Identifying True Grit In A Startup Founder

“If you are going through hell, keep going.” – Winston S. Churchill

Jessica looked more than exhausted when she walked into the coffee shop, looking around slowly before spotting me and walking over. Late the night before I answered the phone to hear a tired voice say, “Can we catch up. It’s all just going shit. I’ve had some wins along with the crap, but I can’t take joy in anything right now. Half of my people have quit or plan to quit. How long does this keep going for?’

Have you ever noticed how sometimes people seem to shrink, or seem smaller than they are. I see this all the time. This isn’t about depression, this is about what happens to someone when they get up every single day and fight their way through it only to wake up the next day and do it again. With the stresses of being the person who leads a startup into the unknown and squarely shoulders the burden of all the uncertainties about the business model, funding and the future the founder can become ‘compressed’ – like they are under pressure from all sides and just shrink. Even worse is when they are also dealing with personal grief, whether it is a relationship breakup, a loved one dying from cancer or major illness.

Jessica was compressed – and clearly suffering from the adrenal exhaustion that comes from 10 cups of coffee a day for weeks at a time.

“We had some great wins lately. We have signed up a new alliance which will double the size of our customer base in 12 months.  This is brilliant news.” Sighing, she continued. “Our existing customers are playing silly buggers and paying late. Some are discounting their payments until we add more functionality, even though there is no product in the world that can offer a fraction of what ours does. Don’t they understand contract law? All my lawyer friends won’t do any more pro bono for me, so I can’t even sabre rattle properly. I have trouble meeting payroll because of this. My credit cards are maxed out, my husband has loaned me every penny he has, even worse, I took money from my grandmother. Can you believe that? I hate myself. She has so little, and she’s been through so much in her life, but when she heard how bad things were for me she wrote a check. I hate myself for accepting that check. I am no longer the person I thought I’d be.”

This is not an untypical episode in the life of a startup founder, and of all the people I know Jessica will get through this. She has that famous ‘reality distortion field’ that people said of Steve Jobs, although it was sputtering and sparking this morning. Normally she would have charmed half of the people in the coffee shop with her charisma and stories, and had at least one person ask about an internship. Not today.

I am fascinated by how some people like Jessica can persevere when others simply collapse. Some people can persevere for a month, some for a decade. It’s all a head game, and you can’t tell what is going on inside somebody’s head from outside.

I have met triathletes and marathon runners whom I thought had perseverance but couldn’t take the uncertainties of the startup life. We are all told the importance of having routines, but sometimes the sports obsessed can be obsessed with routine to the exclusion of the need for flexibility that comes with running a startup.

I know mountaineers who have scaled peaks solo, and others who have ridden half way across the world by bicycle through places people rarely go. People who perform magnificent feats of endurance against all the odds tend not to be good at dealing with people. They can shy away from the emotional pain and disappointment that comes with relationships. It is quite interesting to note that many of these admirable characters are clinically depressed and use extreme adventures to self-medicate.

A clear warning sign of mental fragility is the over use of inspirational quotes. A good quote can help us reframe a problem and change the narrative, which is a good thing. There are a few quotes in this article, for example. When someone fills their LinkedIn and Facebook pages with inspirational quotes about leadership and optimism my first reaction is “Oh crap, they aren’t doing well.” At which point I usually call and ask how they are. Inspirational quotes should be like a hit of sugar that recharges us, not a crutch we use to keep going.

Excessive alcohol consumption is likewise a temporary crutch. It may dull the pain and help you sleep at night, but it also makes it harder to get out of bed and face the day and do things which need to be done.

Talking about changing the world – an expected line from TED speakers and young people in general – will win praise from all quarters and may get you laid but will very rarely win funding from investors. Taking on all the burdens of changing how people and society think and act is a good way to absolutely destroy yourself and descend into cynicism and alcoholism.

Having brilliant ideas and expecting others to deliver is also a warning sign of detachment from the realities of a startup. Many others in the startup space have also made the comment that being the ideas man, while good, is not sufficient. Startups are Darwinian in many ways. You may have a group of founders starting off with equal shares and great enthusiasm, but six months in, when half the team have been working 15 hour days delivering the product, the one who tries to tell them what to do but can’t contribute is going to be sidelined. Incoming investors often demand that such people are given the shaft. Startups don’t need middle management.

If I had to define what I thought were indicators of true grit in a founder I’d put it down to genuine optimism, and the desire to beat your enemies.

To me genuine optimism is the belief that things will work out and trying regardless of the doubts and fears in your head. Whether there are genetic factors at play here I am not sure. To be a genuine optimist you need to have been beaten down many times and still have the ability to get up. Or as the 19^th century satirist Ambrose Bierce put it “It is held with greatest tenacity by those most accustomed to the mischance of falling into adversity…”

In modern society positivity has become a quasi-religion. You see many people who smile and enthusiastically accept every challenge when talking to those above them in the food chain, but behind closed doors all that optimism proves to be just a mask. People want to be seen as being positive and a doer, especially in the month or two leading up to a performance review. People in their twenties usually haven’t faced too much hardship so this is an easy mask for them to wear. In our thirties and forties we take responsibility for children, our parents and we often see our grandiose dreams crushed.  If someone is still optimistic at 35 then that’s a good sign that they are a keeper.

Speaking about having enemies means having rivals. It may simply be a case of one-upmanship over friends or old university colleagues, a fellow entrepreneur whom you feel is stealing too much of the limelight, or a competing business. Enemies define us because every time we think that things are working well, they come up with a new and better way to do things which we then need to emulate and surpass.

“To be successful you need friends and to be very successful you need enemies.” – Sidney Sheldon

Nothing can motivate us more than the need to beat a rival.

I am sure that next time I catch up with Jessica she will be back to her normal self; she has true grit. I also know that many other startup founders are going through the same and some of you will make it and others of you won’t. No matter the case, forgive yourself for being human. When you are tested it makes you stronger and even if you don’t end up being the next Facebook or Uber millionaire, you are going to be better the next time you start a business or take a job.

To end with yet another quote from quite possibly the most quoteworthy individual in history.

“It is not enough that we do our best; sometime we must do what is required.” – Winston S. Churchill

Your customers are rational…. Just not the way you think they are.

