The New York Public Library will be closed from May 25 to May 27.
Feel proud of your 70-hour weeks? You may as well boast about coming to work drunk.
Just how deep does the lionization of long work hours run in the entrepreneurial community? Pretty deep, according to Forbes writer Michael Simmons. When he started asking around Silicon Valley if 70-hour work weeks were worth it, he noticed founders turned cagey.
"Talking publicly about the topic brought fear of judgment," he wrote. "Two of the people I interviewed said that things like sharing vacation photos was a taboo as investors might see them. People who start ‘lifestyle’ businesses and who talk about balance and stress are often put into a bucket of people who aren’t serious about business."
In fact, taking breaks or getting a good night's rest are viewed as signs of weakness. Some even exaggerate how many hours they put in, according to time use expert Laura Vanderkam.
This valorization may be popular among entrepreneurs, but it has Julia Kirby, an editor at the Harvard Business Review, hopping mad. So mad, in fact, she wrote a strongly-worded blog post, "Change the World and Get to Bed by 10:00," a must-read for any professional.
Kirby includes a chart every business owner should take a look at. Getting drunk and not sleeping enough have roughly the same impact on performance, and neither are good. If you're coming to work consistently sleep-deprived you're basically functioning drunk. Take a look:
Kirby argues we need a social movement against sleep deprivation much like the cultural shift against smoking. Whether Hollywood producers will heed her words is an open question, but as a business owner in possession of a pillow and an alarm clock, you can take action today simply by going to bed at 10pm.
Or take things a step further, as Kirby suggests, and encourage your team to do the same. "If you're a corporate leader, you have the reasons and you have the means to change today's dysfunctional culture around sleep."
Do you think our cultural attitude toward sleep is unhealthy?
It's all about the future at this stage in a company's life. But to back out a $1.1 billion valuation for Tumblr, you have to be really, really optimistic.
As all the world knows, Yahoo is paying $1.1 billion to acquire social media platform Tumblr. That’s a very nice exit for investors who sunk in about $125 million, according to Business Insider. But was it a fair price for Yahoo?
A number of people besides Marissa Mayer seem to think so. Matt Mullenweg, founder of Automattic and founding coder of Wordpress thinks the company could be worth 10 times what Yahoo paid. Paul Buchheit, a Valley entrepreneur (FriendFeed) told the New York Times, “If a company has a 1% chance of becoming a $100 billion company, then it’s worth about $1 billion.”
Let’s run the numbers.
Finance 101 says the value of a company lies in the annual cash flow it generates, to be profitably reinvested in the company or returned to shareholders via dividends. To turn cash flow into valuation, analysts divide the annual cash flow by the company’s cost of capital. (Think of cost of capital as a measure of a company’s riskiness; the higher the risk, the higher the cost of capital.) A company with a stable $10 million cash flow and a 10% cost of capital would thus be worth an estimated $100 million.
What doesn't get you to $1 billion
In 2012, the Tumblr generated $13 million in revenue and $25 million in expenses. Losing $12 million a year obviously doesn’t earn you a $1 billion valuation. But Business insider says Tumblr’s goal for 2013 is to generate $100 million in revenues with $40 million in expenses. Since Tumblr is a risky investment, you might assume its cost of capital is 20% annually. Then the $60 million cash flow divided by 20% gives you a $300 million valuation. That’s still only about 25% of what Yahoo paid.
But what if the company can eventually generate $1 billion revenue and have the same 34.4% cash margin that Facebook now enjoys? (Just for perspective: to hit the billion mark in five years would take a 140% compound annual growth rate in revenue; to do it in 10 would take 54% a year growth.) With a successful revenue model, Tumblr’s cost of capital could decline to, say, about 10% annually. Thus, the $344 million cash flow would yield a valuation of about $3.44 billion, or more than three times this week’s price for Tumblr.
It's all in the expectations
Moreover, investors would presumably not expect that Tumblr’s cash flow would stop growing at $344 million. They’d expect it to keep going, which means they’d put an even higher value on each dollar of current cash flow. If investors rated growth prospects for this future Tumblr as optimistically as they do the outlook for Facebook (whose stock trades at 33 times operating cash flow), then Tumblr would be worth $11.4 billion.
Now let’s look at the Buchheit methodology: What would it take for Tumblr to be worth $100 billion? Well, based on Facebook’s market valuation, Tumblr would have to have to generate $8.8 billion in revenue, $3.03 billion in annual operating cash flow, and have the same growth prospects currently in Facebook’s $62.4 billion valuation.
The winner's curse
Assumptions are everything in valuing any early stage company. I would say the probability that Tumblr would have been the next $100 billion market cap company are significantly lower than 1%. My hunch is that management would not have sold themselves to Yahoo for $1.1 billion if they were on target to generate $60 million operating cash flow this year. It's what economist Richard Thaler calls the winner's curse: All you know for sure after an acquisition is that you paid more than other potential buyers thought the company was worth.
The prove the wisdom of this purchase, the managements of Tumblr and Yahoo will have to turn 18 billion monthly page views into revenue with a very healthy cash flow margin and a white hot growth rate. Yahoo CEO, Marissa Mayer, posted on her Tumblr blog, “we promise not to screw it up.” That’s an excellent mission statement if ever I heard one.
Do you and your employees do these three things? In other words, are they as good at their jobs as Brenda is at hers?
I believe in life-long learning. I also believe you can learn something from almost anyone. The key is to extract the wisdom from the wood chips and apply it to your own life.
For years, I've had a favorite waitress named Brenda. I hate to wait for anything, but I'm happy to wait for a seat in her section because I think she actually improves my digestion. I always learn something from her, which, given the fact that restaurants are the ultimate customer-service industry, is hardly surprising. This week I learned three important things from her. So pay attention.
1. Repeat After Me
Brenda has her own way of taking orders. She repeats everything that I say right back to me, word for word. There's a curious comfort in that, which is very reassuring. How many times have you had some waiter stand there while you're reciting your very complicated choices and not write anything down or repeat a single thing? Did you really feel confident that you were going to get what you ordered, or were you just a little anxious that maybe Wally the Waiter didn't have the world's greatest memory, and that your potatoes were coming with peppers whether you liked it or not? That’s not exactly the warm and fuzzy feeling that makes for return visits.
The most important part of Brenda’s process isn’t that she always gets my order right. Her mimicry sends a specific and powerful message. Not only am I being listened to; I am being heard. And I am being heard by someone who actually cares about me and about getting my order right.
The ineffable feeling of being “important” and cared for is the absolute heart of great customer service. Getting the order right is basic execution. Getting the listening part of the process correct is even more important. It’s that old cliché: I don’t really care how much you know until I know how much you care.
