- My NYPL
Tools and Services
- Using the Library
I am a...
- Classes & Events
- Support the Library
The entrepreneur's Revolution Fund has invested a large sum in the Washington D.C.-based salad chain, Sweetgreen.
Sweetgreen just got some green--courtesy of Steve Case’s Revolution Fund.
The fund, started by Case and two former AOL colleagues, announced its $22 million investment in the Washington D.C.-based salad chain startup on Wednesday. Case said he thinks the startup has a lot of potential to become a popular restaurant chain, as reported by the New York Times.
“I do think there will be a Chipotle equivalent in the healthy dining category. I think Sweetgreen is well positioned to be that iconic brand in this next wave,” Case told the outlet.
Case will join the startup’s board and act as an advisor to the founders. There are currently 22 Sweetgreen locations scattered across the east coast. The outlet reported that the company plans to use the new capital to open more locations. New York, Boston and Philadelphia are amongst the next cities Sweetgreen plans to infiltrate.
Nicolas Jammet, Jonathan Neman and Nathaniel Ru--all Gerorgetown University graduates--started the company back in 2007, with a focus on local produce, sustainability and healthy living. The team has incorporated creative marketing, advertising and customer engagement tactics in the past--it even launched its own food and music festival, Sweetlife Festival back in 2010.
The photo-sharing app is getting some adult supervision. Now the question is whether the former Facebook and Instagram exec can turn Snapchat into a big business.
Snapchat is growing up.
The white hot Los Angeles-based start-up has just landed former Facebook and Instagram executive, Emily White, as its chief operating officer, according to The Wall Street Journal. It's a major show of faith for the two-year-old start-up that allows people to send each other photos and videos that automatically disappear in a matter of seconds. Lately, Snapchat has become, arguably for good reason, the poster child for modern tech start-up hubris. Snapchat's founders, Evan Spiegel and Bobby Murphy, have been derided for reportedly turning down Facebook's $3 billion acquisition offer and raising gobs of money without having a revenue strategy in place. White (who some are already comparing to Facebook's COO Sheryl Sandberg), could change all that.
Before joining Snapchat, 35-year-old White led efforts to bring ads to Instagram, which was also a pre-revenue company when Facebook acquired it in 2012 year for just under $1 billion. In an interview with the Journal, White said the move was a no brainer.
"It happened really quickly, but to have an actual COO role in one of many companies that is disrupting the communications arena is one I could not pass up," she said. "I think that Evan has been looking for someone who can help him grow and scale what is already something that has changed a lot of the way people think about the mobile experience."
To be sure, the hire suggests that Snapchat CEO Spiegel plans to make good on his promise to forego easy exits and turn Snapchat into a big, standalone company. Having cut her teeth in online sales at Google and then at Facebook, White stands to strengthen Snapchat's potential for building its own advertising model. Of course, that doesn't mean it will be an easy task. As Instagram's ad model has proven, users don't take to having their newsfeeds infiltrated by brands easily
As White admitted to the Journal,
"I am about to learn a lot about the way communication is happening right now and am excited to help grow [Snapchat] into a big business."
If you want young talent to fit in, don't treat them like a bunch of freshies.
Hiring and training young talent presents an inherent challenge. Companies need to both bear with fresh employees as they get used to the working world while still making them feel like they're a crucial part of the team.
One strategy for dealing with this challenge comes courtesy of the National Hockey League's Boston Bruins: Tear down the rhetorical walls that separate your younger and more experienced employees.. Captain Zdeno Chara has banned the use of the word "rookie" in the team's locker room, the Boston Globe reports.
For reasons that trace back some 20 years to his junior hockey days in Slovakia, Chara believes the word has no place in the hockey workplace. ... In the Bruins' locker room, newcomers are respectfully called "first-year players" or "younger guys" or "newer guys."
While younger players still need to work their way up the leadership ladder, Chara says he strives to make them feel like they're a welcome part of the team--not part of some strange subset within it--before they even lace up their skates.
So, how to shift this idea off the ice into the office? From a semantics perspective, it's easy enough. Take demeaning terms like "junior" out of titles. And if you have a reverse mentoring program, consider eliminating the term "reverse." Mentoring is mentoring.
But it's not just about semantics. The ban on "rookie" is just the literal representation of a Bruins locker room culture that fosters respect for its youngest players and emphasizes that they're part of the team like everybody else. From the Globe:
"I had a couple of bad experiences," the earnest, 6-foot-9-inch defenseman said of [his early career], where, he recalled, rookies often were forced to perform demeaning chores or rituals. "And I said, 'You know, if I ever am in a position to control that, I would totally change it, because it’s not fair.'"
It's worked for the Bruins, after all. Boston, which advanced to the Stanley Cup Finals last season and won the Cup in 2011, is in first place in the league's Eastern Conference this season, and three of its top-10 scorers are first- or second-year players.
Here's a look at the new wearable devices on the market--and those coming in 2014.
A wave of companies, many of them start-ups, is creating wearable electronic tracking devices for nearly every part of the human body, from brainwave-monitoring headbands to smart socks. Retail revenue from wearable technology is predicted to reach $19 billion by 2018, according to a new study from Juniper Research. Here's a look at the products already on the market as well as a few of the items launching in the next year.
Sigmo's language translator clips to a lapel and translates speech into 25 languages ($64, early 2014, buysigmo.com).
The Nike Fuelband SE tracks exercise intensity against a preprogrammed goal ($149, nike.com).
InteraXon's Muse measures brainwaves and lets users control games with their minds ($269, interaxon.ca).
Bodymedia's Wireless LINK armband tracks physical activity, calories burned, and sleep quality ($119, bodymedia.com).
Fitbit's Force measures physical activity and sleep quality. It also functions as a smartwatch, delivering phone notifications ($130, fitbit.com).
GoPro's Hero3 records video and can be mounted on a helmet or a user's chest. It's also waterproof ($400, gopro.com).
Google's Glass takes photos, records video, and searches the Web (no price yet, 2014, google.com).
Emotiv's Insight tracks brainwaves and lets users control games telepathically ($229, spring 2014, emotivinsight.com).
Misfit's Shine monitors activity--and can fit into a necklace or a bracelet or clip onto a shirt ($120, misfitwearables.com).
Narrative's life-logging camera snaps two geotagged photos every minute ($279, spring 2014, getnarrative.com).
Under Armour's Armour39 chest strap keeps tabs on heart rate, respiration, and calories burned. Plus, it wicks away sweat ($150, underarmour.com).
Lark Technologies' Larklife tracks exercise, calories, and sleep quality. Plus, it gently vibrates to wake users up ($150, lark.com).
Jawbone's Up tracks sleep, activity, and calories. It sends an "idle alert" for too much time spent on the couch ($130, jawbone.com).
Recon Instruments's Jet is like Google Glass for athletes. It has a camera and tracks and displays a user's speed ($599, spring 2014, reconinstruments.com).
The Nike iPod sensor fits into Nike sneakers to track a runner's pace ($19, nike.com).
Withings's Pulse clips to a lapel to track a user's heart rate and physical activity ($100, withings.com).
Pebble's Smartwatch displays texts, emails, and calls ($150, getpebble.com).
Heapsylon's Sensoria Smart Socks use textile sensors and a Bluetooth anklet (shown) to track speed and cadence ($149, spring 2014, sensoriafitness.com).
LumoBack's posture belt vibrates when users start to slouch. It also tracks activity and sleep ($150, lumoback.com).
Samsung's Galaxy Gear notifies users of incoming calls and emails. Also includes a speakerphone, voice recognition, and a built-in camera ($299, samsung.com).
OMsignal's smart shirt contains textile-based sensors that track heart rate, breathing, and activity (no price or release date yet, omsignal.com
Kapture's Klip records audio constantly. Users press a button to save the previous 60 seconds of conversation ($75, spring 2014, kaptureaudio.com).
Three ways to quickly turn tactics into action.
As the replacement for a company founder, Chad Dickerson had to win the trust of his team. Here he talks about translating tactics into action.
