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If The Shoe Fits: Another Silicon Valley Myth

Friday, July 21st, 2017

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

5726760809_bf0bf0f558_mDo you believe that Silicon Valley is the best (only?) place to start a company? That there is some almost magical ingredient that isn’t duplicated anywhere else?

Many people do and more did back in 2010.

Demis Hassabis, co-founder of high-flying DeepMind didn’t believe the myth.

“I was born in London and I’m a proud born and bred Londoner. I obviously visited Silicon Valley and knew people out there and also I’d been to MIT and Harvard and seen the East Coast. There is this view over there that these kind of deep technology companies can only be created in Silicon Valley. Certainly back in 2010 that was definitely the prevailing view. I felt that that just wasn’t true.”

Investor Peter Thiel was one of the true believers.

“At that time he’d never invested outside of the US, maybe not even outside of the West Coast. He felt the power of Silicon Valley was sort of mythical, that you couldn’t create a successful big technology company anywhere else. Eventually we convinced him that there were good reasons to be in London.”

Hassabis convinced Thiel to invest; Google acquired it for $400 million, and DeepMind is still making AI history.

One of the major reasons Hassabis wanted to stay in London was the availability of incredible talent.

“One of the things was I thought it [staying in London] was going to be a competitive advantage in terms of talent acquisition,” said Hassabis. He went on to claim that there weren’t that many intellectually stimulating jobs for physics PhDs out of Cambridge at the time that didn’t want to work for a hedge fund in the city.

Unlike Silicon Valley which, in addition to its normal talent shortage, suffers a severe talent crunch in whatever tech is hottest.

Silicon Valley may be a great place to start a company if you are connected, but for the majority who aren’t there are plenty of locations that are just as good, if not better.

Of course, that depends on whether your goal is to found a company valued for funds raised, which is best done in Silicon Valley, or to found a company that is valued on actual revenue, which can be done anywhere.

In fact, for the latter, anywhere could even be preferable to Silicon Valley.

Image credit: HikingArtist

If The Shoe Fits: Expediency Is The New Core Value

Friday, May 5th, 2017

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

5726760809_bf0bf0f558_mThere is much talk these days about ‘values’ and how companies need to base their cultures on them.

Many say that “cultural fit” is used to discriminate against older candidates, people of color, and women.

And that’s likely true if the company doesn’t included diversity and meritocracy as an integral part of their core values.

One recently added core value that isn’t talked about is expediency.

Here’s a great example from Facebook.

On May First, Facebook was accused of sharing information on how/when to reach “emotionally “insecure” and vulnerable teens on its network.” Naturally, the company denied doing it, but just the fact that they can should be very disturbing.

Even if Facebook hasn’t allowed advertisers to target young people based on their emotions, its sharing of related research highlights the kind of data the company collects about its nearly 2 billion users.

Also on May first Facebook announced a new effort to fight fake news — definitely expedient considering how angry people are — better late than never.

Facebook has appointed a veteran from The New York Times to lead its news products division, which is responsible for stopping the spread of fake news and helping publishers make money.

Making money is the number one priority — no matter how often a company says otherwise.

That’s what underlies expediency.

And I doubt it will change any time soon.

Image credit: QuotesEverlasting

Golden Oldies: Pay For Performance

Monday, April 17th, 2017

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies are a collection of what I consider some of the best posts during that time.

Money. Everyone’s favorite subject that no one wants to talk about. Especially when it comes to work, as in, “what were you making previously” and “what are you looking for now?”  

Tomorrow’s post focuses on a new law enacted in Philadelphia and New York City that has the potential to change that entire, unwanted conversation, forcing managers/companies to focus on the future, as opposed to history.

Read other Golden Oldies here.

starIn a post last week I asked for opinions on the ideas presented in a series of articles in Business Week on managing smarter but especially one that claims that “treating top performers the same as weaker ones is ‘strategic suicide’” and said I would add my thoughts in a future post.

Bob Foster left two interesting comments (well worth your time to click over and read). Regarding pay for performance he tells the story of a company where everybody from the CEO down all quit.

“Taking on the task to salvage the company, I hired new people that met unusual qualifications: they had to be qualified for the job they were applying for; they had to be unemployed and available immediately; they had to work at sub-standard wages; they had to work while knowing the company could close at any minute; and they had to work without supervision. The team that came together produced a highly successful company, and it was not because of high pay, or performance bonuses (there were none). The team stayed together, and performed, because of mutual respect, trust, appreciation, and consideration—people were ‘valued.’ To me, this is the truest form of ‘pay for performance.’”

I agree that trust was one of the key ingredients in what Bob accomplished, but it wasn’t the only one—or maybe I should say that it needs to be based on fairness and honesty.

