A deal that's important to our company is delayed. Happens all the time. No big deal. Except that it has become kind of a big deal. Things are "heavier" than they should be. I stopped to ask why and stumbled into something worth considering.
A large part of a CEO's job is to gather and disseminate information. In this case, we traveled to meet a prospective partner. The meeting went great. As things wrapped up, we were told that an up or down decision would be made "next week." Pleased with ourselves and very excited about what the partnership would mean, we shared this news with internal and external stakeholders. We had a clear line of sight to an important development -- positive or otherwise -- for us. This is easy news to share. Viral news.Â
Entering week five post-meeting, expectations have not been reset. We know only that they are "working on" deciding. The fact that things are delayed is unsurprising and quite normal.Â
The heaviness comes from the fact that having shared the initial very crisply set expectation, we have nothing similarly crisp to go back to our stakeholders with. There is no good way to spread this news: "Hang in there, we're still waiting. Could have news any day. Or it could be weeks. We just don't know."
So, we don't say anything. We hope that the decision will come quickly and solve the problem. But the lack of news to share with our stakeholders gnaws. We want to close the loop, but hesitate to do it with something so vague on the heels of something so crisp. Something that should be incredibly positive for our company. Everyday, the stress grows a little bit. We try to explain it away, but still feel badly because we cannot re-set the expectations with something more accurate but equally crisp. We want more information, but none comes.Â
We look foolish, or so it feels.
Explicitly set expectations tend to travel fast. Everyone likes to know what's going on. Crisp expectations are viral.
I'm reminded of my first job out of college. I was a sales engineer for a tech company. The purchasing guy at the biggest account I managed had a saying in a frame on the wall behind him. Hung with care explicitly for me and the litany of other vendors he was in charge of, it floated just above his right shoulder.Â
"Do what you say you will do," it said.
Those words still resonate 17 years later. The subtle but crucial point is that any expectation you set could go viral and spread well beyond the person with whom you've shared it. If you fail to properly and proactively manage those expectations, you aren't just letting down the person you set them with. You are potentially making a fool out of that person in the eyes of the people that matter most to her. Or, so it may feel to her.
Take care with your expectation-setting. Poorly managed, they reflect badly on everyone.
Freshkills Park on Staten Island [will be the site of] a 10-MW solar installation, five times bigger than any other system in the city and boosting the city's renewable energy by 50 percent
US' Biggest Landfill To Become New York City's Biggest Solar Project
A startup is like a mosquito. A bear can absorb a hit and a crab is armored against one, but a mosquito is designed for one thing: to score. No energy is wasted on defense. The defense of mosquitos, as a species, is that there are a lot of them, but this is little consolation to the individual mosquito.
The top 100 tech companies granted 19% of their total ownership to non-senior-executive employees. For the rest of corporate America, that number was 2%. In other words, when it came time to share rewards with ordinary employees, the Tech 100 were ten times more generous than low-tech firms.
i could reblog SBJ all day long
Learning From Los Gatos â The Peer Society â Medium
How much are you worth? In a startup environment, that question is never just about salary and 401(k) perks; itâs about how much of the company you deserve given your position and your performance.
@TheFunded via Twitter posted this link. It provides some comps to use when youâre negotiating with your boss or trying to sensibly allocate options for that key hire or board member.
Hereâs the direct link to Christine Herronâs blog post with the numbers youâll want to see.
For those of us who have been in the venture-backed startup ecosystem for a while, several of the slides above ring true. Weâve all seen bad behavior. Having a laugh is one thing. Better understanding where VCs are coming from is another.
How should entrepreneurs new to the venture funding process think about VC?
Here are my broad brush thoughts on those who have the money you want.
VCs have a job that requires âProfessional Attention Deficit Disorder.â These folks review hundreds of pitches a year for a wide variety of products across sold into different markets.
Because VCs flit from product to product and market to market, their initial evaluations are based on the strategic and rhetorical strength of pitches. This is the only means by which they can compare apples and oranges.
They are typically bright and intellectually curious, but you cannot expect any investor to understand the salient aspects of your business from a cold start.
You must bring them information rather than assume that they (1) already know it, or (2) are willing to spend time to figure it out on their own.
Many VCs have a background in engineering or science; a pitch with unsupported assertions is the fastest route to failure. Build your pitch as though you are trying to convince a group of engineers to adopt your solution. Use hard data from credible sources.
The venture capital world is tumultuous these days. Those thriving are working hard. Treat their time as you would want yours treated during a busy work week.
In business (and in life) people are often a obsessed with getting to âyes:â an outcome many view as unequivocally positive and helpful to their goals. I submit that the right answer to most business questions is ânoâ and the more quickly one can recognize which paths are strategic dead ends, the better.