Recently I have been enjoying reading The Logic of Life by Tim Harford. He is an economist who uses the framework of economics to understand the apparently irrational decisions that people make in everyday life. The point he makes throughout the book is that people are almost always rational, it’s just that their measures for cost and benefits may be different to yours.

In other words your potential customers are rational when they don’t buy your product. I don’t know about you, but I find this a good challenge to my thinking. Here are a few thoughts.

1) As a first pass, price is important. Are you overpriced?

Is your pricing structure too complicated? The complicated point is key. You might think you are doing the right thing by your customer in offering all sorts of optionality and usage based pricing, but most of the time your customers are looking for a simple price with options on when they pay (e.g. discount for paying a full year upfront through to monthly payments). Keeping it simple is even more important for new companies as if you are even a whiff more complicated to deal with than the incumbents then you will be screened out of consideration.

2) How much of their core business or business IP are you asking them to trust you with?

Purchasers in mid to large companies will be looking closely at your business and the sustainability of your business.  Let’s unpack this a bit further:

a) How much time do they need to invest to prove they can upgrade to your service? 

No rational company will run the same system in complete duplication for a long period. They might run in duplicate for a test period but not for the longer term. Can you use their existing data fields, metatags or match their existing platform’s processes. This can be a powerful selling point, but is likely to cost you a lot of unrecoverable time in customisation.

A better approach would be to allow them to keep their primary systems (databases, data warehouses, etc.) and then use APIs to access that data, and make it useful in their everyday lives, especially on mobile platforms. The flaw in this approach is that if their primary system provider decides to add that functionality then you are toast, in which case you are really a stopgap solution.

b) Proprietary information, where is it hosted?

When dealing with enterprises you need to offer data storage on their own devices and servers, without a copy ever coming through your system. Smaller companies may be happy to use Dropbox or Onedrive but large companies will assume by default that your system is the weak link in their IT system as far as security of their IP is concerned.

c) Who are you, and how do I know you can deliver?

Success breeds success, but at the beginning of your business you need to find your first buyers to have any success. You need early adopters who will go with you through the early stages, and be more relaxed on the two points above.

If your balance sheet is small and your trading history is short then larger buyers will likely screen you out by default. A key strategy to deal with this would be to identify the highest ranking decision maker you can find and give them the information they need in order to champion the adoption of your product.

If you stay lower down in the decision making foodchain, you will find that the people you are dealing with have other motivations (rational ones) about keeping their career intact, which often involves not taking big risks, meaning they won’t be taking major risks on you.

3) They love the idea, but ….

This is the killer for most new businesses, everyone seems enthusiastic but they won’t open their wallets. What they really mean is a variation on the following:

• It will take too much time out of my day to use it
• I don’t how this will be useful in my everyday working life
• I can already do half these things, maybe not as well, but the systems seems to work
• I have people who already do this

There is no simple answer to this. It can be hard to crack these issues, you might need to take a bit of a risk to get there.  Larger companies have an advantage over you in this regard as they can afford to put in the time and budget to develop a complete product, as compared to most of us who can only afford to bankroll a minimum viable product.

4) No budget

In the current economic climate, this is going to be the killer for your product. Yes, everyone wants to save money, and improve productivity. But, and this is the big one, they are all working within a budget system in which they have to prove their utility, the need to maintain staffing levels and on a purely practical political level, no rational manager wants to shrink the size of their personal empire.

When a company makes deep cuts to budget and staff then they might well become a purchaser in order to implement new ways to do things. However, you will find just as often that they just adjust their way of doing business to match their limitations in resources.

One way to break this cycle is to get to those so high up the food chain that they can genuinely see the benefits. Think of the CFO, CIO and CEO as your potential champions in this regard.

5) New and novel …. I just don’t know

If I am betting a good chunk of the future of my own business on your new technology or service, then I really want to know that you can deliver. This applies just as much to foreign companies cracking a new market as it does to start up businesses.

The classic way to overcome this is to demonstrate the benefits of your service at a minimum of cost to your buyer. That way if it doesn’t work, they can let you go without them being too deeply out of pocket.

For example, you could ask for a smaller part of the business to prove what you can do. You could also offer free trials, or low cost, no penalty to cancel demonstrations. Indian and Chinese companies are aggressively trying to take on the US and Japanese incumbents in the enterprise sector using this exact approach.

6) Existing suppliers

It is easier to crack the supply of simple physical goods with new customers if you offer the right combination of price, customer service and quality.

With complicated services which are implemented over a period of time, there is a large penalty to the buyer if you don’t perform. Changing out suppliers doesn’t just cost money, but valuable time, and delays to their own business.

You need to develop a track record however you can.

You need to be able to offer guarantees/warranties on your service too.

Fortunately, in the current economic climate many companies are starting to treat services as a commodity. This is fortunate in the sense that if you are offering the same service as the incumbent then there is a chance that your customer will be running tenders in order to do test the market. This is your chance to swap out the existing supplier. Beat them on service, price, quality or a combination thereof.

If you can get inside your customer’s thinking you will find that they are in fact rational in their decision making according to their own take on costs and benefits. Don’t assume they are stupid or slow, try to understand them and match their view of the world.

Passion comes from experience

If we all followed our passions when we were 20 years old, we’d all be musicians, actors, bartenders, artists, professional surfers, baristas and fashion designers.

I think there is a big piece missing in all the hype around ‘following your passion’, and that is, it takes a long time to learn how an industry works, and master the skills of your calling.

Most of the examples of passion used in business articles are like those mentioned above. They are based around simple systems where you, as an individual, have a high level of control over activities.

However, the chance of ongoing success in those callings are vanishingly small – yes, some people succeed, but the thumping majority don’t.

In the modern workplace many of us work in large workplaces, which have complex structures, selling products into a complex market, all sitting in the backdrop of a complicated regulatory environment and changing economic conditions.

It takes 10-20 years to master an understanding of your profession as well as how the industry works.

Many of the large companies that hold up as examples about had founders who had been working for more than 10 years. They understood the industry, they understood the end users, they understood what the problems were, and they had a passion for solving those problems.

I think that passion is something that develops as you gain more experience and know yourself better.  The common refrain about following your passion is overstated, and potentially leading many people away from what their real calling could be as is really a simplistic refrain telling us to pursue our adolescent dreams.

After all, there’s nothing wrong with having a passion for ensuring that the accounts are balanced, or that employees are treated fairly, or any other career. Only time will show whether it really was passion or just an impulsive interest. 

