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How to Start a Good Energetic Discussion like Steve Jobs and Jeff Bezos

by Vincent Chan on Jul 16, 2010

Ever wonder how Steve Jobs and Jeff Bezos discuss a new business idea? When the Apple engineer warned Steve Jobs about iPhone 4 antenna issues, what do you expect Steve to say? Unless you are working at Apple or Amazon, it’s really tough for us to find out the answer.

However, after you have read this book: “Code Name Ginger: The Story Behind Segway and Dean Kamen’s Quest to Invent a New World“, you’ll get a better idea about how intense these two business legends could be during a business discussion, especially for Steve Jobs 🙂

The book is about the invention, development, and financing of the Segway, the incredibly innovative electric vehicle. If you don’t want to read the whole thing, there is an excerpt from the book on HBS Working Knowledge called Steve Jobs and Jeff Bezos meet “Ginger”. This article is about a meeting between the Segway’s team, John Doerr, Steve Jobs and Jeff Bezos. They were discussing the positioning of Segway and how they should launch the product.

Here are some of the highlights from their discussion:

When the VC asked, “What does everyone think about the design?” Jobs answered, “What do you think?” It was a challenge but not a question. And then he said, “I think it sucks!” When they asked him to explain, he said, “It just does. Its shape is not innovative, it’s not elegant, it doesn’t feel anthropomorphic. You have this incredibly innovative machine but it looks very traditional. There are design firms out there that could come up with things we’ve never thought of,” Jobs continued, “things that would make you shit in your pants.”

After further intensive discussion and debate by Steve and Jeff, Dean Kamen, the inventor of Segway, concluded that, “This is the most energetic discussion we’ve ever had and like all good energetic discussions it leaves you with more questions than answers, and leaves you questioning everything you thought you knew. And that’s good.”

If you want to find out the details of their discussion, check out this post or the book. You will know what set these two entrepreneurs apart from the rest. If you want to drive your startups or small business forward aggressively, you better learn how to start an energetic discussion like this one.


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Why did so many successful entrepreneurs and startups come out of PayPal? Answered by Insiders

by Vincent Chan on Jun 28, 2010


Why did so many successful entrepreneurs and startups come out of PayPal? I long have been fascinated by the extraordinary achievement from the ex-Paypal team and wonder about the reasons behind their success. In the past, mass media tried to answer this question several times but still couldn’t give us a clear answer.

I once asked David Sacks the same question during an event in Los Angeles. He told me the secret is that Paypal has built a “scrappy” culture. No matter what problems they faced, they would find a way to solve them. I kind of got the idea, but was still confused about the execution details.

So when I saw some of the past Paypal employees answering this question on Quora, I was super excited! After all, they should be the only ones who can tell people the inside stories.

Below are some highlights of their answers. *If you want to check out the sources or leave your comments, please go to here and here.

On Talent Management

“Peter and Max assembled an unusual critical mass of entrepreneurial talent, primarily due to their ability to recognize young people with extraordinary ability (the median age of *execs* on the S1 filing was 30). But the poor economy allowed us to close an abnormal number of offers, as virtually nobody other than eBay and (in part) google was hiring in 2000-02.” (by Keith Rabois, former Executive Vice President of Paypal)

Extreme Focus (driven by Peter): Peter required that everyone be tasked with exactly one priority. He would refuse to discuss virtually anything else with you except what was currently assigned as your #1 initiative. Even our annual review forms in 2001 required each employee to identify their single most valuable contribution to the company.” (by Keith Rabois, former Executive Vice President of Paypal)

Dedication to individual accomplishment: Teams were almost considered socialist institutions. Most great innovations at PayPal were driven by one person who then conscripted others to support, adopt, implement the new idea. If you identified the 8-12 most critical innovations at PayPal (or perhaps even the most important 25), almost every one had a single person inspire it (and often it drive it to implementation). As a result, David enforced an anti-meeting culture where any meeting that included more than 3-4 people was deemed suspect and subject to immediate adjournment if he gauged it inefficient. Our annual review forms in 2002 included a direction to rate the employee on “avoids imposing on others’ time, e.g. scheduling unnecessary meetings.” (by Keith Rabois, former Executive Vice President of Paypal)

