A friend at Apple brought this video to my attention. Mary Meeker covers 10 questions for Internet company CEOs. Watch the whole thing. We are in very interesting times. I found the 2.5 minutes starting at 14:25 the most fascinating. Apple grew $12B in revenue to $20B between fall 2009 and fall 2010. Wow! Thats about all I can say.
This concept is one of the major themes of the recent book The Lords of Strategy. I listened to the Audible version which features a very wonkish sounding narrator. The book is all kinds of academic/intellectual blah blah blah, but I definitely learned a lot from it. Another of the book’s main points is that the roots of the top consulting firms are firmly planted in the academic and intellectual worlds. Maybe this explains the choice of narrator?
Anyways, I wanted to jot down a couple of the main themes while they are still fresh in my mind. Here they are:
1 – Greater Taylorism (that guy with the stopwatch) which led to
2 – The Fiercening of Capitalism
3 – BCG Matrix – the consultant’s Million Dollar Slide
4 – Bain – Thinking AND Executing? – profits at a discount
4 – Michael Porter – apparently not a hit with the tenured crowd
5 – The Birth of Private Equity
6 – Where Are We Going? – good comments on “the shareholder”
See this link for a long interview with the author that covers most of the main points I’ve called out above.
Pieces of trivia/insights I found fascinating:
Bain was founded by a bunch of defecting BCGers. Bain’s big differentiator was that they wanted to do long engagements with a client and actually wanted to stick around to see the results of their strategies implemented successfully. I liked the author’s description of the Bain sales pitch as tomorrow’s profits at a discount. The evolution of Bain came a couple decades later when senior partners realized they’d never become “seriously rich” (only 3-4 million in personal wealth) staying in consulting. So they started Bain Capital and created private equity. Mitt Romney was co-founder (somehow I had missed this). When the BCG Matrix reveals the pieces of a company’s portfolio that aren’t going anywhere (the Dogs), Bain can help you sell them off. In many cases, they’ll even buy the business from you. Then throw a bunch of consultants at it, cut the costs to the bone, figure out the competitive landscape, re-invent the Dog of a company, flip it, and profit.
Being an outsider is powerful. In the best cases, consultants come in with a fresh set of eyes and lots of spare capacity. No day job taking up 90-110% of their time. No internal politics to navigate. No 2-5 layers of middle management and multiple functions to navigate/get aligned. Just a focus on analytics, costs, competitive benchmarking, market share, and a motivated senior leader to share the analysis with. I got a taste of some of the elements of this experience when I interned at P&G. Now that I have a full time job, it is a little more complicated. That said, I like my family, so I’ll have to settle for this book as my window into the consulting world.
All in all, an interesting read. A lot of useful background to help you understand key influences in the history of corporate strategy over the last 50-60 years. Good refresher on key strategery frameworks. Some interesting commentary on how capitalism has evolved / is evolving. I’m guessing the print version is pretty dry, but thats why I did the audiobook. A couple long drives, a grocery run or two, mow the lawn, a little work in the garage, and all of a sudden you come out a little more knowledgeable with a few more useful mental models. I like it.
[end Audible infomercial now]
I find Vinod Khosla fascinating. He founded Sun Microsystems, was a general partner at Kleiner Perkins, and then formed his own fund where he now focuses on cleantech investing. He’s from San Francisco but he talks trash about hybrids, solar, and wind power.
This post over at VentureHacks brought this recent interview with Vinod Khosla to my attention. Vinod is on from 10:40 to 20:40. If you want to hear the LinkedIn founder not answer some questions in a typical CEO-like manner feel free to watch the preceding portion of the video. I wouldn’t bother.
A couple quotes that struck a chord with me from this video:
“If you succeed, it better be material. I say, I don’t mind failing, but if I succeed it better be worth succeeding instead of some incremental thing.”
Also…
“This is really really important and misunderstood about startups. Startups aren’t big or small, they are MADE big or small. So an entrepreneur picking the right partner will more likely end up as a big company than if they pick the wrong partner who wants a 3x return on their money. Any investor who looks at exit strategies, or multiples of investment, or even does an IRR calculation, a rate of return calculation, probably is the wrong partner for you.”
