The next big wave is display media is going to be CRM Retargeting: taking lists of offline customers (like a car manufacturer's list of people's whose lease will expire in the next six months) and serving targeted display advertising to those people.
Jan 19, 2012
Jan 01, 2012
Dec 31, 2011
public stocks are terrible investments
i'll expand more on this in future posts, but turns out the U.S. public stocks have been terrible investments for the last 15 years and I expect they will be for the next 15 years.
Check out the rise and fall of the S&P 500.
If you just take the last ten years (starting from a really low point in right after 9/11), S&P has only gained 8.32%. whoa. A random bond fund would have gained at least half of that in any given year during those ten years.
My advice (and will expand more in future posts): keep a really low percentage of your investments in public stocks.
Dec 28, 2011
A-Player Guide to Self-Improvement: Knowns and Unknowns
For a CEO of a fast moving company or anyone else in a fast-paced environment, self improvement is hard. Really hard. That’s because most smart people have improved all the easy stuff by the time they are 25. The hard stuff is changing one’s personality ... and often that’s hard-wired into our brain and it takes extensive effort to both identify and change.
Becoming a better leader is NOT like losing weight.
My definition of being overweight: you think you are fat and most of the people you know think you are fat. If you satisfy that criteria, then you ARE overweight. You KNOW you have a problem. And the solution (eat healthier and get more exercise) is obvious. Actually implementing the solution is really hard – it takes incredible discipline, resolve, and fortitude … but it will definitely work if you do it.
Becoming a better leader is much more challenging than losing weight. When you are losing weight you have a known problem and a known solution (the easiest type of problem to solve). To become a better leader, you often have an unknown problem and an unknown solution (the hardest type to address).
Identifying the problem
If you want to grow, you need to figure out what your problems are. This is actually really hard to do. Your problems and deficiencies will be “obvious” to everyone you work with, but each person will have a different perspective that is colored by their own biases and where they sit in the organization. Also, most of your employees will never tell the truth, the whole truth, and nothing but the truth. People don’t like to deliver bad news.
You can try anonymous employee surveys. I have found them to be pretty helpful to me. But you need to take them with a grain of salt – especially when you receive conflicting feedback (a common survey result will get both “you are spending too much of your time on Product X” and “you are not spending enough of your time on Product X”). And because anonymous surveys are anonymous, you cannot ask follow-up questions.
A good way to handle this is to make sure you are getting very honest feedback from your direct reports and from the people you report directly to (if you are a CEO, then you report to the board). If you get consistent answers, that could be a good place to start. Doing this is hard and it sometimes requires building trust bonds with the people you work with that could take years to build.
Another tack is to assume you can’t fix everything, so focus on things you can measure like your company’s Key Performance Indicators (KPIs). That way, you at least focus on the known problems (which is a great place to start).
Nov 29, 2011
Nov 11, 2011
Fail to Succeed
“Success consists of going from failure to failure without loss of enthusiasm.”
- Winston Churchill
To truly succeed, you must fail. And you must fail a lot. We all know this, we have all heard this hundreds of times ... but failing is still incredibly emotionally difficult, hard to overcome, and daunting to confront.
Encourage failure and you will increase large successes. This article will cover:
- Why one must fail often to really reach one’s potential
- Why people who deal with rejection have 10x earning potential
- Strategies for confronting and dealing with failure
Failing often will help you reach your potential
If you are not failing often enough, you are most surely settling.
In most fields, a good success rate is about 25%. If you are succeeding more than that, you are likely not innovating enough or you are settling. It is likely that your fear of rejection is stifling your growth.
The top salesperson in almost every organization also usually has one of the highest failure rates. She takes more at-bats, she varies her pitch more, and she goes for bigger sales. In short, she takes more chances, gets feedback, and iterates quickly.
By contrast, often the lowest performing salespeople have the highest close rate. I once met a salesperson who had an astonishing high 50% close rate. Guess what? This guy was selling only “safe” products, never iterating, and not taking chances.