Refusal to accept constraints, external or internal:We were expected to pursue our #1 priority with extreme dispatch (NOW) and vigor. To borrow an apt phrase, employees were expected to “come to work every day willing to be fired, to circumvent any order aimed at stopping your dream.” Jeremy Stoppelman has relayed elsewhere the story about an email he sent around criticizing management that he expected to get him fired and instead got him promoted. Peter did not accept no for answer: If you couldn’t solve the problem, someone else would be soon assigned to do it.” (by Keith Rabois, former Executive Vice President of Paypal)

Driven problem solvers: PayPal had a strong bias toward hiring (and promoting / encouraging, as Keith mentions) smart, driven problem solvers, rather than subject matter experts. Very few of the top performers at the company had any prior experience with payments, and many of the best employees had little or no prior background building Internet products. I worked on the fraud analytics team at PayPal, and most of our best people had never before done anything related to fraud detection. If he’d approached things “traditionally”, Max would have gone out and hired people who had been building logistic regression models for banks for 20 years but never innovated, and fraud losses would likely have swallowed the company.” (by Mike Greenfield, former Sr. Fraud R&D Scientist of Paypal)

Self-sufficiencyindividuals and small teams were given fairly complex objectives and expected to figure out how to achieve them on their own. If you needed to integrate with an outside vendor, you picked up the phone yourself and called; you didn’t wait for a BD person to become available. You did (the first version of) mockups and wireframes yourself; you didn’t wait for a designer to become available. You wrote (the first draft of) site copy yourself; you didn’t wait for a content writer.” (by Yee Lee, former Product & BU GM of Paypal)

On Culture & Ideology

Extreme bias towards actionearly PayPal was simply a really *productive* workplace. This was partly driven by the culture of self-sufficiency. PayPal is and was, after all, a web service; and the company managed to ship prodigious amounts of relatively high-quality web software for a lot of years in a row early on. Yes, we had the usual politics between functional groups, but either individual heroes or small, high-trust teams more often than not found ways to deliver projects on-time.” (by Yee Lee, former Product & BU GM of Paypal)

Willingness to try – even in a data-driven culture, you’ll always run in to folks who either don’t believe you have collected the right supporting data for a given decision or who just aren’t comfortable when data contradicts their gut feeling. In many companies, those individuals would be the death of decision-making. At PayPal, I felt like you could almost always get someone to give it a *try* and then let performance data tell us whether to maintain the decision or rollback.” (by Yee Lee, former Product & BU GM of Paypal)

Data-driven decision making – PayPal was filled with smart, opinionated people who were often at logger-heads. The way to win arguments was to bring data to bear. So you never started a sentence like this “I feel like it’s a problem that our users can’t do X”, instead you’d do your homework first and then come to the table with “35% of our [insert some key metric here] are caused by the lack of X functionality…” (by Yee Lee, former Product & BU GM of Paypal)

Radical transparency on metrics: All employees were expected to be facile with the metrics driving the business. Otherwise, how could one expect each employee to make rational calculations and decisions on their own every day? To enforce this norm, almost every all-hands meeting consisted of distributing a printed Excel spreadsheet to the assembled masses and Peter conducting a line by line review of our performance (this is only a modest exaggeration).” (by Keith Rabois, former Executive Vice President of Paypal)

Vigorous debate, often via email: Almost every important issue had champions and critics. These were normally resolved not by official edict but by a vigorous debate that could be very intense. Being able to articulate and defend a strategy or product in a succinct, compelling manner with empirical analysis and withstand a withering critique was a key attribute of almost every key contributor. I still recall the trepidation I confronted when I was informed that I needed to defend the feasibility of my favorite “baby” to Max for the first time.” (by Keith Rabois, former Executive Vice President of Paypal)

Extreme Pressure – PayPal was a very difficult business with many major issues to solve. We were able to see our colleagues work under extreme pressure and hence we learned who we could rely on and trust.” (by Keith Rabois, former Executive Vice President of Paypal)


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Write Your Business Plan in Pencil

by Bob Reiss on May 19, 2010

This guest post was written by Bob Reiss (@bobsreiss), the author of Bootstrapping 101. Reiss is an Army veteran and graduate of Columbia University and Harvard Business School. He has been involved in 16 startups and is a three-time INC 500 winner. He has been the subject of two Harvard case studies and is a frequent speaker at University Entrepreneurial classes.