We’re too often distracted when we're supposed to be listening. We're texting or typing. We're multi-tasking or checking our monitors for new email. And we're sending a very clear message to the person talking to us. It says, "I might seem to be listening, but you're not really being heard because my mind and my attention are obviously elsewhere.” Nothing could be worse for your people, your customers, or your business.
If your customers don’t think you’re concerned about them or listening to them, they won’t be customers for long. And it’s even worse internally. If your people bring you problems or concerns and you seem too busy to listen or to be bothered, they’ll conclude that you don't care. They'll stop coming to you and, far more critically, they’ll stop caring themselves. When your people stop bringing you problems, you know you have a real problem.
2. Do What You Can Do
Brenda doesn't own the restaurant, so she doesn't set the prices or the portion sizes. She doesn't determine the daily specials and she can't guarantee that they've got my favorite fruit on a particular morning. Sometimes there are things simply beyond her control, like a new cook or busboy who just can’t get things right. And she better not ignore the "no substitutions" rule, which apparently is the Eleventh Commandment in the restaurant business.
Given the many things that can get in the way of delivering the kind of service that makes a difference to her customers, she has developed her own simple strategy. She does what she can.
That may sound simplistic and somewhat random, but it’s not. This isn't some arbitrary process. It isn't a case of flouting the fat cats or trying to get away with something. It's good business to take care of your friends--the regulars--who represent the recurring foundation of the business. That's exactly what she does.
Say you don’t want the green beans that come with the meat loaf. But no substitutes are allowed. Well, she doesn’t substitute anything. She just piles on extra potatoes and lets you know it's a double portion. Not so good for the waistline, but great for making sure you know you're special. She can't change the rules, but she works her magic with the ladle. She works with what she has control over and she does what she can. It shows, and, believe me, it matters. This is her own individual solution. When you incorporate this kind of flexibility and empowerment into your entire organization, you become Nordstrom’s--a business with the epitome of empowered employees and a great place to shop.
3. Don’t Worry, Be Happy
Every job turns out to be a direct reflection of the amount of time, effort, commitment and passion you put into it. There are really no boring jobs; just people who are bored with their jobs because they lack the energy, attitude and imagination to make something great out of every day.
The best bosses I know make it their business to find the pumped-up people in their places and make sure that their excitement, enthusiasm and energy is shared and communicated throughout the organization.
What I love about Brenda is that she absolutely refuses to let anyone be the “bad” in her day. Even on her worst day, she’s a smile waiting to happen. Her enthusiasm is authentic and completely contagious.
It’s about attitude and respect. It says that her job may not be rocket science, but that she takes great pride in how she does it and she puts herself entirely into the process. She expects you to appreciate that, and to respect her effort and commitment to doing the best job she can do every day. And, unless you’re completely unconscious, you do.
If you use any of these words, consider this your start-up slang intervention.
Rockstar / • adjective, outstandingly good. As in, "We're looking for a rockstar developer to join our team." OK, but don't be surprised when one of them trashes a hotel room at South by Southwest.
Value prop (or proposition) / • noun, the reason a customer would want to buy your product. As in, "I don't see the point of another crowdfunding site. What's the value prop? Another thing customers value? Plain English.
Killing it / • verb phrase, to perform successfully. As in, "Our team is really killing it right now. We hit 10,000 users two months after launch." All you are killing is my desire to have a conversation with you.
Productize / • verb, to turn a custom feature into an independent product. As in, "We took that process and productized it." Sorry to break it to you, but no one knows what you are talking about. Everyone is just nodding to be polite.
Ninja / • noun, a person with advanced skills. As in, "Dave is our secret ninja; he's the best coder we've ever hired." Is this a real company or a 6-year-old's fantasy? Why not throw teenage, mutant, and turtle in there while you're at it?
Grind / • verb, to work very hard. As in, "Our team is just grinding it out." Wow, sounds like a great sweatshop you've got going there! Sign me up!
Inflection point / • noun, a moment of dramatic change in the life of a start-up. As in, "We're growing 10x, month over month, and we haven't even hit our inflection point yet." Let me guess--you have a chart with a hockey stick on it.
Stealth / • adjective, secret. As in, "Ben won't talk about the stealth start-up he's working on. All I know is that it has something to do with the cloud." Are you protecting missile codes or launching a company? Careful; I think your phone may be bugged.
As temperatures grow warmer, the days are numbered before an employee comes in wearing skimpy cut-offs. Here's how--and when--to deal with wardrobe issues in your office.
As companies grow in size, the inevitable happens: Someone comes to work in attire that just isn’t right. Maybe it’s the party dress from the night before, or the "too short" cutoffs and flip-flops that are making you (and other employees) cringe. You decided to implement a dress code, but how do you go about enforcing it without looking like an ogre?
Remember: you do have the legal authority to regulate the way your employees dress. If you decide that a formal dress code is the way to go, then you need to be mindful of the following:
The image you want to project: This can vary depending on whether your employees have regular in-person contact with customers. The more your employees interact with the public, the more likely a dress code will be received as logical and necessary. The type of customer matters as well. Selling to doctors requires a whole different attitude towards dress than does selling to skateboarders.
But, if customer contact is infrequent, you can even have a "modified" dress code for days that customer contact is likely. If you are thinking of uniforms, to ensure a standardized image, then try to get employee input and make selection fun. Hold a contest and vote. If you get employees involved, they are likely to accept--and maybe even like--the final decision.
The affect on work performance: Face it: certain tasks are performed more efficiently if the worker is comfortable. Requiring hard-soled shoes for a person on their feet all day is asking for problems. Telling a computer programmer to wear a tie and jacket will probably see you back-filling for all the employees that quit. Remember to think of the tasks each employee is performing and the level of productivity you want. Be reasonable and logical.
The effect on company morale: Any time you take away an employee’s choice, there will be a hit to morale. If you adopt a common-sense policy and message it delicately, you can minimize the impact. Also, even if the reason is due to a few "bad actors," never blame employees for your decision to have a dress code.
Safety concerns: Preventing sandals at the construction site or mandating no loose clothing at a machine shop are not matters of taste; they are matters of worker safety.
Navigating legal minefields: There are a few no-nos when it comes to dress codes. Be careful of any dress code that might cause the following legal headaches:
Put it down in writing: Make sure your policy is not open to interpretation. Write it down and circulate it to all employees. Emphasize the company’s image and the business and safety reasons for the policy. Try to stay away from ambiguous terms like "proper" and "appropriate;" they mean different things to different people. Be sure to list out exceptions and if you are allowing a more relaxed policy--like permitting shorts in the summer--be sure to communicate that this is a perk and not a guaranteed right.
Enforcement: I have written this in several articles, but policies that are unequally enforced are often worse than not having a policy at all. Set up a method to communicate and deal with violations and be even-handed with application.