I work for P&G. Everything we do is huge. At the same time most of what we do is very very small. We are absolutely thrilled if we grow a business 10%. We consider 5% growth a very solid performance. We regularly put significant effort into growing a tiny piece of something in one small channel a couple percentage points, do this all a few times over, and then are proud to put together a plan that moves the needle by incremental points (by points I mean one or two).
When we do something new, we do WAY more than “an IRR calculation”. We’ve got teams of people from multiple functions, worksheets with tons of tabs, financial review meetings, and years-long timetables. According to Vinod, this would be guaranteed to smother the idea, result in failure, or at the very best something only “incremental.” And often that is what happens. However, occasionally the team turns out a Swiffer and builds a billion dollar category out of thin air. P&G is full of paradoxes. Big and small.
This phrase often runs through my head and almost just as often includes an expletive that I try hard to suppress. Of course, IT systems don’t make it possible to NOT open a ticket so I just suck it up and open them like a good little employee. Enterprise IT blows, opening tickets rarely gets you what you need, and the whole process is generally infuriating.
2 recent experiences from work:
1 – A standard accounting report that I regularly supply to a retail partner had an error in it. (Still unresolved 12 days later)
2 – LCD panel on my laptop went out combined with multiple blue screens of death. (Partially resolved 7 days later)
These experiences involved opening multiple tickets, filling out more than one form, sending multiple emails, and working with multiple support people. I am still not satisfied with the resolution of either of these problems.
The ticket opened to investigate the accounting error in the report was “resolved” within 4 days with an email informing me that the clearly incorrect report is actually correct along with a classic “buck pass” name drop of someone else who might know more. Now, one other coworker and I have received multiple emails from the individual who “resolved” our problem asking us to please “close the ticket” since the issue has been resolved. Where is the “are you freaking kidding me!?!” response voting button in Outlook? There is no straightforward feedback mechanism. Someone with no understanding of my business thinks they have solved my problem and I am still stuck with no answers for my retail partner. They can’t close their books and I am left looking like an idiot. With the help of my coworker, we are now multiple buck passes down the line with multiple cryptic responses prominently featuring random internal numbers generated by various internal systems I’ve never heard of. Sweet!
I do have a new LCD screen in my laptop (different resolution from original panel). No resolution on my blue screen of death errors however. I was offered the classic “I guess we could re-image it again” line. The annoying part of the harware experience was that I got significantly faster and better service from Dell as a student when I bought a laptop from the Dell Small Business division. Taking a machine to the on-site kiosk in my work building is an exercise in silliness. First you need to go online and open a ticket before they will talk to you. Then once you have opened a ticket online they have a terminal where they want you to enter your info, your ticket number and a description of your problem. Once those two steps are complete and they are willing to actually converse with you, then they want you to fill out a paper form with all of the same info again. Awesome! The loaner for my Core2Duo with 2GBs of RAM was a Celeron with 1GB of RAM that takes 20+ minutes to boot and open Outlook. On a return trip to the kiosk I talked them into installing an extra gig of RAM to make the loaner usable. They explained that this wasn’t normally ok/against policy/whatever but did “hook me up” in the end. Dell wouldn’t have been able to give me a loaner same day, but would have had a tech onsite with the right parts the next business day. Based on three experiences with Dell service, my problem could be captured in one phone call or IM session and the tech would treat me like a human. I much prefer being treated like a human over the enterprise IT “rat in a maze” nonsense.
This is a huge business opportunity. Salesforce.com sucks in many ways (that is another post) and still has built a business with a $15B market cap. Their equity seems to be “we aren’t in-house IT” and people eat it up just because we have all had such lousy enterprise IT experiences.
We need Stack Overflow or a competitor in the same space to create an enterprise IT support platform and attack this in-house support problem. Tickets that are opened need to be worked on by people that understand the business need. If I am working with retailer accounting data I want to talk to someone who understands customers and retail. I’m sure the R&D engineer wants to talk to someone who gets labs and experiment design. Let the support people choose what problems they work on. Use a keyword-based algorithm to tag incoming tickets and route them to the relevant boards/holding areas for pickup. Make solving more difficult issues worth more. Get transparent end user measures of satisfaction and compensate support people on the end-user satisfaction levels they deliver. Gamify the system by increasing the value of a ticket the longer it goes unassigned. Enterprise IT has the potential to be a real help, but instead we settle for cost savings, roadblocks, and more “tickets.” Someone will fix this and build a billion dollar business. Who is it going to be?