Be Transparent About Change
“Nine months in as CTO, I’d made about 15 personnel changes on a team of 20. People were demanding answers: Why are you doing this? I said, ‘I’m doing it for the good of the company and the community. Six months from now, if the company is worse for it, I’m a jerk. But if six months from now the company is better for it, you’ll know I did it for the right reasons.’ I took a lot of risk, told people I was taking the risk, but told them it was going to get better.”
Find Time for the Future
“By the summer of 2009, we were losing our minds; the site was blowing up every day. I started a small group of the best engineers, and I called it the Breakfast Club. I said, ‘I know you don’t like to get up early, but I want you to come here for breakfast three days a week, and we’re going to talk about the future only, nothing about what’s going on. We’re going to build the Etsy future.’ ”
Do Whatever’s Necessary
“One year, right before the kickoff for holiday shopping, we discovered we needed a new server. We literally needed it the next day, so I pulled out my Amex and ordered the server. It was delivered to a FedEx center in Moonachie, New Jersey. I ran out of the office in Brooklyn and drove to Moonachie. I pulled the car up into the loading dock at our data center and carried it over to the guys who would install it.”
The best way to build stronger defenses is to identify your company's weak spots. Here's a primer.
First things first: There are way more than five ways that cyberthieves can break into your business. (They’re surely thinking up new methods as you read this.) Often they use more than one approach in a single attack.
Even so, small-business hacks tend to fall into a few categories. We turned to security professionals and "ethical" hackers--they help businesses identify their vulnerabilities--to find out the most common methods used and what you can do to protect yourself and your brand.Weak Passwords
How It Works: With a $300 graphics card, a hacker can run 420 billion simple, lowercase, eight-character password combinations a minute.
Risks/Costs: 80% of cyberattacks involve weak passwords. 55% of people use one password for all logins.
Notable Scams: In 2012, hackers cracked 6.4 million LinkedIn passwords and 1.5 million eHarmony passwords in two separate attacks.
Your Best Defense:
- Use a unique password for each account.
- Aim for at least 20 characters and preferably gibberish, not real words.
- Insert special characters: @#$*&
- Try a password manager such as LastPass or Dashlane.
- Check out password alternatives.
How It Works: An infected website, USB drive, or application delivers software that can capture keystrokes, passwords, and data.
Risks/Costs: 8% increase in malware attacks against small businesses since 2012. Average loss from a targeted attack: $92,000.
Notable Scams: In February, hackers attacked about 40 companies, including Apple, Facebook, and Twitter, by first infecting a mobile developer’s site.
Your Best Defense:
- Run robust malware-detection software like Norton Toolbar.
- Keep existing software updated.
- Use an iPhone--Android phones are targeted more than any other mobile OS.
How It Works: Bogus but official-looking emails prompt you to enter your password or click links to infected websites.
Risks/Costs: 125% rise in social-media phishing attacks since 2012. Phishers stole $1 billion from small businesses in 2012.
Notable Scams: Scads of small businesses were targeted in 2012 with phishing emails designed to look like Better Business Bureau warnings.
Your Best Defense:
- Keep existing software, operating systems, and browsers updated with the latest patches.
- Don’t automatically click on links in emails to external sites--retype the URL in your browser.
How It Works: Think 21st-century con artist tactics, e.g., hackers pretend to be you to reset your passwords.
Risks/Costs: 29% of all security breaches involve some form of social engineering. Average loss: $25,000 to $100,000 per incident.
Notable Scams: In 2009, social engineers posed as Coca-Cola’s CEO, persuading an exec to open an email with software that infiltrated the network.
Your Best Defense:
- Rethink what you reveal on social media--it’s all fodder for social engineers.
- Develop policies for handling sensitive requests like password resets over the phone.
- Have a security audit done.
How It Works: Hackers hold your website hostage, often posting embarrassing content like porn, until you pay a ransom.
Risks/Costs: $5 million is extorted each year. The real cost is the data loss--paying the ransom doesn’t mean you get your files back.
Notable Scams: Hackers locked the network at an Alabama ABC TV station, demanding a ransom to remove a red screen on every computer.
Your Best Defense:
- As with malware, don’t click on suspicious links or unknown websites.
- Regularly back up your data.
- Use software, such as Kaspersky Internet Security 2014, that specifically checks for new exploits.
Sources: Symantec, Kaspersky, Verizon, CSO, LastPass, abcnews.com, Osterman Research, Neohapsis Security Services
Answer: clean air, clean living and lots of cash to invest.
We had barely started our tour of the Chautauqua, Boulder's verdant 19th-century park, when my guide for the morning, local historian Carol Taylor, handed me the packet with the "cautionary tales." They were photocopied news articles, all from national publications, all featuring Boulder and all written--in Taylor's mind, anyway--by superficial out-of-towner nincompoops. "Namaste and Pass the Naan," read one's subhead. "You will be hard-pressed to find one person here, including your 85-year-old grandmother, without a six-pack," read another. Over four decades, as Taylor's packet meant to show, writers had missed the town for the lovely trees (and bike paths and mountain views)--unfairly reducing Boulder to a playground where smug eco-liberals puffed legalized marijuana and compared triathlon times.
"We're so much more complex than that," Taylor said. She gave me a gentle, pleading look. "Don't just go back and write that everyone rides their bikes everywhere."
Out from the gleaming sunlight, a Lycra-clad cyclist whizzed majestically by.
Let me just say, it's hard to keep a straight face when touring this idyllic mountain city--and interviewing its start-up founders and venture capitalists, its coffee-shop denizens and microbrew cognoscenti. It's so tempting to linger on the glorious hippie mane of the organic peanut butter CEO, or quote the impossibly outdoorsy venture capitalist ("I only invest in companies I can ride my mountain bike to!"). But I don't want to be unfair or stoop to caricature. It's not as if they were handing out free joints to everybody on Pearl Street, the city's main drag, on the day I arrived. (No, that was two days earlier. The event was called the Boulder Flood Relief Joint Giveaway.)
But easy as Boulder may be to mock, the city is impossible to dismiss. Boulder is an entrepreneurial powerhouse like no other. In 2010, the city had six times more high-tech start-ups per capita than the nation's average, according to an August 2013 study by the Kauffman Foundation--and twice as many
per capita as runner-up San Jose-Sunnyvale in California. This vibrant culture has given Boulder a prosperous economy: Without the help of oil, natural gas, or any monolithic industry, Boulder County (population 300,000) ranks among the top 20 most productive metro areas in terms of GDP. Unemployment is 5.4 percent--almost two points below the national average and a full point below the Federal Reserve's goal for the nation. It is the home to a start-up incubator, Techstars, and a healthy venture capitalist community.
Boulder as start-up haven is not a new development, either. Since 1960, it has quietly nurtured nascent industries, including natural foods, computer storage, biotech, and now Internet companies. It's the original home of Ball Aerospace (one of the first NASA contractors), herbal tea pioneer Celestial Seasonings, StorageTek (later acquired by Sun Microsystems for $4.1 billion), and the biochemistry lab that led to Amgen.
But Boulder wasn't always so affluent, so collegiate, so pretty. The history of Boulder, the start-up haven, is a fascinating story of a community that built itself from scratch through a combination of individual effort, shared sacrifice, and counterintuitive choices (not to mention a near-constant urge to skip out of the office and get outdoors). Its success is a very specific, and in some ways limited, way of fostering a local economy. But it offers an unexpected solution to how cities all over the U.S. could make themselves a welcoming spot for start-ups.
When city fathers first laid out Boulder, the city was dry, barren, and unremarkable--a two-mile stretch of road at the mouth of Boulder Canyon that served as one of several mining-supply depots following the 1859 Colorado gold rush. Wrote Isabella Bird, a British travel writer, in an 1879 book: "Boulder is a hideous collection of framed houses on the burning plain."
But a streak of exceptionalism ran through Boulderites. They displayed a deep commitment to city beautification and education. In 1877, just six years after Boulder officially incorporated, citizens persuaded the state legislature to make it home to Colorado's first public university; 104 families donated land and money to build the campus. In 1889, the citizens voted to issue a $20,000 bond to build the Chautauqua, a place where visiting Texas schoolteachers could hike, picnic, and listen to lectures--a sort of bucolic TED Conference of the time.
