• So + Lo + Mo = LOL

    A lot of things are sort of funny right now with respect to technology entrepreneurship. One of those things is apparently called SoMoLo (or SoLoMo or MoSoLo, depending on who you talk to.)

    I was talking with a VC friend of mine who brought up the idea of SoMoLo. Oddly, I hadn’t heard of it and asked what it was. He explained it was the convergence between social, mobile and local and that it’s all the rage right now for Silicon Valley startups. Everyone wants to jump on the bandwagon.

    SoLoMo, SoMoLo, MoSoLo. WTF?

    (The legendary) John Doerr, of the high tech venture capital firm Kleiner Perkins, is credited with coining the term, SoLoMo, which seems to be the most widely adopted version in use today. But I’ve even seen references to MoSoLo, like this one by Lisa Barone over at Outspoken Media (although the piece is actually titled The SoLoMo Revolution: Social Media, Local Search & Mobile Search Collide). This Tumblr post from blogospiel even refers to it as ‘Human Pixeling’: the idea that people today are addressable wherever they are.

    SO what?

    I’ve always made fun of startups that all want to do the same thing. (Not just because I’m trying to be mean, but because I’m trying to raise awareness and help people, I swear!)  Anyway, this do-the-same-thing phenomenon may be no more evident than it is today here in Silicon Valley with SoLoMo. It’s not that I don’t agree that the three converging trends are interesting, but…

    What people don’t realize about the utility tools like mobile apps that make it easy for you to find deals, your friends, etc., is that by and large, they don’t often produce great businesses.  Why?  Because they are winner-take-all markets. You either make it big or you go nowhere. Few startups in these markets are doing really well. People think they can get a base hit or a double, but the reality is they’re either going to hit a home run or strike out.

    Either you’re Twitter or you’re nobody, as far as I’m concerned.

    It all goes back to what I said in The Irrationality of Entrepreneurship. With SoLoMo, you have a very high probably of wasting 2 or 3 years of your life coding/designing your butt off for something that will never gain (enough) market traction.

    LO and behold, you still need to be unique

    I think more young people are starting companies around the world than ever before. I have no problem with that; in fact, I love it!  I was 14 when I started my first company. But here’s the problem: I think most successful entrepreneurs are uniquely positioned to tackle whatever problem they take on.

    Just because you’re a 20-year old kid who knows how to use your mobile phone to check-in somewhere doesn’t make you unique. It means you are just like everyone else.  Perhaps worst-of-all, you probably have the power-user bias.  You’ll pitch something like a ‘geo-enabled meta-checkin game layer that incentivizes users by allowing them to unlock daily deals when their friends are in a 300 meter radius from them.  It’ll be huge!”

    My answer: O rly?

    You can’t just pile on because there are so many other college kids starting companies now and they all expect to succeed. You have to bring something unique to the table. You need to go after something that is special to you and you’re background. Something uniquely your own.

    MO is not the answer

    Investors: Just because a space is hot doesn’t mean you’re going to pick a winner. And taking money and throwing it at a bunch of startups in the SoLoMo space just so you can ‘have a horse in the race’ isn’t the answer either. Just because you buy 10 lottery tickets doesn’t mean you’ll win. You increase your odds a bit, but it’s still a long shot!  What you are really doing is just wasting more money.

    I know SoLoMo is hot. I know it’s a big trend.  If I could invest in an index fund of the space, I probably would.  But I realize that most individual contenders in the space are losers, and I’m not crazy enough to invest in one.  You shouldn’t be, either.  The reality is, most companies in that space are not going to win. They’re not hot and never will be. Which brings me back to the original equation:

    SO + LO + MO = LOL

    SoLoMo is hot. True. But isn’t it just another example of Extraordinary Popular Delusions and the Madness of Crowds? Which, by the way, was written in three parts:

    1. National Delusions,
    2. Peculiar Follies, and
    3. Philosophical Delusions

    Ring a bell?  Still want to go out, jump on the bandwagon and waste several years of your life?

    If you do, then I’ll be here ROFLMAO.


  • The (ir)rationality of entrepreneurship

    I am convinced that entrepreneurship is far from a rational pursuit.  I am also pretty sure that I’m not the only person who thinks so. I’ll put it simply:

    • the numbers are stacked WAY UP against you.
    • the personal, professional, emotional, and financial commitments are borderline insane.
    • the ‘expected value’ of the investment is well below zero.