Maslow's Hiearchy of Needs - Are We Getting It Wrong?

We all hear about Maslow’s hierarchy of needs.

HR use it as a reason to talk about your career and work life balance. Want to be entrepreneurs use it as an excuse not to start. And, as an entrepreneur I often lament the lack of balance in my life 

according to the hierarchy.

The common understanding we all have is that you can’t have any of the higher layers of the hierarchy until you have the lower layers.

For example, you can’t have safety until you have your physiological needs. Or, you can’t have self-actualization (the top of the pyramid) until you have esteem.

Given that many people are using this pyramid in making decisions in their lives, the question is, how did Abraham Maslow intend for people to use it.

1. First off, he never used a pyramid.
2. Secondly, Maslow himself said that individuals will need varying amounts of each level of the hierarchy at any given time, and may not even need some of the levels of the hierarchy.

Examples given where it breaks down include:

• A mountain climber taking risks (i.e. ignoring the safety hierarchy) in order to get to the top (i.e. self- actualisation, belonging, esteem).
• A musician or actor who is focussed on self-actualisation but may be living with their parents or friends, barely able to pay for their food or board.
• A community worker who is held in high esteem, has a good sense of belonging, achieves self-actualisation, but has poor income and may even work in risky situations.

These exceptions are to show that everybody has a slightly different mix of needs, and that you will be fulfilling some or all of them, to varying degrees, at the same time.

In other words, don’t get hung up on it, don’t force people to follow it, and don’t lose sleep over it at night.

As a business owner you may well have a loving family, achieve self-actualisation, and have esteem, but also be struggling to pay bills at the same time. This is all normal.

At best, use the Maslow's theory is a good guide to the kinds of things that people value in their lives, and using it that way will enrich your understanding of other people. However, it should never be used as the benchmark by which you should make decisions.

My advice would be to go and talk to other people in your situation and share stories rather than focussing on the ‘pyramid’.

Are we over ‘Authentic’ yet?

Authentic means all the good things, such as genuine, done with passion, original, and not taking short-cuts.

I frequent ‘authentic’ cafes staffed by bearded men (who apparently wax the rest of their bodies), and tattooed ladies, all festooned with the other accoutrements that go with Hipster style (jeans, retro-t-shirts, messenger bags, androgynous clothing, body piercings, etc.).

Sometimes I do find myself wondering if it is actually possible to be authentic when you are actually copying the same style as everyone else, but yet again, maybe I am just being curmudgeonly. I enjoy the overall image – it implies creativity, even if it isn’t; at least it provides a bit more variety than the usual corporate bland.

I’m a big fan of cafes where the coffee and food have been made with an obsessive attention to getting the product just right. And as an amateur designer I am a huge fan of the homewares and everyday items that are now coming out, but, unfortunately, refuse to pay for any of these designs in the ‘authentic’ design shops – I can’t afford it.

On the flipside, I am sure that you, like me, are sick of trying every new ‘authentic’ cafe – when most of new cafes I go to would be better off with a Nespresso machine, or at least go on some barista training courses to better learn how to use their machine (even if they do buy the best authentic coffee roasts).

From a business point of view the best examples of businesses that follow an authentic model are cafes that source their beans, roast their beans, educate their customers, and put up a décor that is original and inviting. Customers are willing to pay a bit extra for this experience.

If you wish to set up an authentic business then you need to realise the following.

1. Excellence is the requirement – your product must be of the best quality. It could be fresh ingredients cooked perfectly, it could be great design with great materials and fabrication, or it could be a perfect experience.
2. Sustainability – it requires customers to remain interested in what you are offering. If you are ‘on-trend’ then be prepared to no longer be fashionable in a short period of time. Minimise your costs and retain profits to enable you to pivot to the next trend.
3. It is hard to scale – the pricing point and ‘authentic’ experience need to be systematised and replicated, with quality control in place. You can set up a good sized family business, but there are likely limits.
4.  It requires a good customer base. For example, there is large and growing organic food business with supermarkets stocking organic growing. However, organic food is recognised as being more expensive, so people tend to have an ‘organic’ phase in their life rather than be that way for life. There’s nothing like having a mortgage and kids to make you appreciate the price of cage laid eggs, milk and vegetables from the regular supermarket. Hell, have more than four kids and you will consider dumpster diving out the back of takeaways, fighting off the homeless and drug addicts just to save a few pennies.
5. The longer you are in business the less tolerant you are of the idiosyncracies of ‘authentic’ employees. You know, people who work to the timetable in their own head, turning up when they want to, can’t take criticism, and don’t respect that you own the business and that you have to do capitalist things such as paying bills.
6. You are really setting up a craft/boutique business that relies on customers willing to pay for the product. This mostly sucks as a business model as you are competing against larger businesses who can produce goods at a lower cost and market better than you. Such businesses have been round for centuries, and sell almost exclusively in the luxury market as that is the one market willing to pay for quality and innovation/originality.
7.  Marketing is hard. You can’t simply call yourself authentic any more, and put bearded guys wearing shorts showing off their tattooed legs to indicate you are all original. Now that is the new norm, you are going to have to find ways to cut through.

We are now seeing not only big brands co-opting authenticity, but also legions of well meaning amateurs with zero originality or interest in the product setting up businesses, and trying to take advantage of the higher pricing point. They have diluted the ‘authentic’ brand and are well on the way to destroying it.

At best, the ‘authentic’ brands with great products will grow – just a bit, and we are all going to stick with them. A bunch of new entrepreneurs have been inspired by this trend and have set up great new businesses. We will see, however, a winnowing of the rest.

I am, however, now over everything being authentic. When McDonald’s starts selling ‘authentic’ Big Macs it will be time to find a new trend – you have been warned folks.

Driver, Passenger or Navigator?

I’ve invented a new personality test this morning (freshly baked) to help you categorise people so you can get the best out of them.

Drivers – willing to make decisions, willing to take responsibility for their actions, willing to ask for help, willing to delegate, realises they carry the whole team in their car, willing to lead, and able to teach others to become drivers or navigators.

Navigators – specialists who can provide advice on the complexities faced by the driver, able to distil complex issues down to the essentials needed for decisions, driven by helping others (drivers and passengers), good at delegating when running teams, good subject matter experts, concerned with the mechanics of the business.

