Two news stories have been running through my mind this week.

A few weeks ago Amazon announced their two new locations for HQ2. Queens and Northern Virginia. Both are already heavily populated and expensive places to live.

And, if we are being fair, those cities may not truly benefit from Amazon arriving. Time will tell of course, but a greater impact might have occurred had Amazon chosen a medium sized city.

I recall the madness/hope by city leaders all around the nation. They lobbied, made promises and petitioned for Amazon to arrive and help their city thrive.

I live in St Petersburg, FL and we have a growing tech scene. We also have an MLB baseball stadium with low attendance and in a prime part of the city. Our proposal to Amazon included tearing that park down and leasing the 80 acres at a reduced cost to Amazon. I’m sure other cities made comparable offers.

All in an effort for salvation from one company.

You hear the other side of it too. GM is closing five plants. Tens of thousands of skilled employees are now laid off. Those were good jobs, too, for the area.

They are the anchor companies that allow the baker, the book store and the banks to survive. When those plants came to those cities it was salvation. People had a job, benefits and could raise a family.

I understand that companies come and go. I firmly believe in the free market and realize that companies are not charities. They are profit driven and make decisions based on the bottom line.

My point to all of this is that cities cannot rely on one industry alone. They need diversity. Salvation is not found in any one company.

What do you put your faith in?

Image credit: Joe Wolf

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

In the dim past (1980s on) when I started working with startups they were carefully thought out, market sensitive/smart, with much of the effort focused on being able to sell the product, AKA, generate revenue, whether hardware or software.

They rarely needed to pivot.

The rise of the Internet/web/cloud/mobile and the falling cost of software development, with a focus on iterations and eyeballs, created a different approach and pivoting became the name of the game.

While ‘pivot’ has many definitions, the one that seems most accurate in many cases is “throw it up and see what sticks.”

According to Dilbert’s Scott Adams, this is how to do a startup today.

Here’s the system:
1. Form a team
2. Slap together an idea and put it on the Internet.
3. Collect data on user behavior.
4. Adjust, pivot, and try again.

Thanks to Google Analytics, Optimizely, Bitly, and other tools for measuring customer behavior in real time, a smart team can try different approaches and different products until something works out. A start-up in 2014 is a guess-testing machine.

Adams says this is why good founders have to be good psychologists.

Every entrepreneur is now a psychologist by trade. The ONLY thing that matters to success in our anything-is-buildable Internet world is psychology. How does the customer perceive this product? What causes someone to share? What makes virality happen? What makes something sticky?

Much of what Adams says makes sense, but are these the ideas or solutions that can recharge our economy, juice the job market or solve humanities ills?

Image credit: HikingArtist

Today we look at some interesting commentary on the state of the talent force (I positively detest the term ‘human capital’); some new and some seriously old.

Companies frequently hire from the outside based on the idea that new blood is good for the organization, but is it?

According to Wharton management professor Matthew Bidwell, “external hires” get significantly lower performance evaluations for their first two years on the job than do internal workers who are promoted into similar jobs. They also have higher exit rates, and they are paid “substantially more.” About 18% to 20% more.

Have you wondered if the job market will ever turn for more than the young tech-enabled? Maybe not quickly enough, but time does move on and demographics will not be denied.

A Human Capital Zeitgeist, is emerging as companies big and small are getting smacked with the realization that talent management is SO critical to competing in a volatile marketplace, they might actually have to throw a bit more respect at the “human” in the human capital equation.

This demographic time bomb isn’t new; it was recognized more than a decade ago, but managers’ ability to recognize, attract and retain talent has escalated dramatically, with the economic crash more like an attack of hiccups, than an actual change.

McKinsey declared the start of “the war for talent” in 1997. It has turned out to be a more or less permanent conflict. Revisiting their earlier work in 2001, the management consultants stated: “The war for talent will persist for at least the next two decades. The forces that are causing it are deep and powerful. The war for talent is a business reality.”

Do you believe that happy employees perform better? Not everyone agrees, although I freely admit I’m on the pro side of that argument.

Productivity measures across national economies have captivated the attention of policy makers and executives alike. Ultimately, though, the source of productivity is the individual knowledge workers who get things done every day. And the evidence is clear: People perform better when they’re happier. OR Happy employees tend to enjoy the status quo so much that they might resist changes to it. This is hardly a recipe for success in today’s world, where agility and embracing change are essentials for success.

Of course, no discussion of productivity can take place without including Elton Mayo and the Hawthorne Effect. Impressive experiments, since they are as relevant today as they were nearly a century ago.

What he found however was that work satisfaction depended to a large extent on the informal social pattern of the work group. … He concluded that people’s work performance is dependent on both social issues and job content.

