A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Amongst all today’s hype about unicorns Andrew Wilkinson stands out as a beacon of light and a voice of sanity for many entrepreneurs.

Wilkinson is founder/CEO of two successful companies, Flow and MetaLab.

He launched Flow in 2011 and has been growing ever since sans outside investment.

Although he has had talks with angels and VCs over the years he has no interest in taking money and has been publicly vocal on the subject.

He talks about being a horse, instead of a unicorn.

Meanwhile, there are thousands of internet businesses out there, quietly making tens, and even hundreds of millions of dollars, who have taken the same path as In-N-Out. They don’t need to be first, second, or even tenth, in their space, and have instead chosen to focus on a small percent of a massive market. They answer to customers, not investors, and focus on making their employees, customers, and themselves happy.

While In-N-Out is Wilkinson’s model, you can look to privately held SAS for a unicorn-sized software model.

SAS was founded in 1976; in not-quite 40 years it has grown to 13,660 employees who produced $3.09 billion in 2014 from 75,000 customer sites in 139 countries.

Whether the drive stems from the demands of the investor world or the need for instant gratification, Wilkinson’s attitude is a breath of fresh air.

Raising venture money is a high risk commitment to go big or go home, and it isn’t for everyone. It certainly isn’t right for me, but neither is the surfer lifestyle business. I’m somewhere in the middle, with the Snyders of the world. I’m not a unicorn, I’m a horse.

Give it some thought or, to paraphrase an old commercial, “try it, you might like it.”

Image credit: HikingArtist

FinTech, the wedding between finance and technology, is a hotbed of startups and innovation, especially in London. Now it’s lighting the fires of the investment community in Silicon Valley, so I prevailed on Ajo Fod, who knows the FinTech world well, first as a quant and now as an entrepreneur, to attend the Trading Show and share his observations with you.

I had the pleasure of attending Trading Show West Coast 2015: West Coast’s leading quant, automated trading and big data event last week. This is one of the most legitimate trading shows I’ve seen and truly geared to professionals.

The first thing that caught my eye, was the surprisingly large majority wearing business attire; I was expecting some confusion. Google tried to hold down the fort of casual-at-work and a few people were dressed in jeans, with long-sleeved shirts for good measure.

But finance won over West Coast causal even in San Francisco. My decision to dress in a brown suit and a tie was just the right measure down from full business dress.

I was impressed by the balance between different groups of professionals. Quants / traders / investors / hardware / risk management and students were all well represented.

Different scales of enterprise from startups to micro hedge funds to medium sized funds, such as AXA Rosenberg, to industry titans like BNY Mellon Financial and Blackrock were there, too.

The mix of speakers, from hardware tech providing fast access to markets to macro thoughts from Lex Huberts, was good, especially considering the audience.

Systematic trading and HFT is no longer about the fastest execution. The marginal advantage from trading faster needs to be weighed carefully against the cost of the infrastructure, while the ability to forecast farther into the future is significant.

Apparently, the fastest access to markets is provided by Algo Logic. They sell machines that race the path from tick data reception to placing trades in 1.2micro seconds!

They achieve this by storing the logic in hardware in FPGA (field-programmable gate array). They include trading logic and risk checks on the chip to achieve this kind of reaction time.

The speed is used to grab favorably priced orders before anyone else can. The winners at any speed tend to be the ones with higher algorithmic sophistication. The direction of development in this field tends to be about adding computing power to the FPGA.

The discussion on Co-location vs Cloud Servers focused on the tradeoff between speed and algorithmic sophistication.

Pravil Gupta of Quadeye Trading and Bert Shen from SuperMicro are both suppliers of HFT technology. The difference is that one is about more sophisticated but still very fast trading while the other is at the higher speed end of the spectrum.

Speed is not everything in the HFT world. The incremental speed edge costs significantly. While there will always be fast traders that grab obviously mispriced orders over a short time horizon, others will play the game of taking the not so short-term bet.

The roundtables covered a list of varied topics. As expected the round table audiences in the Bay Area were largely focused on state-of-the-art in Big Data and deep learning.

These technologies could be the future, but I don’t see as much profitable application of these technologies as there is hype.

FinTech startups seem to be numerous in data services for the finance industry. iSentium: works on estimating the sentiment of tweets. Another works on interpreting SEC filings. Strategies are being fed information faster to produce more efficient markets.

The past was a speed race. The future is going to be about more information used in smarter ways.

For example, Alpha Sangha, my startup, combines information from a variety of data-sources using complex models/algorithms that maximize profitability while filtering out noise.

Acronyms come and go, so here are three relatively new ones stay aware of.