In the end, do your very best to be fair, logical, reasonable and non-discriminatory. A lot of this can be handled through communication with your employees. If you make it a conversation with your employees, rather than an order, you can learn a lot as you craft an appropriate dress code.
These simple questions help you figure out whether you're talking with a real customer or a lookee-loo.
During your first conversation with a prospective customer, your job is to discover if they've got the money to buy your offering and if you're talking to the person who has the authority to buy.
To this end, there are fourteen questions that you should memorize so that you can introduce one or more of them during your initial customer conversation, according to the Keith Rosen, author of Coaching Salespeople into Sales Champions:
The beauty of these questions is that they're likely to spark a conversation that will allow you to assess whether there's a real need for what you're selling and whether there's already some budget allocated to buy it.
Note: don't pepper the customers with these questions like an interrogator giving a prisoner the "third degree." Work them into the conversation as you discuss the customer's situation and business goals.
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Not being afraid to ask, "What's in this for me?" makes women more in tune with their customers, says Forrester Research's James McQuivey.
Entrepreneurs who want to be digital disruptors should pay more attention to how they use tech, says James McQuivey, vice president of Forrester Research.
During a conference held at New York's Internet Week on Monday, the business man said women approach technology with a practical mindset. Whereas men are too focused on passion, women tend to see things from the customer's angle and ask, "What's in this for me?" This makes them in tune with their market and better able to serve its needs.
"Seeing the need on the other end of the technology, not the technology," is crucial to being a digital disruptor, explained McQuivey. "Men can genuinely say they love their technology," but "it gives us the desire to seek new things to love and to be content with their flaws."
On the other hand, women "use technology," but do not love it. Instead, they're more focused on getting things done, connecting to people, and managing resources. It's for these reasons they're helping tech to evolve and become more user-friendly.
McQuivey also pointed out women tend to be better than men at creating product experiences, which are crucial to digital products and services.
Do you agree that women are pushing technology farther?
For Goal Zero, what began as a humanitarian effort to provide solar power to the Congo grew to a $33 million business.
By the time Robert Workman was 52 years old in 2007, he was already a successful business owner with over $100 million in revenue.
But, he felt, that success wasn't enough. So after selling his business, he dramatically switched gears and headed to the Congo. There, he saw a need for reliable power. Meeting with local aspiring entrepreneurs, he asked, "If we could get you the means to reliably power your phone, lights, and other needs for a business, could you make a living for yourself?"
The answer was a resounding yes. So Workman set out to develop the solution: a portable solar power source.
What began as a humanitarian effort based on one product gradually evolved into Goal Zero, a business with over $33 million in revenue in 2012 and a growth rate of more than 16,000 percent. Based in Bluffdale, Utah, Goal Zero sells everything from smartphone accessories to 30-watt solar panel kits, and is one of the companies vying for a spot on the 2013 Inc. 5000. As applications arrive, we thought it would be worthwhile to shine a spotlight on some of these fast-growing private companies. (For more information and to apply, go here.)
As it turned out, Workman's product wasn't only useful in the Congo. He noticed an interest in the United States from emergency workers, outdoorsy types, and gadget gurus.
He developed more Ground Zero products using his own savings, and grew the company with a $2 million investment from the company he had formerly owned, Provo Craft. His big break came when three companies, Cabella's, REI, and BassPro, agreed to carry his products--starting with one of his solar kits, a gadget that uses solar power to recharge mobile phones, AA, and AAA batteries. Similar retailers now carry a range of products from Goal Zero's three main product areas: electronics and accessories, battery packs, and solar power.
While Goal Zero continues its efforts in the Congo, the company's shoppers are now mostly in the United States. Most sales, 65 percent, are through retailers, but 30 percent come from what Atkin calls "hand-to-hand combat"--road shows and demonstrations where employees demonstrate and explain new products to customers. The remaining 5 percent is from direct-to-consumer efforts, mostly via Goal Zero's website.
"Solar is well over a $1 billion opportunity, so we invest millions every year into product development," Atkin says. "We really have a pipeline of products for the next 10 years."
The founder so believes in his company model, he says there's no limit to what it can do.
Like many entrepreneurs, Jon Oringer, founder and CEO of Shutterstock, became a businessman out of necessity.
He began his professional life in math and computer science, but quickly found he was lost without photos.
"Each time I went to create my website, I needed imagery," he said during Internet Week. "It was complicated to get, the process was expensive, I had to negotiate rights. I knew there had to be a better way."
On Shutterstock, anyone can sell their imagery, which is reviewed on an individual basis. Buyers pay $249 per month for the privilege of being able to download whatever they need. Before that, users had to pay "hundreds to thousands of dollars," he said, and producing custom shoots or negotiating rights was annoying.
Orringer opened the stock photography market for users and shutterbugs, which helped everyone promote their content. "There was no longer that generic content," he explained. "We realized we had high-volume marketplace as a platform. Anyone can come in and buy with a subscription."
While Shutterstock is mostly focused on footage and stills, Oringer said he's open to changing his content.
"Really, we can put anything in this model and sell it," he said.
Want to raise more responsible kids? Then put them to work, says the Texas businessman.
Charlie Hamilton, a serial entrepreneur and champion of Lemonade Day in Lubbock, Texas, knows all about running a successful business. But when it comes to raising successful kids, he realizes you sometimes just have to say "no."
“Successful adults often worked when they were young," he writes in The Kansas City Star. "They mowed lawns, baby-sat, or had a lemonade stand. Learning how to work hard, provide good customer service, overcome challenges, ask for the sale, and understand the value of a dollar are invaluable life lessons that kids simply can’t get from a textbook.”
Those are great building blocks for any entrepreneur.
"When told they will have to spend their own money on that toy at the checkout line, they don't want it quite as badly," Hamilton continues.
Quality family time is another perk with this training. Helping your budding entrepreneur think through projects and face challenges will strengthen your bond, and the skills learned are useful for both business and everyday life.
"The self-satisfaction and confidence that the child develops as a result of these experiences prepare him or her for adulthood," Hamilton says.
The Texan opened his first business, a fireworks stand, when he was 12.
Want to hire someone on an H-1B visa? It'll be a lot easier if they're a model.
Beauty beats brains, and it's better to be sexy than tech-savvy--at least if your goal is to work in the United States under an H-1B visa.
The highly coveted visas, which allow U.S. employers to employ foreign workers temporarily in certain specialized occupations, go quickly. Last month, the government announced that within five short days, it had received 124,000 petitions for 65,000 H-1B slots in the first week of the filing period.
Exactly who some of those visas are going to might surprise you. A new analysis by Bloomberg's Frank Bass and Kartikay Mehrotra shows that foreign fashion models are more than twice as likely to be granted H1-B visas than foreign computer programmers.
