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?
 

An Ode to the Valley

I loved reading Justin Rosenstein's inspirational, heart-felt post Do Great Things on TechCrunch this week. It talks to the same "Death of Big Ideas" phenomenon I blogged about after visiting SXSW Conference last year, and makes a powerful case for why the pursuit of Big Ideas by us, the privileged members of the Valley tech community, is a moral imperative.

You must read Justin's piece in its entirety, but as a preview here are some of my favorite quotations from it:

Technology, community, and capitalism combine to make Silicon Valley the potential epicenter of vast positive change. 


And with increasingly severe threats to our survival — rapid climate change, an unstable international economy, and unsustainable energy consumption — it is more important than ever that we... change the world, foster happiness and alleviate suffering, for us and our fellow beings.

[I]n the face of threats to humanity’s future on the one hand and the extraordinary potential of mankind on the other, at some point we must ask: are we capable of more?

Life is short, youth is finite, and opportunities endless. Have you found the intersection of your passion and the potential for world-shaping positive impact? 

Don’t lose the fire you started with. If you’re going to devote the best years of your life to your work, have enough love for yourself and the world around you to work on something that matters to you deeply... in order to do great things, we must attempt great things.

Don't Trap Your Customers!

For some reason, for years traditional marketers were convinced that consumers need to be herded/forced into making the marketer's desired choice, rather than letting the consumer make an informed decision. As an obvious example, think of claustrophobic setting in pre-Bellagio Casino's, where you could look for miles and not see an exit door! For some reason, it was believed that the less the gamblers saw the possibility of an exit, the longer they would sit at the cramped gambling tables. Not sure how they may have A/B tested that hypothesis, but perhaps they were using sheep rather than people in their experiments?

And alas, this kind of thinking found its followers in the online marketing world as well. I am sure you have all had the unpleasant experience of visiting a website where the options you were looking for were more or less hidden and you felt tricked into blasting an invite to all your friends or doing something else that would evoke an "Oh-My-God-What-Did-I-Just-Do" reaction. But the days of such online shananigans disguised as intelligent marketing may soon be over.

Experiments are starting to reveal that creating a comfortable and pleasant environment for customers leads to higher expenditure by them! Jonah Lehrer recently covered one study in his aptly titled post, Why Being Relaxed Makes Us Spend More Money. I highly recommend that UI/UX designers read that post and the studies referenced therein before becoming too aggressive in creating restrictive funnels that force users to take certain online actions.

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.

Innovation Déjà Vu (or The Idea Clone Wars)

I think we are all too familiar with how every now and then several Hollywood movies come out with the same basic plot in relatively short succession. Here are some of my favorites (not in Oscar-worthiness, but in how much of a clone the movies are of each other):

Matrix, Dark City, & Thirteenth Floor;
Deep Impact & Armageddon;
Antz & A Bug's Life;
Finding Nemo & Shark Tale;
The Truman Show & Ed TV;
Volcano & Dante's Peak;
War of The Worlds (with Tom Cruise) & War of The Worlds (without Tom Cruise);
United 93 & World Trade Center;
etc.

This, of course, is not a coincidence as pointed out in a study published in this 2006 Whittier Law Review article by IP attorney Igor Dubinsky:

Movies arise from scripts, scripts arise from ideas, and while ideas, as Justice Brandeis noted, are “free as the air,” they must be nurtured by authors to present any real value. Once an author gives birth to an idea for a story or movie, he develops it and then attempts to sell it to a movie studio. If the author can secure a meeting with a studio executive, he presents his idea at an “idea-man” presentation. Alternatively, the movie script can be submitted to a studio via mail or a third person.

On the average, movie executives receive over 20,000 movie and TV show ideas per year, but only review 6,000 of these, many of them over meals with executives from other networks. Movie ideas come from various sources including Sunset Boulevard, network executives, the studios themselves, stars and their agents, independent producers, writers, word of mouth, trade papers, and magazines... Only about 200 sample scripts are commissioned per year, and seldom are more than twenty of those
ordered.

Sometimes the person who conceived the idea for a movie script will win a meeting with studio executives, only to have the idea rejected and then rewritten and developed by the executives without paying any copyright royalties to the original author. What happens even more often is that a script author will shop the same idea at numerous movie studios, or movie studio executives at different companies will discuss with each other ideas for movies they are thinking of putting into production. These same ideas will then be developed into movies by two or more competing studios. At the box office these similar movies will come out like déjà vu, within a few weeks or months of each other.   

Are the same nefarious forces at play when we see a sudden rush of group texting startups (hat tip to George Zachary for the apt tweet on this), location-based services, social commerce websites (aka Groupon clones), VoIP startups (ok, I participated in that Clone War by starting jaxtr, a "j" letter mobile VoIP company in 2005), etc?

As the parallels between Hollywood and Silicon Valley in the above excerpt are too obvious to point out, I would like to share with you a more generalized response, which is the following:

Innovation in Silicon Valley is as much a social process as is ideation in Hollywood. We need to talk to others to be able to refine and solidify all the various thoughts that swim around in our heads. The good thing about this social process is that we come up with better results because of it (a recent study points out that the best academic articles are those that are produced by teamwork rather than "solo geniuses"). The bad thing, however, is that as soon as we talk to one other person, we will have to accept the fact that there will undoubtedly be a multitude of others that will have the same idea planted in their heads and will want to do something with it. If you want to innovate, the clone wars are inevitable!

Are Big Ideas Dead?

It seems that Big Ideas are no longer around, at least in the high tech community. No one seems to really care about them. No one seems to want to take on any risk to pursue them in any serious entrepreneurial way. And the current emphasis seems to have shifted towards Small Ideas that require little or no funding and leverage existing set of public API's and the Social Graph (hat tip to Angel Bubble).

I say this after days of walking the hallways and chatting up numerous entrepreneurs and VCs at this year's SXSWi Conference (the interactive portion of South By Southwest, aka The-Closest-Thing-The-Tech-Community-Has-To-Woodstock) in search of someone pursuing, or at least believing in, a Big Idea. Instead, what I found was that it has somehow become more fashionable/lucrative/fundable to create incremental changes (even to clone Groupon or Foursquare), than to try to completely break the mold and change the dominant paradigm in any field. I was hoping to see something different, something truly original and breathtaking, but all that I could see was shades of the same.

And based on other reviews of the event, I am not alone in this disenchantment with the current state of our entrepreneurial culture.  Todd Wasserman has an interesting Op-Ed piece on Mashable, in which he proclaims:

"But we’re not just having an off year. We’re at a new, more boring stage in the [social media innovation] development cycle."

One very smart entrepreneur told me over drinks at SXSW that this year's Big Ideas are "The Internet and Social Networking", mocking the very premise of my inquiry, and thereby proving what I suspected all along: That we have all grown cynical of Big Ideas.

And there is some merit to this cynicism. Big Idea inventions like the Laser, Electricity, Automobile, Ultrasound, Steam Engine, Printing Press, and the Internet happen so rarely and require such a confluence of serendipity, good fortune and resources that in an environment where you can relatively easily launch and grow a company by making an incremental improvement over something already in existence (if not outright copying), then why should you bother? In fact, isn't all innovation an improvement on prior innovations anyway, and that progress is a series of baby steps? For instance, wasn't the can opener invented 50 years after the birth of the metal can itself?

True, but still I hope I am wrong about the death of Big Ideas and that there is still someone, somewhere out there pursuing something that would have quantum leap implications for humanity, even if it is a metal can waiting for a can opener. If you know of some projects along those lines, please do comment below!

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?