Scott Porad

I had coffee this morning with a friend who is looking for work.  (He’s a great guy…10 years at Amazon.com…if you’re looking for someone, let me know!)

As we talked, we came to the subject of “job listings” which are so impersonal.  For a professional, they feel like a pretty bogus way of getting a job.  Or, at least, uncertain and unreliable.

Of course, my thought was that it’s all about who you know…networking.  Essentially, my view is that personal relationships are what will lead to the next opportunity.

After coffee, I came into the office, was reading the paper, and came across David Brooks’ most recent column that addresses the impacts of the recession on people:

Recessions test social capital. If social bonds are strong, nations can be surprisingly resilient. If they are weak, things are terrible. The U.S. endured the Great Depression reasonably well because family bonds and social trust were high. Russia, on the other hand, was decimated by the post-Soviet economic turmoil because social trust was nonexistent.

Brooks illustrates my point in a macro-way, and both of us are simply expressing the point Lisa made when she said people and relationships keep you safe.

Finally, Brooks writes about the impact that social media has on the situation:

Facebook is great, but social networking sites do not by themselves create support networks when jobs disappear and poverty looms.

and notice the exact words he uses: “support networks”.  A “support network” is something different than a “social network”.  The support network is what we’re really talking about here.

There’s an expression I’ve heard that says there are two types of work: working in your business and working on your business.  What’s the difference?

Working in your business is doing the work of making the business go.  For example, if you have a widget factory, you’re working in your business when you’re making widgets.

Working on your business is doing the work of improving the business.  For example, if you have a widget factory, you’re working on your business when you streamline your processes to produce more widgets at a lower cost.

There’s a Japanese work kaizen which literally means “improvement” but has come to reflect a philosophy of continuous and regular working on the business.

Last week, the CheezTech team made an effort at kaizen—we took an hour out of our busy schedules to talk about how we could improve our development processes and productivity.  The results, both practical and emotional, were remarkable.

At the end of our hour we walked away with three concrete changes to our processes.  And, we committed to meet again in a month to see how we’ve done, and look for other improvements.  The entire team felt great!

Today, several members of our team attended a conference and participated in an experiential session that used game-like activities to teach about teamwork and productivity.  In one of the activities, the group was divided in two teams and each team was asked to move as many baseballs as possible from here-to-there following certain rules.

We did it once, and our efficiency was measured.  Then, we were given exactly two minutes to discuss as a team how we could improve our process before we had to do it again.  Just two minutes of working on our business resulted in an almost 100% improvement in efficiency!

Not only did we learn the importance of taking a time-out to discuss improvements as a team, perhaps the most important lesson had to do with the difficulty of implementing changes “to the process” while “in process”.

During the first attempt, two of the 14 members of the team discovered an opportunity to streamline, but were unable to effectively communicate it to the rest of the team.  Since the whole team was busy working in the business, it unable to divert attention and communicate in order to make improvements on-the-fly.

The lesson here is clear: there is genuine value in taking small amounts of time to step outside of working in the business and gather as a team and discuss how improvements can be made to the business.  Taking this time to step aside is critical because it’s difficult to apply changes in-process.

I’m excited for this new aspect of our teamwork at Cheezburger.  By itself, introducing our monthly meeting is an excellent improvement.  I’ll report back you next month to tell you how it goes.

P.S. For those of you familiar with Agile and Scrum development methodologies, this type of kaizen practice is built into the methodology by way of the “sprint retrospective meeting”.

Should I go to the Winter Olympics in Vancouver next week?   That is he question on my mind.  (You, my lucky readers, get a chance to help me decide in the poll at the end of this post.)

I live about two hours away, and I have a place to stay because one of my best friends lives in Downtown Vancouver.  So, I’m fortunate in that respect.

I don’t have tickets to anything, but this gives me the opportunity to trot out one of my pet economic theories: that any event that attracts ticket scalper will always attract too many scalpers.

For every event, there are professional ticket scalpers. These scalpers live and breathe in the market for scalped tickets, so they have a very deep understanding of what the market will bear for a ticket.  As events get bigger and bigger there are more and more people who think they can sell tickets and make a buck.  In other words, amateur scalpers.

As a result, The amateur scalpers, not knowing the market as well, invariably provide supply that isn’t demanded.  In addition, the “amateur scalpers” are more likely to fear losing money, so cut their prices earlier.  The net result is the theory I presented above; just checkout Craigslist…there’s thousands of tickets available.