An oversight (maybe)
According to Bloomberg, the situation stems from the unintended consequence of an immigration law overhaul two decades ago.
When Congress created a separate type of visa for celebrity occupations, including people like "performers, athletes, Nobel Prize laureates and religious workers," Bloomberg said, "lawmakers realized they hadn't put fashion models in a separate category."
So, they lumped them in at the last minute with tech workers and other specialty occupations, under the H-1B visas. Subsequent efforts to move models to the category for performers and athletes have failed.
The result has been that while the volume of fashion models applying for H-1B visas is much lower than for other occupations, their likelihood of having their applications approved is considerably higher.
Roughy 478 foreign applications were "made for fashion models in 2010," according to Labor Department data that Bloomberg culled, 250 of which were approved." At the same time, 90,800 visas were granted to "computer-related occupations," out of a total of 325,000 applications.
Better likelihood of success
Result? A 51 percent success rate for fashion models, versus a 28 percent success rate for computer professionals. Besides having a better shot of getting into the U.S. (and we assume, better looks), foreign fashion models also stand out from other applicants in at least four ways:
Less education. Fashion models comprise the category of H-1B applicants who need to have earned at least a bachelor degree. A bit over 50 percent of fashion model applicants had no high school diploma, according to Bloomberg. Among other applicants, over 99 percent have at least a bachelor's degree.
Make much more money. On average, H-1B fashion models made $161,000. American fashion models make far less--about $27,330 a year on average, "with the average magazine shoot paying about $100 daily," former model and "Boston University sociologist" Ashley Mears told Bloomberg.
From South America. Roughly a quarter of the fashion model applications were made on behalf of Brazilian women, according to Bloomberg.
Work for New York City companies. More than half of the model applications came from New York-based firms, including Trump Model Management and Ford Models. Other employers included Beverly Hills, Calif.-based Playboy Enterprises Inc. and Dallas-based Wilhelmina International Inc.
The report comes at a time as Congress is debating how to bring more skilled foreign workers to the United States, an expansion that is supported by some of the biggest U.S. tech companies. Among the proposals are to increase the number of H-1B visas allowed (from 65,000 to 110,000 a year), and to "increase fees on employers who depend heavily on the foreign workers," Bloomberg said.
What happens if you don't focus on what you could have done better? An experiment in productivity.
As a business owner, you're critical--by nature and by profession. You hold yourself to high standards, and are rarely satisfied with the status quo. You have a tendency to focus on what did not get done, when it should have, what could have been done better, and what still remains to be done to move forward. You know that both survival and success depend on continually measuring how you're doing, and relentlessly demanding more from yourself. I know the toll this scrutiny takes on me--especially when I am at my most driven. It causes me to be stressed, makes me frustrated, and sometimes, distorts my perspective on the reality I am navigating through.
An Alternative to Self-Criticism
Earlier this week, however, I had the occasion to participate in a leadership workshop that changed my thinking. Instead of a critique, I was asked to list all the things I had accomplished for my company in the past 30 days. My partner, who was also there, had to do the same. It took me a few minutes, but then many things began to spring to mind, and as I listed, I felt better. Regardless of what was left to do, there had been some great successes as well. What I found really interesting was that my partner struggled much longer than I did to come up with the list of accomplishments--whereas I knew exactly what major milestones he had made happen! Taking stock of all we had gotten done gave us both a renewed feeling of excitement about our business, and an even stronger commitment to our company's mission and purpose.
This got me to thinking. How would my productivity change if I did this exercise once a week? Taking stock of what got accomplished would allow me not only to feel good about the tasks I had completed, but it would also give me a new way to approach how I organize my work. It would be an opportunity to evaluate how long projects were taking, how I could use my time in the week ahead, and ultimately, it would leave me with the energy I needed to make room--both in my schedule and my heart--for new initiatives that otherwise would have seemed like just more items on an endless to-do list.
Can the Whole Team Get Involved?
And then I had an even bigger "eureka" moment. How would the overall productivity of my staffers change if I asked them to do the same? Perhaps, like me, my employees feel frustrated at the end of the day when they realize she did not get every call made that they had intended. Perhaps, like me, they all feel that it would have been better if they could have told just one more customer about a new product. Perhaps, like me, my employees actually don't realize how much they contribute to moving Metal Mafia forward with each action they take.
So next week, my employees and I are all going to look at things from this new angle. And I have decided to set the tone by leaving a note on the desk of each employee next Monday, thanking her for at least one thing she accomplished in the past week. I think the exercise should start like this, because although I always have an eye on the things my team is getting done, I am sure I do not make a point of telling people I noticed often enough. I want them to know that I am paying attention not just to obstacles, delays, and urgent matters but to all the victories, big and small, as well--so my staff will do the same.
I'll let you know in a few months how taking time to reflect on the positive parts of the road already traveled affects how we all feel about the rest of the journey ahead.
Mark Suster explains why trying to win the "war on talent" is a losing battle.
For the past five years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. And to keep up with the Jones's it seems that Yahoo! has now employed the same strategy.
And who cares, right?
A couple of tech giants throw millions around in either cash (for which they have hoards) or part with some publicly traded stock. And a few teams of super talented, educated and bright entrepreneurs make a few mill. in their 20s. What could be more capitalist than that?
It has even gone so far that we now have evocative headlines in the tech press such as "Buy or Die," which is what got me thinking about this post.
We've been here before--trust me. Every era has its own amnesia for M&A gone wild.
In the end, it doesn't really matter. It's not some big tragedy on a grand scale. But the press (and I suspect many of the senior execs of these companies) don't really explore the corrosive downside of these acquisition.
So I thought I would.
Buy. Or Die.
Really?
If I don't commit to millions of dollars of acquisitions I will … die? I'm supposed to believe that my best innovation can only come from scores of startup founders who just made millions and have now become CVOs at my company? (Chief Vesting Officers)?
Meh.
The Aqui-hire Business
Many buying companies price these deals on the basis of $1 million per engineer on the team for an early-stage deal. And they might give a premium if the team has been around a longer period of time, has built some hard-to-build proprietary technology or has some customer traction.
Usually the location of the engineers matters great so having offshore engineering makes acquihires unlikely.
Let's assume an early-stage company around for two years with limited traction. It is probably purchased in the $5 to $15 million range even if you see higher numbers in the press.
Almost certainly the startup would have raised some capital. Let's assume $2 million in seed money.
If the money comes from professional investors it usually has a "liquidation preference" meaning that their money comes out before the founders or common stock. (If you don't know venture economics--there is an overview here.)
While at initial glance this sounds unfair, when you think about it -- it doesn't. If you give $2 million for 20 percent of a company ($8 million pre + $2 million investment = $10 million post-money valuation) that has no product and no customers and it turns around three months later and sells for $5 million it would hardly be fair for investor to get $1 million back (20 percent of the proceeds). That's why liquidation preferences exist -- downside protection.