Passengers – the majority of us and the core of any business, do their job well, trust the decisions of others but willing to ask questions during the decision making process, rely on the system set up for their work, concerned with doing their job right and being recognised for it.

Things can go wrong, for example, when a driver fails to delegate to the navigator and passenger, or where they are decisive but don’t have sufficient experience and won’t listen to their navigators.

Likewise, navigators may not have a breadth or depth of experience to provide all the advice they are required to. In many companies too many inexperienced navigators and you end up with a risk averse company.

Passengers who have forceful opinions but lack the understanding of the bigger picture that the navigator and driver face can be disruptive. Also, ambition combined with a lack of confidence or lack of willingness to take on roles with a higher level of responsibility may lead to a BACK SEAT DRIVER – the most irritating personality type of all.

Hopefully this will help you understand yourself and those around you so you can work to get the best out of them, encourage personal growth, and get those who are in the wrong seats to move.

Your data is your memory - we need to make it searchable

I confess, I’m a digital hoarder. I have back-up drives, copies of hard disks, I keep hard disks from old laptops and desktops, I have old SD cards from cameras, old USB sticks and even old floppy disks. I don’t want to let go: I feel that all those documents and files are a part of me somehow.

My memory is no longer solely in my brain, or written down on paper – it is almost entirely digital.

Add to this that I am now buying digital products through Amazon, iTunes, Sony and more, I realise that the scope and size of my digital identity is only going to grow. (Please see a prior post on what a digital identity is here.)

My underlying idea here is simple: humans mostly think in terms of relationships between data points, we don’t think in terms of structured database tables.  We remember things in terms of relationships, and often uncovering one memory triggers another whole set of associations that can lead you to the answer you want.

As an example, many people I know like to use archived emails to track down information because they remember a date or a person they associate with a piece of information (yes, I keep email archives going back 10 years just to do this.)

Use in the workplace

Let’s take a workplace example that I could use in my consulting practice.

I get a call from a client asking me to reissue several reports as well as tracking down the original source documents for assumptions.

I have a lot of clients, and despite best intentions, some files remain on emails, some in saved documents on my computer, some on the cloud, and some in notebooks.

What I’d love to do is to let the system know the name of a person, a year and month and the name of a project.

The system would then track down any documents with those parameters, then give me a search outcome. I could then choose a couple which were most relevant, then the system could go and complete the search.

What I would love to see is:

•    A list of folders with relevant files.
• The documents in those files.
• All email threads associated with the  project – starting with direct communication with that person, but also then expanding out to other people associated with the project.
• Any calendar entries associated with that project. It would be even better if I could click on a calendar event and then have documents created before and immediately after that calendar event show up in a list.
• Contact details for any person involved with that project.
• Could I even see when I was making calls or receiving calls from people involved with that project.

 Alright, this might be a bit much, but you get the idea.

Use on a personal level

You are at a dinner party with a friend and they are about to travel overseas to a country or city you have gone to before and they are asking for recommendations on where to stay, things to see, places to go, and places to eat.

Okay, this might seem a trite example, but wouldn’t it be cool to do a search based on August 2010 (when you went on that trip) and check your photos, check your itinerary on Google Maps (or equivalent), check your credit card or bank records for the name of the restaurant or other place, etc.

As a second example, let’s say you were really moved by a painting you saw when you visited an art gallery years ago. This isn’t as stupid an example as you might think. Let’s say you are in your 60’s,  you have terminal cancer and you want to relive some of the really positive experiences of your life (this example is near and dear to me at the moment as I just lost my mother to aggressive cancer at with little warning. I would have loved to have been able to help her remember some of her fondest experiences at the end.)

You would like to see the painting again, and want to find out the name of the painting and where it is now. Wouldn’t it be nice to see what shows were on display at the art gallery at the time, but wait… you only remember that it was in 2007 and you were on holiday in a certain city. What if you could easily track down where you visited in that city, then the few galleries in that area, then see what was on display, find the painting in question and then find out where it is today.

A third personal example would be trying to track down a song you really liked in 2005. Right now you can search for music released in 2005, you can search for the top 100 hits every week in 2005, but what we can’t do is search for a song we used to play all the time in Spring 2005, which may well be a song from the 1970’s.

I don’t know about you, but as my digital music collection grows, I am finding it harder and harder to make sense of my music collection. An album I liked 10 years ago may not be one I want to listen to now. On the other hand I may be nostalgic for music I liked 10 years ago.

We tend to remember music from times in our lives and relationships. It could have been a friend who introduced you to some classic jazz from the 1930’s, it could have been a particularly great Summer vacation, it could have been a song that helped you get through a painful breakup.

As a fourth personal example, this concept could be of use in budgeting, and other aspects of our lives.

These days we make most of our purchases using electronic banking. Accounting software already allows for transactions to be directly loaded from bank statements and credit card statements. On a personal level, some people may want to keep track of the same. This could also be taken to the next level.

What if by clicking on a transaction at a supermarket you could also get the itemised docket. You could check what you were buying, the price of it, how much of it you bought and even its nutritional value and calories.

This might sound over the top, but look at it another way, if you have ever met anyone trying to keep a food diary to lose weight, or to kick substance abuse (whether it’s alcohol, caffeine or sugar), you will know how hard it is. Not only do we all hate manually entering data, but one of the strongest characteristics of human beings is our ability to bullshit ourselves about what we are actually doing. You can’t improve without measurement.

Having this kind of data available for yourself or your doctor, or your accountant could be quite valuable.

We are reaching a threshold

Our lives are becoming more and more complicated and we are relying more and more on our digital memory, and I think it will become harder and harder for us to have that digital memory erased every time we delete a hard drive, or change over a phone or phone provider. That data should be ours, not that only that of the company that provided the service.

It’s only going to become more complicated: in the very near future we have the internet of things arriving where we will connect our household, workplaces and cars to the internet. Also we are entering the world of 3D printing for physical objects ranging from items we use daily, through building construction to now research is proving up printing replacement organs for our bodies, and even printing food (the US army is looking at this.)

Just as I write this blog, news has broken that Delaware has just passed laws allowing families to inherit digital assets. This is a great example of what is coming. Now family members are legally entitled to access all digital assets, including Facebook, Twitter, and I presume iTunes and Amazon, despite what the terms and conditions for those web sites are.