The trouble with creating a winning business strategy is that it is impossible for someone to tell you that you have it right until after the fact. Early on, a credible business person can provide only three answers when asked about your strategy: (1) âThat is interesting,â (2) âWhat can I do to help?â or (3) âNo, that wonât work because _____.â
My central point: Faced with limitless strategic options, finding the right path is a process of elimination. Thus, businesses must fearlessly and thoroughly seek out and embrace Noes among all of the possible paths. In my view, young companies gain clarity and focus with each successive No they uncover.
If one is less than completely fearless and thorough in finding Noes, false Yeses will lull the team into thinking all is well. At best, a false Yes leaves a company in a suboptimal strategic position. Better results are possible, but things are okay. At worst, there is a breach of fiduciary duty to shareholders in an effort to hide from an inevitable No. Capital and jobs will be destroyed. Time will be wasted.
There are a lot of Noes out there, and their value is underestimated by many. If No is a bad word in your world, perhaps you should reconsider the positive role it can play in building your company. I think you will be pleasantly surprised by what you learn as you explore the Possible with the knowledge that you wonât hear a meaningful Yes until the journeyâs end.
Noes are the only signposts you will have along the way.
Nate Lewisâs talk on energy â solar is the planetâs only hope
Here are a few of the salient points.
Current world-wide energy consumption is about 14 TW (terawatts).
By 2050, our thirst for energy is projected to roughly triple to 50 TW or so.
By 2030, we need to have built 10 to 30 TW of carbon-free power sources.
Nukes, geothermal, wind, tidal, hydro, biomass, etc. are all dead on arrival. (Read the aforementioned paper to see why.)
âClean coalâ is the very epitome of an oxymoron. Sequestration (assuming we could afford the 30% to 40% energy tax that imposes on a coal plantâs electric output) is dubious, at best. Lewisâs peer-reviewed numbers suggest that perhaps there exists 50 to 150 years of CO2 storage available in geologically appropriate underground locations.
Solar is the answer. 120 PW (thatâs petawatts: 120,000 TW) of solar energy hits our planetâs surface. 600 TW of which is practical to capture, which, at 10% conversion efficiency (todayâs technology), yields 60 TW.
Cost-effective energy storage to buffer solarâs intermittent supply remains the missing enabling technology.
Obama and McCain need to stop their nonsensical support for biofuels and funnel some big time funds into the solar economy. CO2 molecules are very stable and last for about 3000 years once in our atmosphere. Every ton of CO2 we release will be with our planet for a long, long time.
Elon Musk (CEO of SpaceX, a PayPal founder) is determination personified. His attitude and commitment embody what it takes to get a startup off the ground. In his case, âgetting off the groundâ is literal: SpaceX is developing the first privately-funded, liquid-fueled rocket transportation business. They recently suffered their third consecutive in-flight catastrophic failure.
From Wiredâs interview with Musk:
Optimism, pessimism, fuck that; weâre going to make it happen. As God is my bloody witness, Iâm hell-bent on making it work.
Building a successful technology business is an incredibly difficult thing to do. There will be times when your refusal to fail is the only thing that keeps you and your team going.
Why uniqueness is a dangerous idea â A discussion of substitutes and their impact
All too often one will hear an entrepreneur or an inventor say something like, âWe donât have any competition. What we are doing is unique.â
The addressed market is economically irrelevant. In this case yours may indeed be the only solution to the problem, but entering the market will cost you and your investors dearly: the revenues will level off at a small figure and further growth will require entering other markets, presumably with new products requiring new R&D funding. (Niche markets are fine if your ambition is a small, bootstrap-funded operation. Hopefully time-to-revenue is quick for you, and itâs enough to keep your business afloat.)
Myopia has the best of you: the level at which you are focused is too granular. An example is the FCCâs shameful bungling of the Sirius, XM merger. As far as satellite radio is concerned, it is true that Sirius and XM are the only providers. Their merger creates a âmonopolyâ for this particular approach to delivering audio entertainment. Had Kevin Martinâs (and his committeeâs) vision been better, he would have seen that substitutes abound at the consumer level: AM, FM and now HD radio, podcasts, CDs, iPods and streaming Internet radio services like Pandora.
Venture-backed companies donât have the luxury of going after tiny markets.
As I quickly learned during my summer working for Matt Crawford, the VC game is about picking companies able to grow quickly and defend market share in large, growing markets. So, if your company is VC-backed, or looking for professional funding, you must not fall into the trap of defining your market opportunity so narrowly that substitutes donât exist.
Issued patents seem to negatively reinforce notions of uniqueness.
If you go after a large marketâby definitionâthere exist solutions to the problem other than yours. You may miss this if you focus narrowly on the technology itself. Issued patents seem to negatively reinforce notions of uniqueness.
Special, patented and innovative products are great. As a recovering engineer, I love products like this. They do neat things in ways that make us proud. And, weâre often quick to cobble together a story of why the productâs specialness will allow us to build a profitable company that will grow quickly.