After the liquidation preference the founders (probably one to three people) are likely to get 90 percent of the remaining proceeds and the staff -- those engineers that the acquiring company so desperately wants -- would ordinarily receive a very small proportion.
I talked about the math of this in this post, "Is it Time to Learn or to Earn."
Mark, doesn't the acquiring company mostly care about the super innovative founders? Those one to three you're talking about?
If they do, then they're naive. And most buyers aren't. Most founders stick around for their lock-up period--one to two years--before going on to found their next company.
Think about it -- they were the ones most willing and most able to take risk in the first place. They founded their last company with no money in their pocket. Now they get to go out and try again with $2 million in their pockets plus the credibility of having just gotten a big W.
Most founders stay the least amount of time they can.
I know the buyers try the best to believe that [insert well known founder name here ... David Sacks, Max Levchin, Dennis Crowley, Keith Rabois] will stay and help lead their company in a totally new direction. But evidence suggests otherwise.
So the buying company usually wants to pay $0 for the company. And wants to structure a huge payout for the employees that will remain. That way investors (dead money for the buyer) and founders (flight risk) don't get all the spoils while the faithful staff who will stick around get nothing.
And precisely because buyers usually prefer to have limited money go to investors -- investors almost always have the ability to say "no" to transactions in the terms of their funding documents (aka "blocking rights").
And that is the tension in the acquihire -- What is the purchase price for the company? What is the "earn out" if the acquired company hits some performance targets? What is the amount of money set aside for staff retention? And will investors allow a deal to happen in the first place?
The numbers you see announced in the press for deals are hardly ever right.
OK, Mark, we get the mechanics. But what is so corrosive about this?
Why Acquihires Hurt the Acquiring Company
How about if we look at it from the "rest of company" perspective?
You have been at Google, Salesforce.com, Yahoo! for years. You have worked faithfully. Evenings. Weekends. Year in, year out. You have shipped to hard deadlines. You've done the death-march projects. In the trenches. You got the t-shirt. And maybe got called out for valor at a big company gathering. They gave you an extra two days of vacation for your hard work.
And that prick sitting in the desk next to you who joined only last week now has $1 million because he built some fancy newsreader that got a lot of press but is going to be shut down anyways.
What kind of message does that send to the party faithful who slave away loyally to hit targets for BigCo?
I'll tell you what is says.
It says if you want to make "real" money -- quit.
Go do a startup. Get some famous angel or seed money. Get yourself in a big demo day competition. Woo the press. Hire legions of young, impressionable graduates from the top engineering universities. And then come back and sell me your company.
I know many rank-and-file employees. I've had the chats with them. You rarely meet people who don't resent the scores of entitled acquihirees of their company.
Does Yahoo! et al really have to keep up with the Jones's to build its future?
For the 200 new employees they'll get through acquihires do they unleash 2,000 unhappy existing employees? Sure, most won't quit. Because they know that it's not a slam dunk to start a business and get acquired. But the most talented of those 2,000 will.
What if the $100 million you're going to spend trying to win this alleged "war for talent" instead went into big retention plans to keep your most talented employees.
You can't "Roll Out the Red Carpet When Your Best Employees are on the Way Out the Door" as I wrote in this post. So why not announce big, hairy audacious goals on recruiting the best mobile talent with sign-on bonuses and retention plans? And reward your existing top 10 percent of employees handsomely.
I'll bet the ROI would be higher than acquihires.
Acquihires and Venture Capital
I'm a VC. I know I'm supposed believe in acquihires to bury my investments that aren't working.
I would never discourage any teams of people I'm working with against early acquisition if they felt it was in the company's best interests.
But that's not how you make money in the venture capital business. You make money by backing winners that build real businesses.
I look for entrepreneurs who set out on their journeys to do exactly that--build big businesses. Change industries. Not looking for quick flips.
And on many occasions I have passed on deals where it was clear that the founding team was over-optimizing the deal structure to focus on a quick exit.
When I have great teams with products that are taking longer to show traction than they or I would like, I usually spend time trying to figure out how we can build a better business versus selling early.
I don't blame entrepreneurs who go for an early exit when it comes up. To the contrary. On many occasions where I've met with teams of people in whom I've never invested I've encouraged exactly that -- an early exit at a "small" price. Because if your business isn't working or isn't likely to work, it's obviously better than running into a brick wall or over-capitalizing yourself.
And, of course, many small acquisitions work for the buyers when there is a clear strategy for owning the asset or a clear alignment with the team you're acquiring.
But as a repeatable strategy for large companies to try and compete with each other it still strikes me as a wasteful strategy. And few in the press are willing to call this out.
Sarah Lacy did. It's why I love reading her writings -- she's one of the few remaining journalists in the tech sector (along with Kara Swisher and a few others) who have been around long enough to have earned their critical eyes or cynicism.
She wrote this excellent piece last year called, "The Acqui-hire Scourge: Whatever Happened to Failure in Silicon Valley."
And I thought I'd finish with a quote from Sarah:
"Allowing entrepreneurs -- and their investors -- to save face by saying they were "acquired" instead of failing is nice, but it's a bit like the pre-schools where everyone wins a trophy for showing up."
You can still keep your company moving forward while keeping your feet firmly planted in the day-to-day details. Here are three reasons to do so.
You often hear the phrase "in the weeds" in restaurants referring to a server who has fallen behind, but in this post I'm going to use the phrase to mean being involved in the day-to-day details.
As the CEO of my online marketing company VerticalResponse, you might imagine that I spend my days in a corner office, attending board meetings, and generally moving things forward. And you'd be right. But what you might not know is that I love the day-to-day stuff just as much, and more often than not, you'll find me right there in the weeds with my teams.
You might wonder, how can you lead when you're busy in all those details Janine? I'll tell you...
1. It Grounds Me
Even though I spend a huge chunk of my day in meetings with my leadership team, you'll still find me every Tuesday at 3 p.m. in the trenches with my core marketing team working through the challenges and opportunities of the week. We might be looking at the conversion funnel or which keywords result in the most new sign-ups for us. And guess what? I love each and every minute of it. Why? Because the minutia grounds me.
I've been a marketer a quarter of my life. It's what I know and it allows me to focus. And often because of that laser-like focus on the details, it enables me to uncover opportunities like when we saw that people who signed up for our service and loaded their customer list into our e-mail marketing system were three times more likely to purchase than those who didn't. That's just one example of how being "in the weeds" led to an important way to move our company forward.
2. I Stay In the Know
It's amazing the things I learn or hear just by being present at meetings like the one I mentioned above. It's mostly managers in this meeting and we go over a myriad of topics. I often hear about projects being sidelined or obstacles they face because of another functional area in the company or process that isn't working.