Yes, there are practical limits to this today in terms of cost, but given projected changes in the cost and capacity of digital storage and processor speeds over the next 5 to 10 years, this may all be closer than we think.

It’s also not like this is a totally new concept

Google has tried to expand its search capabilities from websites by including books, movies and music. They previously sold their search capabilities for internal use at companies where a rack mounted unit could classify all files in the company servers and make them searchable.

There are also a lot of efforts to make images searchable too (e.g. using a meta search like, Rembrandt, lady, small child, tree in background, or as another example, ocean view, Gold Coast, 1950’s).

Some of this technology is already coming of age through intelligence analysis, forensic accounting and legal discovery processes where the automation of all this can occur because the time, effort and costs of this are considered worth the benefits.

For example, when doing an analysis of procurement fraud in a company it is possible to mine (where legal) facebook, Google+ and Linkedin contacts for an individual and see their relationships with suppliers. This can then be used to automatically sieve through the terabytes of data retained by a company to find the key documents to be used. Many instances of fraud aren’t terribly well disguised, and if someone is getting a clear benefit from a supplier in the form of kickbacks there is a pretty good chance that they will become friends online, if not in person.

The intelligence community is already using these methodologies to try and monitor for terrorism, organised crime and other forms of crime. Think of the NSA revelations that Snowden exposed. This is where the whole metadata question comes in: they want to keep record of what numbers you received calls from, and who you called, at what time, and the same for emails. They don’t necessarily keep the content of those calls or emails, but they can see the relationships. They have another layer where the system monitors phone calls and emails for keywords, and then starts mapping relationships between people when trigger events occur.

Lawyers on complex lawsuits are starting to trial the use of intelligent searching during the discovery phase of the lawsuit. What this means in practice is that you get given several terabytes of scanned documents and PDF’s that have been turned into images so the text isn’t searchable. Instead of paying a large team of junior people to spend months combing the files and creating a searchable database, the emphasis is now on making the files searchable through the use of optical character recognition, then running rules based searches to look for keywords, frequency of keywords, authors of documents, dates of documents, recipients of documents, etc. That is, the system maps the documents and you just perform a Google type search on the documents to pull up the relevant ones, and see relationships with other documents.

These systems exist, and they are expensive to run as they require an expert to use, and as you’d expect the real cost comes with finding the data, then formatting and reformatting the data into a form you can use (called ‘data munging’ or ‘data wrangling’), then linking the data correctly into the search program.

What I am talking about is bringing this to a personal level or a corporate level where you have greater control of providing permissions to your own private data sets.

I want the future now

There has to be a way to start stitching all this together as we go forward as part of our digital identity.

• We need standards on what data we own.
• We need to be able to retain our own data, and have strict permissions and access based on the who is trying to access it, and setting in stone privacy laws and rules. This gets weirdly complicated where your data and digital assets may be distributed among servers around the world.
• We need documents, files and digital data to have standards on tagging/metadata so that we don’t have to automate classification.
• Even keeping track of things like when I played a piece of music, or watched a movie, or read a book may be something we can keep track of. There will be a growing need for standards on this.

I wish I could live in the future, and I hope someone out there is working to make this happen. (I’d love to hear any examples of work in progress and ideas on other ways this could work.)

What risk will you take today?

I had this phrase put to me recently, and I have to say I like it. I have been spreading this as a meme, and I thought I’d share a few ideas with you all on ways of taking on risks.

1)      Ring a supplier and ask for a better deal.

You are probably paying too much for electricity, internet, phone plans, cloud software services, etc. Try ringing up and seeing what they can do for you.

I did this yesterday with my internet provider and they ended up apologising for slow data speeds lately and recalibrated their connection overnight – meaning that I don’t need to upgrade plans.

2)      Contact a customer you were always afraid of contacting.

We all have a major customer that we are afraid of making a mistake with, so we never call them.

This is also known as ‘No one asks out the pretty girl’. I used this analogy with a smart job-seeker a few years ago, and instead of using it to find work, he took it on himself to ask out only the prettiest women, to great success. He even had one lady sobbing as she said he was the first person to ask her out in four years – but she told him no anyway. Over the course of six months he kept me up to date with exactly how accurate the saying is (which I really didn’t need to know as I was still married at the time.)

I see this kind of thinking all the time. Smart people who want to work for a multinational but are afraid of rejection so apply to smaller companies instead and keep the multinational as a dream.

We all do it, and in business we often do it in our marketing efforts, ignoring alliances, and in winning new business. Go out and contact someone when you are afraid of rejection.

3)      Ask someone for suggestions

Whether we are talking about employees, co-workers, customers, suppliers, your wife or husband, or even your kids: find a way to ask them what you could be doing better, or what they would like more of in your relationship. We leave too many things left unsaid.

4)      Ask for a referral

Cold calling is hard and mostly doesn’t work. So how about asking somebody you know for a referral to a new customer. Conversely, think about someone you could introduce to one of your contacts.

5)      Take a day off

We all work too many hours, all too often sitting at our desks. Take some time off. It could be a simple as a walk around the block, eating lunch in a scenic park, or just going to work late after a nice sleep in.

Or you could completely take a day off. Spend some time with your family, go see a movie, drive to the beach, play golf, go shopping… whatever… take some time out.

By doing this you are directly challenging your own stress and anxiety level by proving that the world won’t come to an end by taking a day off.

Also, by relaxing, we can reduce our fixation on some areas of our business and are better placed to see things as a whole.

6)      Have a difficult conversation

Speaking from painful personal experience, I know that stress comes from your personal life as much as it does from co-workers, managers, employees, suppliers and customers.

We are all taught to be professional no matter what the circumstance, but this doesn’t change the fact that some relationships are just bad.

If you notice a growing distance in any relationships, an increase in snarkiness in responses, growing cynicism, delays in response to communication, or any unresolved tension, then you probably have miscommunication.

We can all avoid conflict at times, but often the solution is far less stressful than you think.

Go talk to someone, and go with an open mind and drop the defensiveness. Be prepared to talk about feelings.

Also, sometimes it is better to have no relationship than a permanently shitty relationship.

7)      Put yourself out of business

This isn’t a new idea. Drucker has been raving on about this for years.

Look at new ways to do things that reduce the time and effort to perform your business.

Look at disruptive technologies.