Bob says the pay was ‘sub-standard’, but I assume that it was universally sub-standard relative to position and experience. If he had chosen to pay part of the team, say 10% more than their peers, the team wouldn’t have coalesced.

And that is exactly why I disagree with the idea of paying top performers, AKA stars, big sign-on bonuses or higher salaries than their peers.

  • Based on my own experience, 98% of star performers become stars as a function of their management and the ecosystem in which they perform. Change the management, culture or any other parts that comprise that ecosystem and the star may not survive.
  • Just as a chain is as strong as its weakest link there is no star in any sport, business, media, etc., who can win with a team that is subject to constant turnover and low morale.

Consider this common example.

Two people are hired at the same time with the same background, same GP0 and similar work experience, but with the one exception. One graduated from a ‘name’ school and the other from a community college. Starting salary is $50K, but the manager adds a 20% premium to the first candidate’s offer on the basis that she must be better to have gone to that school.

Neither candidate lived up to their potential because the manager made poor choices. In doing so he set both up to fail but for different reasons; one thought she had it made and the other that he was low value.

Merit bonuses fairly given for effort above and beyond acceptable performance levels make sense as long as they don’t come at the cost of developing new talent.

But one problem with ‘pay for performance’ is the pay often comes before the performance, but there are others and I’ll discuss them more Thursday. In the meantime, here are links to five posts from 2006 that give more detail on the trouble with stars.

Stars—they’re in your MAP

More about stars and MAP

Rejects or stars?

Star compensation

Retaining Stars

Image credit: sxc.hu

There were several interesting comments on the original post; check them out.

Ducks in a Row: How Facebook Stepped in the Poo

Tuesday, August 2nd, 2016

https://www.flickr.com/photos/44412176@N05/4197328040/

Facebook really stuck its foot deep in the doo doo pile when it claimed its racial diversity numbers, which are even worse than its gender diversity stats, are the result of a lack of qualified candidates.

What is really going on is the very real human desire to hire “people like me,” but using “cultural fit” as an excuse for their bias.

In a post shared widely on social media, the computer science student and iOS developer took Facebook and its Silicon Valley peers to task for focusing on whether potential employees are a “culture fit” — an ambiguous gauge often used to defend discrimination.

But that, of course, depends on what is meant by culture.

Culture is a reflection of the founder’s/company’s actual values — values equaling stuff such as how customers are treated and whether politics will rule over merit.

Culture is not a function of perks — or it shouldn’t be.

“Most of tech recruiting is currently not built to look for great talent,” wrote Thomas in her post.

“I’m not interested in ping-pong, beer, or whatever other gimmick used to attract new grads. The fact that I don’t like those things shouldn’t mean I’m not a ‘culture fit’. I don’t want to work in tech to fool around, I want to create amazing things and learn from other smart people. That is the culture fit you should be looking for.”

You wouldn’t necessarily expect tech, with its penchant for data-based decisions, to cherry-pick the stats, but Facebook is an amalgamate of human beings and their biases, so it’s not that surprising.

Then, of course, there’s the data — which you’d think a company like Facebook, reliant as it is on algorithms, would’ve parsed before blaming education for its diversity ills. There simply isn’t a pipeline problem as long as there are twice as many black and Hispanic computer science graduates as there are actual hires from these minority groups.

So, once again, the old programming saying ‘garbage in/garbage out’ proves true.

A perfect summing up of Facebook’s, and tech-in-general’s, “no pipeline” excuse.

Flickr image credit: gorfor

If the Shoe Fits: Seeing the Forrest, but not the Trees

Friday, August 15th, 2014

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

5726760809_bf0bf0f558_mSince Spring the media has been sharing stories and statistics about the rampant sexism, ageism and general bigotry in tech, its self-proclaimed “meritocracy” and the amazing male hyperopia (farsightedness) that seems almost incapable of recognizing bigotry in themselves or those close to them.

Y Combinator President Sam Altman and founder Paul Graham are a good example.

Last month Altman posted the importance of eliminating the gender bias in tech and Silicon Valley in particular, and that people need to stop pretending.

“One of the most insidious things happening in the debate is people claiming versions of ‘other industries may have problems with sexism, but our industry doesn’t.'”

He cited Y Combinator’s track record of accepting women founders into the incubator as proof that it isn’t sexist.

He did not, however, explain Graham’s statements in May that he doesn’t fund founders with strong accents or women who have/want kids.

Altman thinks HR can be a solution.

“Our sense is that many will benefit by doing it [human resources infrastructure] earlier. Traditionally, startups have thought of HR as a drag on moving fast and openness, but a well-running team is one of the best assets a company can ever have.”