Salespeople with really high close rates are too afraid of rejection. They need to be taught to fail more.
Why do some guys date people way more beautiful/interesting/healthy than themselves? What you don’t see is that this guy will often approach twice as many dating prospects; the only way for a “6” to date a “9” is by pursuing lots of 9s. It is easy for a 6 to get a 4 – you will rarely be rejected if you set your sights low. But if you want to go for that 9, you have to be ready for a lot of rejection.
The good news is: if you learn from the rejection and really focus on iterating your approach, you’ll likely land that 9. And you’ll also gain confidence in other areas, and soon you’ll actually be a 9 yourself (or at least better than a 6).
It is a bad sign if you are an entrepreneur and every investor you meet with wants to give you a term sheet on your terms. Either you should be going after better investors or you should be insisting on better terms. A lack of rejection is the surest sign that something is scarily wrong.
Let’s think about rejection in the context of building products. If you are a software engineer and every test on your code passes, that means you are likely taking too much time before you run your code. You could be thinking about every corner case. This might be the right attitude if you are writing software for nuclear reactors—but it is death if you are focused on a consumer internet application.
Lack of failure also often means lack of speed. Speed inherently breeds mistakes. Drivers are much more likely to get into accidents as they increase speed. But you’ll never win the Indy 500 moving at 70 miles per hour.
Lack of innovation is often due to a fear of rejection. People don’t want to seem unreasonable. They want to get along socially. That “don’t rock the boat” feeling is often manifested because people are afraid of being rejected by their colleagues, friends, and society. This is often the case in any large bureaucracy that breeds extreme political correctness. Fear of failure often means that people are too worried about putting their neck on the line. They stop innovating and they focus on fitting in. “Fitting in” is death – to paraphrase George Bernard Show, all progress comes from unreasonable people.
"I can accept failure, everyone fails at something. But I can't accept not trying."-- Michael Jordan
High rejection rates = higher earnings
People who get rejected more often earn more. Much more. Rewards often follow risks and people’s intolerance for rejection is one of society’s biggest perceived risks.
Why do marketers make about half what salespeople make? Because when someone rejects a marketing message, it is a rejection of the product. But when someone rejects a salesperson, it is felt as a personal rejection. Personal rejection stings. It hurts. People actually cry when they are personally rejected. We’ve all felt that sharp pain of rejection and we hope to avoid it whenever possible.
Almost all the highest-paid writers have incredible stories of early manuscripts being rejected by hundreds of publishers. Writers that shy from rejection often end up working for a marketing organization or a large news outlet and rarely have any type of lasting impact.
And this is true in almost every field: science, business, politics, arts, society, medicine, and more. Those who can partially overcome their fear of rejection are the only ones that can change the world.
"In order to succeed, your desire for success should be greater than your fear of failure." -- Bill Cosby
Using benchmarks to cope with rejection
The number one way to cope with rejection is to normalize it so you can benchmark yourself against others.
Think about it from a sports perspective. If you are a Double-A ball player, you have a benchmark you should be hitting against. If you are hitting .300, you are doing really well (even though you are failing 70% of the time). That’s because everyone’s stats are public so you have a good idea of what is good and what is not good. If you are hitting .250, it probably means you need to work on your swing. But if you are hitting .450, it does not mean you are amazing ... it means you need to start playing against better competition and move to Triple-A. By being successful 45% of the time, you are, in fact, succeeding too often.
Benchmarks like these are helpful, because they give you an understanding of if you are getting rejected the right amount or outright failing. If I were playing Double-A baseball, I’d have a batting average of approximately 0%. Failing too much would give me a lot of good information (to move to another profession, like becoming an Internet entrepreneur).
In baseball, benchmarks are published and easy to come by. Organizations can help their employees better deal with rejection (and, in turn, push themselves) by publishing failure rates and then explicitly telling employees they should aim to fail a bit more than the rate.