Look at competitors – figure out what is actually succeeding for them and ‘be inspired.’

Go look at a few competitor’s websites today.

Read some industry literature.

Ask contacts in other industries how they deal with the same problem.

8)      Do something at random

Many business owners are control freaks of one variety or another. It is good to learn to let go.

Start simply by changing preferences and routines.

• For example, try a new brand of deodorant or breakfast cereal every time you buy some.
• Try a new store to buy clothes, or a new place to get your haircut.
• Drive to a different shopping centre this week.
• Drink tea instead of coffee, or vice versa.
• Try different restaurants, cafes or takeaways to your normal fare.
• To practice this even further try going somewhere on the weekend by choosing which way to go at an intersection by flipping a coin.

This was taken to its peak by Dice Man who advocated making decisions by rolling a dice.

This is all about letting go of things you don’t need to control, busting out of a rut, and reducing fixation on your business.

9)      Take out a line of credit

We need money to grow. Most small businesses use personal loans and credit cards to fund their working capital.

Once you have been in business for a while, you will find the banks amenable to providing working capital loans.

Is it time to have a few conversations with bankers about options.

10)   Hire a new employee

The old saying is that the best time to hire a new employee is when it hurts the most.

To grow you need more people.

Look at hiring some help today. Even if it is just for a day or a week, having an extra set of hands about might really help.

Deliberately plan a risk or two every day. They don’t have to be big, just risks that you normally don’t take.

New projects are always appealing, but should we do them?

CEO’s love them. Board’s love them. Banker’s love them. We all love new projects.

They hold the promise of being the long term solution to your company’s problems. A more productive workforce, less union problems, a new culture, a lower production cost, new equipment – you name it, we all see this as a good thing. However, after 15 years of doing valuations on new projects I am beginning to wonder if new projects are always good.

I now wonder if many new projects aren’t really just wishful thinking. Let me explain.

It is always but always hard to sort out existing operations. There is no easy solution. You have to spend more capital on an existing assets – which the Board is reluctant to do. Then you have to sort our culture issues, take on unions, fire people, take a financial hit as you pay out accrued entitlements such as leave, restructure, etc.

Even if you do all that, the turnaround time can be years, and your whole company can become demoralised for the period in the middle. Basically it sucks. It is hard work, and the reward is delayed.

Instead we focus on something new because we imagine it is starting with a blank slate and that none of the existing problems will occur. Trust me, those exact same problems will occur.

My thinking on this has been sparked by my own divorce. You reach a point in a relationship where things are just not working – just like a problematic asset. You are stuck in your ways, and you can’t see any way to fix up your existing relationship – just like existing operations. So you both find someone new.

Counsellors say that you need to understand your own issues and biases before forming a new relationship to avoid making the same mistakes. How many companies can say that they work through their own organisational issues before they embark on a new project?  Aren’t they just repeating the same mistakes on a new project by avoiding fixing up how the rest of the company works?

What this has really highlighted for me is that the job of turning things round and fixing up what you already have is really difficult and that most of us will do anything to avoid it.  As someone who consults specifically in the area of new major projects for major companies, I see this bias all the time. It’s subtle, pervasive and most people aren’t even aware that they are acting this way.  It’s taken me 15 years of working at the coal face of new projects to even find a way to describe it.

The challenge for all of us is to find ways to unlock the value in what we already have and bring out the best in people and operations as well as profit. That’s not to say that we don’t need new investments, but that they may not always be the best answer.

Auto-nagging and other ideas for the future of Google Glass

Since Google glasses came out I have been thinking a lot about the future of computing and apps. I think we are not far off turning science fiction technology into everyday reality.

The topic that got me started was thinking about friends with vision problems or impairments. Red Green colour blindness runs in my family and I was thinking – wouldn’t it be great if the glasses could identify a red light and flash “STOP” in your vision.

Of course I am not talking about Google Glasses as they are now, but a future device which is a powerful computer as well.

So – how about the following list of ideas.

Colour matcher for the colour blind (already an app for smartphones). Never buy a purple shirt again when you thought it was brown.

Facial recognition for the blind – hear their name. “Jessica has entered the room.” or “David is looking at you.”, or “a stranger is staring at you”.

Facial recognition for networking – see somebody and you can be reminded who they are, pull up notes from recent conversations, etc.

When travelling, see a translation of what you are hearing in a foreign language in English in your glasses.

See subtitles on a foreign language movie through fast translation.

Read a foreign language newspaper in English.

Pick out a face in a crowd – good for not only police looking for a suspect, but also at any time you are waiting for, or looking for someone – and can use the higher sensitivity of your camera than your eyes.

Lip reading – great for the deaf, but could also assist with translation too (yes, and of course spying too).

Look at an object in the shop and pull up comparative models from other brands, and pricing. “this model is available for $10 cheap within 500m of here”

Do I have any eggs left? Automatically see an image of what was in your fridge the last time you opened it.

Is my garage door shut? I can’t be the only person out there who leaves home in a hurry and then can’t remember if I shut the garage door. How about your glasses take an image and reminds you. Or it could be linked to a camera of the garage door.

Looking for directions. You are walking down the street and you see an arrow pointing you in the right direction. Or even better, it highlights your destination.

Visual groupon – walk down the street and see the deals of the day flashing in front of the shopfront.

Find your cat or dog. Not only put a little GPS tracker on your furry companion, but when the little bugger gets lost, you get visual directions to their location. You can see a flashing beacon or suchlike when you look in the direction that they are in.

Keep an eye on your kids or pets from another room.

Create a food diary that is 100% honest. Everytime you start chewing sensors pick up the vibrations and take a photo of what you eat. Never say “I forgot about the Mars bar” again.

Auto-nagging – my favourite idea and a few years off. Everytime you look at high calorie food it asks “Do you really need this today? Your calorie intake for the day is already too high. Think about your health.”

Keep track of your household budget – just look at your shopping docket (receipt) and the optical character recognition will add things up. Link it to your expenses and banking apps and you will get an alert in real time.

Recognising food for the blind – to a blind person cans and packages all tend to feel the same. How about optical character recognition reads out what food it is. This could be based on bar codes to start. They could use it while shopping to try new things, as well as to recognise food when they are home. Foodmakers could have their cooking/preparation instructions linked to a QRcode or something on the label.