However, the dozens of women who work for established companies with plenty of human resource infrastructure and have shared horrific stories on platforms from Whisper to Fortune are proof that rules don’t work.

The real solution in any company, from startup to Fortune 50 is a founder/CEO who backs a culture that is blind to gender, age and color and, most importantly, walks the talk, both professionally and personally.

This puts you, as a founder, in a position to truly change the working world.

Image credit: HikingArtist

Ducks in a Row: When Will It Change?

Tuesday, May 20th, 2014

https://www.flickr.com/photos/geordieenigma/2725675007/

The recent conversation I had with a group of managers was both eye-opening and depressing.

The managers were from a variety of companies, from startups to enterprise, most at mid-to-senior level.

They ranged from late twenties through fifties and, although not intentional, all were white.

The subject was diversity/inclusiveness.

Without exception, they claimed that their organization really was a meritocracy and that the media stories of gender/racial prejudice, especially in tech, were overblown or untrue.

Several commented that there was no real research that proved bias.

I pointed out a recent rigorous study that showed that the prejudice started long before careers.

Our analyses, which we reported recently in a second paper, revealed that the response rates did indeed depend on students’ race and gender identity.

I almost laughed when several held the tech startup world up as an example of how meritocracy worked, since nothing could be further from the truth.

The sad part is that they are good managers whose organizations are meritorious—at least in comparison to most.

I’m not sure if it’s naiveté, ignorance, wishful thinking or secret agreement, but when the people doing it right assume everyone else is, too, nothing will change.

Flickr image credit: Geordie Hagan

Entrepreneurs: How High is Networking ROI?

Thursday, September 26th, 2013

http://www.flickr.com/photos/davidorban/3275759439/Hey entrepreneurs, you heard it here from a founder a year before another founder said it in Fast Company.

“It” is the time you waste at so many of the events dedicated to startups and the personalities that populate the entrepreneurial ecosystem.

Networking is presented as the great equalizer; providing situations that are supposed to bridge the chasm faced by new founders and those with well-connected Rolodexes.

But believing that is in the same league as believing in Santa Clause, the Easter Bunny, the Tooth Fairy or the Silicon Valley Meritocracy.

There is no way to minimize the intensity and energy—mental, physical and psychical—involved in founding and building a company; the most likely result of adding networking to the schedule is faster burnout and more damage to your other relationships.

One of the most important skills a founder (or anyone) needs is the ability to prioritize.

To that end, skip the networking and at least 70% of the time you spend on social media and spend it on high ROI actions, including time with family and friends.

You’ll be glad you did.

Flickr image credit: David Orban

If the Shoe Fits: The Myth of Meritocracy

Friday, August 30th, 2013

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

5726760809_bf0bf0f558_mThose who like to believe that tech is a utopian-like meritocracy need to wake up to reality.

Silicon Valley is indeed a meritocracy for those to whom these criteria are not hurdles. But others—the blacks, women, and Hispanics whom it overlooks—find it an elite private club from which they are excluded. — Vivek Wadhwa (see the entire article series here)

According to Mitch Kapor, who founded Lotus and (for those of you who are too young to remember) sold it to IBM in 1995 for $3.5 billion, the idea that all it takes is hard work and a god product to be a success in the Valley is pure fantasy.

“There’s an admirable belief about the virtues of meritocracy – that the best ideas prove the best results. It’s a wrong and misguided belief by well-intentioned people.”

The idea that merit matters goes further down the drain when you see comments, such as the most recent one from Paul Graham of Y Combinator fame.

One quality that’s a really bad indication is a CEO with a strong foreign accent. I’m not sure why. It could be that there are a bunch of subtle things entrepreneurs have to communicate and can’t if you have a strong accent. Or, it could be that anyone with half a brain would realize you’re going to be more successful if you speak idiomatic English, so they must just be clueless if they haven’t gotten rid of their strong accent. I just know it’s a strong pattern we’ve seen.

Or this comment.

I would be reluctant to start a startup with a woman who had small children, or was likely to have them soon. But you’re not allowed to ask prospective employees if they plan to have kids soon…Whereas when you’re starting a company, you can discriminate on any basis you want about who you start it with.

Kapor now runs Kapor Capital, a for-profit venture firm focused on funding minorities whose ideas are focused on improving opportunities for the poor through education, sees the world very differently.

“We have a responsibility to give people opportunities to do what they can do. It’s a fundamental tenet of democratic society. Libertarians who believe in a completely minimalist state, and don’t feel we have that responsibility, are harming humanity.”

Choosing a role model is a private decision. 

Who will you channel? Mitch Kapor or Paul Graham?