In 1908, citizens hired landscape architect Frederick Law Olmsted Jr. (the son of the legendary creator of New York City's Central Park) to consult with them on how best to plan the city--a precocious move for a town of 10,000. His recommendations included putting wires underground and keeping streetlights beneath tree level, and he cautioned them about suburban developers, "dirty industries," and pandering to tourists. Above all, he said, Boulder must be beautiful--a prosperous town where people would spend their lives, not just make their money and get out. "As with the food we eat and the air we breathe, so the sights habitually before our eyes play an immense part of determining whether we feel cheerful, efficient, and fit for life," Olmsted wrote in his report.
Boulder might have remained a sleepy pretty college town, were it not for the communists. In 1949, fearful of a Soviet nuclear attack, President Harry Truman issued an order to stop the clustering of major buildings in Washington, D.C. The nation's basic research labs had to expand elsewhere. Boulder citizens, sensing an opportunity, bought up 217 acres of land and beat out 11 other cities to make that site the home of the National Bureau of Standards's new Radio Propagation Laboratory.
At first, the D.C.-based scientists bristled, considered it an exile. "They would say, 'Where do we go to see the Indians?' " says R.C. ("Merc") Mercure, one of the founding employees of Ball Aerospace, who was a physics graduate student at the University of Colorado at the time.
But the move put Boulder on the U.S. government's map. In 1952, the federal government made greater Boulder the site of Rocky Flats, a 27-building nuclear weapons manufacturing facility. After the Department of Defense ordered sophisticated rocket pointing controls from CU's labs, researchers, including Mercure, left to form Ball Aerospace, which filled those contracts and others. Eventually, the government made Boulder the site of the National Center for Atmospheric Research, and IBM moved its tape drive manufacturing division out there, which later led to the founding of storage start-ups StorageTek, Exabyte, and McData. On the backs of these technology jobs, Boulder's population doubled from 1950 to 1960 and then jumped to 67,000 10 years later.
By the late '60s, scientists weren't the only new people moving in. Across the country, the hippie movement was under way, and as suburban teens and twentysomethings started migrating to beautiful places across the country, many chose Boulder. (In the first half of 1968, drug arrests in the city doubled.) To Mo Siegel, a Colorado boy who had grown up on a ranch 80 miles away in Palmer Lake, the assembled flower children were his kind of people--and, in 1969, a potential market. A health nut already, the 19-year-old began gathering herbs in the foothills surrounding Boulder, filling up gunnysacks with chamomile and red clover blossoms, sewing them into little muslin tea bags, and selling them, in 1969, as Mo's 36 Herb tea. It would become the first year of business of Celestial Seasonings, the brand that became known for teas such as Sleepytime and Red Zinger. (Siegel eventually sold the company to Kraft, bought it back, and then sold it again to Hain Foods for $336 million.)
Celestial Seasonings was among the first of many natural-foods companies, including White Wave, maker of Silk-brand soy milk; Horizon Organic Dairy; and Alfalfa's, a specialty market akin to Whole Foods. For these sorts of entrepreneurs, Boulder was an ideal test market. Given its population of affluent, outdoorsy types, brands could test new ideas with a friendly group of consumers in the local markets, work out the kinks at low risk, and then take the successes to a more general market in Denver and beyond.
"I just got so much support. Everybody believed," says Siegel.
With industry picking up and the population booming, the city could have stoked the growth, welcoming developers in to build out new housing and offices. Instead, it did the opposite. In 1959, the city drew a line across the surrounding mountains, above which it would not provide water or sewer services--purely in order to protect the view. In 1967, residents instituted a special 0.4 percent sales tax to purchase "green space" around the city, stymieing developers, heading off major roadways, and preserving nature. Next, the city limited new housing starts to just 2 percent a year. Now the county manages more than 97,000 acres of open space. Boulder is in a bucolic bubble, with the Rocky Mountains on one side and parkland on the other.
Encircling the city with green space has had several implications for Boulder, some expected and some not. Though never exactly cheap before, the limited space has resulted in sky-high real estate prices--with a median price of $431,200, single family homes are 1.5 times as expensive as in Denver. Meanwhile, as the preserved space flourished, so did the deer population--and the hungry mountain lions, which commuted in to eat the deer and, occasionally, attack citizens of Boulder.
The green border, paired with the city's conservative zoning and development laws, has also meant that national retailers--or any monolithic competitor--have trouble finding good spaces to open in Boulder. Meanwhile, the city's hard line against expansion doesn't really allow its own start-ups to grow much past a certain size. The result? The town has made itself a physical incubator for small businesses. "After companies reach 500 employees, they either have to move out to the other side of the open space or sell," says Kyle Lefkoff, a general partner with Boulder Ventures since 1995.
But for those who can afford the housing, steer clear of the mountain lions, and squeeze into its limited office space, Boulder affords an incredible quality of life--along with a place to do business. The planning strategy, which at first seems antibusiness, simply favors those who are in it for the long haul--those who are thinking about raising families and living in Boulder until old age, and weeds out those that would dive in because of a juicy tax incentive.
There are entrepreneurs like Phil Anson, who came out after graduating from college purely to bum around and climb. A onetime line cook, he started selling premade burritos out of a cooler to support himself. In time, he found he liked scaling that business better than scaling rocks, and Evol Burritos, his 73-employee company, now distributes to supermarkets nationwide and rang up $12.4 million last year.
There were those who arrived in Boulder by accident and fell in love. Matt Larson, founder of Confio Software, moved there because his biggest investor told him he had to as a condition to getting funded (the man lived in Boulder and wanted to be chairman but didn't want to move). Alabama native Dale Katechis ended up in Lyons, the town just north of Boulder, after he and his wife ran out of money on the way to Montana. Katechis started waiting tables. Then he opened his own restaurant, Oskar Blues Brewery, and started brewing beer as a way to get his eatery's name out, and found the beer sold better than the food. (His brewery, which sells Dale's Pale Ale, made $33 million in sales last year.) Little Lyons "was like Mayberry in the mountains," Katechis says, his voice tinged with the last remnants of an Alabama drawl.
There are those entrepreneurs who moved to Boulder when they were older, when they already had money, almost as a reward to themselves. In 2001, the Wall Street day-trading firm where Kate Maloney worked opened an office in Boulder, simply because she and some co-workers thought it would be more fun. Six years later, she started TherapySites, a Web company she runs out of a loft apartment downtown. In 2006, adman Alex Bogusky moved a chunk of Crispin Porter + Bogusky, the advertising agency he co-founded, from Miami to offices in Gunbarrel, a town eight miles northeast of Boulder. To Bogusky, outdoor sports lovers and entrepreneurs share a common DNA: "Thrill seekers are drawn to this place," he says. "Once you get out here, you want the ultimate thrill in business, too, and that's start-ups." By the time Bogusky retired from the agency, the Boulder office of Crispin Porter + Bogusky had swelled to more than 700 employees--many of whom had moved from Miami.
And finally, there are those who came out of the University of Colorado and couldn't imagine going anywhere else. The most famous is probably Marvin Caruthers, who, as a biochemistry professor in 1980, helped start the biotech firm Amgen. His co-founders decided to put company headquarters in Thousand Oaks, California, but Caruthers kept a lab in Boulder. Since then, the University of Colorado has become a destination for DNA and RNA research. Veterans of his department, of Amgen, and of the university's biology departments would go on to start biotech firms, including Applied Biosystems, Dharmacon, Myogen, and Pharmion, companies that sold for more than $6 billion altogether.
I wish I could point to some municipal entrepreneurship program or other business initiative that enticed these people to start companies in Boulder. But the thing is, entrepreneurs claim the city stymies them more than it helps. Mundane parking regulations hindered business early on, says Niel Robertson, CEO of $12.6 million-a-year Internet advertising start-up Trada. The city, in its efforts to reduce congestion, gave Robertson's 17-employee company just three parking permits. (The company, which now has 100 employees, has since moved to a building with a parking garage.)