Just recently in one of these meetings I found that a new person was having issues getting an answer to something that only people who have been at our company for a few years would have known. I gave the back story about the situation to him and the team he was getting his information from, we documented it and now it's no longer an obstacle. By having this information I am able to work with my leadership team to address issues like these and remove obstacles that I might never know about otherwise.
3. I (Still) Think Like a Customer
Even though I've been living and breathing this business every day for over 12 years, I still think like a small business owner. And as much as my teams do this too, there are often times that they are so close to what they are doing and know so much about it, that I serve as the SMB voice of reason. For instance when looking at a new tool we were developing, one of my team members voiced that she would want all the reporting at the very top with the action items underneath. Her reason was simple. She looks at a lot of reporting and would want it straight away. I understood her point, but made the counterpoint, "you're not a typical small business owner, they don't think like that."
I'll always be driving this business forward and looking for the best opportunities for growth for us and our customers, but you can bet you'll always find my feet firmly planted in the weeds.
How do you lead and still take on the day-to-day details? I'd love to hear.
Did you enjoy this post? If so, sign up for the free VR Buzz weekly newsletter and check out the VerticalResponse Marketing Blog.
How humility and honesty brought one start-up founder life-changing publicity.
Long before bloggers were household names, John Lusk, along with his co-author and business partner Kyle Harrison, leveraged their humble company's newsletter into The MouseDriver Chronicles, a New York Times bestselling book. Along the way, they created a supportive community of emotionally attached stakeholders that would be the envy of any social media manager. Here's how they pulled it off.
After graduating from Wharton in the late 1990s, John and Kyle launched a start-up based upon a simple product: a computer mouse shaped like the head of a golf driver. They named their novelty product a "MouseDriver".
The company's newsletter was initially created to share their entrepreneurial journey with a few family and friends. Says John, "I said, 'Hey, listen were going to start writing this newsletter and it's going to highlight our trials and tribulations, our failures and our successes. It's gonna highlight our emotions, our ups and our downs. If you want to be kept informed just send me an email and let me know that you're in, and that was it. And of those 35 people... everybody opted in."
Here's what was in that first newsletter:
Dear Friends,
We have no income and no venture capital funding. Our inventory is being financed by companies with names like Chase, Citibank, First USA and Capital One. Our office consists of a refrigerator, oven, sink, two desks, a bay window and one very large Texas flag... We're motivated, passionate, excited, terrified and at many times, have absolutely no idea what we are doing. Every hour of the day is filled with constant mood swings and the question of "What the hell are we doing?" enters our minds on a daily basis.
Without realizing it, John and Kyle had begun to build a community of virtual stakeholders who were developing an emotional bond with the company.
To John's surprise, the number of subscribers to the company's newsletter began to quickly grow."Within three months, we had over 500 subscribers and again, you had to send me an email that said,' I'm in.' We weren't marketing the newsletter, it was just out there, sort of growing organically."
Crowdsourced Advisors
In addition to providing a source of emotional support and encouragement, John began to use the newsletter to solicit advice. "The newsletter became sort of a de facto Advisory Board for us. We would send out some of our issues, we would highlight some of the problems and the challenges we were having with MouseDriver and all of a sudden, people would respond. I'm not talking about one or two people responding, we get 10, 15, 20 responses for a particular problem.
The popularity of the company's newsletter soon began to grow--faster than MouseDriver's sales. Per John, "We continue to grow the business and as the newsletter grew, the media kind of picked up on the story as well. The media... wasn't... saying, 'Wow, this is the best product ever and you guys are just killing it.' It was...'Wow, we've heard about your newsletter, and it seems to be motivating and inspiring entrepreneurs around the country. We'd love to talk to you about it.'"
Enter Inc. Magazine
The turning point for John and Kyle was a cover story in Inc. magazine. "February of 2001, Inc. magazine ended up doing a cover story on Kyle and me called, An American Start-Up. Again, the story wasn't about how our product was just knocking it out of the park. It was about our newsletter and how we weren't afraid to put things out there, and to talk about how hard it was to be an entrepreneur.
The Inc. article generated tremendous interest in the newsletter. In the pre-blogging days of 2001, John had to literally send each newsletter out via Outlook, which limited the number of recipients that could be included in each email. As the number of subscribers grew, so did the cost and time committment.
In John's words, "(After the Inc. article) our newsletter completely took off. We went from five thousand subscribers to ten thousand subscribers in less than... six months. We got so many responses we kind of were trying to figure out, 'What do we do with all these people?"
From 10,000 Readers to Bestseller
However, before John and Kyle could fully harness the power of their growing newsletter audience, their focus was drawn to codifying their entrepreneurial experiences in book form. "Once the media picked up on it, every major publishing house... (called) from Time Warner and Harper Collins and Harvard Business Press and Perseus. Saying, 'Hey, we want to pay you to write a book.'
We really wanted to encourage people to do what we had done. You know, despite the fact that we had all these highs and lows, we felt like we had learned so much about ourselves. The 4 years that we spent with MouseDriver, we'd learned... everything we learned in business school and then some, especially around common sense and street smarts and how to read people and these are things that you just don't get from any other corporation and these are things that are going to help you in everyday life."
Not every business will be able to transform its story to a bestseller. Nevertheless, there are a number of community-building lessons entrepreneurs can draw from John and Kyle's experiences:
1. Journalize: Maintaining a journal helps you keep your successes and failures in their proper perspective. It will be invaluable you when it's time to write your own bestseller.
2. Consistency: Communicating with your constituents on a set schedule keeps your community engaged and forces you to create content, even when you feel you don't have time to spare.
3. Vulnerability: Most people tend to be more empathetic, and thus more helpful, when you share your shortcomings and mistakes, along with your triumphs.
4. Ask For Help: Don't be afraid to call upon your community for specific assistance.
5. Speak, Don't Preach: These folks are already believers; don't alienate them by talking "at" them. Rather, write in a conversational style that encourages your fans to add to the discussion.
6. Sales Matter: Although they did many things right, John and Kyle failed to generate significant MouseDriver sales from their community. As John noted at the conclusion of his talk, "The book did help us increase sales... but we could have increased a lot more, had we had the distribution, had I been actually focused on sales like I probably should have been, instead of writing the book."
You can watch/listen to how John and Kyle turned their email newsletter into an international bestseller in this nine-minute excerpt from John's recent talk at UC Santa Barbara.
A productivity junkie who's done it all decides to stop planning entirely. Will his experiment work?
Have you tried about a dozen different productivity systems but failed to see long-term results?
Computer scientist and professor Cal Newport empathizes. After noticing he had more research ideas than he could possibly turn into papers, he "launched at least six different plans aimed at increasing my research output," he wrote on his blog.
