Tag Archives: economics

Four Keys to a Happy Work Environment

Posted on April 30, 2012 | Leave a comment

I’ve been thinking about work, and what makes working at a company enjoyable. What any person might like or dislike about work can vary widely, of course, but I’ve worked at a lot of different companies, and across those various companies I’ve found four main factors that determine how pleasant work at a company might be:

  1. The wind is at your back
  2. Things work smoothly
  3. Common commitment to a mission
  4. Strong management team

Wind at your back means that the market is moving your way and revenues are coming easily (as easily as they ever do). Like you’re Instagram and everybody wants your app. Or you’re Caterpillar during a construction boom, when people are clamoring for your tractors. When the wind is at your back, everything is easier. Your decisions all seem right, and if you happen to make a mistake, it just doesn’t matter that much. Your colleagues are in good moods, your bosses are happy with your work, and bonuses are in your future. When the wind is at your back, work almost seems like play.

Having your company work smoothly is an internal state, rather than one dependent on the market. Processes are in place and lines of communication are established. Objectives are set, each group is executing on those objectives, and everybody is in synch. When your organization is firing on all cylinders you feel productive, even if the wind isn’t at your back. Sure, maybe you could be growing faster, but you are getting things done, and that feels great.

Even if you aren’t all in synch, you can all be committed to the same mission. And this doesn’t need to be a feel-good, change the world sort of mission. Going back to Caterpillar, if everyone is committed to the mission of making great tractors and selling the heck out of them, then you are all on the same team, heading toward the same goal, and that is fun. You might be facing a headwind (housing crisis!) and your company may not be very organized, but at least you are all in it together, pulling in the same direction.

If you’ve got good management, everything is a little better. A good boss makes you feel appreciated, like your contributions actually matter. And if your contributions matter, you will work harder on those contributions, and feel better about that work. Good management can make work more rewarding, and more fun. Bad management, on the other hand, makes you dread coming to work each day.

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Posted in Business, Pop culture

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CEOs: Imagine You Are The Janitor

Posted on March 23, 2012 | 1 Comment

OK, I promise this will be the last entry on cultural change. At least for a while.
But I wanted to return to the topic that started this arc: changes in corporate culture. You might recall how I postulated that a company could change its culture only if that change started at the top. The CEO needs to live the culture that he wants the whole company to have.

But that raises a question: can a CEO, from his top of the heap position, even successfully think through cultural issues? Go back to my prior example, where there is a culture of being late to meetings because the CEO is always late to meetings. If the CEO is always late, but nobody is late to the CEO’s meetings (because he is the boss, after all), then maybe he doesn’t even realize that this culture exists, and that it wastes everyone’s time. His time isn’t being wasted, so perhaps he doesn’t even see the problem.

If this is true of the CEO, it is likely true of other high level executives, depending on the size of an organization. So how can these oblivious executives work to develop a functional corporate culture? Here I turn to the work of John Rawls, a titan of political philosophy.  Rawls tried to develop a political system that maintained the liberty of markets while countering the tendency of market economies to perpetuate economic disadvantages.

In his masterwork, A Theory of Justice, Rawls balanced these two competing strands through an invention he called the veil of ignorance. Rawls suggested that policy makers devise policies via a thought exercise in which they ignored their actual station in life and imagined how the policy would affect the least advantaged person in society. By operating behind a veil of ignorance as to how policies would affect them personally, they would develop policies that were fairer to everyone.

Maybe CEOs and other top executives should sometimes step behind a veil of ignorance. As a thought experiment, it’s not really that hard. Ask yourself “How would the average employee feel about this? What about the lowest ranking employee?” Only a CEO whose ego has been stoked to l’etat c’est moi proportions will not be able to imagine how his underlings might feel. In the case our always late CEO, surely he will recognize how people feel when he is always late to their meetings.  And if he is so Louis XIV that he is truly unable to imagine how others might feel, then that company’s culture is utterly doomed and everyone should just leave.

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Posted in Business, Philosophy, Pop culture

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Marc Andreesen Finally Calls The Tech Bubble

Posted on January 5, 2012 | Leave a comment

After months of saying, contrary to all evidence, (like this, this and this) that there was not a tech bubble going on, super-VC Marc Andreesen has finally publicly pulled back from investing because valuations are too high. Duh.

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The Myth of the “Job Creator”

Posted on December 12, 2011 | Leave a comment

A key Republican talking point is that the wealthy are “job creators” and that any tax on these job creators will cause them to fold their cards and go home, hurting the economy in the process. This is clearly ridiculous, and I have challenged before the concept that tax rates diminish incentives to build companies, but here is a great essay from an entrepreneur and investor (a successful one — he is clearly in the 1%) describing how people don’t create jobs, the economy does. And the economy is made up of regular folks — the 99% — who need to buy the products produced by the entrepreneurs. Without a successful consumer class, nobody will be a job creator.