Anson, the burrito maker, says it took eight weeks just to get a permit to install a new refrigeration unit at his plant. "They're so conditioned to say no to everything," he says. "It's a massive pain in the ass." But leave town? No way. "It's a dual-edged sword," says Anson. "It's harder for me to run my plant, but it's also why people can't build mansions and block each other's views, so we have a balanced city."
Of course, Boulder's not perfect. Many businesses would struggle to exist there, especially those that require heavy equipment or a low-wage work force. Its regulations, and its constricted land area, heavily favor small companies. In fact, several start-ups, including Internet security firm Webroot and StorageTek, grew out of the town, choosing to move out to a sprawling office across the green space in neighboring Broomfield. But many other entrepreneurs decided to sell out and stay--and join Boulder's growing number of angel investors and venture capitalists, the next step in the city's development. Mo Siegel now invests in other natural-foods companies. Caruthers helped start Boulder Ventures, which invests almost exclusively in Boulder entrepreneurs.
All together, venture capital firms invested $587 million in Colorado in 2012--a far cry from major venture hubs such as Silicon Valley and New York City ($11 billion and $2.3 billion, respectively) but significant. They would rather do that than move to some tony retirement place--because in their minds, Boulder beats 'em all. That's the thing. Pretty much every entrepreneur told me he or she started up in Boulder or stayed in Boulder for that same reason: It's a beautiful place to live. And it's beautiful not because the city forefathers had some nifty pro-start-up policy--but because they had the foresight to plant lots of trees, welcome a university and federal science labs, buy up lots of parkland, and then stay disciplined about preserving the beauty they had created. The idea was simple: Make a city a great place to live, and people figure out how to make a living there.
Etsy is growing rapidly, has hundreds of happy employees, and is worth hundreds of millions of dollars--but is still deeply troubled. Now comes the hard part for CEO Chad Dickerson.
In his first week as chief technology officer of the e-commerce company Etsy, Chad Dickerson took a promising engineering candidate to a café near the company’s office in the Dumbo section of Brooklyn, New York, to conduct an interview. While the two were sitting at the bar, the new CTO got a text message from Etsy’s founder, Rob Kalin, saying the site was down and nobody knew why. Trying to remain calm and not give away the bush-league crisis, Dickerson excused himself and headed to the restroom to respond. In a series of texts and calls, while his candidate sat nursing a drink in the other room, he learned to his horror that the site didn’t even have a way to tell visitors it was experiencing technical difficulties. “You’d go to Etsy.com, and it was like dead air,” Dickerson says. In the scramble that ensued, someone remembered, “Oh, yeah; we used to have this blog. Let’s get that going again, so we can at least redirect people there.”
Etsy had launched in 2005 as a marketplace of handmade goods, and by the time Dickerson arrived, in 2008, the craze for artisanal products was well established in popular culture. Kalin’s company was perfectly positioned at the center of it all (and Kalin himself would be on the cover of Inc. twice). Individual crafters would crochet beanies and whittle baby toys in their garages, and Etsy would provide them online storefronts and access to a vast customer base. Kalin had recruited Dickerson to join Etsy with a passionate narrative about how the site was trying to change the world through the sheer power of craftsmanship. Dickerson had long harbored something of a hippie streak, and he was restless in his job running the advanced-products team at Yahoo, so he took a chance and moved with his wife across the country from Silicon Valley to Brooklyn.
Now, just a few days into his job, he began to wonder if he had made a terrible mistake.
It wasn’t just the technology that was a disaster. Kalin had started the company, along with two friends, when he was a 24-year-old recent graduate armed with a classics major and a passion for furniture making but little to no technology or business acumen. His lack of experience didn’t limit the company at first, but as Etsy grew and took on tens of millions of dollars in venture capital financing, it began buckling under the weight of its success. Customer service was a joke, for instance; sellers who had problems often waited a week to get a response to an email. Kalin’s co-founders left the company in 2008 and said the experience had been like “an abusive relationship.”
That’s the company Dickerson took responsibility for in 2011, when Etsy’s board removed Kalin and named Dickerson CEO. Since then, head count has more than doubled, to more than 450. Gross merchandise sales have roughly tripled and are on track to approach $1.5 billion this year. There are more than a million shops on Etsy, 18 million items for sale, and 60 million monthly unique visitors, up from 25 million when Dickerson took over.
Not only is Etsy moving fast, but under the hood, things are running smoothly. The site is stable and fast, mobile traffic has surged, and a custom payment platform has streamlined the buying process and added a new revenue stream. Transactions happen in nine languages across more than 200 countries. Within the company, Dickerson has created a culture in which employees have a high degree of creative freedom and, when things go wrong, accountability without blame. “We actually trust people,” Dickerson says. He calls the approach a “radical decentralization of authority.”
It’s a remarkable success story: A leader takes over a troubled operation intimately tied to its founder and earns the trust and admiration of his staff members by, in large part, trusting them. Spend a few days hanging around Etsy headquarters, lunching at picnic tables and tearing up paper plates so they’ll break down more easily in a compost pile, and you come away with the impression of a confident and enlightened company. An IPO is widely anticipated.
And yet, spend just a few minutes scanning the Etsy forums, where sellers trade tips and discuss Etsy-related issues, and another story quickly emerges, one in which Etsy faces nothing short of an existential crisis. On the forums, a highly vocal faction of members accuses Dickerson of selling out the company’s mission. In this narrative, Dickerson was brought on as a tool of the investors, who want the company to grow at all costs. Etsy is just a step away from becoming eBay, these people say.
At issue is what belongs in the Etsy marketplace. The individual artisans who helped build the company from scratch believe handmade goods should be just that, nothing more. This sounds reasonable enough--until a successful seller finds herself unable to meet demand and has no choice but to leave Etsy if she wants to expand her business. There are countless examples of exactly that happening.
Etsy, which makes most of its money by charging a 20-cent listing fee for each product and taking a 3.5 percent commission on each sale, clearly needs to keep its best sellers around. At the same time, the company can’t afford to alienate its passionate core. It adds up to a distinctly 21st-century dilemma for Dickerson. It’s not enough for the CEO of Etsy to build great shopping technology, post big sales numbers, and inspire his work force. He’s the leader of a community as much as a company, and that means balancing wildly divergent priorities. That his particular community includes a million-plus artist types with, in many cases, anticommercial tendencies, makes it all the harder. Only if he can earn the community’s trust, as he earned the trust of his staff, can he prove himself a visionary CEO.
To understand the conflict that’s roiling Etsy’s community and the challenge facing Dickerson, consider the case of Tielor McBride. A bearded 28-year-old Brooklyn-based leather-goods maker, McBride joined Etsy in 2010. He was designing window displays and interiors for Ralph Lauren stores, but after he got promoted into the advertising department and the work left him creatively unfulfilled, he decided to turn his hobby of making rugged leather and canvas bags into a profession. He made his first sale on Etsy in late 2010, under the shop name TM1985, and business took off a few months later when he was highlighted on Etsy’s homepage as a Featured Seller; he had 200 orders in one day.
As sales picked up on Etsy, McBride’s connections in the fashion world also started paying off, and he began selling bags to independent boutiques in Brooklyn and beyond. His business quickly exceeded his capacity to turn out bags in his workshop, so he decided to expand his production operations, as any budding entrepreneur would.
Today, 12 skilled workers make TM1985 bags and wallets and other accessories in a small family-owned leather-goods factory in New Jersey. McBride visits the factory two or three times a week to make sure the foreman knows what’s coming down the line, to keep an eye on quality, and occasionally to help punch out leather or rivet pieces. He designs all his products himself and still makes prototypes in his own workshop, but increasingly, he spends time on operational matters. He will sell half a million dollars’ worth of bags this year, about 90 percent of that through his wholesale channels and just a few percent through Etsy.
“I’ve benefited a lot from Etsy--I got my start there,” McBride says. On one level, his success is a testament to the cultural movement that made Etsy possible. His brand’s entire reason for being is a rebuke to big business and a return to personal attention to detail. And yet, as he’s grown, the amount that his hands touch any individual piece has shrunk to nearly zero.