Anyhow, on the con side of the ledger are these things: cost…I would imagine it’s not going to be cheap when you add it all up. Border traffic is going to be a headache; probably not the nightmare that is predicted, but it’s never a breeze.  And, apparenlty, transit within the city is going to be a nightmare.

On the other hand, how often does the Olympics come to the town next door?

What do you think?

I take lots of notes. Then, from time to time I go back and review them, which I was doing a few moments ago. I found one that I really liked…it really seems to pack a lot of punch in just a few words:

In the future, power will flow toward the artists who can build an audience independently. It’s always been that way, but creators have more tools now.

What I meant by “tools” was that the Internet and social media allow artists (and others, like brands) to connect directly with consumers thereby building audiences independently.

In other words, the power of the gatekeepers is in decline. He gate keepers are not the same kingmakers they once were. Those who learn how to capture the power that is slipping from their grasp will be the kingmakers of the future.

We were recently interviewing for a position at Cheezburger, and a candidate was describing a difficult situation at one of his previous jobs.  I asked, “How did you resolve it?”

“Well, I’ve never seen the world’s problems solved without communicating,” he replied.

I practically wanted to hire him on the spot.

—

One of the things I’ve been thinking about quite a bit lately is putting together good teams.  (Randy recently suggested a book called Beautiful Teams, but I haven’t had time to read it.)

More specifically, I’ve been thinking about when startup teams start to grow beyond the point where everybody can sit in the same room.  There are three dilemmas that have been on my mind.

Specialization versus Generalization

When there are only a handful of people, specialization is something that’s hard to afford.  Instead, a startup needs jacks- and jills-of-all-trades.

The thing about these jacks and jills is that they’re hard to interview for because most of what being one of them entails are intangible qualities: a good attitude for doing anything and being flexible, and the ability to figure things out on your own.

Ben is always suggesting doing some sort of screening or “testing” to find candidates with these qualities, but have yet to think of a screen or test that will find these types of people.  I would completely be open to your suggestions in the comments.

Organizations in Flux

Another dilemma has to do with building teams at an organization in flux.  One quarter your building widgets, but the next quarter you’ve pivoted based on the “product/market fit” and you’re building gidgets.

At a more stable company, or where you have larger organizations (and specialization), it’s much easier to say, “we need a widget stamper” and hire someone against that need.  But, at smaller companies you’re always looking for people who could potentially fill two or three roles.  “I need a widget stamper who could also manage the widget stamping team, and occasionally make gidgets.”  Again, this raises the degree of difficulty on hiring.

Functional versus Tactical

A functional team is, for example, the design team—all of the designers report into a design manager.  A tactical team is a “project team”—in this case, there is a cross-functional group that works together on a specific task.

In a startup, tactical teams are absolutely the way to go.  In a small startup like Cheezburger, we’re basically just one tactical team all working together.  But, as startups get bigger, having one giant tactical team is impractical.

This is illustrated by the following riddle: “If it takes 2 people an hour to dig a hole 10 feet deep, how long does it take 6 people?”  As anybody who has ever worked on a group project knows, the answer is not “20 minutes”.  At best, it’s “one hour” and more likely it’s “an hour and a half”.

As a result, the practical thing to do is split the group into multiple tactical teams.  Yet, there are two challenges I see with tactical teams.  First, is the obvious, “who reports to who?”  Is it realistic to expect a project manager to supervise a developer or designer?

The second has to do with actual quality: at some point, as you have more than one tactical team, there has to be someone ensuring the “quality of the craft”.  In other words, someone making sure that all the developers, designers, etc. are working to the same standards of quality across all the teams.

Typically, what ends up happening is that there are functional teams and tactical teams.  The official org chart has functional teams, but as a day-to-day matter people work on projects tactical teams.

The introduction of functional teams means hiring functional team managers, which adds overhead, both monetary and organizational.  A startup might be able to afford the monetary overhead, but it’s the organizational overhead that is the killer.

Why? All of the sudden, there are do-nothing-managers having meetings with other do-nothing-managers about what the actual do-something-workers should be doing.  In the meantime, the do-somthing-workers sit around and wait to be told what to do.  At this point, most likely, your startup stops being nimble and dies.