The smartest entrepreneurs plan on growing and are prepared for change.

I have a few words of advice for first-time entrepreneurs, as well as seasoned business owners looking to hit a new stage of growth. My advice is this; write your business plan in pencil. I realize this may be difficult for all you non-golfers, but doing so will illustrate two important principles.

  1. Change is inevitable
    I have little doubt that you (the small-business owner) will shortly have to change, amend, modify, scrap or abandon your original business plan altogether. One of the attributes of successful entrepreneurs is flexibility. By writing your business plan in pencil it forces you to look at change as the only constant. Make change your friend, embrace it and work it to your benefit.

    The reasons why your original plan will need to be changed after your company is operational are myriad. It’s likely you under or over-estimated your competition, margins, cash needs, competencies and suppliers. Or you misjudged market need and size. Every entrepreneur discovers new opportunities that didn’t appear until there was actually a business up and running.

  2. We must avoid business plan worship
    When we see documents neatly typed (and maybe even received praise for them), we are reluctant to change. Especially for those who attended business schools where the plan took on a larger than life importance. People whose plans got high marks, or even worse, won a business plan contest, tend to feel their plan is inviolate. They also tend to believe that if they rigorously adhere to the plan it will yield the riches of their dreams. It’s my hope that the mental image of a pencil will remind you that change is good and will help you reach your goals.

Most small-business owners that I know never wrote a business plan. In 16 start-ups, I’ve never written one. And John Altman, a very successful entrepreneur, founder of six companies and former professor of entrepreneurism, never wrote a business plan for his start-ups, either.

Most people who write a business plan do it to raise money or because someone told them that’s what they’re supposed to do. The fact is that a detailed plan is only required if you want to raise money from a bank or venture capitalist. And both hardly ever offer a loan or invest in early stage companies. So your energies are wasted writing those long and thick plans.

Now don’t get me wrong. I strongly believe in planning, just not in long, voluminous tomes that will probably go unread. For most sole proprietors, that business plan can reside in your head, or–if you must commit it to paper–on a napkin.

If you really want to write a plan, try this. At the start of each year write what your goals are and specifically target new areas of distribution and the names of new accounts that you want to clinch. Also, put on paper the names of current customers with whom you want a deeper relationship and the strategies you’ll employ to do so. This plan should only run one or two pages. I also recommend you write down your accomplishments and shortcomings from the previous year. While you can do this exercise primarily for yourself, I would also share it with members of my team.

As your company gets bigger, that’s when those written planning documents become paramount. As your company grows you want to be sure all your employees are on the same page and equipped with the knowledge of how they can contribute to the company goals.

It is a reversal of commonly accepted logic to suggest you postpone the business plan until you’ve reached a growth spurt. But, as John Altman said on this point, “If you’re going to empower the other people in your company, guess what; you’d better give them a map to the highway you’re on! Otherwise, they can’t share that vision in your brain.”

(This article first appeared at www.entrepreneur.com – 5/14/10)


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Revenue per Employee in China vs US

by Vincent Chan on Apr 23, 2010

Saw this interesting post, ranking tech companies by revenue per employee, on Signal vs. Noise and its following discussion. I wonder what the numbers will look like for tech companies in Asia. The findings are pretty interesting. Let me show you the numbers now:

(Note: 37signals has already mentioned that the ideal measurement would be using “profit and payroll” instead of “revenue and employee headcount”. It’s hard to get those numbers though. Still, these interesting numbers should give us a better idea at which companies are the most efficient.)