Recipe suggester – don’t know what to cook tonight? Don’t want to go down the shops? How about you just have a look in the fridge and cupboard and a series of recipes come up based on what you already have. You could choose cuisine types “Indian please’, or how long it takes to cook, or recipes by famous chefs.

Reporting accidents – upload images and video to the government, police, emergency services, insurance provider, etc. It tags information with location, time stamp, and even licence plates of other vehicles.

Clothes shopping – See some clothes you like, then put them on your avatar to see how you’d look in them.

Buying new glasses or sunglasses – again, try them on your avatar and see how they fit your face. The makers would put the exact dimensions online so you’d see exactly how they fit.

For the nature lovers – how about recognition of birds, spiders, bugs, moths, etc. Not only can you find out which species it is, but you can record the date, time and location which will help all the ‘twitchers’ out there and gather data for science.

Virtual reality cenotaphs – when you visit places that you associate with the deceased, see photos or videos of them there with you.

Visible invisible friends – for the kids in all of us. Have an invisible friend that interacts in real time with objects and people around you.

Night vision – need I say more. This would be awesome, and breakthroughs are starting to be made.

Black and white vision – this may not be an obvious one, but for visual artist seeing the value of a colour painting is important. Abstract artists could more easily create figure-ground effects. You could also do paintings with imposed colour blindness – which might seem stupid, but some artists seem fresh or unique because they see colours differently.

Guided tour around the Louvre – access the Louvre App when you are there and it will pull up details about the objects you are looking at. If you are short on time, it will provide guided tours by theme that lead you around the gallery.

Virtual cosplay (costume play)– lighten up your day. Get your Google Glasses equivalent to turn all your co-workers into cartoon characters. Your boss annoying you? Well turn him into the pointy-hair boss from Dilbert. Turn your team leader into a superhero or villain. Put Angeline Jolie’s face over the top of less attractive co-worker to make your life just that little bit visually pleasing. All done with facial recognition technology.

Coping with dementia – facial recognition of loved ones, a return home when lost navigation tool, set a geographic boundary that will trigger an alarm if they cross it and notify you where they are.

Tinder on steroids – imagine eHarmony or RSVP, or tinder for those more active types, using facial recognition. Highlight the faces in a crowd who might be compatible. Eliminate them by double blinking. Nothing new here. Fifteen years ago the Japanese had pagers with proximity sensors and fetishes loaded so people who met each other in public would know there was somebody else up for the same mischief nearby. This is just the updated version.

Trouble getting it up? – how about you overlay an attractive person’s face on your partner. Put your favourite movie actor or actresses face in place of theirs and performance is guaranteed. This could be the new way to spice up your sex life – take roleplaying to the next level.

Visual instructions – want to change the sparkplug on your mower. A visual overlay will guide you. Don’t know where the fuse box is in your car – let a visual overlay show you.

There are so many more ideas out there I know. This is just a selection of ideas that have come to me, and I am sure the rest of you have millions more.

I can’t wait for the future to happen.

Are universities taxpayer funded monopolies?

We live in the age of education democratisation. With the advent of online education providers, people can study the degree and the skills they like without having to go to campus.

We all love the idea. My issue is with how universities are funded and whether they have an unconscionable advantage over private sector training organisations – particularly here in Australia.

Australian tertiary institutions are largely funded by the Australian Government based on the number of students they have enrolled. They also receive grants from the State governments to set up new schools (which usually gets spent on new buildings, rather than academic and support staff, but that’s an issue for another time).

So, basically we have institutions where the physical buildings, the salaries and all other costs are funded by the taxpayer.

Let me give an example. Here in Queensland the State Government set up a training provider panel a couple of years ago to provide training to public employees.  The State Government has a budget attached to each employee of $5000 per year. The training panel criteria was that training could be provided at approximately $250 per person per day, and that all training would count as credit towards a university degree.

Even though the most effective forms of training for the public sector are likely to be vocational courses (i.e. applied skills) this move has provided two outcomes.

1)      The private sector can’t compete because universities are indirectly and/or directly subsidising courses through taxpayer funds, and

2)      Universities have expanded their role into vocational education, taking away a chunk of the market for private sector providers.

Yes, the State Government has saved costs, but it has also locked in a monopoly arrangement for universities – which in the current phase of democratisation of education seems quite short-sighted.

On top of this, we are seeing those same taxpayer funded resources used to set up online training.

In case you think I am blowing steam about a non-issue, let’s look at how government owned power generation companies are treated.

Government owned power generation companies have access to a lower cost of capital than their private sector competitors due to an implicit government backing. They also have access to large amounts of legacy assets which provide both the cash flows and the people to work on new power projects.

In recognition of the unfair advantage that government owned power generators have, they are now forced to use private sector equivalent pricing for their services and on new projects. They are legislated in black and white on these matters, and in some instances face a competitive neutrality fee to help enforce this.

Ports, rail and other government owned businesses face similar regulations.

To quote the Queensland Treasury - “Competitive neutrality means that government businesses should not enjoy any net competitive advantage over their competitors simply as a result of their public sector ownership.”

While we don’t call them government owned, given the funding model for them, aren’t universities really the same thing.

Could it be time to do something about this? Time to inject some competition I think.

Are you so smart you’re dumb?

High intelligence is not always an indicator of good ability in business. 

I have had the honour of working with many seriously smart people, those with an IQ of 140 - 160 or more, and it is breathtaking to see how some genuinely work at a few levels above the rest of us. When it works well these people make CEO or found successful companies in short order. However, it often goes wrong and I know too many otherwise smart people who are unemployable or in jobs they resent.

