Don't Waste A Mistake!

Something that a lot of good parents know is that you gotta let your kids make mistakes. In fact, that's the only way they can learn and grow as confirmed by years of research in developmental psychology (see, e.g., Remember, Mistakes are for Learning).  It's no different for adults either. Nonetheless, when we as entrerpeneurs are in the midst of startup activity, with all the confidence, optimism and forward-looking stamina in the world, we tend to try to brush the mistakes aside (if not under a rug) and move on. Who's got time for all that when you are trying to disrupt the course of mankind?

Problem is, without learning from mistakes we are bound to... you know the rest. So, how do we reconcile the desire to rapidly move forward while also learning from mistakes?

The magic solution to this dilemma is in that elusive notion of "startup culture" that I have been referring to many times in this blog. If your culture is one in which mistakes are punished and viewed as shameful and reflective of your worth as a team member, or worse, human being, good luck to you. You will be chasing your tail to infinity.

On the other hand, a culture that welcomes mistakes as opportunities to learn and grow from tends to be one in which not only innovative ideas find roots, but also find the optimal path(s) to grow among the many good and bad possibilities. Our attitude towards mistakes is what determines our ability to learn from them. Again, there is ample research data to confirm these in case you are interested (see, e.g.,  )

Here is an excerpt from Better by Mistake: The Unexpected Benefits of Being Wrong by Alina Tugend that captures some components of a productive, healthy attitude towards mistakes as applicable to parenting as it is to running a startup:

There are no simple fixes, but there are ways all of us can shift our thinking about mistakes. Starting with our children, we can emphasize effort and deemphasize results. We can appreciate that we -- and they -- can't be perfect, nor is it a goal we should aim for. We should strive to do our best, but if the prize is ever-elusive perfection, then the fear of failure will too often overshadow the willingness to experiment, take risks and challenge ourselves. We should be careful of the contradictory message that it's all right to make mistakes but not where it counts...

Assuming you have bought into the idea that it is better to learn from mistakes than to shove them under the rug, here are some practical steps you can take in that direction when encountering a mistake (be it a bug in your release, catching spelling errors in your expensive ad campaign, misplacing an important document, etc):

1. Always be grateful when a mistake is found. Catching it later would have been worse at the least.
2. Express your gratitude and make sure your body language confirms that.
3. Don't focus on who is responsible, but for what went wrong.
4. Shed light on the situation in a collaborative, problem solving session focused on learning
5. Brainstorm on ways to catch that kind of mistake earlier in the future
6. Focus on learnings and action plan moving forward

Some other quick, noteworthy readings on this topic include:

Fred Wilson's Don't Let a Good Crisis Go to Waste
Jessica Stillman's Don't Let a Good Mistake Go To Waste

The Startup of You

Anyone interested in having a fulfilling career ought to read The Startup of You by Reid Hoffman, one of Silicon Valley's exemplary and visionary entrepreneurs behind successes such as Paypal and LinkedIn.  However, if you don't have time to ready the book, take a quick look at the following slides which do a phenomenal job of delivering the key messages in the book.  ENJOY!

Start-up of You, Visual Summary from Reid Hoffman

Yup, Culture Is Usually the Real Culprit!

It has already been a great year so far.  Many blessings on the family front have kept pace with new intellectual pursuits and personal growth opportunities, all resulting in a flurry of 24/7 excitement and activity around my neck of the woods.

Amongst all that excitement, I still couldn't help but take special personal delight in reading Brad Garlinghouse's recent post on LinkedIn, "What I got wrong in the Peanut Butter Manifesto". Brad, a visionary ex-Yahoo executive wrote the now-legendary "Peanut Butter Manifesto" six years ago, a leaked internal memo in which he pointed out "lack of focus, accountability and decisiveness" as Yahoo's critical problems at that point. He aptly prophesied Yahoo's talent exodus and steady subsequent decline in relevance in the world (until Marissa Mayer).

Now, with the benefit of hindsight and reflecting on his role as the chief executive of YouSendIt, Brad has a revised perspective. Namely, he is now convinced that the problems he pointed at Yahoo were mostly symptoms of a much deeper ailment, one that we could summarize as lack of an entrepreneurial culture:

[Yahoo's] core culture no longer encouraged and celebrated innovation with the same zest and ardent ambition to change the world—too often this had been displaced by half-hearted maintenance of the status quo.