    In short, there is not very much that’s rational about being an entrepreneur.

    While I am sure that entrepreneurship is not rational, I am not really sure about whether irrationality is an entirely good or bad thing.  This subject has been plaguing me for a while, actually.  I’ve always viewed rationality in a positive light, and I’ve always thought of being irrational as a weakness (or an opportunity for improvement.)  But, for whatever reason, I never connected the dots.  My whole life has been one irrational pursuit after the next.  Yikes!

    Rationality reduces waste

    So what’s so good about being rational?  It mostly has to do with waste, it seems.  If we are rational about the world, then we’ll pursue opportunities that have higher probabilities of success (less risk) that are typically accompanied by less reward.  But if we are irrational, then we’ll chase huge outcomes, even though we are very likely to fail.  So what happens when we fail?  Typically, we waste stuff:

    • Wasting time: if we pursue something irrational that doesn’t pan out, then we wasted some significant amount of time.  And, of course, in startup-mode, these aren’t normal days we are wasting.  These are 18-hour all-in days.
    • Wasting money: we usually waste some combination of our own and other people’s money.  Usually, the other people (investors) have a lot more of it than we do, so the impact to our personal bank account is the most meaningful.
    • Wasting potential: life is about opportunity cost.  Just because we fail doesn’t mean we are not talented.  If a startup we pursue doesn’t pan out, we have lost the opportunity to have applied our talent to a ‘winner’ during the same time.

    So, the real positives of being rational are that we waste less.  We take paths and seize opportunities that have a higher probability of success, and as such, have some peace-of-mind in knowing that our time and money was reasonably well spent.

    Irrationality has upside, too

    What most people don’t often realize (and I’m not sure I ever did until now) is that irrationality has some potential upsides.  Those upsides are particularly useful when you are trying to start something new.

    • Potentially huge wins:  By attacking a significant space full of huge incubements, you not only prove that you are crazy, you have the potential to pull off a monstrous success if you can make it work.  (Examples: Google, Zappos, Dell)
    • Powerful motivation: Nothing drives you quite as much as ‘having no choice’ but to make it.  I’ll never forget the first time one of the companies I started was at risk of not making payroll.  I was never better at pounding the pavement for new revenue than I was then.
    • Few stones unturned: When you are irrationality committed to a problem (I use ‘problem’ instead of ‘solution’ very deliberately here…), you are driven to try many different things to find a solution.  Perhaps more than one would rationally pursue.  One of those stones may be your winner.

    The positives around irrationality are all around guts and upside.  If you weren’t crazy enough to keep going, you may not ever find that ‘huge win.’

    Whatever you do, own it

    In the end, it seems impossible to figure out which trait is better.  They both clearly have strong pros.  I could agonize forever about which path yields a better life, but I’m not sure its worth it.  The choice that’s right for us depends on who we are.  There is no one ‘right answer.’  Also, I think that each of us can be rational or irrational in different spheres of our lives.  (Example: I was very rational about breakfast this morning, but am totally irrational about the company I’m going to start next.)

    While there isn’t just one right answer, I do think its really important for us to be aware of how rational we are with respect to the different decisions we make in life.  It’s ok (I would even say ideal) for us to ‘own it.’  We should know what our core assumptions are when we make a decision in life, and should acknowledge it if we are being completely irrational.  Two things happen when we do that: 1) we are much more honest with ourselves in our intellectual dialogue and 2) we are able to learn a lot more from both our successes and our failures when we understand what truly motivated us in the first place.

  • Empowerment is everything

    If I were to simplify the world into two types of teams, I’d have to say there are extraordinary teams and then there’s everybody else. If you want to build an extraordinary team, empowerment is a requirement, not an option.

    Ownership and empowerment

    Think about the most talented people you know – really high velocity people. Are those the kind of people who can operate in an environment where they have no sense of ownership? If you give that some thought, I think you’ll come back with the answer that highly talented, high velocity people want and need a sense of ownership because that’s how they operate.

    The most effective people are driven by a sense of passion. Emotion is part of what makes them so good at what they do. I’ve always characterized them as “hungry.” But what are they hungry for? Typically, they’re hungry to prove something; to make a difference; to make an impact. You can’t be hungry to do those things if you have no sense of ownership over what you’re doing.