More established US companies:

Tech companies in China:

While I am not going to make any conclusions based on these numbers, one thing is pretty significant – the revenue per employee numbers of the Chinese companies are a lot less than the ones in the US. Because of technology? productivity? knowledge? Need to find out more about these in the future. 🙂

Happy Friday!

*UPDATE: I have updated the chart and table for the Chinese tech companies with correct data. Thanks for the reader in the comment section.


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Never Forget Your Customers

by Bob Reiss on Feb 27, 2010

This guest post was written by Bob Reiss (@bobsreiss), the author of Bootstrapping 101. Reiss is an Army veteran and graduate of Columbia University and Harvard Business School. He has been involved in 16 startups and is a three-time INC 500 winner. He has been the subject of two Harvard case studies and is a frequent speaker at University Entrepreneurial classes.

The No. 1 need for business success is a customer.

That’s pretty obvious, so why am I telling you this?

It may be obvious but most companies seem to quickly forget this essential fact. Small and startup companies desperately need customers to begin their journey to profits and sustainability. Many large Fortune 1000 companies forget the customers who made them successful.

Just look at all your daily life experiences in dealing with a phone company, an airline, a utility, your cable provider, a government provider, etc. In an effort to develop systems to deal with their size, they become impersonal and forget about the one constituency that propelled their success. In turn, the customers become increasingly frustrated with their treatment and become open to changes in their buying behavior.

You might posit that orders are most important, but, orders do not create more orders. Only satisfied customers do that. Happy customers whose expectations are met or exceeded become your best salespeople and effectively promote your wares by word-of-mouth, at no cost to you. You can’t buy more effective advertising than that.

Satisfied customers are likely to become long-term customers who will look forward to buying your new offerings. It is much easier to increase revenues through existing customers than to find new ones and much less costly. The bonus is that these satisfied customers get you new ones through singing the praises of your company, its products and/or services to their friends, family, and acquaintances.

Unlike other forms of media advertising, there is no cash outlay for this. There is, however, an investment in maintaining the quality, service, need fulfillment, value, timelines and warranty of your offering. If you deliver on these actions, positive word-of-mouth will enable you continued growth and sustainability. Likewise, if you fall short, you’ll have to deal with negative word of mouth, which can rapidly lead to your decline and is difficult and costly to reverse.

Your orders from products or services will eventually yield revenues which can be used for payroll, expenses, taxes, innovation. Most importantly, continued sales leads to profits.

So if we were to simply chart what we’ve said above, it would look like this:

CUSTOMER + ORDER = MONEY

Add the sales element to this equation and we have what I call the “Anatomy of a Business.”

SELLING + CUSTOMER + ORDER = MONEY

Sales is often demeaned and downplayed by academia, students, ordinary people and even some business people. However, sales is a profession and key to any organization’s success. As we see above, the customer is also a key element because they make purchases, which creates cash flow–the lifeblood of a business. Selling is the process of persuading customers to initiate these orders. It can be a simple quick one-on-one encounter or a complex long-term process. Without sales, you will not get orders.

These basic principles are easy to forget but it would benefit all entrepreneurs to remember the anatomy of a business in their hectic schedules Of course, it gets more complicated when competition is added to the mix. When you add in dealing with other issues like having the right resources to accomplish your goals and creating a culture of integrity and innovation, remembering customer satisfaction can fall by the way-side.

So, amid all the chaos, problems, uncertainties, new opportunities and setbacks, don’t forget for a moment how all your decisions and actions affect your customers. Neglect them and be prepared to pay a high price. Satisfy them and prosper.

(This article first appeared at www.entrepreneur.com – 2/23/10)


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Preview: Backbone – a better way for small business to manage workforce

by Vincent Chan on Jan 13, 2010

It’s not a secret that we are working on something cool in the past few months. I am extremely excited to tell you that our little startup company, Primitus, is almost ready to launch. One year ago, Primitus was only a dream. But thanks to our investors, it’s becoming a reality now. After getting some early feedback on Hacker News, we have decided to build our first product – “Backbone“, an easy and affordable Human Resource Management tool for small business. Today we announced that we’re just few days out from beta release.