Square Pegs

These issues are murky and challenging and there isn’t a right or wrong answer.  These dilemmas have probably been around for generations—I bet the bible even has suggestions on org charts!

Yet, all of this confusion leads me to a final thought: earlier in my career, if there were a team member who didn’t fit—a person who was competent, but who was a square peg in round hole—my inclination was to replace that person with someone who is a better fit.  I regret some of those decisions because now, with more experience, I see that that as a mistake.

The biggest challenge in hiring people is finding someone who is a good fit.  Hiring for a startup is risky and hiring mistakes are expensive, both financially and organizationally.  As a result, these days my inclination is the other way: if your team has someone that is “good”…someone who is competent, who works hard and is committed to their jobs, who is pleasant to work with and willing to be flexible and learn new things…then find a place for them.

A startup is probably better off with these people than with the unknown of a perfect widget maker who probably has some other set of issues that, as a startup manager, you’ll have to deal with.  In other words, it’s the devil you know versus the devil you don’t!

Dave McClure recently wrote a blog post that everyone is going gaga over…here’s the money line:

Gradually we are discovering that the default revenue model on the internet should probably be the simplest one — that is: basic transactions for physical or digital goods, and recurring transactions (aka subscriptions) for repeat usage.

This is not new.  In fact, it’s the same shift that happened after the first dotcom bust.

When we launched drugstore.com, it wasn’t initially clear if the core of the business was e-commerce product transactions or health and wellness information (like WebMD) or an online health magazine.  But, when the economy tanked, the answer became crystal clear: e-commerce was the core of the business because it was the actual way to make revenue.

Now, we’re in Web 2.0 and we’re doing the same thing over again.  The economy has tanked, people need to make money, and…oh, look at that, charging for things is the best way to do it!

In other words, Web 2.0 is the same thing as Web 1.0, it’s just that the players and technologies are different.

There’s an old phrase, “those who don’t study history are doomed to repeat it”.  I’m not sure if this is “doom” versus the realization that every business cycle has similar characteristics and phases.  In another 5 years, this phase of Web 2.0 will shake out, and then we’ll be on to some new technologies and Web 3.0.  Rinse, lather, repeat.

From there, Dave goes on to explain who—as part of this great revenue realignment—is going to win.  His points on the winners and losers are interesting.  I can’t say one way or the other if his predictions are correct, but his trendspotting is right on.

To buy an iPad, or to not buy an iPad, that is the question.

The answer is no.

I love the idea.  It would live on my sofa and everyone in my family would use it.  Instantly, it would become an indispensable part of our every day life.  Five years ago my friend Lee had a NEC Tablet which just ran ordinary Windows and used a stylus, but I thought it was awesome.  A perfect integration into everyday life.

So, why won’t I be buying an iPad?

In first place: no front-facing camera.  I’m sitting on the couch, watching a show or a game, I want to talk to my friend about it…video chat.  Awesome.  Except I can’t.  I have to get up to my computer.  In other words, it’s not a complete device.

Runner up: no multi-tasking.  Can’t write an e-mail and listen to audio online simultaneously.  Can’t write a document and research it simultaneously on the web.

Honorable mention: poor typing interface.  I’ll reserve my complete opinion until I have a chance to try it out, but from what it looks like in order to type I will have to set it down.  Lame.  I’m lying on the couch, watching a show our a game, I want type an e-mail.  Except I can’t.  I have to sit up and put it on my lap to type.  Major inconvenience.  In other words, it’s a laptop.

Maybe iPad 2.0 will have these missing features, but as far as I’m concerned without them it’s not a complete device.

Update: overnight, another deficiency occurred to me: the iPad needs to have a built-in kick-stand.  How am I going to watch a movie?  Hold in up for two hours?  It seems too heavy for that.  Set it up on a chair?  How will I be able to get the right angle on it?

I would say that at least twice a week a friend, acquaintance or randomly introduced person asks me for a big of guidance on their web site.  The two most common things I’m asked are:

• I have a web site, but how do I get it to rank higher in Google?
• My small company wants to start a web site, but we want to spend any money, so what should we do?

I’ll skip the first question, but here’s my pretty standard answer these days for the second.