    Ownership provides a sense of receiving credit for something good. At the end of the day, some of the best of us want to see our name in lights – “This is something so and so did.” There’s nothing wrong with that and it’s not a matter of being egotistical it’s just that it’s very difficult to prove something you can’t put your name on. High performers don’t want to put their name on something they had no input in. It just wouldn’t mean anything to them.

    So if you want to create extraordinary teams (and why wouldn’t you want to?) you have to give people ownership. Empower them. Empowering people results in a whole different level of performance.

    Empowerment opens doors for succession and referrals

    Through empowerment you not only get the best work out of that individual, you attract the best people to the team.

    Teams that are empowered become so proud of where they work they develop a reputation and buzz that attracts other great people. Google demonstrates that with their 20% time – you can do whatever you want to 20% of the time. Zappos, whose mission is to wow the customer, keeps it broad. They don’t say, “Here’s how you wow the customer.” They just say, “Here’s what we want to do. You go figure out the best way to wow the customer depending on the situation.” Now that’s empowerment!

    Empowerment is your succession plan. If you want to build an organization that will live on after you’re gone, empowerment is the answer there as well. If your team members are not empowered, they won’t know how to function without you.

    The subject of empowerment means a lot to me and I hope to write more on it in the near future. How do you feel about empowerment?

  • Control the narrative – become a product evangelist

    Through a recent newsletter from the Silicon Valley Product Group, I came across a great article by Marty Cagan about, product evangelism, which I see as essentially helping people to imagine the future and inspiring them to help create that future by “selling the dream.”

    In that piece, Cagan lists his top 10 pieces of advice for product leaders who want to sell the dream:

    1. Build a high-fidelity prototype (see Some thoughts on rapid prototyping)
    2. Share the pain
    3. Share the vision
    4. Share learnings generously
    5. Share credit generously
    6. Learn how to give a great demo
    7. Do your homework
    8. Be genuinely excited
    9. Learn to show some enthusiasm
    10. Spend time with the team

    I really hadn’t given much thought about product evangelism as a thing until I read the article, and then I thought, “That’s really cool.” I’ve always been more concerned about the opposite problem – too much dedication to a product idea where you can get so dead set on a vision that you end up constraining the creativity of the team. (See Ideas are worthless, execution is everything.)

    It’s all about controlling the narrative

    In general, product evangelism becomes important because everything in life is built on what I call a narrative. You see something happen, or in the case of a product you see a feature that doesn’t make a lot of sense to you so you build a narrative in your head. A personal dialog that justifies what you’re doing, even if you don’t agree with it. Maybe something to the effect:

    We had a dumb designer and he came up with this idea. I’m just doing what I have to, but in time I’m sure it will be easier to see that this will never work.

    The problem is, the narrative may not be true at all. More often than not, narratives may be based more on mistaken perceptions than on reality.

    Within a pure product organization, controlling the narrative is 90 percent of your job. In essence, everyone is very close to the product and its development and knows what’s going on. But if you’re not in a pure product situation – where other groups exist beyond pure product development – there will be people who don’t know what’s going on or why you chose the product you did. The narratives they create may be far from the truth.

    The beauty of product evangelism is that you’re creating the narrative for the people around you so they can build a mental model that includes aspects like:

    • Here’s the problem…
    • Here’s the pain…
    • Here’s what we’ve learned…

    And in so doing, you allow them to incorporate what’s important in their narrative. So in that sense, by becoming a product evangelist you control the narrative.

    The most important aspects of product evangelism

    To me, the most important items included in Cagan’s 10 pieces of advice are items 4 and 5 – share learning and credit generously. I think they’re most important because they’re the hardest. You absolutely have to do those things if you want to be a good leader. Unfortunately, it’s what I see the least of, not only in myself but in the people around me. Sharing what you’ve learned and sharing the credit should be a requirement, not an option.

  • Ideas are worthless, execution is everything

    The thing that always surprises me is that entrepreneurs are so protective of their ideas. They don’t want to talk about them for fear that you’ll steal their idea and claim it as your own. They won’t give you the time of day unless you agree to sign an NDA or otherwise agree to put yourself in jail and throw away the key.

    When I encounter people like this, I can’t help but to put them in the same category as Betamax cassettes. To some degree, the protectiveness isn’t as prevalent here in Silicon Valley as in other parts of the country, but still it exists.

