Where the Magic Happens

Very true.  Via Bijan Sabet.

Entrepreneur = Salesperson

At the start of the first day of class my Entrepreneurship professor in business school said two things to the class.

The first was, “if you don’t want to do sales every day, all day, then don’t be an entrepreneur”.  Then he asked everyone that was in sales to raise their hand. After about a third of the class raised their hand he said, “90% of you are not truly salespeople, you’re order takers, because you don’t have a quota and you aren’t getting rejected every single day”. I’m paraphrasing, of course.

While harsh, there’s lot of truth to this. Entrepreneurs are salespeople and salespeople are entrepreneurs.  They put their success and failure out there for everyone to see. A lot of other roles in an organization can take cover behind things like shared goals and muddled metrics and a lack of a direct cause and effect on revenue. Salespeople can’t. They have an individual goal, with clear metrics and a direct impact on revenue.  Like the entrepreneur, salespeople put themselves on the line.

Jim Keenan had a great post on this a while back. To emphasize the point, I’ll post an excerpt from it here:

So why doesn’t everyone want to be a sales person?

Because  . . .

It takes guts to only have HALF your salary guaranteed

It is sucks to be rejected on a daily basis

It’s hard calling up people you don’t know and asking them to meet you

It’s scary asking strangers for things

It’s uncomfortable challenging people

It’s tough being held accountable to black and white metrics. You can’t hide from the numbers

It’s not easy having your results constantly compared, in the open, to your peers

It’s not easy losing

It’s tough being fully accountable for your own success or failure

It’s not fun doing something where you can fail so quickly after be successful

Not everyone likes being in the spotlight

Unpredictability SUCKS

Most people don’t want to be in sales, because it takes GUTS! It takes guts most don’t have.

SecondMarket & the Tech Bubble

There was a fantastic column the other day on Reuters written by Felix Simon titled, Facebook’s SecondMarket Puppets. The column points out how investors that put their money in Facebook using SecondMarket while Facebook was private have actually lost money since the company went public. This is interesting – and scary – for companies with upcoming IPOs that are allowing their illiquid shares to be traded on a secondary exchange. In theory, the value of SecondMarket was that you could get in on a hot company pre-IPO and make big bucks if/when they went public. But it seems that this isn’t a guarantee. Simon’s key insight is this: 

…it’s increasingly looking as though shares in private tech-companies are a bit like fine art prices: a place for the rich to spend money and feel great about owning something very few other people can have. The minute they become public and democratic, they lose a lot of their cachet.  And a lot of their value.

The level of hype propping up the valuations of some of the hot private and public internet companies is enough to keep me far away from these securities...and SecondMarket.

Segmenting the Unemployment Rate

Any data set is a lot more useful if you segment it.

As an example, let’s say you find out that your e-commerce website converts at a rate of 3%. That is, for every 100 visitors, 3 make a transaction. That’s somewhat useful data, but it isn’t actionable -- i.e. you can't do much with it -- until you segment it. 

You need to break the users into segments: by gender or age or income, etc. When you do, you’ll find actionable insights that will allow you to take actions that will increase your conversions. For example, you might find that men between the ages of 30 and 40 that make more than $100k per year actually convert at the rate of 20%, but that most of your site’s visitors are in lower converting segments, thus the aggregate 3% conversion. With information like this you can adjust your marketing to bring more higher converting users to your site -- you'll get more marketing bang for your buck.

We must do the same with our unemployment data. The unemployment rate -- last time I checked -- was 9%. This number is quoted over and over again in the media as if, by itself, it actually means something. 9% unemployment is not actionable.  It must be segmented.

For example, the U.S. unemployment rate for those with graduate degrees is 2%, college grads 4.5%, high school grads 9.7%, non-high-school grads 15%. 

It’s critical to recognize the difference between these segments. The data is telling us that for the educated segment of our population, unemployment is at or well below its natural rate. But for the uneducated population it’s super high. This is actionable data. This tells us that there isn’t necessarily a shortage of jobs. There may actually be a shortage of qualified labor. Politicians should keep this segmentation in mind when evaluating "job creation" vs. "job training" programs.

Mary Meeker's State of the Internet

Nobody is better than Mary Meeker -- now a partner at Kleiner Perkins -- at summarizing the state of the internet. Last week she presented her Internet Trends 2012 presentation at the All Things Digital Conference. This presentation is fantastic, I recommend flipping through it when you get a chance. The most compelling part to me is her summary of how technology has forced almost all industries -- from photography to healthcare -- to reimagine their products and they way the deliver value. That section begins on page 33 and ends on page 84.