While the following apply to all of us, here are a few of my observations for the smarter set (and Engineers with borderline Aspergers too):

1.  In the end it’s all about people. Relationships are important. The ability to persuade others as to the course of action to take is vital. Understanding company politics is important. Many intelligent analytical types see an obvious answer and then get frustrated when others don’t listen. You need to learn to take others on the journey. You need to learn people skills. If you work in engineering, finance or investment banking then I am speaking to you in particular.
2. Learn to stop justifying your decisions, and make the right decision. Too often smart people use their knowledge and verbosity to justify and defend their decisions. I come across this all the time. They put up a bulletproof case for the actions they have taken. This is simply using your intellect to paper over your deficiencies. Learn to take your medicine, and shut up sometimes. 
3. Understand that best practice needs to apply to the average employee, not the smartest. Procedures and processes to run a company should be based on the needs of the average employee. That which may take you a few hours using the latest statistical data science techniques could take days for the average person, if they can do it at all (not that they would be expected to in most cases). Make sure you understand the expectations on the performance of the average employee. 
4. A company can’t run on its smartest people alone. By employing a few smart people a startup company can do a lot in a short period of time. However, for a larger, more mature company smarter people are actually a risk because it is harder to replace them. What a smarter person brings to a company (in theory) is higher productivity and greater understanding of more areas of the business. Any role for that person is by definition tailored to their ability. However, people with a high IQ also tend to get dissatisfied or bored easily and move on to other roles or companies. In other words higher staff turnover and instability often go hand in hand with high IQ employees. 
5. Being rational is not always rational. This is vital to understand. Society and culture run by sets of rules that are not rational. These rules are based on our non-rational side – otherwise known as human nature. The Ten Commandments are rational when you take human nature into account, but are not rational to someone who uses Boolean logic. I often find high IQ people making the equivalent to what I call the drug addict’s excuse  – “I’m just borrowing it, I’ll return it later.”  Remember the old saying that we judge ourselves by our intent and we judge others by their actions. If you rationalise everything you do rather than considering how it appears to others then you are going to piss off a lot of people and be deemed untrustworthy. Learn to do the right thing, not the rational thing. 
6. Learn to accept dumb decisions. Management get paid to call the shots. They may not get them right all the time, but they are accountable for their actions. Once a decision is made, it is made. I see far too many smart people unable to let go of the option they put up which in their mind was better than the option taken. At worst this turns into poisonous rancour and a real “I told you so” attitude at the slightest thing that goes wrong – I also see it as a root cause of depression in some of my smartest friends. Please learn to accept defeat with grace and then back the current course of action, and improve it where you can. You will earn more respect that way than by complaining about how stupid people are. 

Build the company of now rather than the company of the future

I keep seeing criticism of companies for thinking short term and failing to act long term. There is a whole industry of consultants, analysts and authors berating us all for failing to think long term and the evils of short-termism.

If they are simply talking about the lack of planning and failure to take advantage of opportunities for company growth, then I have some sympathy, but if all the focus of your energies on is the future then you won’t eat today.

For example, here is a fictionalised example of a conversation between a friend who is the owner of an innovative web based business and his Board.

Board Member 1: “So, how are the plans going for expansion?”

Board Member 2: “Yes, we know how important it is to grow as soon as possible.”

CEO: “I’m not even looking at it for at least two weeks.”

Board Member 1: (now apoplectic) “What do you mean by that? How can we not be looking at the expansion plans?”

Board Member 2: (also apoplectic) “This is ridiculous. We’ve spent a lot of time developing these plans for you. You have to execute them.”

CEO (who is also the Chair): “Have you quite finished. Yes… thank you. The simple reason is that right now we don’t have the money to pay salaries next week. Our clients are paying late. Our single largest client is using the service but has decided not to pay because they don’t think the full feature set is there. We also got served with a Breach of IP notice by a competitor even though we have been in existence for 3 years longer than them and were using the IP in question before they even started. The tax office has asked for a formal audit starting tomorrow because we paid our tax bill one day late….. Now I’m working 90 hour weeks, I am taking care of all this shit, all the risk capital so far has been mine, despite the fact that you guys were brought onto the Board and given shares because of your ability to raise funds…… Got it? ….. So, when I say I won’t be looking at it for 2 weeks it isn’t a sign of weakness or my incompetence, it is a sign that there aren’t enough hours in the day. It is also a sign that we might not even have a fucking company in a few weeks if I don’t focus on today’s problems…… Now, do you have anything constructive to say at all? …No, I thought not.”

The reality of business is that you have limited resources in terms of time, people and money. By definition most of your decisions are short term and based in the present moment. Many advisors come from the privileged position of never having to make decisions with those serious constraints.

The key is to take advantage of the opportunities that come your way. You need to monetise opportunities. Over time you will see the market change and you will see the product/service needs change. The very best companies may see the big picture trends in advance and plan for it.

The world is now highly competitive and globalised. The good old days of planning long term as it existed in the 50’s and 60’s have been absolutely shattered by the reality of modern business. Or as I put it in another opinion piece – think long term, act short term.

The future is competitive, full of short term opportunities and transactions. It is also going to be a lot of fun. 

The psychology of bundling - Why I’m happy to pay for Cable TV, but I hate renting movies

I am feeling traumatised right now. Recently, in order to save on costs when I moved home, I let my all in one telephone, data and cable TV package lapse.  In my new house I went with a Naked DSL plan meaning that I have data only.

This means I use Skype for my phone calls, Apple TV for movie rentals, and when I am bored I go adventuring on YouTube. Hey, it fills the time – and there is an amazing array of content from talented people on YouTube if you go looking.

What is really getting to me is having to pay for movie rentals.

Don’t get me wrong, the rational part of me recognises that renting movies and buying TV series is actually cheaper than my old cable TV package, but somehow it feels painful. Every time I press the button to pay I wince – I can’t explain why, but it just feels awful. I am rethinking my purchase decision every time I buy something. This has me thinking about bundling services again, and what works, and what doesn’t.

I like Google Apps – pay $5 per user per month, and you have great functionality for a small business.

I like Vimeo - $199 a year for unlimited corporate video services.

I think whoever came up with ESRI’s payment system for using online GIS services needs a stern talking to for being an idiot. I do not want to buy a bunch of credits for a long list of services I don’t understand and spend them in ways I don’t understand. If ESRI were to give a packaged price (e.g. $50 per user per month, plus a bit more for really data intensive work) then I’d go for it. In the world of Big Data they are trying to serve, their pricing model is guaranteed to drive people away.

There’s a lesson in all this for our businesses. Customers like to know how much they are going to pay. Bundle your services and give fixed price packages, no more than two or three packages, and let your customer choose.

If Apple TV allowed me to pay $50 a month for a certain number of movies or TV shows, I’d feel fine.

Think of your bundling in terms of ease of use and certainty of pricing, rather than pricing up each individual service and offering completely flexible usage. The bundled package will fit their opportunity cost for accessing your service. You may be offering a cheaper product with completely flexible services, but you are forcing your clients to confront the buy decision each time they use your product, and that’s a major psychological barrier.