How I Manage My Personal Network with Contastic

Every day people in your network have opportunities that are perfect for you.   To get access to those opportunities you need to be top of mind with your contact at the same time as the opportunity is.   Contastic provides an easy way to stay top of mind with your contacts in three ways:

Keeping Track

On a daily basis I use Contastic before and after every call.   It combines my mail, contact information, and notes all in one place.  The profile card gives me an at-a-glance view of the contact’s essential information.

And the top of the data pane shows our recent email conversations, interests, and my notes.  Notes are critical in quickly understanding what our last conversation was about.  As we chat I’ll add a couple lines to the notes for each conversation to make it easy to pick up where we left off. 

Building Relationships

On a weekly basis I try and spend some time nurturing new relationships .  If I’ve just met someone at an event or through an introduction I tag them with a ‘developing’ tag.  This creates a tab in Contastic that enables me to review my list of ‘developing’ contacts at any time. This ensures I can revisit them often to continue nurturing the fragile new relationship. 

Contacts can be tagged with multiple tags (a friend may also be a prospect).  And these tags are an easy way to manage your pipeline.  I’ll make sure to label prospects, leads, and customer accordingly.  This way I know who to reach out to with sales materials, project suggestions, and referral requests respectively.

Staying In Touch

On a monthly basis I’ll set aside an hour (yes – that’s all it takes with Contastic) to go through all of my contacts who I haven’t contacted in over 90 days (Contastic automatically creates a tab for them) to reconnect.  

I try and be brutally honest when reviewing these connections to determine if they should be categorized (focus more on this person!) or hidden (this person is not really relevant anymore).   If a person is important and I haven’t reached out I’ll find a reason to reconnect.  Usually the emails will give some clue as to a topic I can follow up with my contact about.

If that doesn’t seem fruitful Contastic recommends a series of articles based on your contact’s education, company, interests, and things you have in common. 

Often times these articles are great ways to keep up to date on things your contacts care about as well as providing an engaging way to rekindle the conversation.   Once written they can be quickly inserted into a template to be sent in seconds:

That’s how I get Contastic!  It is my daily CRM, my weekly lead nurturing tool, and my monthly means of staying in touch with my entire network.  I’d love to hear more about how use get Contastic in the comments below.

How to Fix a Stack Rank System: An Open Letter to the Next Microsoft CEO

With reports of a new CEO on the horizon I wanted to take some time as an x-msftie to give a foot soldier's perspective on fixing the performance review system - core to fostering great talent.

Recently, Microsoft did away with the dreaded stack rank – the system that forces all performance reviews to a curve with fixed ratios of low, adequate and high performers.  However, this may be overkill.

From my time in engineering and field teams it is clear that the biggest issue with the stack rank is each team is fitted to pretty much the same curve.  In the diagram below you can see that each team gets the same amount of rewards to play with - regardless of the team's performance as a whole.  This means that a rockstar team will have to give around the same number of reviews as a failing one. 

The reason for this is to create an organization wide standard that brings consistency to the review process across their 100k+ employees.  However, it creates perverse incentives where great performers will be paid more to contribute to weak teams than strong ones.  Great steadily revert to the mean as they compete to be mediocre +1.  Failing teams over reward the complacent best of the worst.

However, this isn’t the fault of the system – it’s just a failure of implementation.  Here’s how to get it right: 

1. Product P&L

When I was at Microsoft there were about 22 layers of management between a salesman and an engineer. The only person with true cross-functional P&L for those two individuals is the CEO (true fact).  This prevents any hard accountability from being enforced.   Products need to be re-structured into independent silos.   The organization needs to be restructured into GM-level accountabilities directly responsible for revenue.  While this will make collaboration more difficult, it does

prevent dead wood from accumulating and killing organizations.

2. Trickle-down stack.

A normal distribution can’t be assumed for all of your teams – simply put there will be good and bad performers.  So plan for it.  Each organization with P&L should be fitted to a curve (see below). 

Placement on this curve should dictate the skew of the distribution of reviews given within each team.  E.G. If you crushed it this year – everyone should be able to be rewarded.  If you failed, many more of you should get the axe.  This process will quickly filter people into superstar teams and remove deadwood quickly.