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Posted in Business, Politics, Pop culture

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Graphical Look at Federal Deficit

Posted on August 6, 2011 | 2 Comments

Courtesy NY Times

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Posted in Business, Politics

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Democrats Need to Lead, or Lose

Posted on August 6, 2011 | 2 Comments

S&P downgraded US debt from AAA yesterday, knocking Treasuries from their perch as the safest debt on earth. We will see what happens to yields on Monday, but so far it’s not clear that the markets agree with S&P. After all, this is an agency that had AAA ratings on subprime mortgage-backed securities not that long ago.

But in the meantime, the GOP is using the downgrade to attack Obama, saying “look what happened on his watch.” The president doesn’t deserve all the blame, but I understand why the GOP has seized the downgrade as a bludgeon. And in the same way, democratic operatives are putting the blame on the tea party and its refusal to compromise on deficit cutting.

But you know who isn’t saying anything? Democratic leaders. The White House, Harry Reid, Nancy Pelosi — they are all keeping silent on this. They are trying to be the “adults” and not play the blame game. I appreciate that high-mindedness, but here’s the thing: the game is being played, with or without them. If they stay silent then they just let the GOP control the narrative. You know the Sunday talk shows will be full of Boehner and Cantor and Romney and the gang piling on Obama for the downgrade.

The Democrats have to realize that they are in the middle of a street fight and if they don’t fight back they will lose. And they’ll deserve to lose. If you are going to suck ass at politics, then you shouldn’t be a politician. Regular readers know that I mostly support Democratic policies (with some huge exceptions that I ought to detail one of these days), but I sure don’t support Democratic fecklessness. The Democrats got rolled on the debt ceiling negotiation, and now they are getting rolled on the downgrade. It’s pathetic. Or, to quote a senior democratic official: “if this White House showed a gram of leadership on the debt crisis we could have avoided this historic embarrassment.”

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Posted in Business, Politics

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More on the Tech Bubble

Posted on June 20, 2011 | 4 Comments

One day, two NY Times articles bolstering the bubble hypothesis.

One explicitly describes the bubbly behavior of investing $41 million in photo-sharing startup Color before it even launched its product.

The other describes how some Wall Street broker-dealers with no experience in technology are throwing money at shares in hot private companies. Fast-money Wall Streeters are one step above the shoe shine boy when it comes to bubble indicators.

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Posted in Business, Technology

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Yes, It Is A Tech Bubble

Posted on June 14, 2011 | 5 Comments

We’ve seen lots of talk recently about whether there is another technology bubble going on, with LinkedIn’s super successful IPO, and shares of Facebook, Twitter, et. al. trading on secondary markets at multibillion dollar valuations. I lived through the first dot.com bubble in 1999-2001, and based that experience I am saying right here, categorically and emphatically, that we are definitely in another bubble. I will add some caveats at the end, but listed below are my top reasons for calling this a bubble. Every single thing I list below also happened in 2000, and made rational observers then realize that we were in a bubble. The more things change, the more they stay the same.

A) Insanely high valuations with no reasonable relation to the metrics (revenue, income) of the company (LinkedIn, Groupon)

B) Retail investor hunger for tech stocks. Back in 1999, we were all talking about Joe Kennedy’s famous line: “when you get stock tips from your shoeshine boy, it’s time to sell.” When the public is hungry to invest in a category, it’s a bubble

C) Farcical metrics. In the dot.com era we were supposed to look at eyeballs, not revenues. Now Groupon tells us that we should ignore marketing costs and look at “adjusted consolidated segment operating income”

D) The emergence and venture funding of many copycat businesses. How many flash sale or social coupon businesses do people need? And what about Color, which raised $41 million to launch yet another iPhone photo sharing service, and reputedly only shared 5 photos during the iPhone developers conference and had its president leave within months of launch?

E) Especially the emergence and venture funding of narrow vertical copycats. For example, Juice in the City is Groupon for moms, Pawsley is Facebook for dogs, Everloop is Facebook for tweens (who will, by definition, leave as soon as they are old enough to join Facebook), etc. Anyone who lived through the dot.com remembers “vertical portals.” That didn’t work out so well.

F) Society and entertainment figures or kids fresh out of Stanford and Harvard business school as entrepreneurs.  (Juice in the City, Rent the Runway, Ashton Kutcher.)

G) Venture funds you’ve never heard of leading rounds in vertical copycats (Juice in the City funded by HU Investments and Tandem Enterprises)

H) Companies you’ve never heard of buying prime time TV commercials (Peel)

I) Ridiculous and nearly identical company names (Buzzr, Socialzr, Apptizr  etc.)

J) Weekly launching of new “incubators,” in which people, some with limited experience, will mentor new companies in return for some equity (Growlab, Capital Factory). Or one incubator, 500 Startups, that funded two nearly identical companies: StoryTree and Vvall.