For Dickerson, supporting successful shops like TM1985 has been a high priority. Historically, the company has done this by amending the guidelines for what does and doesn’t belong in the marketplace. What began as a 4,000-word rules document ballooned to 14,000 words by 2012, as various exceptions and fine distinctions were accounted for. McBride was able to continue on Etsy because his manufacturing partner qualified as “partial production assistance” under the rules.
The problem was, nobody was quite sure what partial production meant, and many of the other rules were similarly unclear. Rather than settle debates, the complex thicket of regulations created new debates and an ever-larger enforcement burden for the company. If a wedding-dress maker enlisted her sister to work with her in her studio, that would be an acceptable labor arrangement, but if her sister worked in another state, it would not. Why? Technology changes have complicated matters further: What if someone designed a toy on a computer and produced it with a 3-D printer? Would that be handmade? Why is it any better or worse than Tielor McBride’s bag factory?
Just as important as finding ways to keep sellers like McBride within the rules is providing them with a different class of customers. Rather than letting McBride make 90 percent of his sales to other retailers, for instance, Dickerson has created a wholesale market on Etsy. It allows Etsy members to connect with retailer partners such as West Elm and Nordstrom, as well as independent boutiques around the country.
The wholesale program is one step in a wider effort to professionalize Etsy’s sellers. A tool called Shop Stats provides a dashboard of store-performance metrics. A Seller Education Program teaches members business skills such as how to merchandise for the holidays and how to generate traffic through social media. One goal of the professionalization of Etsy, Dickerson says, is to give sellers more time to focus on designing and making their products. The other goal, of course, is to increase sales for everybody.
Dickerson, 41, is an unlikely tech CEO, a former English major at Duke who started his career as a ponytailed aspiring journalist and fell into Internet technology somewhat by accident. Eventually, he became a pioneer of modern Silicon Valley-style tech culture, the man who made the hack day a staple of the start-up world when he was at Yahoo. A little bit round and rumpled, with salt-and-pepper hair, he radiates a basic decency that makes it entirely believable when he talks about his underlying idealism.
It’s a profile that doesn’t fit the craven-capitalist picture you’d get of Dickerson if all you knew of him was what appears on Etsy’s user forums. The disconnect comes down to trust. Dickerson has earned it among staff members because he delivered them from a demoralizing situation and because of the open, honest culture he created. Oddly, those same core cultural principles have been absent in much of Etsy’s management of its community. When Dickerson talks about creating opportunity for sellers, many interpret that as code for him wanting to court big business and move away from the craft movement. They call Dickerson’s company Etsy-bay.
Nowhere has the lack of trust played out more clearly than in the debate around so-called resellers, distributors of mass-produced goods that masquerade as handmade on Etsy. Nobody denies that resellers exist--because Etsy is an open platform, anyone can sign up, so a certain level of spam is inevitable--but many Etsy members suspect the company of quietly tolerating them to collect the revenue they generate.
In early 2013, Dickerson sat down with Heather Jassy, Etsy’s vice president of member operations, and gave her the task of reimagining the company’s marketplace guidelines. “I want you to write a new set of policies,” he said to her, “and my only requirement is that you do it in a sensory deprivation chamber, without referring to the current ones.”
The project became known internally by the code name Humanscale. “We wanted to emphasize the idea that this was about people,” Dickerson says. The previous rules centered on trying to define what is handmade and what is not. The new rules wouldn’t even bother to define handmade, and instead took shape around three broad principles that Dickerson has encoded throughout the company’s culture: authorship, responsibility, and transparency. Now he would try to encode those cultural values in the selling community.
In Dickerson’s words, authorship means that “the items you sell begin with you; Etsy is not a place to sell items that you had no role in making.” Responsibility means “you take responsibility for the way your items are made from beginning to end.” And transparency means “you should be open and honest about all the people and partners involved in what you are selling on Etsy.”
More practically, the new guidelines allow sellers to hire as many people as they want, in any place they want. Sellers can enlist manufacturing partners to produce all or part of the goods they’ve designed. “Partial production assistance” is gone, as are other, similarly complicated conceptions. The only requirements are that sellers submit applications to use mass production--an in-house team will review them--and that approved manufacturing partners be disclosed on the shops’ About pages.
It’s a radical departure from the past, and for the first time a decentralization of authority when it comes to the community. “We are trusting the sellers to make the right decisions,” Dickerson says, “and do it in a marketplace that’s open and honest.”
A few dozen Etsy sellers have gathered at Etsy headquarters for a town hall meeting in which Dickerson will announce the new production guidelines. Around the world, more than 5,000 Etsy members are tuning in via webcast.
“The sellers here and those of you on the webcast are really who helped build this company, and as we grow, I want Etsy to commit to getting closer to the community, not growing apart,” Dickerson begins, pacing in front of the audience with a vintage sewing machine and a few spools of fabric arrayed on a table behind him. “We all know that Etsy can only do well when our seller community does well-;when you do well.” He announces that the company plans to launch a new era of transparency and open communication with sellers.
From now on, Dickerson says, Etsy will release a detailed quarterly summary of its performance and strategic goals, so sellers can have a better understanding of why the company makes the decisions it does. Beginning today, the company will unveil a new section of its website that offers much more detail than previously available about its market-integrity efforts. The new section will detail how many shops are being flagged as potential violators, how many investigations are opened by the company, and how many shops end up getting booted. A few people applaud when he announces that Etsy will now offer phone support for its sellers, something the community has long begged for.
Things are going well so far, and the audience remains polite as Dickerson launches into the real reason for the meeting--the Humanscale production guidelines, which are now 900 words, down from the previous 14,000. When he opens the floor for questions, some are easily dismissed (Is Etsy selling out? No. Why are there so many resellers? We’re constantly fighting it), but others prove trickier.
One seller in the room points out that, under the new rules, it’s possible that Ikea could qualify to sell on Etsy. As long as there were a person at Ikea designing a product and vouching for the sustainability of its production process, why couldn’t that product now qualify? Dickerson’s response: “If Ikea called today and said they want to be on Etsy, I’d hang up. They should buy from Etsy.” It’s not an entirely satisfying answer, because there’s nothing in the rules that explicitly prevents established brands from listing their products, other than a subjective application-approval process. Saying no to Ikea is an easy call, but what about a smaller but established company that’s serious about sustainable production? How big is too big? Etsy doesn’t have clear answers to those questions yet.
The most important aspect of the Ikea question is simply that it was asked. To Dickerson, of course Ikea would never be able to sell on Etsy. But to a community that doesn’t yet trust him, that’s not obvious. The risk of knocking down the confusing old rules is that people can interpret it as a flinging open of the doors to bad actors. Which is exactly what happens on the Etsy forums as people watch the town hall webcast.
“Oh noooooo... this is not sounding good AT ALL :(”
“Well handmade just died. Etsy just voluntarily self-imploded.”
Dickerson and every other Etsy executive I spoke to said the company ran no financial projections when developing the Humanscale project; every decision was just about responsibility, transparency, and authorship. That’s a highly principled move for an e-commerce company that’s normally driven by data. But the fact remains that empowering sellers to grow more easily can only help Etsy continue to grow--which is, of course, the point.
Dickerson sees the Etsy of the future as a market not of handmade goods but of what he calls “person-to-person” commerce. “It’s all about creative people building businesses, connecting people through commerce, and making items that have stories behind them,” he says. He envisions Etsy sellers mobilizing skilled workers in struggling former industrial communities like Detroit. Manufacturing isn’t a bad word in this vision of Etsy; it’s essential. If Etsy is going to change the world, it’s going to do it by opening a vast market of humanely and sustainably produced goods dreamed up by real people who really care about quality. It’s no less soulful a vision than Rob Kalin’s ideal of individual crafters crafting for a living. And Dickerson sees no reason handmade goods can’t coexist in a person-to-person market with goods made in small factories.