Image credit: HikingArtist

Ducks in a Row: Red Hat Culture

Tuesday, April 9th, 2013

http://www.flickr.com/photos/ny-insurance/6813596277/These days most CEOs acknowledge the importance of culture.

Most incoming CEOs either want to protect and extend that current culture (think Apple) or radically change one that isn’t working (think Yahoo).

There is also a percentage that want to revamp the culture in their own image even whether the current culture is working (think Home Depot) or not (think Penney’s, which I wrote about last month, and that just fired their ex Apple CEO yesterday).

Red Hat CEO Jim Whitehurst was in the first group when he joined in 2007, but it was a real stretch (more like an unexpected bucket of ice).

He came from Delta Airlines command and control culture to a cultural meritocracy based on an open source mindset.

He calls it a “meritocracy” meaning leaders arise based on their brains, not their spot on an org chart.

The chaotic nature, the fact that people can call me up whenever and often call me an idiot to my face. We yell and we debate and we have these things out. Our culture matches the culture around open source, so the people who want to be involved in open source feel at home.”

The proof that it works is in the pudding of revenues and retention.

Red Hat, the first and only open-source software maker to crack $1 billion a year in revenues, is growing like mad.

The company has about 5,700 employees now, hiring about 1,000 workers in 2012. It will hire another 600 to 800 in 2013.

Yet the attrition rate of his R&D group—the company’s biggest group of engineers—is only 1.5%, compared to an industry average of about 5%.

Those are numbers any CEO would be bragging about, no matter what industry.

While merit rules and open source attitudes are sacred, Red Hat is in no way a democracy.

Red Hat still has managers and those managers are still responsible for decisions.

“It’s about transparency not democracy, I can make wildly unpopular decisions and at times I have to do that … as long as I have gotten feedback and articulated my reasons clearly, I can do that.”

It doesn’t need to be. People don’t want to work in a company where decisions are based on majority rule; what they want is to be heard.

They want to know that their colleagues, whether bosses, peers or subordinates, will listen to them and discuss the merits of their thought/idea/complaint no matter who they are or what they do.

Even if you didn’t click any of the above links be sure to check out these 12 Red Hat Management Tips.

The more you implement them the more things will change or, as I keep telling clients, to change how they act change how you think.
Flickr image credit: Dave Lobby

When Will They Ever Learn?

Wednesday, April 3rd, 2013

http://www.flickr.com/photos/wissenstransfer/7648831920/I was going to call this post “How to Make Money,” but then I remembered the lyrics from Peter, Paul and Mary’s hit song and decided it was a much better title.

After all, diversity of all kinds is a war and it’s one being lost in companies every day, whether they are old line industries or the supposed meritocracies of the tech world.

And not just diversity in the form of race and gender, but in terms of management.

Funny how so many companies that don’t “get” the need for a great culture that spawns a happy, therefore productive and innovative, workforce also don’t get diversity in fact.

They all get happy and diverse in theory and in talk, but unfortunately theory and talk frequently never make it to fact.

The facts, however, speak for themselves.

Analyzing the performance of Fortune’s “100 Best Companies to Work for in America” over a 28-year period, the author found that these firms generated higher yearly stock returns than comparable companies not on the list. They also systematically beat financial analysts’ earnings estimates, an indication that job satisfaction is an important variable that the market does not fully value. –strategy+ business (free registration required)

And the real numbers of the future carry their own warning.

The figures highlight the rapid growth in the Hispanic and Asian populations, both of which have surged by more than 40 percent since 2000. Hispanics were 16.7 percent of the population in July 2011 and Asians were 4.8 percent. The black population has grown 12.9 percent since 2000 and makes up 12.3 percent of the nation. Non-Hispanic whites rose only 1.5 percent from 2000 to 2011, slower than the national growth of 9.7 percent, and are now 63.4 percent of the population.

It also turns out that hiring those pesky females in senior positions and putting them on your board pays off handsomely.

Over the past six years, companies with at least some female board representation outperformed those with no women on the board in terms of share price performance, according to the latest study by the Credit Suisse Research Institute.Credit Suisse

But the stats I really love come from Dr Genevieve Bell, a Social Scientist/Anthropologist at Intel Corporation.

So it turns out if you want to find out what the future looks like, you should be asking women. And just before you think that means you should be asking 18-year-old women, it actually turns out the majority of technology users are women in their 40s, 50s and 60s. So if you wanted to know what the future looks like, those turn out to be the heaviest users of the most successful and most popular technologies on the planet as we speak.

So for all those stuck in the command & control past or believe, as Carl’s and TV advertisers do, that the world actually turns on 18-34 years old males I suggest you update your prejudices and get with the program.

Flickr image credit: Tanja Föhr

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