...Great products don’t come out of thin air. They are an outcome of environments where innovation can thrive and talented people are encouraged to be bold.

Sure, one-hit wonders can happen anywhere, but companies that stand the test of time all recognize a fundamental truth: great people build great products and great people gravitate towards great company cultures. The startup culture that Steve Jobs created at Apple to transform a declining computer manufacturer into the creator of era-defining products is an obvious example.

...If a business has to be told that it needs more focus, accountability and decisiveness, there is a bigger problem at hand. Truly successful businesses encourage these qualities innately by creating and fostering a culture that inspires each individual to perform at their peak and rewards passion and results without peanut buttering the end of year bonus.

As I had previously written, the right culture within your organization serves as a success accelerant. The existence of an innovative entreprepeneurial culture is as electrifyingly palpable as its lack is stultifying and stale. But it does not come about by accident. It requires deliberate, relentless acts by the founding team. And it leaves its fingerprint throughout the organization, from the arrangement of desks, to employment policies, perks and benefits, allowed play time, hours worked, mission statement, and even the actual product(s) produced.

As founders, what are some of the things you do to maintain the entrepeneurial culture within your startup? How has that culture helped you achieve your goals?
 

Like it or not, "culture" determines your priorities!

I wrote previously on the virtues of culture as a startup accelerant (by reducing organizational inefficiencies, culture paves the path for exponential growth). However, I left out a crucial effect that culture has on shaping the startup's actual output: namely, that the startup culture manifests itself in the products & services the startup creates.

Here is how:

The entrepreneurial process is the result of making prioritized decisions based on a seemingly infinite set of tasks. Anyone who has spent time at a startup is familiar with the overwhelming (and ever increasing) amount of tasks that can only be tackled in a prioritized fashion in order to make any real progress. The Product Managers are especially familiar with this, as they typically own this process as far as the startup's actual product features and specifications are concerned. They are the stewards of an iterative process that starts with the collection and collation of inputs from various stakeholders inside and outside the organization (including employees and end users), and ending with assignment of the most important tasks to developers and engineers for the upcoming sprint/release cycle.

The most important part of this iterative process, however, is everything that happens in between: Namely, the assignment of prirorities to the requests. And that is exactly where culture comes in since much of the priorities are driven based on the cultural underpinnings (i.e., the "gut instincts" and "feelings") of the organization. Tasks that "feel" important and critical find their way to the top of the list, and those that don't pass the gut check, keep getting relegated to the bottom of the backlog.

To the analytically inclined amongst us, however, the above may sound too fuzzy and perhaps even irrational, as they may object that a responsible Product Manager should primarily focus on the impact of various tasks on the key performance indicators or core metrics of the Product, and leave all emotions and feelings aside. However, even though I firmly believe in the importance of metrics, I have come to view that kind of rigorous analytics in product development as more or less an illusion.

There are many reasons that metrics alone cannot lead to real product decisions: First, the immediate impact of most development tasks is best an estimation and not known prior to release; second, there is usually more than one metric that is impacted by any given product change, and most organizations don't have a strict formula for how to trade off various metrics against each other; third, long-term impact of most product changes are inherently unknown; forth, most startups do not have a formula on how to weigh long term effects against short term effects; and so on and so forth. Product decision makers are dealing with very complex, multivariate issues, things far beyond the capability of the human brain. There is mounting evidence from experimental psychology that it is exactly situations like this where our emotional brain kicks into gear, and helps us make decisions based on our values (for a highly engaging and informative survey of the latest research in this area, I encourage you to read How We Decide by Jonah Lehrer).

And that's exactly where the startup culture makes its imprint on what it produces.

For instance, if "user experience" is important to the culture, then things that help the user's experience will become prioritized, at times even at the cost of some core metrics such as revenue or profits. On the other hand, if "fast growth" is in the startup DNA, then you will see tradeoffs that put at risk user experience and even long term financial viability of the organization.

This is why the role of founders as the guardians of culture is so critical to the success of startups!