BRIC : Brazil Russia India China
MINT : Mexico Indonesia Nigeria Turkey
ESG: refers to the three main areas of concern that have developed as central factors in measuring the sustainability and ethical impact of an investment in a company or business

Ajo Fod is the founder of Alpha Sangha, which helps companies optimize complex forecasting models or algorithms based on large quantities of past data while avoiding the common pitfall of noise. They can further increase profitability by mining for model/algorithm variants that are better fits based on historical data.

Ajo previously worked as a quant at BGI/Blackrock and Mellon. He has masters degrees in both Computer Science (AI) and Operations Research (optimization). He earned a BTech degree from the prestigious IIT-Madras.

Yesterday we looked at how our society moved from a culture of narrow connections to one of mobility and a broader acceptance of those totally unconnected to us to the current regression back to responding mainly (often only) to those to whom we are already connected — no matter how tenuous or irrelevant the connection.

In other words, we went from silos to free-range and back to silos.

Ola Joseph says, “Diversity is not about how we differ. Diversity is about embracing one another’s uniqueness.”

But today we reinforce our particular silos through social media.

Where once we were broadened, 21^st Century media provides the means to assure ourselves that our opinions are shared by both followers and followed.

Trolls aren’t new, either; they are the modern version of poison pen letters.

According to Auden, “Civilizations should be measured by the degree of diversity attained and the degree of unity retained.”

However, the anonymity of online communications allows us to unleash our thoughts with no civilizing or cultural leavening.

And so we join the ranks of trolls in one area, while bemoaning their existence in another.

Image credit: Roshan Vyas

For centuries the most important information upon meeting someone new was where were they from and who was their family.

Once that was known the involved parties would be able to figure out how they were connected; crucial information in order to do business or move forward with any kind of relationship.

Then World War II and the post war automobile culture changed our social structure forever.

Strangers met, formed businesses, fell in love and married — all without the introductions and recommendations of family, friends or other associates.

Fifty-plus years later we have reverted to our previous attitudes regarding introductions — now based on professional/personal networks, social media and the crowd-sourced opinions of strangers.

After attending a fintech conference (see his upcoming post Thursday) Ajo Fod, founder of Alpha Sangha, left a comment on KG Charles-Harris’s post regarding the help that entrepreneurs really need.

The most effective resource at this point in my start-up is introductions to the right people. Meeting them directly doesn’t seem to have the same effect as an introduction.

Entrepreneur of not, what can you do to offset a lack of introductions?

Here is what I told Ajo.

You are right in your analysis that the best connections are the result of introductions and this seems especially true when it comes to investors.

Partly it is a function of trust, i.e., I trust you because I trust the person who introduced us, which is ridiculous as I wrote in Who Do You Trust? in 2008 and KG touched on a couple of years ago in If the Shoe Fits: Facing Reality.

Beyond repeating what you already know, such as working your network, finding connections, etc., I suggest that you put part of your focus on developing your peer-and-below network, not just those who can directly help, by reaching out and helping them. One way to accomplish this is by responding on forums like Quora.

Use your expertise to build your visibility, so that even with no intro you will be a more known quantity when they google you.

Not great, but you have to start somewhere.

Image credit: George Tims

Few question the idea of emotional contagion.

It’s not a problem when the mood is upbeat, but what to do when it’s not fills volumes.

I found a way to short-circuit ‘emotional contagion’ decades before was named, defined and discussed.

I learned about it in my early twenties in a book by Napoleon Hill and it’s since been reiterated by others in various forms.

I’ve used and shared with clients and it rarely fails when done whole-heartedly and not just with lip service.

“Act enthusiastic and you will become enthusiastic.”

Sounds simplistic, but simple is often best — because this isn’t about finding the cause of your negativity, but preempting the contagion.

Accomplishing that means you need to stay aware of your own mood.

Long ago I realized that judging my mood based on its effect was a bad idea—by the time I had the feedback the damage was done.

After a lot of trial and error I found the easiest and most accurate method my mood early was to stay conscious of my facial muscles, wrinkled brow, smile, frown, etc., because my muscles react long before I’m aware of the mood that is affecting them.

I’m not sure why it took me so long to realize that, except that the obvious often zips right by us.

Image credit: ganeshaisis

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here

Have you ever been taken aback by the dichotomy between a company’s excellent product and its amateurish website or product sheets?

If you have, you are face-to-fact with an immature company.

And while important for consumer sales, M&S maturity is absolutely critical when selling to business — no matter the size of the enterprise.

This immaturity has nothing to do with years in business and everything to do with an immature business process with regards to sales and marketing.

If a potential customer meets something that’s immature, i.e., incompetent, in M&S, they will jump to the conclusion that the company is also incompetent in other areas.  