In the days and weeks after the town hall, a few supportive threads in the forums vie for attention with the doomsday predictions. Dickerson hopes that time will prove him right, as the company approves the right kind of manufacturers, drives out the wrong ones, and devises new tools to help everyone sell. “At the risk of sounding quite self-aggrandizing, I just have like a really deep sense of responsibility,” he says. “I know that there’s a lot of conflict and protest in the community, but I really want the community to be successful. When I think about the changes we’ve made, it’s always been in the name of that.” If only the community would believe him.
During a recent event on B2B partnerships, panelists discussed how much personality comes into play when picking partners.
As a young B2B company, one of the greatest milestones you can reach is your first partnership with a large corporation. But with so many startups vying for their attention, how do these bigger companies pick which startups get a meeting?
In the case of Microsoft, it might just be by looking at your Twitter feed.
Head of Partnerships for Microsoft Ventures Claire Lee spoke on a panel Tuesday to a small group of about 120 people in San Francisco. The event was hosted by RocketSpace, an incubator-like innovation campus whose alum include Uber and Spotify. The panel, made up of leaders from corporate innovation teams, fielded questions from startup members looking to get a foothold through a partnership or a pilot.
"I was doing some research on something the other day and I just went off LinkedIn and the website, and I looked at everybody's Twitter account. And I felt a bit weird. I felt like I was stalking people," Lee said. "[But] that's the personal perspective. I know more looking at these guys' and girls' Twitter accounts than I do from any website."
Diana Stepner, head of future technologies at education company Pearson, agreed that personality is a large factor when choosing which startups to work with. "A lot of times we will filter based on the person and how we get along because it is going to be a long process," Stepner said.
The panelist hammered on the point that it is, indeed, a very protracted process. One audience member asked how to hold a large corporation's interest throughout that entire time.
Stepner recommended finding a "champion," or someone who has seen the value in your product from the beginning and can help you navigate through the process. So how can you identify your champion to begin with?
"Reference check people," Lee said. "You should reference check potential investors and corporate partners as much as they reference check you."
Maybe even try checking their Twitter feed, too.
Since 2011, investors have poured $431 million into a new sector of companies aiming to make citizens' lives better. Here's why civic tech is suddenly hot.
When Ashton Kutcher, Jeff Bezos, Google, and Andreessen Horowitz have all invested in a certain sector of start-ups, it's probably safe to say that there's something to it. That "it" in this case is civic tech, and according to a new report, it's one of the hottest niches in start-ups.
The report released Wednesday by the Knight Foundation and data analysis firm Quid defines a civic tech start-up as a company that helps people better interact with their government, partake in democracy, and promote an open and transparent governing body. In practice that means these start-ups aim to improve citizens' lives through crowdfunding mechanisms, neighborhood forums, peer-to-peer sharing, and more.
Between 2008 and 2012, the civic tech field grew on average 23 percent each year, from 83 companies in 2008 to 121 companies in 2012. Jon Sotsky, the director of the Knight Foundation, says there's good reason for the sudden interest in technology that improves citizens' lives.
"This type of tech distruption has happened in many other industries. It's almost like the public services and government usage of tech is a laggard and is coming at the tailend," Sotsky says. "Healthcare.gov and other frustrations citizens have are because they want the same level of tech application they have as consumers in their lives as a citizen."
Investors seem to agree. From January 2011 through May 2013, individual investors, VC firms, and philanthropic organizations poured $431 million into 102 civic tech start-ups. In addition to the high-profile names mentioned above, Napster creator Sean Parker, Reddit's Alexis Ohanian, Yahoo's Marissa Mayer, Y Combinator, and Benchmark Capital have all made investments in the sector.
It's worth noting that Knight and Quid keep their definition of civic tech broad, so that funding figure includes peer-to-peer sharing companies such as Airbnb and Waze. The former has raised $119 million and the latter has raised $30 million. But even start-ups that might fit a more strict definition of civic duty raised a considerable amount of capital. Community forum Nextdoor raised $40.2 million and the petition platform Change.org raised $15 million. Code for America raised $9.8 million.
Areas Ripe for Entrepreneurs
Civic tech is really just getting going. Mayur Patel, vice president of strategy and assessment at the Knight Foundation, advises entrepreneurs to focus on political opportunities within the sector--things like making it easy to submit community feedback to the government, organizing public decision-making, increasing data access and transparency, and improving the voting process, which is still one of the more complicated actions a citizen performs.
Start-ups and organizations like TurboVote and Votizen are tackling the "antiquated" process of voting, Patel says. But with only eight start-ups that collectively raised $4 million since 2001 in the voting cluster, there's a lot of room for competition. In the feedback cluster, 17 start-ups raised a collective $16 million. One of them, SeeClickFix, lets residents report non-emergency neighborhood issues. In the transparency and data niche, the Seattle-based cloud software company Socrata, which is aiming to democratize access to government data, is one of 16 start-ups that collectively raised $37 million.
"People want to interact with their government in a way that is immediate," Patel says. "Peoples' trust in the government and its ability to function has waned."
Click here to check out the full report. Click here to see the Knight Foundation's bubble tree map of the civic tech companies, funding, and its growing landscape.
A seasoned investor offers a handy three-step process to halt panic and get a handle on a challenge that seems beyond you.
Ambition is all about pushing yourself beyond your perceived limits. If you’re not taking on reach goals and slightly terrifying challenges than you’re unlikely to reach your full potential. Which all sounds good in theory, but there’s a little discussed byproduct of this can-do attitude. Sometimes you’re going to get in over your head -- way over.
And because no one really likes talking about their moments of utter panic and fear, we also rarely talk about how to get through them. That makes a recent Harvard Business Review Blog Network post by Whitney Johnson, author and co-founder of Rose Park Advisors, Clayton Christensen's investment firm, all the more valuable.
In it, Johnson shares her own career crisis moments and offers this handy three-step process (complete with the handy acronym SOS) to get a handle on your fear and more forward in a positive way when, as she brilliantly puts it, "your ego cashed a check your skills couldn’t cover."Stop
When panic is setting in the most natural thing to do get busy. But frantic flailing and ill-considered emailing is exactly what you don’t want to be doing when things are looking overwhelming, according to Johnson. "As uncomfortable as it may feel, don’t just do something -; stand there. When you stop, you conserve emotional and physical reserves and preserve your political capital," she writes.Organize
OK, you’ve paused and taken a few literal and metaphorical deep breathes. What’s next? Now that you’re in a somewhat calmer frame of mind Johnson recommends a thoughtful review of exactly how bad the situation really is and in precisely what way. "Organize, assessing the situation and appraising what you need to do to regain your buoyancy," she advises.Secure
Once you know exactly where you are and what you lack, the final 'S' stands for securing. In short, swallow your pride and ask for help. "In the best of situations, you’ll be able to ask for and get the help you need," says Johnson, adding that "even in a less trusting work environment, help from the right people and the right places can make a difference."
If this sounds like a simple plan you could put into use, the complete post, including more details and examples from Johnson’s own career is definitely worth a read in full.
How did you handle the situation the last time you were in over your head professionally?
The world is advancing faster than ever before. Can you keep up? Here Inc. columnists share how to stay ahead of the game.
The rate of technological and cultural change is astounding. The first text message was only 21 years ago. Due to cellphone usage, the government and phone companies are currently negotiating how to eliminate the use of the near obsolete copper phone and switching system. Google is only 15, Facebook will turn 10 in 2014 and Twitter has only been around 7 years. Companies and industries have seen infrastructure changes of mass proportions in the last 2 decades. 18-year-old Amazon is one of the fastest change agents. They have now added Sunday delivery and are actually developing the use of flying drones that can deliver individual packages to your door in 30 minutes.
As a thoughtful leader today of a company or team, you have to assess, apportion resources and take action in an environment with 3 to 5 year lifespans and constant technological disruption. You can do this only if you look to the future. If you spend your time enjoying the present or worse, wishing for the past, the world will most certainly pass you by.
Here are additional insights from my Inc. colleagues.