A software development organization could follow suit by publishing the rate at which tests break. Sales orgs could publish the percentages of cold calls that turn into warm leads. Companies could publish the rates at which employees accept their offers.
Most individuals punish themselves every time they have a minor failure. And while they might implicitly know that there is a high rate of failure in any task, they take each rejection as if that task had a 100% success rate, and they were just a dummy who could not succeed. That is being too hard on oneself.
With a benchmark, you can cope with rejection better. Let’s say that you are a CEO and one of your employees leaves your company for a competitor (the ultimate rejection). You should understand the benchmark rate before you beat yourself up. In fact, if none of your employees leave, you might not be pushing the envelope enough. But a high rate of turnover might be a warning sign that you need to radically change your company’s culture.
Similarly, if every prospect you offer a job to accepts, you’re doing something seriously wrong. You’re likely not fully explaining the culture, the long hours, or the fact that the office dog Melvin takes random poops on employees’ chairs. Or you are setting your sites too low. In my experience, a good benchmark to follow: 30-60% of your offers should be rejected.
In the absence of a failure rate to benchmark, make one up. A good rule of thumb is: have a success rate of 25%. About 75% of the ideas you propose, new initiatives you take, and client engagements should not go to the next step. And that’s healthy.
"My reputation grows with every failure." - George Bernard Shaw
Special thanks to Jared Kopf for his topic inspiration and to Gizem Orbey for her edits.
Oct 21, 2011
Oct 11, 2011
Oct 10, 2011
Oct 03, 2011
Unless you are awesome, you will be outsourced
We’re quickly moving to a new world where the wealth gap is compounding and increasing. We’re moving to a world that is going to look a lot like Hollywood: a few people enjoying insane success ... and everyone else spends their days waiting tables.
The delta between A-players and B-players in companies has always been high. A-players get promoted faster and they earn more. My guess is that an A-player earns about 30% more than a B-player in that same position for most professions. An A-player administrative assistant usually can earn about 30% more than a B-player in the same position. That’s a significant difference and even more when you compound that difference in savings and lifestyle over the course of one’s career.
In some professions like sales and entertainment, an A-player might earn 300% more than a B-player and essentially live an entirely different lifestyle. In the future, everyone’s jobs will look more like salespeople.
Let’s focus on the profession I am most familiar with: software engineers.
Today, an A-player software engineer has a lot more job prospects than a B-player. That seems obvious. But there are plenty of B-player and C-player engineers that work at great companies and get paid well. Their services are needed and important. And while they don’t make the contributions that an A-player makes, they still are very valuable to a company and have a lot of importance to the success of an organization.
But things are changing (queue in the Darth Vader music).
There are three forces that will drastically change work, compensation, and our value to each other forever:
1. A productivity boom will automate B- and C-player work
2. Globalization will commoditize B- and C-player work
3. A-players can have much more impact
The productivity boom will automate your job.
Everyone is massively more productive today than they were just a few years ago. A salesperson can use tools like Salesforce.com to track customers, LinkedIn to find prospects, and they can easily call and send documents from the road with their iPhones (unless they are on AT&T). The Internet makes all of us extremely productive and automates parts of our jobs.
In the 1990s, I was a software developer and I remember writing a script to determine if a string was a valid email address. It took about 12 hours for me to write. First, I had to research what could and could not be in an email address (dashes are ok, commas are not, only one “@” symbol, etc.) and there were a bunch of corner cases that I had to guard against and test against. After coding into the night, I finally came up with something I was proud of.
Today those 12 hours of work would take about 1.2 seconds. There are hundreds of libraries that have been written by really smart people and tested by thousands of programs. All one has to do is plug one of them in. It is simple, easy, and effective. Now I can spend the remaining 11 hours, 59 minutes, and 58.8 seconds on something more useful.
Thanks to the open source trend, even complex projects are free and quick to set up. My company, Rapleaf, runs all of its systems on an open-source framework called Hadoop. Hadoop is something that took hundreds of thousands of hours to build. And we get access to this software for free.