Were any effective? Not really, he confessed, so he decided to try something new: the anti-plan plan.
He defines it this way: "An anti-plan has you to throw out all … rules and just dive in, adapting, the best you can, to your circumstances. It requests only that you keep a record of your experience, capturing, for later review, your thoughts, triumphs, and frustrations."
To keep this record, Newport devised a system called a "gournal," where he regularly emails updates and reflections to a special email address, which automatically sorts them by labels. Here's what he hopes to get out of it:
The theory behind anti-planning is that it exposes you to a much wider swath of the productivity plan landscape. Your journal will keep you updated on how well you’re doing, which provides the selective pressure needed to drive you toward some novel approaches to getting more depth out of your working habits.
People sometimes worry that anti-planning will tank their productivity. The reality is usually the opposite: the flexibility and constant self-reflection tends to increase the rate at which you produce valuable output.
For these same reasons, however, anti-planning can be draining (all that reflection and decision making reduces willpower). So I usually only last a month or two before falling back onto a more structured set of rules.
The key, however, is that the system I end up after anti-planning is often more effective than where I was before.
The anti-plan, then, is not so much a long-term change as a means to get a better sense of how you work. Rather than blindly adhere to someone else’s system, you watch your own patterns to develop tricks and schedules that maximize productivity. It's an approach Newport thinks many folks could benefit from.
"If you’re frustrated with the effectiveness of your productivity plans, spend some time without one, and see what bubbles to the surface," he suggests.
Want to track Newport's progress? You can follow developments on his blog.
Will you give the anti-plan a try?
The two online food delivery services are merging to scale growth.
Two online food delivery services, Seamless and GrubHub, agreed to merge, Bloomberg tweeted Monday morning.
GrubHub CEO Matt Maloney will keep his title at the new company, while Seamless CEO Jonathan Zabusky will assume the role of president. Financial terms of the deal were not disclosed. The name of the combined team--Grubless, anyone?--has not yet been announced.
TechCrunch explained the significance of a possible merger over the weekend, noting how big the online food biz has become. Citing research from Cornell University, TechCrunch said more than 40 percent of adults have ordered food online, and 10 percent of restaurant orders originate online.
While Seamless has traditionally dominated the New York City market, particularly in worker hub midtown Manhattan, GrubHub has made the midwest its launch pad.
GrubHub, which was founded in Chicago in 2004, has expanded to more than 500 cities and more than 20,000 restaurants, and raised $84 million in venture capital funding in the process.
Seamless, on the other hand, launched in 1999, was acquired in 2000, and then became its own entity in 2001. It rebranded from its earlier name Seamless Web two years ago. Today it's in 12,000 restaurants, and reportedly generated $85 million in revenue last year, according to Reuters.
Both brands are also visible--through signage--in restaurants and cities they serve.
The merger will, ideally, enable both companies to expand farther.
Neither company had an easy time of it, and to this day the founders struggle with balancing life and work. As GrubHub's co-founder Matt Maloney told Inc. in a video: "It's super tricky all the time."
If you approach Monday from the right perspective, it can be your favorite day of the week.
It's Monday morning--early. Soon, my Facebook feed will start to fill up with "I hate Monday!" and "Looks like Monday snuck up on us again!" posts. To which I respond, "Fools! I love Mondays!"
Maybe my reaction is not typical, but here's why I love Mondays.
I'm an introvert who works at home. I love my husband and my children dearly, and I do look forward to the weekends, where we do a lot of stuff together. But, they are extroverts and I'm not. I'm an introvert, which means I need some alone time to recharge. From the time school gets out Friday until everyone is out the door on Monday, that time is rare. But, Monday morning comes, and I drop the kids off at school, and kiss my husband and send him to his office, and then I can sit down in front of my computer, alone. In the quiet. And did I mention, alone? Ahh, bliss.
I'm also a bit of a workaholic. Sometimes I joke about being lazy, and I am with certain things (like folding laundry and washing windows). But, I'm not when it comes to writing, which is what I do for a living. I write a lot. I read a lot, in order to be able to write things that are of value. I talk to a lot of people. (Yes, I know the taking to people seems to contradict the introvert thing above, but there's a difference between chit-chatting with someone at the church picnic and interviewing someone about their micro-multinational business.) So, I like to get back to Monday mornings, when I can get some work done.
Monday is full of possibilities. Monday gives you a whole week to look forward to! I like to take time on Monday morning to review my schedule and plan for the week. See what is coming up, with whom I need to speak, and what needs to be done. I do try to wrap lots of things up on Fridays so I don't get hit with old stuff on Mondays (although that isn't always possible). But, Monday is the time to start fresh.
Nobody else likes Mondays. Okay, I admit it. I do like to rub my love of Mondays into my Monday hating friends. They don't call me Evil HR Lady for nothing.
Brains aren't inexhaustible; like any piece of sophisticated equipment, they're delicate and can break.
I got kidnapped one weekend last month. My husband and daughter pretty much frog-marched me out of the house, into the car, and out of town. I didn't know where I was going but was promised I could be back at my desk in 48 hours.
I found it wonderfully soothing that I didn't know where we were going or what we would be doing. I hadn't made the plans so didn't feel responsible for them. All I knew was that I wasn't allowed to work.
And then I found myself ensconced in an insanely-charming hotel overlooking the sea. We ate a lot of wonderful fish, had some great conversations and, the next day, went for a challenging walk that ended with a great outdoor lunch.
The reason for my kidnapping was complicated but suffice it to say that this was my first day off since New Year's Day. I had seriously forgotten how to do anything except work. I worked in my sleep and in the bath, I talked about work over meals, and listened to work while I cooked dinner. I wasn't much fun to be around and it wasn't a ton of fun being me. But worst of all was knowing the perils of overwork. Clock in more than 11 hours a day (something I did regularly) and you significantly increase your chances of depression and cognitive decline. You forget words, are less good at solving problems, and find it harder to be creative.
Knowing this should make you work differently. Anyone managing another human being needs to remember that brains aren't inexhaustible; like any piece of sophisticated equipment, they're delicate and can break. Many organizations are led by bulls in china shops, wantonly wrecking the assets they most depend upon.
My biggest problem, of course, is that I work for myself. I don't have a boss to tell me to stop and I'm lucky enough to love what I do. Like most entrepreneurs, it's hard for me to see where work stops and I start--and that's how I like it. But the medical evidence scared me--it still scares me--and I think that, overall, I'd rather have a long career than go out in a blaze of glory.
So I was lucky to be kidnapped. Within 47 hours and 35 minutes, I was back at my desk. But not for long....
Mark Suster explains why you should never be afraid to ask for what you want.
No.
The one word the best entrepreneurs never accept.
I said it.