Finally, no commentary on people and the workplace would be complete without something on the Millennials; the demographic the media and pundits keep insisting are completely different from preceding generations—but are they really?

“For the past 12 years, I have studied the so-called generation gap through empirical research, and have found that stereotypes of millennials in the workplace are inconsistent at best and destructive at worst.” ­­–Jennifer J. Deal, senior research scientist, Center for Creative Leadership

Flickr image credit: pedroelcarvalho

Certain subjects have been discussed and debated constantly over the years; today’s links are updates on four of them.

The first looks at the very sensitive subject of job, creation, loss and outsourcing, using Apple as its case study. (You may also find this op-ed companion piece of interest.

“All these new companies — Facebook, Google, Twitter — benefit from this. They grow, but they don’t really need to hire much.” –Jean-Louis Gassée

In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand.”

Then, of course, there is the ongoing debate on the effectiveness of managers; it started around the time the first hunting party organized to go after a wooly mammoth.

“It’s very tough to believe that there are such wide differences in management out there.” –Raffaella Sadun, assistant professor at Harvard Business School.

(Only someone who has never been in the workplace could make that statement with a straight face.)

The list of companies, not to mention executives, that have crashed and burned as a result of their lies is extensive and very public, while the number that are more or less opaque is uncountable. Is there truly a benefit for those that practice candor?

“In fact, the share prices of survey companies in the top quartile of CEO candor outperformed companies in the bottom quartile by 31%. For nine of the past 10 years, top-ranked companies have outperformed bottom-ranked companies on average by 18%.”

Finally, a disturbing look at the meritocracy called Silicon Valley.

“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

(Hat tip to Emanio CEO KG Charles-Harris for sending this to me.)

Flickr image credit: pedroelcarvalho

Talented managers are taking flack these days for not becoming entrepreneurs.

Whether hinted at or stated outright, their value is demeaned when they choose to stay in corporate positions and they are accused of wasting their talents when they could be out creating jobs by starting companies.

Kindly put, this is a crock.

As Andy Grove pointed out, after the first couple of years job creation is about the same in growth companies as large corporations.

Now Valley legend Esther Dyson, CEO of EDventure Holdings and an active investor in a variety of start-ups around the world, weighs in pointing out that without managers there would be no companies.

The real spur to job and value creation is not turning hundreds of college grads (or dropouts) into entrepreneurs, but hiring thousands – and hundreds of thousands – of people into growing companies that can organize and motivate them and make the best use of their talents.

Thank you, Esther!

This needed to be said by someone with a lot more clout than I have.

Startups are much like marriages.

In marriage, the real work starts after the bride and groom say “I do.”

In startups, the real work starts when the first “outsider” is hired.

There is a reason that very few founders build and run their companies—it’s not what they’re good at.

That’s why we should be celebrating managers with the talent and skill to build the company for the long-term.

Flickr image credit: HikingArtist

I never did understand the frenzy around startups and small biz as an engine for job creation, but I kept still—no one makes a fool of themselves intentionally.

Then last July I read an article by Andy Grove about what it takes to create jobs and my thoughts didn’t seem quite so ignorant. In September I read that after the first rush of hiring small and large companies are fairly even regarding job creation.

I also couldn’t understand the economic value of companies such as Groupon, Twitter, Zynga or even Facebook. I really couldn’t see how new ways to sell stuff was going to rebuild the middle class; it just didn’t seem that anything new and real was actually being created, but I didn’t broadcast those heretical views, either.

Now I’m seeing my heretical ideas voiced by people with cred.

So if this tech bubble is about getting shoppers to buy, what’s left if and when it pops? [Steve] Perlman [founder or WebTV] grows agitated when asked that question. Hands waving and voice rising, he says that venture capitalists have become consumed with finding overnight sensations. They’ve pulled away from funding risky projects that create more of those general-purpose technologies—inventions that lay the foundation for more invention. “…But they are building on top of old technology, and at some point you exhaust the fuel of the underpinnings.”

Beyond all this is the fact that selling stuff requires a strong middle class to buy it and even startups with real products aren’t contributing to the manufacturing jobs that underpin that same middle class.

“The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.” –Andy Grove

China and India are consumer powerhouses not because of their newly minted uber-rich, but because of their growing middle class.

Most of this has been said in one way or another, but it doesn’t seem to have sunk in. I certainly don’t have the answers, but I am sure that the conversation needs to become a lot louder before anyone notices, let alone takes action.

Image credit: Flickr

Article first published as No Help Wanted on Technorati.

Back in the late Seventies/early Eighties women who chose to stay home, as opposed to working, were, demeaned, called “traitors to the cause” and looked down on for their choice.

Which was stupid.

Today, people who don’t start their own companies or choose to work for established corporations are similarly treated.

Which is just as stupid.