All this means that it is faster than ever to implement good ideas. Instead of investing resources in implementation, companies won’t need as many engineers to get a project done. And if implementation is cheap, companies can spend more on ideas instead.
Globalization will commoditize your job.
There used to be a few people in your town competing for your job. All you had to be was better than those few people and you were golden. And even if you were not the best, you were still needed.
Today there are millions of people competing for your job. While there are very few amazing developers, there are millions of good ones. There are tons of people that can write decent code, integrate with APIs, and get stuff done. And they are all over the world and they want your job.
And globalization will continue to accelerate. Historically, the biggest missing piece to stopping a world where you can be outsourced at any moment was the technology to collaborate. Today it is massively easier to collaborate in person than through any other medium. But that’s changing.
Even simple tools like ubiquitous video conferencing via Skype, project management systems (like those developed by 37 Signals), and easy screen captures have made a world of difference. Many more communication solutions will be developed -- and once we can easily collaborate with someone 12 time zones away, then your job can be more easily outsourced.
A-players can have much more leverage.
Because of globalization and the productivity boom, implementations will be cheaper and easier. B- and C-players will be commoditized and their salaries will fall.
At the same time, the value of A-players will rise exponentially. The typical A-player spends 5% of her time today figuring out what needs to be done, and the other 95% executing it. When I started working on my script to detect valid email addresses, it probably took me a few minutes to figure out what I wanted, and then hours to actually get it done.
But imagine a world where execution is cheap and fast. An A-Player can implement dozens of ideas in the time it now takes to implement just one.
That means the people who can figure out what needs to be done become much more valuable.
So, I can be outsourced. Now what?
Over the next generation, we are moving to a world where most (like 90%) software developers will earn a decent wage (say $50k/year) and a few (like 10%) amazing developers will earn over $500k. Yes, the income distribution for the same profession of people who went to the same university and had the same SAT scores could actually be that stark.
I want to point out that I’m not advocating that this divergence in compensation happen. I’m not. It has the potential to fracture society. And it seems like it will massively reward people that have lucky breaks. But I’m worried that regardless of how we feel about this growing division between the A-players and B-players, it will happen anyway.
This stark division is already happening at companies like Google. Most engineers there have similar backgrounds and all get paid well. But a few of the amazing engineers earn compensation over ten times the average. Yes, 10x. One day, every company will look like Google.
So what do you do about it?
You must be the Jedi Master of your profession.
Unless you are awesome, you will be commoditized.
Here are some things that will be less valued in the future and some things that will be more valued:
| Less-valued | More-valued | Why? |
| General knowledge | Judgment | Search engines will be attached to our brain |
| Knowing more than one major spoken language |
Sales in any language | We’ll have universal translators |
| Coding | Art | Building things will be much easier. Designing aesthetics will always be hard. |
| SAT scores | Combining left-brained and right-brained thinking |
Systems-thinking will be easier to outsource |
| Majoring in business | Majoring in philosophy | Learning to “think” will be more valued that just learning |
Special thanks to Jeremy Lizt, Paul Santinelli, and Travis May for their help in writing this.
Sep 17, 2011
In the future, there will be no models
As mass media dominated our culture in the 20th century, so did the advent and fame of models. Now a person (both female and male) could make a very good living off of nothing but their looks. They could pose for glamour shots in magazines, grace TV commercials, and ensure that motorists headed to work would see their faces on billboards hawking the most admired brands.
And models have been well-paid. Yes, only a handful get paid like pro athletes, rock stars, and entertainers. But that handful makes bank. Real bank. And people like Kate Moss, Tyra Banks, Heidi Klum, and others have become household brands and many people used their modeling careers to propel them to greater success.
But in the future, there will be no models.
We are almost at the point where there is no need for a human model. Technology, animation, and design will soon replace humans. Your products will actually look better being displayed by an avatar than by a real human being. And that avatar won’t be moody, demand private jets, or be at risk of anorexia. In fact, they won’t even demand overtime.