Culture As Startup Accelerant

After all is said and done, culture is the glue that holds a society together, enabling it to overcome all sorts of difficulties. The importance of culture, however, becomes magnified in a startup setting, as succinctly put by Nilofer Merchant in a recent post on Harvard Business Review's blog:

Success is a function of Purpose, Talent, with a Culture accelerant. Or: S = (PT)^C

Culture drives that much-valued-yet-elusive exponential growth that every founder dreams for their startup. Without that certain culture, no matter how many smart and talented people you gather around the table, and regardless of how great the mission you embark upon, you are unlikely to succeed. Why? Because all those well-intentioned smart people start getting in each other's way, and sooner or later, end up sabotaging each others' efforts rather than leveraging one another, and thus slowing progress, innovation and growth.

I must admit, I have never seen a successful startup whose employees detected the existence of a "bad" or "disfunctional" culture, and plenty of unsuccessful ones where that was exactly something (perhaps the only thing!) employees could agree on.

Culture is exactly why the founders are critical to the success of their startups: They are the ones who set the culture (just by sheer chronology of events) and can either maintain or destroy it over time (just by sheer action or inaction over time). Founders who are unaware of the critical role they play in fostering a productive culture within their startups have some very hard lessons to learn. The following are some examples of "peopley stuff" (Nilofer's phrase) that founders have a direct impact on:

• Level of trust between employees
• Level of collaboration among employees
• Time spent on politics and CYA stuff by employees
• Attitude towards risk and innovation by employees
• General good-will of employees towards success of enterprise
• Hours that employees put in at work
• Hours that employees work during the week
• Hours that employees dream about work (in a good way)

And this is just scratching the tip of the iceberg!

Manufacturing Entrepreneurs

I think every politician/economist in the world has by now accepted the fact that entrepreneurship is vital to long-term economic growth and prosperity. Much less understood, however, is how one would best go about creating more entrepreneurs in the society.

Do you create more entrepreneurs by copying "Silicon Valley" (whatever that means)? Do you do so by pouring more money into science education and R&D? Or by giving more tax incentives for engaging in entrepreneurial activities? Or is a liberal-arts education the missing ingredient, as Vivek Wadhwa recently suggested in The New York Times and TechCrunch?

As an entrepeneur with a liberal arts background (Philosophy, Economics, and Law), I do firmly believe that having had some exposure to the liberal arts is of great value in leading a well-rounded and grounded life. However, when it comes to entrepreneurship, I am not sure how much credit I can justifiably give to my liberal arts training.  As a matter of fact, I think the role of financial incentives, sciences as well as the liberal arts in creating more entrepreneurs in a society is quite limited at best. In other words, they may be considered necessary conditions for more entrepreneurship, but by no means sufficient. This is supported by existence of plenty of countries/states/regions/universities in the world that produce excellent scientific and liberal arts scholars and provide lots of tax incentives for entrepreneurial activities (such as in Canada), but those efforts do not produce the desired entrepreneurial activity in the target population who opt for more traditional career paths.

Why? Because the emphasis on  individual incentives and particular college degrees misses the essence of entrepreneurship, which is fundamentally a social activity and therefore mostly influenced by the prevailing culture. Some cultures (be it within a society, a company or a single family) kill entrepreneurship desires while others nurture and grow it.  In my experience, entrepreneurship only thrives in a culture that is forgiving towards those who fail at taking entrepreneurial risk.

Wherever I have seen strong cultural punishments (e.g., guilt, shame, etc.) associated with failed entrepreneurial endeavors (as in Canada, Germany and so many other societies), entrepreneurship has been stifled. Conversely, the culture in Silicon Valley intrinsically celebrates and values taking entrepreneurial risks. Having had near-hits with one's past ventures, in the Valley, is something to be proud of (even brag about) rather than hide. Behind most successful Valley executives and entrepreneurs is usually a trail of failed prior attempts. Counter-intuitively to outsiders, past misses make an entrepreneur even more "fundable", as those experiences are deemed invaluable to VC's and Angels alike.

Regardless of whether the Valley mindset was created by amazing foresight or sheer historic accident, it is apparently exactly what our mammalian brains need to take on risk. According to a recent psychology experiment recounted by Jonah Lehrer on his blog, our brains' pleasure centers hardly distinguish between almost winning and actually winning, which explains why so many people flock to Vegas and actually enjoy throwing hard-earned cash at one-sided gambles. He goes on to provide an evolutionary explanation:

Why would the mammalian brain be designed this way? One answer is that we didn’t evolve for Vegas. Rather, near misses help us stay motivated when engaged in activities that require actual skill, and not dumb luck. Let’s say we’re learning to play basketball. At first, our shots are going to be all over the place, a seemingly random distribution of bricks and airballs. And yet, as we slowly get better, those shots will get closer to the rim. A few might even go in, which is pretty thrilling. The purpose of near misses, then, is to keep us motivated while we slowly improve our form. If we only got excited by makes, we’d quickly give up, which is why the brain also needs a mechanism to register progress.