K) Putting a tech sheen on non-tech companies so that they can raise money at tech company valuations (The Melt)

L) Features posing as companies. A clever little web widget, even a useful one that gets a lot of users, might not be enough to support a viable company. And starting companies that you know can only succeed by being acquired is a classic bubble move. For example, StumbleUpon, Blippy. Actually, Blippy alone is enough to prove my bubble hypothesis. Only in a bubble could that company have even existed.

Now for the caveats, or counterpoints:

As many have noted, some of these companies, particularly the big ones (LinkedIn, Groupon) are generating real revenues. Back in 2000, revenues were a rare thing. However, I should note that neither LinkedIn nor Groupon are particularly profitable. Neither is Pandora. Twitter still doesn’t really have a revenue model. The random widgets and apps that are raising money? Not so revenuefull.

There are more customers now. With the spread of broadband and smartphones, an online business has a much larger base of potential customers than in 1999. That means that the same capital investment can, theoretically, be spread over a much larger revenue base.

This bubble is focused on consumer-facing internet businesses. Not all tech companies are being lifted by the bubble. Microsoft, Google, Amazon and the ilk at still trading at normal to relatively normal valuations.

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Posted in Business, Technology, Trends

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The Newspaper of the Future (ie. Now)

Posted on May 27, 2011 | 3 Comments

The painful decline of the daily city newspaper is well chronicled by now, so much so that there is even an entire website dedicated to watching newspapers die. The causes are myriad (see the footnote below), but they can generally be tied to A) the internet; and B) changing patterns in the consumption of information.

Papers have tried a variety of approaches to counter these trends, with most of these approaches based on changing websites (paid, free, semi-paid!) and cutting costs. Few of these approaches, however, have even touched on content strategy. As regular Thoughtbasket readers know, I firmly believe that content is king.  My thoughts on what city newspapers should do are highly influenced by my reaction to my local news market, San Francisco. SF’s historical daily, The Chronicle is, and always has been, a terrible paper. The Chronicle’s website, SFGate, is even worse than the paper.

My advice is pretty simple: relentless focus on local journalism. Cover city hall, cover local issues, cover local teams. Big parade for Columbus Day? Cover it. District attorney owns a strip club on the side? Cover it. Downtown real estate prices dropping? Cover it. Cut costs by getting rid of all non-local coverage. A city paper doesn’t need any national or world coverage. License a few AP stories to give your readers the big picture basics, but certainly don’t have a Washington bureau. Maybe, if your city is big enough (ie. Chicago, LA and not much else), you have one reporter in DC to cover what your Congressmen do. In the same vein, maybe you have a reporter in your state capital, but purely to cover local issues. Leave broad coverage of the state capital to that city’s paper. If your readers want state, national or world news, they know how to find it: on the internet!

Do people care about local coverage? Absolutely. Think about the old axiom that all politics is local. Because people care a lot more about the pot holes near their homes than they do about Washington DC discussions of foreign aid. In my city, San Francisco, there are not one but TWO new papers that have launched purely to provide deep local coverage. Both are non-profits, it’s true, but they clearly sense a consumer need or they wouldn’t have bothered to raise the money required to launch. And that is in addition to the two local alternative weeklies, one of which has repeatedly (like the two stories summarized here) broken major stories about local politics that the Chronicle has missed. Plus you have AOL’s Patch, which provides hyper-local coverage. Moreover, the old afternoon paper, The Examiner, is still around, although kept alive through some payment deal with the Chronicle. The presence of all these local news sources tells you that people want to read local coverage. The question is why the big legacy local papers, who should own this space, don’t cover it.

Some people say that you can’t make money on local news because good local coverage will eventually cause discomfort to the powerful and wealthy in the community, who will then pull advertising. Certainly a strong local paper will, at some point, have to cause some pain to the city’s power brokers. Since most cities are run by a few wealthy families, a couple of businesses, and real estate interests, everybody knows what the sensitivities are. But it’s exactly those sensitivities – corrupt politicians, incompetent civil servants, venal and debauched businessmen – that readers crave. Readers want to know the truth about the powerful, and as long as a paper speaks that truth, it will have readers. And if a paper has readers, there will always be advertisers ready to pay to reach those readers.

Footnote with more specific causes of newspaper decline:

  • Craigslist
  • The end of the local department store
  • Decreased public acceptance of journalistic “authority”
  • Family dynasties seeking cash instead of a legacy (hello Bancrofts)
  • A generation that prefers screens to paper
  • Lower margins for car dealers

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Posted in Business, Trends

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More on Microsoft-Skype (Microskype?)

Posted on May 11, 2011 | Leave a comment

The NY Times did a nice summary today of what analysts are saying about the Microsoft/Skype deal. And I don’t think it’s nice just because it confirms a lot of what I said yesterday. I think it’s nice because the author does a good job of quickly capturing and explaining a variety of viewpoints.

FYI, if you are over your 20 article limit on the Times, just clear your cookies. Bing, got more Times!

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Posted in Business, Technology

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