1. Be a Fast Follower
The days of creating a 3-year technology plan are over, but that doesn't mean that you should let your company pursue every new technology or trend that presents itself. My advice--be a fast follower. Hang back and give a new idea or approach a 6 to 9 month window to see if it will work by allowing another company to be the first to implement and deploy. You will learn from the mistakes others are making and discover the best practices for success. Take QR codes for example. The earliest deployments of QR codes focused on a user-pulling information, which was hard to implement and often fell short of users' expectations. Lessons learned from failed campaigns and user feedback led to more successful implementations such as ticket and coupon redemption. Eric Holtzclaw--Lean Forward
Want to read more from Eric? Click here.
2. Master the Short Term
My key advice for planning five years out? Don't count on it. Larger ventures have one big advantage over entrepreneurs. They can throw resources at more speculative long-term projects, knowing that only a few might hit it big. Thus, Apple can afford flops like the Lisa and Apple Maps as a price to pay for iTunes and the iPhone, and Amazon can pretend it will have drones in two years. For entrepreneurs in smaller ventures, however, the main benefits of planning for a future five years out are the insights into opportunities on a shorter, more manageable horizon. Bill Murphy Jr.--DC Bill
Want to read more from Bill? Click here.
3. Master Characteristics of Agility
Flexibility--Stretch your mind to learn new skills and explore new approaches. Look for learning in post-project reviews, customer meetings, changes in priorities and mistakes. Seize these experiences to build flexibility into future approaches.
Strength - Regardless of the whirlwind of changing circumstances around you, continue strengthening what your team is the very best at--core competencies. Don't paint stripes on your back if you are not a zebra.
Speed--Quit analyzing and follow your intuition. Apply the 80/20 Principle to make smarter, faster decisions. Gather 80 percent of the relevant information in the first 20 percent of the available time. The remaining 20 percent of the data (which would take the remaining 80 percent of your time to obtain) typically will not substantially improve the quality of your decision. Lee Colan--Leadership Matters
Want to read more from Lee? Click here.
4. Stay Uncommitted
Cope with constant change by locking yourself in as little as possible. Long-term leases, hard-to-sell property and expensive equipment may be necessary for your business, but choose shared or easily turned over resources when you can. The most successful entrepreneurs are those willing to quickly change direction to capture an opportunity or avoid a threat. It's human nature to stick with what's worked in the past, but that can be deadly--just ask Kodak. I'm not suggesting you should constantly flit from one idea to another. But if you've been doing the same thing for a while and find yourself wondering if it's time to change direction, you probably should. Minda Zetlin--Start Me Up
Want to read more from Minda? Click here.
5. Get a Step Ahead
Change is a given--the question is not when will change come to your industry, your market and your business, but how soon. If you want to win in the long run, you've got to be a step ahead of your competition, not just one or two days out of seven, but every day of the week. This means keeping up with the latest news and trends in your industry, and then being ready to pivot at moment's notice. Learn some lessons from Jeff Bezos at Amazon. He just blew UPS and Fed-Ex (and all of Amazon's competition) out of the water by partnering with the Postal Service on Sunday delivery, and the 30-minute delivery idea via drone is blowing everyone's minds. Be like Jeff Bezos and Amazon, and lead change--don't wait for it to pass you by, because it will if you let it. Peter Economy--The Management Guy
Want to read more from Peter? Click here.
Like this post? If so, sign up here and never miss out on this weekly roundtable.
If the CEO isn't accountable for a company's people and culture, who is?
The recent discussion about “why we no longer need human resources” obscures the larger issue.
The familiar arguments against HR criticize the name (human “resources” equates people with widgets), complain about the inconvenient layer of process-oriented details, and stereotype HR professionals as drones. It's all a setup for the well-worn accusation, “What value does HR provide?”
The answer: HR provides what the CEO wants provided.
It’s up to the CEO
A CEO and the HR function are uniquely, inexorably linked. HR actively touches every element and person in an organization. The CEO is the one person accountable for keeping all company functions aligned and moving in the right direction. And because the CEO is also the only individual who touches every element and person in an organization, HR should be the conduit that helps or hinders these vital connections.
HR is a reflection of how a CEO sees his/her role in leading the organization’s people and culture.
If a CEO is disinterested, HR operates only at the transactional level (policies, procedures, compensation, benefits, administrative programs, etc.) But if a CEO wants to elevate the organization and the people in it, HR is the ideal partner.
HR at its best
A CEO can use HR at its highest level--as the steward of the organization’s health, with the CEO holding ultimate responsibility for these standards.
Organizational health is similar to personal health. Think: over time, what does an organization need to do to stay in shape, maintain balance, move flexibly through change, develop muscle for creativity, and foster the nutrients for invention, honesty, learning, and growth? What does it need to start, stop, and continue doing? How does it call itself to account for habits that are not useful? How will it develop the resources (there’s that word again) to accurately simplify complexity, while having the strength to face complex things that can’t be simplified? How does the organization know that its people and culture are healthy and sustainable?
The highest calling of HR is to hold a mirror up to the organization so that it can become the best it can be. Not coincidentally, this is also the highest calling of leadership: to lead a group in accomplishing more than could be accomplished individually, with each individual achieving more than they expected of themselves.
To change HR, start with what the CEO wants HR to be
A CEO must know what he/she wants the people and culture of the organization to be, own the outcomes, and not compromise on hiring the best HR people possible. A CEO can limit HR to mediocrity, or require that HR soars.
When a CEO chooses mediocre HR:
- HR does not report to the CEO. This is the clearest signal that HR is not a priority.
- HR reports to the CEO, but is run by a mediocre executive.
- The CEO “takes care of HR” by outsourcing it. While some HR transactions can be outsourced, organizational health can’t.
- The CEO has no idea how to engage the issues of people and culture. No one on the board of directors does either, or, alternatively, they can’t be bothered to influence the CEO to shape up.
- Of the CEO’s Top 10 Priorities, organizational health is number 14, which might as well be number 264.
- The CEO pays lip service to HR, saying “our people are our greatest asset,” but, based on the CEO's behavior, the executive team (and most of the company) knows this is drivel.
- The CEO allows members of the executive team to behave badly (bullying others, running fiefdoms, receiving special treatment, etc.). Nothing undermines HR more than a CEO who allows his or her direct reports to act in a manner inconsistent with what HR says are the standards of the organization. When this happens, the company will “believe” the executive team over HR every time.
In a company run by an enlightened CEO:
- HR reports to the CEO, who feels the proximate pressure of being accountable for issues of people and culture, while holding the head of HR to the same high standards
- The CEO understands that one factor completely within the organization’s control is how it treats its people. An enlightened CEO wants to take advantage of this tremendous opportunity.
- The CEO knows that culture happens with or without an effort to steward it - and that an unattended culture is a disaster waiting to happen.
- At the executive level, there is broad agreement and commitment to the strategy that the best teams win consistently not because everyone always gets along, or gets what they want; the best teams win because they have the best commitment to achieving the shared purpose together, because of and in spite of their differences.
- Therefore, the CEO and the executive team personify the efforts to build organizational health, enlist the full efforts of HR, and courageously lead the way.
The CEO must chose
Another useful snapshot on social media describes an exchange between a CFO and CEO. The CFO asks, "What happens if we invest in developing our people and then they leave us?” The CEO replies, “What happens if we don't, and they stay?”
Imagine this: A CEO says, “I want to create and maintain an organization where everyone has an opportunity to succeed; with the highest standards of organizational health; that inspires everyone to contribute and grow; and allows to us to pursue our vision, achieve our current goals, and create new ones.” The head of HR replies, “I am right there with you. What are you prepared to do to lead this?”
As CEO, what do you choose to do?
Liberal pundit Sally Kohn explained how she worked for Fox News, an environment where almost everyone always thought she was wrong.
If anyone can speak about the difficulties of dissonance in the workplace, it's political commentator Sally Kohn.
"I am a progressive lesbian talking-head on Fox News," Kohn said during her TED talk released online today. (Kohn was with Fox when her talk was recorded, but has since left the network to become a free agent.)
Kohn said her work environment was such that her co-workers "literally want to obliterate everything I believe in." How did she survive this type of workplace for 2 years? By using, what she called, the most important tool she's learned -- emotional correctness.