[scribd id=95259089 key=key-mv1qbwlvykk5cacr6a7 mode=scroll]

The 40 Hour Work Week

I came across what was supposedly a very, very controversial graduation speech given by a right wing talk show host to students at Texas A&M.  It turns out that the speech was simply a chapter in his (fictional) book.  Much of the speech is totally over the top.  But if you’d like to get your blood flowing you can check out the entire speech here. 

The reason I’m posting about it is there was one line towards the end that struck me as pretty good advice for college graduates… 

Speaking of earning, the revered 40-hour workweek is for losers. Forty hours should be considered the minimum, not the maximum. You don’t see highly successful people clocking out of the office every afternoon at five. The losers are the ones caught up in that afternoon rush hour. The winners drive home in the dark.

Also, related to this topic, Salon.com had a good article a while back on the advent of the 40 hour week, that argues bringing it back would increase productivity -- interesting read when you have a few minutes.

What Really Matters

Businesspeople are trained to believe that revenue, profit and shareholder value are what matter in business.  

So if those are the only things that matter, in order to make more sales, all you need to do is show your prospects a strong ROI.  If you can show the client that their investment will pay out 2x or more of their investment, they'll buy, right?  

Wrong. 

The reason this is wrong is because revenue, profit and shareholder value don't account for human emotion.  Humans are generally motivated by their own personal fear and their own personal greed -- these things are satisfied by events that are generally far more basic than numbers.  So when you focus your pitch around nothing but ROI, you aren't tapping into what matters to the human that you're dealing with. Here are some of the questions that a potential partner might be asking themselves when you're blabbing away about revenue, profit and ROI. 

• If this project works, will it make others looks bad?
• Do I want the added responsibility that will come with success?
• Will I get in trouble if this doesn't work?
• Am I going to have to work later at night or on weekends because of this project?
• Will my boss think this is cool?
• Will my spouse think this is cool?
• Will it be fun to work on?
• Will I get promoted if this works?
• Will I have to move to a new office if this works?  Will I have a longer commute?

This is why understanding your client and the individuals you’re working with is critical.  Know what will get them a bonus and know what will get them fired.  And be sure that the value your product brings to your partner will lead to one and prevent the other.  

Client Management Lesson #4: Ask For More

This is the fourth post in a seven part series on Key Client Management Lessons. Lesson #4: Ask For More

In earlier client management posts I’ve talked about how it’s critical to align your interests with the client’s interests.  Identify a shared goal that benefits both parties and work towards it.

In some cases, you may find that your ambitions are far higher than your client’s.  As a result, there can be some friction as the client perceives you as pushing too hard and not deferring to their priorities.  This is a bad situation to be in.  You’re forced to either upset the client or lower your ambitions.  Neither is optimal.

This is why, when setting goals for a project, always ask for more.

To get to a “win/win” in any negotiation you have to ensure that both parties are happy.  If you know you’re going to run into a situation where the client is going to try to get you to hold back on your goals, set two goals.  The first goal should be one that can be reached with solid focus and hard work.  The second (generally 20% to 40% higher) should be a stretch goal -- that is, one where you’ll need some big things to happen to be successful.  Present the stretch goal to your client.

If you do this, one of two things will happen: 1.) they’ll accept it as the goal for the project and that’s a win as you’ll both be pushing for huge success or 2.) they’ll push back and try to get you to lower the goal.  When #2 happens you’re still in a good position as you can concede on what you asked for and still be happy.  Either way, you’re happy and they’re happy, and that’s a win/win.

Sometimes asking for more is the only way to get to a win/win.

There’s a fantastic book on win/win negotiating titled, Getting to Yes.  I highly recommend it if you’re interested in reading more on this topic.

TripIt

I've been travelling quite a bit over the last couple of months -- I’m on a plane or train or both at least once a week.  One of the most painful parts of travelling is keeping track of my itineraries: carrier, airport location, departure times, arrival times, confirmation numbers, hotel names and locations, etc. When you're moving around a lot, keeping track of all of this can be a complete pain.