Question: What do phonograph needles, red laser diodes and gallium arsenide satellite transceivers have in common? At the level at which money is made, they are substitutes for one another. To build a successful company selling red laser diodes to CD player manufacturers, for example, one must identify and deal with substitutes at all levels of the market.
Kodak made great chemical film. Fuji and AGFA products were the obvious subs for Kodakâs bread and butter business. They had no answer, however, for the killer substitute that entered the market at a higher level. Digital cameras are an attractive solution to the problem of taking, storing and sharing photographs. How much shareholder value and how many jobs were lost by Kodakâs inability to counter this substituteâs entry into the market?
Markets can be segmented all sorts of ways. How you slice up the market informs which substitutes you identify. I believe most companies do a good job of creating strategies based on a single list of substitutes. Too often though, market share is grabbed by previously unanticipated substitutes. It is well worth the extra time and energy spent looking at the substitutes at different levels and from different perspectives.
If you donât have a compelling strategy to compete among all of the substitutes you identify, itâs time to either change directions, or change horses.
Phiar Corp.âs Battle with Substitutes
Phiarâs technologies were special, and surrounded by rings of patents. Metal-insulator diodes are uniquely capable when compared to diodes made of silicon, gallium arsenide, indium phosphide, etc. But, a special and unique technology must not be confused with a defensible and unique market opportunity. The latter can make you rich. The former plus $3 will buy you a latte.
Phiar enjoyed some compelling advantages in economically irrelevant markets: terahertz frequency communications, wireless PC interconnects, and sub-millimeter-wave imaging systems. DARPA and the U.S. intelligence community loved our âuniqueness.â DARPA funds are great, but they never support the burn-rate of a company gearing up for a big win. VCs, on the other hand, donât want to hear about tiny-volume DoD markets, much less fund R&D aimed in those directions.
At the level in the market where Phiar was to make its money, we were crushed by substitutes. If you look at the problems we attempted to solve from end usersâ perspectives, we were not unique, cost-effective or production-ready.
The first part of this story is a battle of substitutes for one particular type of radio. The second part deals with the unfinished business of deciding if that type of radio is the best solution for the larger consumer problem: distributing video content around the house.
Wirelessly streaming HD video is a large technical challenge. (This requires a data rate of roughly 2.25 gigabits / second for uncompressed 1080p video.) When we began looking at this space, there was only one approach on the table: gallium arsenide-based 60 GHz radios, which were hopelessly expensive.
Phiar aimed to build radios that matched GaAs performance at much lower prices. Motorola thought that was a terrific idea, so together we began solving an important problem with a solution we could defend against GaAs substitutes.
Enter SiBEAM, a company spun out of UC Berkeley that claimed the ability to build 60 GHz radios in dirt-cheap silicon CMOS.
After enough credible people told us SiBEAMâs technology actually worked, Phiar dropped this market. CMOS was too tough an opponent for metal-insulator electronics. (CMOSâs price point, economies of scale and âwarm / fuzzyâ familiarity were advantages we could not overcome in a timeframe that mattered.) We had been beaten in the race to solve this problem the way Phiar and SiBEAM thought it should be solved: with 60 GHz radios.
Phiar moved on to other markets. But, this substitute story continues. As elegant a solution as 60 GHz is, there are other ways to solve the problem of streaming video around the house.
An AP story on substitutes for the 60 GHz approach appeared on July 23, 2008. Prior to our decision to pursue other markets, Phiar carefully watched these substitutes develop and had multiple discussions with all of the companies involved. tZero is using the always-a-year-away Ultra-wideband technology. Amimon (the focus of the article) is using a WiFi-based solution.
SiBEAM, Amimon and tZero offer dramatically different technical solutions to the problem of streaming video around the home. Major stakeholders are consumers, Hollywood studios, media conglomerates, and consumer electronics manufacturers: not an easy bunch to simultaneously please.
If I were on SiBEAMâs board, I would be worried. (âDid those fellas with crappier technology just throw down the gauntlet to start a Betamax / HD-DVD fight? My God, theyâre going to fixate on our 60 GHz signalsâ inability to penetrate walls! Amimon says they are âuncompressed,â we know that claim is based on dodgy semantics: there simply is not enough spectral width allocated to WiFi for that to be true. Do we accuse them of lying? My limited partners were counting on a good exit from SiBEAM, damn it!â)
This battle of substitutes, like most others in the technology world, will be won not on the basis of technical elegance, the number of patents, or the engineering teamsâ brilliance. These are the requirements to enter the ring, not winning the bout.
The winner will do a better job at marketing, partnering and manufacturing execution. If your company can build a working product, make sure you identify all of the substitutes you will face at each level, and have a plan to beat them where it matters: in the market.
