I think it depends on the overall bench strength of the organization, their personal style, and ultimately the degree to which technology is the critical enabler of the company. In many cases, “good enough” technology really is, while in others good enough just dooms you to obscurity.

More than anything a CTO in medium and large companies has to be both respected and liked because their job is to disrupt the status quo and be a change agent to groups and individuals who have a lot vested in the status quo. It’s often overlooked that CTO’s rarely have a lot of staff that reports to them and while they set product direction they often don’t define the products, so in order to be successful a good CTO has to win on merits of his or her ideas, not just on the title.

In summary, a CTO is the source of big picture technical and product strategy in an organization. This is often expressed during whiteboard deathmatches or through prototypes that they quietly whip up and surprise the company with. In short, they drive innovation often while frustrating the rest of the organization. CTOs are typically the external technical voice of the company and crave inspirational contact with the external world. They thrive on variety and find solace in chaos.

[From Buzz Pressure » Blog Archive » CTO Handbook — How to care for and feed your CTO]

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The Danger of Incrementalism

The title of this post is a little cryptic, so allow me to explain. Big companies have repressive cultural dynamics and decision making cycle that result in important strategic initiatives taking a really long period of time to emerge and when they do the compromises that are made in order to get consensus from the range of power centers that have to submit their consent means that the thing they intended to deliver looks really different when it emerges.

Let’s take NBC Direct, the recently released video download service from NBC. The consensus appears to be that the service is constrained by technology requirements, limited in functionality, and imposes use rights that are so constrained as to make the service of little value to users.

Each one of these decisions likely resulted from different NBC groups have a myopic and conflicting view of what NBC Direct was supposed to do. NBC Direct is not a video download service, it’s an entertainment channel and while NBC would not permit their network broadcast to run on specific brands of televisions or select cable systems, inoperable after a predetermined number of days, and choked full of so many ads that the amount of ad time eclipses the actual content… but amazingly that is just what they did with NBC Direct.

Some of the decisions about the technology, specifically the requirement for IE and WMA are easy to understand given the networks long affiliation with Microsoft. Having said that, these decisions are still wrong and hurt the service because, well most obviously it takes 7% of the market off the table, Mac users. Similarly the decision to not allow download to iPod further constricts the addressable market for NBC.

Given that the service relies on Microsoft’s DRM technology so the vague promises that Firefox and Mac support are coming are thin.

Other decisions, such as the downloads expiring 7 days after they are posted are really impossible to understand. To be clear, the downloads don’t expire 7 days after downloading, they expire 7 days after NBC posts them. What this means is that if you download a video on the 1st day of availability you will have 6 days and change to enjoy it, but if you download the video on the 6th day it will expire in less than 24 hours. I can only imagine this decision was driven by some network scheduling executive who insisted that viewers only have access to the episode of any show made available for the week that it is current.

Lastly, this service has dumps so many advertisements on the downloads that it’s comical. This again reflects an incremental decision driven not by the quest to capture as much reach and attention as they could, but to accommodate advertising execs and the commitments they surely made on the backend to satisfy advertisers who are increasingly moving away from TV to online.

NBC Direct is a lame service that suffers from technology and usage restrictions, all of which were avoidable and predicted by historical failures at competing services. Apparently, nobody at NBC kept asking “what objective do we want to accomplish here” before allowing the service to become henpecked by a thousand competing requirements. Like Chris at NewTeeVee says, I’d recommend that you just don’t bother with NBC Direct.

UPDATE: I realized that the title of this post is still a little too cryptic. What I am attempting to say is that any one of the decisions that NBC made with Direct could have been enhanced if they maintained a clear view as to what their purpose was with the service, but even in the absence of that sense of purpose none of the individual tactical decisions referenced about would sink Direct, it is the totality of missteps that will make this fail.