Now let me walk you through a broader story because avoidance of the word in and of itself will seem cliche. Stay with me.
When I was little I had a role model for entrepreneurship - my mom. She was a natural leader. She was president of the UJA in Sacramento. From this I saw civic involvement and leadership first hand.
She was a nurse but was never graduated from a four-year college. Still -- she can do the NY Times crossword puzzle better and faster than I. Even today.
She was a hustler. And a ball buster. And a natural sales person. She was never afraid of the word "no" even to the point of embarrassing me.
My youth was filled with her arguing with vendors if they tried to pull a fast one. As my wife will tell you -- arguing is cultural -- you grow up with it or you don't. I did. It's very Jewish. For better or worse. She's learned to embrace it in me. If a maitre d' tries to seat me at a table in huge traffic flow or a corner she knows not to bother sitting down.
My mom bought our family's first computer and encouraged me to learn it at 13.
She opened two businesses -- a bakery and then a restaurant. I worked in both before leaving to work in a software company at 17. I never knew a world in which you weren't supposed to work and make money. Even though my dad was a doctor and in retrospect I probably didn't need to earn my own money. My mom always taught me it was my responsibility to do so.
When I was younger my mom taught me something I never forgot:
"You don't ask, you don't get."
It's simple. I know. But it amazes me how many people don't really get it.
Here are two stories:
Story one:
When I lived and worked in London my wonderful assistant was Deborah Halliday, who was raised a very "proper" British young lady. Her brother played rugby for the English rugby team and went to Oxford. That’s kind of like having a brother in the NFL in the US.
If there was any society in which being a hustler was out of step with the norm is was England. Yet I was a foreigner so I got away with being different.
I used to ask Deborah to book my travel plans in France and Germany were I went one to two times a month. There were online tools to book this stuff but the Internet booking sites were early.
I would tell Deborah, "I found this hotel near the Champs Elysees for 170 Euros. But I don't want to pay that much. Tell them I'll stay if they'll give it to me for 120 Euros."
"What? You want … what? Mark, you can't do that! You can’t just name your own price."
Me: "Of course, I can. Tell them you found a hotel down the street for 100 Euros but I prefer to stay at their hotel. Haggle. See what you can do."
Deborah was mortified. Bless her cotton socks. I put her outside of her comfort zone.
Me: "Deborah, you don't ask, you don't get! What’s the worst they can tell you? "No?" If so, we'll call back an hour later and pay 170 Euros. It's not like they're going to tell you 'no' in an hour. You might as well try!"
Classic Mexican Road strategy.
Here's the thing. They NEVER said 'no.' Such were the times. They weren't fully occupied.
She began to love it. It was liberating. I taught her to make it a game. I would challenge her to see how cheap she could get rooms. I can still hear her giggle at how ridiculous it was in her mind's eye. And yet how eye-opening it was that you could have almost anything you wanted. If you just asked.
Story two:
Fast forward. My son Jacob. He's now 10. When he was seven or eight, my wife used to sit down with him to do homework and train him in the importance of getting it done early and well. Luckily I have such a terrific and organized wife. Or Jacob would be screwed.
They sometimes did homework at Le Pain Quotidien. And if Jacob was good, he could get a treat.
Tania once took him up to the counter to pick out a treat. He pointed at a chocolate cake and told Tania he wanted a piece.
"No, honey. That's a whole cake. You can't have a piece. It's not cut. Why don't you find something else?"
Jacob: "Of course I can have a piece. Just ask them!"
Jacob has IJ. He knows to ask for what he wants. He is respectful. But he has an inner compass that instead of saying "O.k." to adversity he says "Why not?"
She had him ask the lady behind the counter directly. She said, "No problem."
My wife smiled and couldn’t wait to tell me the story.
My wife thinks Jacob's an over negotiator but she secretly loves it. I always take it as a compliment.
Both stories have something in common. Not being ashamed to ASK. As I tell people almost weekly, "What's the worst that could happen? That they would say 'no'?"
And I mean it. I promise you that 95 percent of the people I meet are afraid of people telling them no. They are personally embarrassed by it. Or insulted. Or view it as failure.
I'm told "no" all the time because I often ask for more than others do and therefore you need to be willing to hear "no."
I was on a flight last year from DC to LAX. I had a business class seat due to status of flying a lot and my family was in economy. I felt bad and was planning on rotating.
But when I sat down I asked if my family could upgrade since there were three open seats. I assumed the answer would be "no" but I figured I had nothing to lose.
The flight attendant said "O.k., but you’ll have to pay a small upgrade fee and I can't move them until after take-off." But move them she did. And she decided it wasn't really important to make me pay since the seats were unoccupied.
Score!
We had also just been upgraded from London to Baltimore.
Two times in a row--unreal. My wife was a bit incredulous (but grateful). I simply pointed out that our kids learned a more important lesson than the downside consequence of their expecting to always sit in business class (which isn’t going to happen!).
They learned to ask, "Why not?"
You don't ask. You don't get.
And here's the thing about "no."
I know first hand just how chicken people are about hearing it. I've sat through so many meetings where sales reps didn't ask for the order. I've been pitched by hundreds of entrepreneurs who never actually asked me whether I would invest. Very few people do.
Here's an experiment for you.
Hold interviews with tech people, marking people, ops people, finance people -- whatever. They always finish the interview with a "thank you" and barely ask next steps.
Any great sales person will ask you at the end of the meeting, "So, how'd I do? Who else have you spoken with? How do I stack up? What do I need to convince you of to get an offer? What is the next step in the process?"
Great sales people are trained to "ask for the order." If you interview a sales person and they don't ask for the order, be worried.
I like to flip things on their heads. I like to ask in reverse in interviews, "If we did get aligned to offer you this role, do you plan on accepting? What other offers do you have? What do we need to do to win? What steps do you still need before you decide to go with us?"
I want to know. And I have nothing to fear in the answer.
My favorite (not!) is dealing with lawyers (or VCs) who say, "As a firm, we never do a, b, c." Let me tell you now that often this line is BS. But my standard response is, "I don't care what you normally do. I think it's right for our situation. So unless you explain to me logically why it doesn't make sense at our company, my assumption is that it's a good idea."
In summary, I recommend some honesty with yourself. "Asking" is a skill that can be practiced and learned but you need to be self aware.
How comfortable do you feel with asking for the order? How confortable do you feel with asking awkward questions or asking for things that are out of the norm, "Could we have your room for 120 Euros so we don't have to stay down the road?"
If you don't find it within your confort zone - practice in small ways for asking for slightly unreasonable things just to get used to it. It's a skill you're going to need as an entrepreneur.
After all--you don't ask, you don't get.
View of the Kremlin, ca. 1790. NYPL Slavic and Baltic Collectionss.
One of 700,000 pictures in the NYPL Digital Gallery
