Archive for December, 2009

I should start by saying that I have not fully fleshed out this stream of thought. It occurred to me this morning in the shower and it’s been knocking around my head all day (when I wasn’t trying to rebook a terrible day of traveling. Thanks snow!) So I decided to blog about it here and see if that helped me work through it.

I’ve been reading quite a bit about start-ups, venture capital, and most specifically venture capital returns in the last few months. Typically venture capitalists make their money when their investments “liquidate” through either an IPO or acquisition. Over the last 30 years there have been many hugely successful IPO’s including Google, Microsoft, Dell, Amazon, etc. This IPO’s are a huge engine of wealth creation and access to capital in our economy. Access to these capital markets can be critical to the success of business growth.

Recently, however, it’s become harder for startups to access these markets. The added regulatory requirements put in place by Sarbanes Oxley have made it significantly more expensive for young companies to launch an IPO (estimates put compliance costs at $2 Million or more). And, in addition to costs, SOx also introduces personal liability for the officers of the company.  Increasingly these young companies are turning to M&A instead. They seek out larger players in the market and negotiate a sale.

So what does this mean? In the short term, probably not much. Venture capitalists and their investors may see somewhat smaller returns and company founders may not see the extreme paydays (though Mark Zuckerberg seems to be doing just fine and I don’t hear Ev Williams or Biz Stone complaining at all). Additionally there might be somewhat slower job creation. But overall the short term implications are probably pretty small. The long term implications could be much larger. What happens if the trend continues and we develop a lack of new public companies? What if all new tech startups sell to Microsoft or Google or Apple? Will we eventually have an economy dominated by a few mega-corporations similar to the financial industry today? What happens in the next recession? Do we have to bail out these tech giants? Do they become “too big to fail”?

Or am I over-extrapolating and over reacting?

Good Talk,

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Every day we are faced with a multitude of decisions covering a broad spectrum of things; what tie should I wear today? Should I ask her out?  Do I have time to stop for coffee? At what price point should I launch my product? Should I kill feature X or add feature Y? Can we afford to hire another person for this project? Can we afford not to? At times these decisions can pile up and become nearly crippling (the well used cliché analysis paralysis). We spend far too much time weighing options and worry about outcomes.  Often it’s a better idea to just DO SOMETHING! Don’t spend all your time analyzing and modeling and worrying. Ask yourself what is the worst that can happen and then just try something and see if it works.

I should note that this method will work for all businesses. Even if you have a business with huge product development costs, long development times and where changes are going to be really expensive you can still use this method. What’s the worst than can happen? Well, the worst can be pretty bad, so make sure you diligently analyze options and weigh costs.

But for most of us there is an innate bias toward overestimating risk and underestimating gains. It can be extremely difficult to overcome this bias, but asking what’s the worst that can happen is a good method. (Suzy Welch recommends asking what are the implications 10 minutes from now, 10 months from now and 10 years from now. I think this achieves much the same goal.)  The important thing is to realize that most decisions we make are not going to have huge implications. It’s usually better to make a decision, execute based on it, and then move onto the next thing. Because really, what’s the worst than can happen?

Good Talk,

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I recently started a new assignment with a new client in a new state and it got me thinking about what it means to be the new guy and how to make the most of a new situation. As a consultant it is a necessary and “normal” part of the job to often be “the new guy”.  After a while we get pretty used to it.

I should start by saying that everyone I work with has been great about welcoming me and getting me up to speed. We’ve tackled the paperwork to get me a badge; we’ve dealt with network access and a brief overview of policies the client expects us to follow. They were also very forthcoming with office “culture”; who the pranksters are, who to avoid before 10am, who to see when you need an answer 5 minutes ago, etc. The team has really been wonderful. And yet, despite the lunches and the dinners, the meetings, the late nights, it inevitably takes a while to completely fit in. You’re on the outside of inside jokes. You can’t relate to problems or successes from earlier. You don’t know colleagues who have already left the project. Eventually, obviously, this will all pass as you take part in new triumphs, develop your own jokes, and live your own stories. The time it takes to completely fit in (until people stop saying “have you met Tom”) varies from client to client and team to team, but there are concrete steps you can take to speed the process.

1) Engage: It is just my natural tendency to observe and study a new environment before engaging.  This is a terrible idea! I have to constantly fight the urge to sit back and watch. You learn so much faster by engaging, talking, debating (politely – you are still “the new guy”) than you do by observing. Speak up in meetings, proactively engage people in the hallways and at around the coffee machine, leverage experiences from past projects, etc. It should be a goal to make a real impact on a decision within your first day. It doesn’t need to be a earth shattering decision, but something. This helps you focus and get into the weeds.

2) Be on time and “Present”: Perhaps your last client had a habit of starting meeting 5 minutes later than scheduled or maybe it was the kind of company where meeting attendees spent the meeting buried in their laptops “multi-tasking”. When you’re new to a client or company be sure to show up on time (or, even better, a couple minutes early to meet new people). If, over time, you realize that meetings do, in fact, start late then feel free to fall in with the crowd if you so please (personally, I hate meetings that don’t start and end on time…but that’s for a different post). Also, leave your laptop at your desk (unless explicitly needed for the meeting), leave your blackberry or iPhone (or Droid) in your pocket and pay attention. Bring an old fashioned notebook (I use these) and take old fashioned notes.  By being 100% focused on the current meeting you will more quickly learn the client’s business and your role in their success.

3) Ask Questions: This is sort of a corollary to numbers 1 and 2, but I think it is important enough to warrant its own bullet point. Ray Bradbury wrote in Fahrenheit 451, “If you hide your ignorance no one will hit you and you’ll never learn”. Often times consultants are reluctant to ask a lot of questions (after all, we are paid for what we know and to answer questions, not ask them). A much better approach is to ask as many questions as you have (luckily, in Corporate America, we are rarely hit for our ignorance…). It’s much better to ask questions in your first couple of weeks than it is to pretend you understand everything and then have to go back and ask basic questions. Keep in mind that the client will ALWAYS know their current business better than you will. Your job is to learn as much as you can and then implement solutions to improve the business going forward.

4) Have Fun: Yes, it’s a cliché. But why not have fun? You’re going to spend 60-80 hours a week with the people in your office. Take the opportunity to learn about them. Have conversations that extend beyond the walls of your cubicle or office. If you’re in a new city, explore local restaurants (not national chains, please). On my last project we regularly used this to blow off steam. You’ll be a lot more successful if you make it a point to have fun whenever possible, plus it never hurts to be known as someone who’s fun to be around. You never know when you’ll cross paths with these people again.

I’d love to hear additional suggestions. What other tips do you have?

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