Not everybody should be an entrepreneur; not everybody should work in a startup; and those choices do not reflect negatively on the quality of a person’s skills or attitude.

Choosing to work for an established company or large corporation does not lower people’s intrinsic value; nor does it mean they are dumb, lazy, unmotivated or uncreative.

Some see large company experience as a training ground, while for others there is pride in being part of something large and ongoing and they enjoy the camaraderie.

Some are looking for stability, although that is mostly gone, and some don’t really care as long as they can pay their bills—their job (paycheck) is not their career; that energy is focused on a passion that just doesn’t pay.

Even some entrepreneur’s think traditional jobs can be a better fit.

Just as thousands of intelligent, educated, driven, passionate, creative women chose to stay home and raise their kids, thousands of intelligent, educated, driven, passionate creative people choose to work for large companies.

As I said Tuesday, it’s about fit and “fit” isn’t a reason to judge.

We are all different; you need to find what floats your boat and do it—not do what others say should float it.

Stock.xchng image credit: http://www.sxc.hu/photo/1221230

Most entrepreneurs and early joiners don’t focus on the future when swept up in the excitement of being acquired, but that is an error if they believe in the long-term viability of their creation.

As with much of M&A what goes wrong is usually found in the two cultures—or rather in their mismatches.

MySpace is a great example of mismatched culture exacerbated by the loss of its champion’s focus.

MySpace wasn’t killed by Facebook, it was killed by a parent that sacrificed its future on the alter of immediate revenue and no understanding of its market.

But who is really hurt in this process?

Not the founders and pre acquisition employees who have the opportunity to cash out much, if not all, of their options.

Certainly not the original investors, who typically enjoy a high return on their investment.

Sometimes the acquirer, who may end up with losses that damage the corporate bottom line and a sale price below what was originally paid.

Certainly the current employees who are laid off.

But the true hurt, the hurt that lingers for the longest time is the hurt to our country’s competitiveness.

Small biz is wonderful, but small biz can’t drive the economy or create the jobs needed to rebuild our middle class. It is the startups that move from small biz to enterprise that do that.

The problem is that investors don’t care about anything except cashing out; entrepreneurs aren’t allowed to care if they want to and corporations just don’t get it.

Read the MySpace story; it’s a cautionary tale with multiple lessons for both entrepreneurs and acquirers.

Flickr image credit: http://www.flickr.com/photos/digallagher/4880167882/

What do you do when you graduate and can’t find a job?

What do you do when you’re laid off and can’t find a job?

What do you do when you hate the jobs you find?

DIY, better known as start your own business.

Whether building, rebuilding or remodeling a career, more and more people are opting to create their own.

Some do it out of necessity, as has been done in the name of ‘consultant’ in past recessions, but many are going for something larger.

They are doing it because they have a vision and are willing to back that vision with the 80 hour weeks and steep learning curve that it takes to be a successful entrepreneur.

They are coming together online and in person to learn from each other and often to help each other.

What happens when the statistics predicting that most businesses fail within five years are proven accurate? Or when the economy improves and business ramps up hiring?

Will these entrepreneurs give a collective sigh of relief and happily march off to toil for someone else?

Some will, but personally I think corporate America is in for a very rude awakening.

Flickr image credit: http://www.flickr.com/photos/dpstyles/5202530836/

I have only two items for you today, not because they are longer than typical, but because I hope they will stimulate your mind as they did mine.

First, a provocative essay from Andy Grove, Intel’s legendary CEO, now retired, but obviously not from thinking. In it, he explains why startups aren’t really an engine for job growth what actually needs to happen.

[New York Times columnist Thomas L.] Friedman is wrong. Startups are a wonderful thing, but they cannot by themselves increase tech employment. Equally important is what comes after that mythical moment of creation in the garage, as technology goes from prototype to mass production. This is the phase where companies scale up. They work out design details, figure out how to make things affordably, build factories, and hire people by the thousands. Scaling is hard work but necessary to make innovation matter.

The scaling process is no longer happening in the U.S. And as long as that’s the case, plowing capital into young companies that build their factories elsewhere will continue to yield a bad return in terms of American jobs.

Now for the real mind bender.

Are you familiar with the Singularity?

…the arrival of the Singularity — a time, possibly just a couple decades from now, when a superior intelligence will dominate and life will take on an altered form that we can’t predict or comprehend in our current, limited state.

At that point, the Singularity holds, human beings and machines will so effortlessly and elegantly merge that poor health, the ravages of old age and even death itself will all be things of the past.

Some of Silicon Valley’s smartest and wealthiest people have embraced the Singularity.

Read the article, read some of the links, think about the pragmatic, ethical, moral and religious aspects, then come back and share your thoughts.

Flickr image credit: http://www.flickr.com/photos/pedroelcarvalho/2812091311/