Now imagine that you lived in a society where everytime someone missed the basket during training or in a game, they were boo'ed off the court or worse yet, threatened that they could never play basketball again. How many star basketball players would that society produce?

Just like in professional sports, entrepreneurship requires "actual skill, and not dumb luck." If the culture discourages risk taking entrepreneurial endeavors by punishing those who fail at it, then you start messing with those brain centers responsible for motivating people to become entrepreneurs in the first place. In which case, no amount of rewards, tax incentives, scientific or liberal arts education can motivate people to get in the game and start practicing.

Entrepreneurship Lessons from Seinfeld

I have always been a great fan of Cosmo Kramer in Seinfeld, and now I know why. But before I get into that, I would like to start this post by repeating a question that is on our collective minds these days:

WHY ON EARTH HASN'T ANYONE BEEN ABLE TO 'PLUG THE DAMN HOLE' YET AND AVERT ONE OF THE WORST ECOLOGICAL DISASTERS OF OUR TIME?

Has no one ever really thought about a solution to this kind of problem? Not even someone at BP? It is hard to believe that this is such a mystery, especially when you compare this problem to so many other, much more complex obstacles that mankind has been able to overcome with flying colors (say, putting a functioning robot on Mars as an example!), not to mention the fact that even celebrities (e.g., James Cameron) seem to have their version of the solution to this problem these days. And when you put all that together with the fact that BP has almost infinite resources as the fourth largest company in the world (prior to this accident), things don't quite add up...

Anyhow, this Gulf oil spill crisis reminds me of one of my main takeaways from my experience in the venture capital world: That there is a BIG difference between an inventor and an entrepreneur, and that the valley between innovation and entrepreneurship is filled with the rotting corpses of innumerable great ideas that never see the light of the day.

I am convinced that the proverbial "mad scientist" dwells in the minds of each and every one of us, and although our innovative scientist comes up with great solutions to everyday problems as we encounter them, most of us rarely ever do anything about them. And the same exact phenomenon happens all over the world in academia, corporations, startups, governments, oil companies... you name it! People constantly come up with great ideas, and those ideas are soon shelved (or less affably, tossed) in the circular file.

Given this overabundance of brilliant ideas, the question really becomes Why aren't these solutions put into practice, productized, or mass marketed? Just like the Gulf oil spill, there are so many "unsolved" problems out there, and the solutions aren't there not because no one has figured out the solution in their head/lab/company/department, but because no one has so far effectively executed on the solution.  It is one thing to innovate and to find the answer to a problem, but it is a completely different thing to breathe life into that innovation and to bring it to the market, which is the essence of what we call "entrepreneurship".

In that sense, Seinfeld's Kramer was a true entrepreneur despite his crazy ideas (remember, he actually made his Coffee Table Coffee Book and it eventually became a movie!), whereas the main character, Jerry Seinfeld, was at best a mere innovator, with tons of opinions and brilliant insights into everyday problems, but never really doing much of anything about any thing (but I suppose we can forgive him, as he was just a comedian after all).

The Gulf oil spill tragedy, and many other everyday tragedies resulting from unsolved questions, is symptomatic of the fact that as a society we have put so much more emphasis on innovation to the detriment of entrepreneurship (see, even the show was called "Seinfeld" and not "Kramer", as I would have liked it!). There is constant talk of promoting R&D, or a "culture of innovation" at all levels of government and corporations worldwide, but FAR LESS resources, time and money is spent on promoting a "culture of entrepreneurship": For example, a simple google search for "culture of entrepreneurship" returns barely 200,000 results, whereas "culture of innovation" returns over 1.5 million results; Or consider the fact that we have volumes of laws that protect innovators' rights (aka Patents), but can you point me to any law that tries to protect entrepreneurs? And some laws that even try to come close to promoting entrepreneurship (e.g., Startup Visa) face fierce opposition in legislative bodies for some unknown reason; and the list goes on...

I think it is about time that as a society we start giving entrepreneurship its due, if we really care to have effective solutions to our problems. What do you think?