"Emotional correctness is the tone, the feeling. How we say what we say. The respect and compassion we show one another," Kohn said.
One of the people whom she admires most is also one of the people with whom she most disagrees: her conservative colleague Sean Hannity, host of Hannity, one of the network's most popular prime-time news programs. Kohn said he's one of the sweetest people she knows.
"I think Sean Hannity is 99 percent politically wrong, but his emotional correctness is strikingly impressive. And that's why people listen to him," Kohn said. "Because you can't get anyone to agree with you if they don't even listen to you first."
You can watch Kohn's entire TED talk here.
If you think that leadership is about taking action and getting things done, you're wrong.
Many people believe that "leadership" means getting out there and telling people what to do, how to do it, and when to do it. Nothing could be further from the truth.
The true goal of leadership is to make yourself unnecessary.
I know that sounds completely crazy, but I'm completely serious.
Here's what hugely-successful venture capitalist Mitchell Kerztman told me back when he was the CEO of PowerSoft:
I am the reverse of the Peter Principle. When I started the company, it was a one-man business. There was a time when I did every job in this company. I wrote the programs, I sent out the bills, I did the accounting, I answered the phone, I made the coffee.
As the company has grown, I do fewer and fewer of those jobs. And that's just as well, because I was certainly less competent at them than most of the people who are doing them now.
I'm the reverse of the Peter Principle in the sense that I've finally risen to my level of competence, which is that I don't do anything very well and now what I do extremely well is nothing.
The idea that the true goal of leadership is the ability to do nothing is encapsulated by the Taoist term wu wei which has two meanings: "action without action" and "action that does not involve struggle or excessive effort."
In the classic "The Art of War," the author Sun Tzu expresses wu wei by pointing out that great generals are reserved, calm and detached, rather than hotheads or busybodies.
The same thing is true for all great leaders.
Great leaders recruit people who are so talented that they need no guidance and can handle problems and disagreements on their own, without requiring the great leader to intervene.
To use a somewhat overused (but nevertheless profound) term, great leaders "empower" people to make their own decisions.
If you truly empower people, you are no longer needed as a decision-maker. You make yourself unnecessary.
When you've successfully accomplished this goal, only then you can expand your influence and take on new responsibilities (and once again strive to become unnecessary).
If you don't make yourself unnecessary, you'll be stuck, as a leader, at the same level, riding herd on the same people.
Like this post? If so, sign up for the free Sales Source newsletter.
When your business begins to grow, surrounding yourself with the right senior level hires is essential for success.
No company is perfect. And your investors are going to discover your imperfections sooner or later. Here's why you should beat them to it.
Everyone has a body feature, quirky trait, or embarrassing life event that they’re uncomfortable sharing. We typically do everything we can to bury or mask those imperfections.
Founders often do the same thing with their companies.
Maybe there’s a bug in the company’s software that could squash its credibility or security, or maybe the company’s customer retention metrics are underwhelming. Entrepreneurs are understandably sensitive about these issues. When they meet with potential investors, they often try to bury them deep in their proverbial closets.
Here’s the problem with that way of thinking: Partnering with a venture backer is like getting married. You've heard that before. Now think about what it means.
If your relationship is built on transparency and trust, you will likely forge a successful, long-lasting partnership. If it’s built on lies and half-truths, then you're going to have to deal with consequences that are much more damning than the skeletons you were trying to hide.
Why Revealing Your Issues Can Help Your Business Prosper
Yes, I’m the founder of a venture capital firm. So of course I’m going to advise you to reveal your darkest secrets to venture investors before you sign a term sheet.
Here are two big reasons that doing so is in your own best interests:
1. Your skeletons might not be skeletons Often entrepreneurs are overly sensitive about their company’s shortcomings, and they view their problems as deal breakers. Sometimes, however, those issues are really just minor imperfections. By revealing your skeletons to potential investors, you at least give yourself the chance to assess the severity of your issues.
2. You can tap into a well of expertise and insight Many VCs have begun to offer consulting services that are designed to help their portfolio companies solve key operational and strategic issues. You might discover that your investor knows exactly how to address the challenges you are facing.
Of course, some VCs might also end their conversation with you the moment you bring up any sort of imperfection. That isn’t always a bad thing. As a smaller, growing company, your goal should be to find an investment partner that is willing to grow with you and help you manage the many obstacles of scale. If an investor immediately dismisses you because of your skeletons, they probably weren’t a good fit for your business anyway.
The Right (and Wrong) Time to Reveal Skeletons
Admitting that you have skeletons in your closet is a big step toward a stronger investment partnership. But at what point should you reveal those issues to investors, and how should you go about it?
My advice would be to bring potential deal-breaking issues up earlier in the investor-company courtship, and to do it in the most transparent way possible. The last thing you want to do is waste anyone’s time or make it look like you were trying to hide or minimize a major issue.
On the other hand, if you think an issue is relatively minor and might unnecessarily distract an investor from the truly appealing things about your business, then it may be best to withhold that information until later in the engagement.
Here’s the bottom line, though: As Louis Brandeis once remarked, sunlight is the best disinfectant.
If you’re going to bed at night worrying about the things you are hiding, then you won’t be able to confidently lead your business. Even worse, the longer you ignore your issues, the more likely it is that they will fester into fatal flaws that aren’t so easily cured. When your investor discovers the issues (and he or she will), it is going to damage your relationship and your reputation.
Even if you've had a bad year, don't skip the holiday party scene. With the right approach, you can always turn a get-together into a great opportunity.
When holiday party invitations land in your inbox, do you see them as a waste of time? Or do you recognize them for what they are: a great opportunity to expand your network?
There's no better time of year for networking--if you know how to make the most of holiday parties, according to Kathleen Brady, career coach and founder of Brady and Associates Career Planners. Here are her tips:
1. Don't stay home.
If you haven't had a stellar year it may be oh-so-tempting to skip the holiday party scene, especially if you feel intimidated at the thought of meeting more successful people there. Go anyway, Brady advises, and bring the right attitude with you. "You gotta show up like you belong."
2. Plan what you'll say.
Before you leave for the party, plan exactly what you'll say to describe your business or job. It should be something short that projects a positive outlook.
"If you say, 'I'm working from home and trying to get this new company going,'" people will perceive you as unsuccessful," Brady says. Instead try something like, "I'm an entrepreneur, I'm working on this great new product and we expect to launch in the spring."
3. But first, focus on others.
Now that you know what you're going to say, don't say it. At least not until you've asked the people you're talking with about their own careers and passions. "Start by showing interest in other people," Brady advises.
4. Talk to the loners.
At every party, you'll see at least one person standing alone. Walk up to one of these folks, and start a conversation, preferably with an upbeat comment of some sort. Chit-chat for a little while, and then introduce yourself.
5. Find a graceful exit.
Once you've talked to someone for a while, it's polite to move on so you don't monopolize all of that person's time. And you don't want to limit your own networking to one person, either. But don't commit the faux pas of looking over someone's shoulder to see who else is there. Instead, be straightforward and say that you want to go say hello to some other colleague or talk to others at the party.
Brady recommends against the commonly-used tactic of excusing yourself to get a drink. "Good manners dictate that you offer to also get a drink for the other person," she notes.
6. Stand at the edge of a group.
What if someone you really want to meet is already in a conversation or surrounded by a group? Unless it looks like a serious or private discussion, go over and stand quietly at the edge of the group. Wait for an opportunity to gracefully join in the conversation. And, Brady suggests, pay it forward: If you're in a group conversation and you see someone standing at the edge of it, make it a point to include that person.
7. Set appropriate goals.
Don't seek to leave the party with investors already committed to your project, Brady advises. And don't try and collect the largest possible stack of business cards either. Your goal should be to connect with a small number of valuable contacts whom you may work with later on. "You're trying to create on-ramps to build new relationships," she says.
Like this post? Sign up here for Minda's weekly email and you'll never miss her columns.
Leaders don't become great through charisma or vision alone. At its core, leadership is about executing on ideas.