Jobs for high-priced models will go extinct. But don’t cry for those that are gorgeous -- they will always have a leg-up in every profession on the rest of us that are saddled with a big nose, love handles, and acne. And, of course, beautiful people are far more likely to marry those with money and success. But individual beauty in the 21st century will not be as important or marketable as it was in the last century.
Jun 21, 2011
Position Players verses All-Around Athletes
(This blog was first featured on VentureBeat)
Hiring managers face a dilemma similar to coaches: Should you hire someone who’s really good at one particular thing – or someone who is more of an all-around player?
The question is: should you optimize on experience (people you are confident that will get a specific task done) or on potential (people who are great all-around athletes but not as good at a task you need to get done now)?
Above all else, you should always hire A-Players exclusively. Never hire people that are “good-enough.” You want GREAT people in your organization -- people that you love work with and people you’d walk through walls for.
The Position Player
The position player is someone who is amazing at one core thing that your company needs. A professional football team has a ton of position players. These are some of the best people in the world at their position (and they are highly compensated because of it). When building a great football team, you need a great quarterback, linebacker, wide receiver, kicker, coach, groundsperson, doctor, and more. You need people that are incredibly good at one key role and do it great consistently.
The All-Around Athlete
The all-around athlete is someone that is good at many positions but may not the very best at any particular position (like a winner of the Olympic decathlon). A great athlete on the field is someone that has burst speed, endurance, hand-eye coordination, court-sense, and is a team-player. In a company, a great all-around athlete is likely someone who is crazy smart, works really hard, has a great attitude, communicates well, and is a team-player.
So should your organization recruit the Position Player or the All-Around Athlete?
Answer: it depends on where your company is now.
Scaling mode
If your company is in scaling mode and you know what you are going to be doing for the next three years, you should optimize for position players. While great position players are usually very expensive, they know how to do get their thing done extremely well.
If you are putting together the world’s best football team, you know you are going to need a great kicker. It is going to be extremely hard to win without someone who can kick long field goals consistently, so it is extremely important that you find this person. A kicker is highly specialized (they are probably not going to play any other position) and would be extremely difficult to retrain. So you only want to invest in getting a kicker if you are sure you will need one for the years to come.
Suppose your company is an ad network looking to build a portfolio of publishers. Someone who’s extremely familiar with the internet advertising space (perhaps someone who has helped build publisher networks in their last two jobs) would be the ideal choice. They won’t come cheap, but they may have the experience to attract world-class publishers.
Change mode (pivoting)
When you are in start-up mode (which might be for many years depending on the company), your business model is likely to change frequently as you pivot based on customer research and an evolving market.
When you are in change mode, it’s best to optimize for hiring all-around athletes. There’s no sense spending time and effort recruiting the best field-goal kicker if next year you decide you want to play basketball instead of football.
[[AD: if you are enjoying this article, follow Auren on Twitter]]
Avoiding early mistakes — and how to step on the gas
One of the common mistakes start-ups make is to immediately bring position players on board. It’s a risky proposition. While hiring position players will significantly increase the chance of success for your current model, it gives you little room to pivot. Any significant change in your business model might force you to swap out your team.
If you are tech company in change mode (or even if you are developing a “start-up” within a large company), start by finding talented software engineers. (Regardless of the company’s shifts, it’s a safe bet you’ll need people that can write great code.)
Don’t get too specialized, though. If you hire a killer iPhone developer, that may backfire if you end up building back-end billing systems for large businesses.
For non-engineers, change-mode companies should optimize for people who are really smart, get stuff done, and can easily communicate complicated concepts. These people are likely going to be valuable in any setting.
When you finally enter scaling mode, you’ll be well-positioned to accelerate by hiring key position players. You’ll also likely have found that many of your all-around athletes have morphed into position players themselves. With a few additional hires, you can augment their strengths.