    Ideas don’t have inherent value

    What I find is that people systematically overvalue their ideas. They think the idea in itself is inherently valuable. In reality, it’s the execution, not the idea itself, that holds value (with the possible exception of medicine and a few others-maybe). Most people have the same ideas or they have ideas that are in and around the same thing. In fact, when you think you’ve come up with a great idea, you should assume 10 other people have that same idea (or ideas that are very similar). What’s more important is your ability to execute against that idea.

    What really matters

    The ability to execute is what really matters. If asked to evaluate a potential opportunity as an outsider, I tend to ask 3 questions:

    • How well is the founder/entrepreneur able to do this versus somebody off the street?
    • What are the dynamics of the business itself and how well-positioned is the team to run the business?
    • How well does the business scale (not the idea itself)?
    The reality of it all

    Everybody knows you’re not going to end up doing what you say you’re going to do in your business plan. Reality is going to intervene at every turn. Being successful, in large part, depends on how flexible you can be and how quick you are on your feet to respond by taking advantage of unforeseen opportunities and making course corrections in response to challenges.

    When people are secretive of their ideas with the attitude of “If I tell you you’ll just go build it”, I figure they’re either not well-positioned to run the business or they’re not confident that they’re the only person that can do it right. If they’re worried about it, they probably didn’t have a lot of chance for success anyway.

    Ideas themselves don’t have inherent value – it’s more about your ability to execute them.

  • Where should Product Management live on the org chart?

    I think it’s surprising, given how critically important product management is to most tech companies, how few people really know anything about it. A lot of companies (including tech companies) either don’t have a Product Management person or the Product Management function doesn’t exist at all.

    So where should the Product Management function live on the org chart? Obviously, there’s no one-size-fits-all answer. The answer depends on:

    • The type of business.
    • How far along you the business is in its growth trajectory.
    Product management in technology companies

    If you’re running a product-based technology company, the Product Management function needs to be owned by someone in the core inner circle of the business, such as a C-level officer. If your business is product based, it’s critical that your Product Manager have a seat at the executive table. You shouldn’t have products reporting into someone who reports to the CEO.

    In a startup that’s especially true. In a lot of early-phase tech startups, the Product Management function is actually run by the CEO or founder himself/herself – the person who incepted the idea for the business. There are a lot of B2B startups where the CEO only focuses on products because he or she had the idea in the first place.

    But the CEO shouldn’t be completely enveloped in products alone. The CEO needs to be thinking about all the moving parts of the business and not just products. In some cases, you’re better off bringing in an outside CEO because if your CEO is focused solely on the product itself, who’s going to focus on getting it sold?

    Product management in non-tech companies

    For companies where technology and products are not the core of the business, product management doesn’t need to report to the CEO. One approach might be to have product management report to a C-level officer, such as a CTO or CIO who reports to the CEO. If yours is not a technology business, but technology is an enabler (such as Ford or DelMonte, e.g.), product management doesn’t really need to have a seat at the executive table. Instead, it can proxy through someone who does have a seat. However, it’s still important that the Product Management function exists and gets proper attention even if technology is not core to your business.

    Growth, scale and product management

    The question of scale, or where you are in your business growth trajectory is also important when it comes to product management. For example, eBay is a business where the whole business is the marketplace. They don’t stock merchandise or make their own products. All they do is connect buyers with sellers.

    eBay’s ‘product’ vision for the marketplace is core to the business, but in this case it may not make sense for product management to report to the CEO because the company is highly decentralized. Each part of the business has its own General Manager or Vice President. Groups are broken into subgroups and each sphere has its own product person.

    At eBay’s scale, decentralizing product management makes perfect sense. In smaller businesses, decentralizing product management is generally neither necessary or wise.

    The most important thing about product management

    The most important thing is that product management needs to be recognized as a function. Someone owns it and has the necessary autonomy to make important product decisions. However, your CEO should not also be your VP of Products unless the rest of the executive team is strong enough to make sure other aspects of the business are getting the necessary attention.

    What you don’t want to do is tell someone they’re responsible for product management, dictate to them what has to be included in the product and then make them responsible for product metrics, too. A true Product Manager cannot be accountable for any metrics if you’re telling him or her what features to include in what order. They have to truly own the Product Management function.

    If a Product Manager is not empowered to really do the job, that’s okay but don’t give them a title such as VP of Products. Give them a more appropriate title and say they’re a Program Manager or something. Don’t mislead them or anyone else by calling them a Product Manager when they’re not.