Let’s show you some of the basic features, benefits, and a few screenshots.

Why?

We believe that traditional enterprise HR management systems are too expensive and difficult to use, especially for small business. Because of these reasons, many small businesses hack together solutions for many of their HR problems with Microsoft Excel, pen and paper, or nothing at all. We want to reduce the massive technology gap between large enterprise and small business.

In this talent age, companies with the best talent win. Small business cannot ignore the importance of talent management. We want to simplifies HR management so small businesses can focus on developing their talented workforce.

Unlike complicated enterprise HR systems, Backbone is built for small business from day one. It was created to make solving simple HR issues simple. We looked at the needs of small business managers, included the best features, and take away everything else.

Benefits

Below are some of the goals we want to accomplish with Backbone:

Help small businesses gain control over and do more with their workforce
– Give managers rich insights into their workforce
– Save time, improving HR operational efficiency
– Foster a more inclusive and collaborative culture
– Better retention and higher productivity
– Make information about company activities more visible, accessible and measurable

Twitter-like Microblogging Feature

Like Twitter and Yammer, Backbone allows users to post updates of their activities, follow others’ updates, and share great resources. Unlike Twitter and Yammer, Backbone also combines other business activities into the news feed. In the Backbone’s activity feed, users not only can see group and personal updates but also other business activities happening inside the application. In this way, managers can monitor all activity in one single place.

Employees Database 2.0

In the web 2.0 era, the old boring employees’ profiles don’t work anymore. Backbone tries to redefine what a worker’s profile should be. We make it easy to identify employees’ hidden talents through the tagging feature.

Analytic Dashboard

Our analytic reports help small business better understanding of HR’s overall performance and employee productivity.

Expense Reporting

Our application enable workers to take care of their own expense reports. Moreover, Backbone streamlines the processes for submitting and approving employee leave. Employees use it to view their absence balances, record their time off requests, and track the approval process of their requests. And managers can look at employees’ current, planned, and historical absence events; monitor absence trends as a predictor for employee engagement.

And more…

Company goals management, group management…etc.

Interested?

If you want to sign up for the private beta, simply go to our pre-launch page and fill out the sign up form:

http://backbonehr.com

The product is free during beta and we will donate $1 to Kiva.org for each qualified beta account. If you got a special demo invitation code from other blogs, you will get a special discount in the first year after the introductory period.

We look forward to hearing your feedback and incorporating your suggestions.

Thank you so much for your support!


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Success is All in the Attitude

by Bob Reiss on Jan 13, 2010

bootstrapping101This guest post was written by Bob Reiss (@bobsreiss), the author of Bootstrapping 101. Reiss is an Army veteran and graduate of Columbia University and Harvard Business School. He has been involved in 16 startups and is a three-time INC 500 winner. He has been the subject of two Harvard case studies and is a frequent speaker at University Entrepreneurial classes.

This article is based on the contents of the book Bootstrapping 101.

What’s important to the success of small-business owners and entrepreneurs? Knowledge, skill and talent.

However, many competitors have the same traits you do. The key to beating the competition and achieving success is mental, reflected in one’s attitude, totally controlled by the individual and requires no cash. This holds true in most human endeavors besides business–in sports, the arts and politics.

How many times have we seen the underdog team or player win over the more talented opponent? The difference is often attitude.

These 12 attitude attributes can put you in the right mindset for achieving entrepreneurial success.

  1. Have passion for your business.
    Work should be fun. Your passion will help you overcome difficult moments and persuade people to work for you and want to do business with you. Passion can’t be taught. When it wanes, as it surely will in difficult times, take some quiet time. Whether it be an hour or a week, take inventory of all the reasons you started the business and why you like being your own boss. That should renew your passion.

  2. Set an example of trustworthiness.
    People have confidence in trustworthy individuals and want to work for them in a culture of integrity. The same is true for customers.