Summation:
If your company is on a straight road and you want to accelerate growth and propel the company forward, add position players. If the road ahead is cloudy, optimize for all-around athletes.
p.s. if you like this article, follow Auren on Twitter
May 31, 2011
May 16, 2011
It is alive! The Death of Email Has Been Severely Exaggerated
It is hard to go to a tech gathering these days and not hear the phrase “email is dead.” Everyone says the same thing: “no one is going to use email in the future because my children don’t use email.”
Saying email is dead is rational, understandable, and … dead wrong. Email is here to stay and it is only going to get more, not less, critical to our lives.
First the facts:
People spent more time in email in 2010 than any prior year. The next biggest year was 2009. The next biggest was 2008. And so on. And 2011 will certainly be the biggest year for email ever. We are still on a rising trend as mobile devices are accelerating the growth of email.
The best proof of email’s continued ascendency is all the profit companies are making from it. Given email is an old technology, it is incredible that there are hundreds of companies that make over $50 MM/year just selling email deliverability services.
The Email Service Provider (ESP) space has been growing by 30% per year over the last several years. Companies like ConstantContact (NASDAQ: CTCT), Responsys (NASDAQ: MKTG), ExactTarget, MailChimp, VerticalResponse, Blue Sky Factory, iContact, Cheetahmail, Datran’s Stormpost, e-Dialog, Silverpop, Sendgrid, YesMail, Eloqua, and hundreds of others are providing the ability to send billions of emails for millions of businesses.
While social media gets all the hype, the combined revenues of all the social media marketers pale in comparison to the boring email companies.
And look how email has revolutionized industries. Gilt Groupe – an email list for fashion items – now has a higher valuation than some of the most well known retail brands. GroupOn has revolutionized services by sending them out to deal-seeking consumers via email. And organizations like MoveOn have galvanized hard-core supporters through the simple use of an email list.
Even traditional retailers have massively benefitted from email. Companies like the GAP, 1800Flowers, Buy.com, and others generate a huge amount of their revenue (and a larger amount of profit) from emailing their customers and letting them know about special offers and new products.
Email marketing is expected to be the top area of investment spending among marketers in 2011. Email drives more revenue than any other medium (even mediums like TV). And email is almost certainly the highest ROI center in marketing.
The power of email is that it is asynchronous (the recipient can read it whenever they want), it can be personalized to the user (unlike a Twitter post where everyone reads the same message), it is inexpensive to send (unlike direct mail), free to receive (unlike SMS), it is very trackable, and it is easy to access for almost every American with a wallet.
Some definitions:
Facebook wall posts aren’t email (they are visible to everyone) but Facebook messages are (they are sent to only a small number of people). While IM is not email because it is meant as a synchronous means of communication, SMSs might become just another form of email (though it will likely continue to have a higher cost).
All of us are overwhelmed by our inbox. But information n overload is not confined to email: we’re becoming overloaded with our newsfeed, tweets, LinkedIn stream, SMS messages, RSS feed, and the dozens of other sources being thrown at us every week. There will be more tools in the future to make the experience of using and managing email more enjoyable and more productive … and because of that, I don’t expect to email usage to peak for at least another 15-20 years.
None of this means email will stay the same. It won’t. Email is already getting more social, more filterable, more actionable, and more personalized. We’ll see some great strides in email in the coming years and it will continue to evolve and become more important in our lives.
May 09, 2011
Auren Hoffman is CEO of Rapleaf and an active angel investor in over 30 technology companies.
Follow @auren
Follow on Auren's Facebook
Search
Links
Recent Posts
- CRM Retargeting
- Great talk by Juan Enriquez on the fate of the U.S. and technological revolution
- public stocks are terrible investments
- A-Player Guide to Self-Improvement: Knowns and Unknowns
- Thank you, United Airlines
- Fail to Succeed
- Many software developers (even back-end
- what traits predict future success?
- learning how to code is
- Unless you are awesome, you will be outsourced
Recent Comments