To start, I always recommend Wordpress for any blog or small web site.*

1. Cheapest and easiest thing is http://wordpress.com which is free, and you can get something like http://yoursite.wordpress.com up and running in less than 5 minutes. (If you want something like http://www.yoursite.com or http://blog.yoursite.com it costs $10/year.)
2. If would like more control than Wordpress.com will give you, then the next step up is http://page.ly. It’s about $15/month, but very easy to use.
3. If you want even more control, then you’ll want to get your own web hosting account and install Wordpress on it.   That will give you more control and flexibility than Page.ly, but is more time consuming and requires some technical expertise.   I wouldn’t recommend this until you’ve experimented with #1 and #2 first to see if they fit your needs.

I’m grateful that these people cross my path because all too often they hire a web developer to build them a custom site for thousands of dollars.  Oh, brother, do I have stories I could tell…disaster stories.

The truth is that Wordpress will solve the needs of most people.  Or, at least, it’s a great place to start.

The one knock I’ll make about Wordpress is that many of the themes are “blog-oriented”, while many small businesses just need a simple site…no blog required.  I’ve hacked a number of themes for this purpose, and am thinking of releasing my own theme that is perfect for the sole proprietor or small business who just needs a few pages telling about their business.  If you know of any of these themes, please let me know.

* – Disclosure: I have no financial interest in any of these companies, and none of these links are affiliate links.  I have no financial interest in these recommendations—they are genuine.

I am on the board of a local non-profit.  Like the broader economy, and many non-profits, finances have been tight.  The good news is that our 2010 budget is looking pretty okay.  The not-so-good news is that our 2011 projections are not so rosy.  As a result, we met over the weekend to discuss and plan.

A pastor from a local church with a lot of experience in non-profit management and fundraising who counsults with other non-profits came to meet with us.  We had a long meeting, but he shared a few key thoughts on fundraising that somehow seemed applicable to the world of startups:

• Philanthropy directly correlates to volunteerism.
• If you need money, ask someone for advice.  If you need advice, ask someone for their money.
• People will not contribute to a non-profit because it has needs; they will contribute because it meets their needs.
• Fundraising is about having relationships…with people who make decisions about money.

How I word translate these to startups:

• Revenue from customers directly correlates to participation.
• If you need to raise money for your startup, build a circle of advisors to can guide you.
• Customers will pay for your service because it meets their needs.*
• Business is mainly about relationships, but revenue is about relationships with people who make spending decisions.

A final note on the item I starred (*): Kathy Sierra extends this thought in a way that I am fond of.  She says making great products isn’t just about serving customer needs…it’s about making them feel that they’re more excellent for using your software.

I’m have a friend with a web site who sells laptop cases online (which he designs and has manufactured in China). In the month of January, year-over-year his sales are down quite a bit, so he asked me to help him figure out why.

First, I checked to see if visits were up or down. He has an increase in visitors, and his search engine traffic is way up, so that’s not the problem.

Next, I looked at conversion. Way down. I mean double-digit down. This explains the difference in revenue.

Digging a little further, since search traffic was up, but conversion down, I took a look at his top keywords. For his top keyword, you could tell they were highly qualified customers because they were searching for “ laptop cases”. Even for these types of visitors, conversion was down.

This made no sense to me. He hasn’t changed his site, yet highly qualified prospects were converting at a much lower rate. How could this be?

The answer lied in acting like a user. In went to Google, and searched just like a user would. His site was the first three natural results–awesome, the SEO is working.

The problem was that Amazon, Target and others who resell his product were buying all the paid results. And you know what else they were doing? They were selling his product at a discount!

The exact same product that he was selling for $99 wad on sale at Amazon for $64! All thing considered equal, why would a potential customer have any reason to buy from him when Amazon, Target, et al, are completely trusted sources?

The lesson here is that not all conversion problems are solved by twiddling with your web site. You can redesign your landing pages and checkout flows and what have you until the cows come home, but it won’t make one lick of difference if the store next door is selling the same thing for less.

It reminds me of the expression: to a man with a hammer, everything is a nail. All too often companies spend time fixing something that will never, ever solve the problem because it’s the only “hammer” available. Or, if not the only, then the most convenient.

A web site is just one of the many components to an online retail business–it is the equivelant of the physical store in the real world. Price, product, and location are the other components. All of these work together to convert ptospects to customers.

This applies not only to online retail, but to all businesses that are selling goods or services. The web site is only part of the equation.