  3. Be flexible, except with core values.
    It’s a given that your plans and strategies will change as time goes on. This flexibility for rapid change is an inherent advantage of small over large business. However, no matter the pressure for immediate profits, do not compromise on core values.

  4. Don’t let fear of failure hold you back.
    Failure is an opportunity to learn. All things being equal, venture capitalists would rather invest money in an individual who tried and failed founding a company than in someone who never tried.

  5. Make timely decisions.
    It’s okay to use your intuition. Planning and thought are good. But procrastination leads to missed opportunity.

  6. The major company asset is you.
    Take care of yourself. Your health is more valuable than the most expensive machinery or computer software for the company. You don’t have to choose between your family or your company, play or work. Maintain your health for balance and energy, which will, in turn, enhance your mental outlook.

  7. Keep your ego under control.
    Don’t take profits and spend them on expensive toys to impress others. Build a war chest for unexpected needs or opportunities. This also means hearing out new ideas and suggestions no matter how crazy they sound.

  8. Believe.
    You need to believe in yourself, in your company, and that you will be successful. This confidence is contagious with your employees, customers, stakeholders, suppliers and everyone you deal with.

  9. Encourage and accept criticism graciously. Admit your mistakes.
    You need to constantly work on convincing your employees that it’s okay–even necessary–to state their honest opinions even it if conflicts with the boss’s opinion. Just stating it once or putting it in a mission statement won’t cut it for most people.

  10. Maintain a strong work ethic.
    Your employees will follow your lead. It will also help you beat your competition by outworking them, particularly when your product or service is very similar.

  11. Rebound quickly from setbacks.
    There surely will be plenty of ups and downs as you build the business. Learn from the setbacks and move on. You can’t change the past.

  12. Periodically get out of your comfort zone to pursue something important.
    Many times you will feel uncomfortable in implementing a needed change in technology, people, mission, competing, etc. For the company and you to grow personally, you sometimes have to step out of your comfort zone.

Many organizational and leadership shortcomings can be overcome or mitigated with the good attitudes described above. All can be learned except passion, which comes from within. Take time out of your hectic schedule to periodically reflect on these attributes. You may be inspired to act.

(This article first appeared at www.entrepreneur.com-1/4/10)


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Jack Welch on Company Size and Success

by Vincent Chan on Nov 24, 2009

size

With all the hype about the advantages of small company size in recent years, does growing big really mean failures to your company?

Bill Taylor, cofounder of Fast Company, just wrote a great article on the relationship between size and success on his Practically Radical blog. He recently did an interview with Jack Welch, the legendary former CEO of General Electric. And one of the themes of their conversation was about company size.

While Jack agrees the disadvantages of big institutions, like waste and bureaucracy, he still believes managers and entrepreneurs should want their companies to get bigger. He said:

For one thing, it’s evidence that you’re winning in the marketplace. For another, it gives you the opportunity to bring in more people, which gives you access to more talent, which allows you to tap into more ideas, which you can then spread more widely – and start winning all over again.

In this talent age, which companies don’t want to get more brain power? But for many companies, managing talent is the hardest part. How can a company scale without suffering the costs of size? Jack has an answer for us:

“I want to be big, but then run the company like it’s the corner grocery store.”

Obviously, this sounds easier said than done. And some people even argue that GE was never run like a corner shop either. But that doesn’t mean it is unachievable.

In fact, there are many new companies which are BIG and SUCCESSFUL in the past decade. For example, Google, Amazon, Apple, Netflix, Salesforce, VistaPrint, Research In Motion, Zappos…etc. All these companies were started by a small team of people. But right now, they have thousands of workers, great corporate culture and tremendous success.

After all, IF you have the management skills and leadership to make your company remain quick, responsive, and flexible, why stay small? (Assuming you have an ambitious goal).

Don’t be remain small just because people think you are cool.

Start small. Grow big but remain agile.

In the future posts, I will dig into different strategies that help growing companies to become smarter and remain quick, responsive, and flexible.

Photo source: januszbc @Flickr


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