TripIt is an iPhone app that solves this problem.  Anytime I book a train, plane, hotel or dinner reservation all of the relevant information is imported neatly into the TripIt app.  When I open the TripIt app it shows me all of my trips in chronological order.  When I click on an individual trip it shows me all of the relevant information for each flight, train, hotel and dinner reservation.  TripIt takes a good chunk of stress out of traveling and I never have to carry print outs or search through my email to find a confirmation number.

There are two ways to get your itineraries into the TripIt app.  You can either forward your itineraries to the TripIt email address or you can set it up so that TripIt automatically scans through your email every 10 minutes looking for itineraries. I've gone with the latter option and it's worked great.  

TripIt makes money by offering premium packages -- TripIt Pro and TripIt for businesses.  You can see the different product features here.  So far I've opted to stick with the free version.  

If you're looking to reduce some of the stress that comes with travelling frequently, TripIt is a no-brainer. 

Soap Operas & The Internet

You may not know that soap operas are called soap operas because they were originally created as a way to sell more soap.  Putting a quality drama on television during the day is a great way to get peoples' attention.  Sprinkle in some ads for soap and you have a pretty nice business model.  This is what's known as the "interruption-based" advertising model.  The viewer shows up to watch a drama and gets interrupted every 10 or 15 minutes with profitable ads.

Many of the top internet companies are beginning to look a lot like soap operas.

Facebook is covered with irrelevant display ads and requires you to install all kinds of apps to work effectively.

Irrelevant advertisements have started to pop up in my Twitter feed.

LinkedIn has gone from a super clean site to a mess.

Spotify and Pandora ads are poorly targeted and happen too frequently.

Don’t get me wrong.  I recognize that these are businesses that need to generate revenue and I have no problem with them doing so.  I guess I’m just a bit disappointed that as internet companies have evolved into real businesses, they’ve defaulted to old fashioned disruptive marketing to make money. Each of the companies above have built great products and innovated significantly.  You can't say the same about their business models. 

Boomerang

I recently read Michael Lewis' new book, Boomerang.  It's a fascinating book about the recent European Debt Crisis.  Like most of Lewis' books (especially The Big Short, that chronicles the U.S. financial crisis) he's able to take a fairly mundane topic, roll it up into a few hundred pages and make it a page turner.

The book dives into the crises that occurred in the last few years in three countries: Iceland, Greece and Ireland.

It's a fascinating and very well written book.  It gives the inside story on the political, economic and cultural circumstances that led to the unlikely collapse of three different economies.  If you're interested in European economics, politics or culture, I can assure you that you that you'll enjoy reading Boomerang.

Healthcare Tech Lessons: Fee for Service vs. Managed Care

Today, when a patient goes to their primary care physician with a health problem, they are referred to a specialist, generally in a hospital setting, and given a number of treatments.  The hospital then bills the insurance company or government for each of these treatments (this is what's called fee for service).  The hospital then pays the physician a salary or an incentive-based payment.  One of the reasons that the government is trying to shift the healthcare payment model away from fee for service (and towards manged care) is that it provides an incentive for providers to over-prescribe various treatments -- e.g. more treatments = more money.  

As we shift towards a managed care model, when a patient contracts an illness, the insurance company or government will pay a healthcare organization (what will be called an Accountable Care Organization, or ACO) a fixed lump sum.  This lump sum will then be split between all of the providers that provided treatment.

This change and its effects have been talked about at length.  But here are two effects that may not be so obvious:

1. It could put the Primary Care Physician (PCP) in the driver's seat.  Because the PCP generally has the best relationship with the patient, they could be the conduit for all healthcare payments. The savvy PCPs will setup their own Accountable Care Organizations where they take the payment directly from the insurance company or the government.  From there, they can dole out the appropriate share of the money to the specialists and hospitals.  Having physicians pay hospitals instead of hospitals paying physicians would radically change the power structure in healthcare as we know it.
2. In a managed care environment, there's an enormous incentive to keep costs down.  Because providers are going to receive the same lump sum payment for an affliction, regardless of how many prodedures they perform, the only way for them to profit is to lower their expense base.  As a result, to increase efficiencies, we may begin to see hospitals have floors that are designated to afflictions, rather than specialties.  That is, instead of having a radiology or dermatology or cardiology wing, there may be a diabetes or heart disease or lyme disease wing.  That would be a radical change in the way hospitals are run and costs are managed.

We can't underestimate the disruptive effects that are coming as a result of payment reform.