That’s why look & feel are so important — we Americans, unlike most other countries, have grown up in a society where marketing is central, so in many ways looks are more important than substance.

Young companies are often immature; they hire sales people, but turn a blind eye to the need for doing the product marketing work first.

The shrug off lead generation/creation, lead nurturing, sales process, sales collateral that fit the process, key selling points against competitors, target user profile, target influencer profile, etc., and, worst of all, customer service.

These are the real underpinnings for success.

A lot to cover; a lot to do, but the payoff is significant.

After all, you don’t want your target customers to dismiss you because you look immature, do you?

Over the years, certain posts I’ve written I seem to require reposting, because the subject keeps coming up; not investing management time in your self-starters is one of them.

Self-starter Does Not Mean Self-managed

When your company is new just how flat can the organization be? How well do “self-starters” manage themselves? These are crucial questions for startups and small businesses since how they are addressed can make or damage your company.

One of the first important outside hires made when a company is ready to grow is in sales. Today, founders are often technical with a biz type who handles sales and marketing. Unfortunately, technical people often have a tendency to think that non-tech jobs are no big deal, especially in sales and marketing.

They believe that hiring salespeople is no big deal—that as long as they have a good track record in their previous sales position and understand the product they can manage themselves.

If this sounds off base to you, you’re right, it’s not that simple. To use a real-life example, I had a client who thought that way.

Previous to hiring me this CEO hired a salesman, we’ll call him ‘Jack’, with a fantastic sales record selling to the same market.

The CEO personally taught Jack the product line and explained what the company was working to accomplish and then pretty much gave him free reign.

In the year Jack was with them he sold only two accounts, spent a good deal of his time on marketing and managed one large client.

In that year Jack’s commissions totaled only $15K.

When he left he went to work in a field completely unrelated to anything he’d sold before and in a market about which he knew nothing. In his first year at the new company he earned over 125K in commissions.

What was the difference? Management.

Based on his track record both the CEO and Jack assumed that he could manage himself. However, Jack didn’t have, and didn’t create for himself, the structure, accountability, etc., necessary to be successful.

When Jack left he admitted that although he had no knowledge or training in marketing, he spent substantially more time than he should have on it — but he had no choice.

After the CEO and I had fully analyzed what happened he concluded that the failure was 80-20, with the 80% his responsibility.

Hind sight is 20/20, and my client believes that if he had taken the time to do what was needed instead of expecting Jack to completely manage himself, that he would still be with the company and doing a spectacular job.

So remember when you hire that “self-starter” does not mean self-managed. Even the best will need direction, structure, and accountability in order to perform brilliantly.

Beyond that, tomorrow I’ll be sharing information Friday on the biggest sales error made by many startups and small companies.

Join me tomorrow to learn about the other major sales error made by many startups and small companies.

Image credit: iamwahid

Most of us crave acknowledgement when we do something well, I know I do.

Decades ago when I worked as a recruiter for MRI in San Francisco my boss, “Ray,” wasn’t big on that.

It’s not that he wouldn’t do it, he just never thought about it.

Acknowledgement wasn’t something Ray needed, so he was blind to its effect on others.

When he did give the kind of heady feedback that makes people hungry for more, you could see that he didn’t understand it.

Worse, more often than not, it came in response to what he was told — you literally had to walk into his office and say you closed the deal or got a new client to have it happen. 

But praise caught by fishing or out-and-out asking is not worth a whole lot when it comes to motivation.

Nor did he understand how to build a strong team; the kind that could put an ‘Office of the Year’ award on the wall.

I still remember his effort to create the same esprit de corps as “Jeff,” another MRI manager and good friend of his enjoyed.

The effort failed, probably because Ray considered Jeff’s approach rah-rah stuff — the kind of stuff he was known to disparage.

Ray’s problem was similar to many managers I’ve worked with over the years, i.e., he assumed others wanted to be managed in the same way he liked to be managed.

When Ray did try doing it differently it felt like a con.

Which it was, because he didn’t really believe in what he was doing.

Image credit: Jim Hammer

What exactly do people mean when they say they want to be paid fairly?

Generally speaking, people define “fair” relative to themselves and those around them.

Developers working in a small company don’t compare their salaries to the developers at Google or even to their bosses.

The comparison they do typically has two steps.

• First, they compare themselves to their peers, i.e., similar job, background, title, company, industry and location.
• Second, they compare their salary with the salaries of those they see as peers.

The comparison is possible because, no matter what company policy says, compensation is never really secret.

As long as salary differences are based on factual points, as opposed to charm, politics, or managerial whim, people will believe they’re being treated fairly.

Because they are.

Flickr image credit: Rennett Stowe