3. Intrepreneurship

As companies grow, they seem to deliberately remove incentives for employees to make revolutionary breakthroughs.   The intent is to avoid destabilizing an organization.  However, the result is always a stagnant top-heavy organization that is doomed to be overtaken by a younger rival (see disruptive innovation). In order to steadily create new products, individual employees needs to have the incentive and resources to break away from existing product teams to create their own.   When engineers only see a ~10% variation in compensation there isn't incentive to do 10x better work or be innovative.

Salesforce in a Nuthsell from Dreamforce 2013

Having just spent the day at Dreamforce I was struck by the incredible breadth of the offerings at Salesforce.  And, for the life of me I couldn’t find a single document to help me keep them straight.  So, with some help form @halesalesforce (thanks Will!) I’ve built out this quick and dirty diagram for those of you still at Dreamforce to navigate all of the new offerings:

The major theme of the company this year is integration.  In the past Salesforce has focused on storage in the Cloud.  Now they have the data, and need to integrate it into a cohesive system.  Every customer I talked to underlined this as the primary pain and the vast majority of partners at the Dreamforce expo were focused on this.  So, it seems this is the era of integration.

This begs to question – what’s next?  My money is on intelligence.  Once we have all of an organization’s data in one place – we can now (finally!) analyze it.  Sales needs to become smarter by harnessing machine learning, statistic, and NLP to translate the tribal knowledge of top salespeople to an entire organization.   Imagine a world where every sales rep can follow best practices powered by data. I’m looking forward to seeing some smart sales solutions at Dreamforce 2014!

Rethinking Customer Development

I'm a huge fan of Steve Blank his theory of Customer Development.  I've found his writing always inspirational and insightful.  However, has been a little to dense for me to use as a clear roadmap.  Many in the Lean Startup movement point to the Business Model Canvas as a cure - which, try as I might, I've never been able to actually follow in a real live business.

The issue was that each of these pieces is part of a flow - not a discrete map.  So, here at Contastic we started using a variant that models the business as a process rather than as a map:

This covers same essential areas as the Business Model, but slightly re-arranged to fit the process of validating a startup.  Generally, each stage from left-to-right is dependent on the next and should be evaluated in that order.  At each milestone the company should seek to find a path through.  I like to have at least two stages written out to look at: general themes, and then specific actions/sources to test:

While by no means complete, this model serves as a basic roadmap of our plan.  We also often use  third level for tactical tests to confirm items in level 2 (ie acquire 20 customer per day at Dreamforce).  As they are confirmed the fact bubbles up to the next level.  As we develop the company we continually edit this knowing that the dependencies flow from left to right and then top to bottom.  

Hope this helps you all bring a strong evidence-based approach to your ventures.  We're continually evolving this model, so if you have any ideas for improvements or cases where it fails let me know in the comments below!

Seven Deadly Startup Sins

I've been working full time on Contastic (getcontastic.com) for about three months now fully immersed in the valley culture.  It's amazing to be in a place with so many resources, but each opportunity is also a distraction.  Time is your most precious commodity - if it's not invested wisely, your company will die.  In the spirit of helping founders make better choices here are the seven deadly startup sins to avoid:

1 - Building too many things

It's hard enough to build one feature well.  If you attempt anything more than that you will dilute your resources and will end up with a basket of mediocre features that nobody cares about.  Approach scoping from the prospective of a 10 second demo - only build what can be demoed in 10 seconds or less.  This is all the time you'll get from a customer or investor.  Spend your time making one amazing magical feature that can wow anyone in 10 seconds.

2 - Getting feedback from non-customers

The first thing people do when building a company is to ask the people around them.  This is lazy and leads to bad information that will lead you down the wrong path.  Focus on customers - people willing to pay for your product at some point.  Ignore all other input.

3 - Building features customers won't pay for

When I started using lean methodologies I quickly found myself drowning in divergent customer feedback.  When asked 'what would you use?', customers will ask for everything under the sun.   The real question is 'what would make you pay (more) for this product'?  If adding a feature doesn't change their willingness to pay drop it.   Only build what changes willingness to pay for a large segment of your customers.

4 - Following advice

Almost all advice is well intentioned, but bad.  Nobody knows your business like you do.  Ask people for their stories, their experience, and their opinion within their scope of expertise.  Do not ask for or listen to anything else.  The worst advice comes from experts outside their field of expertise.  It sounds deceptively credible, but will lead you down the wrong path.

5 - Telling customers what they need

Coming from a sales background I'm naturally inclined to get to 'yes'.  While good sales, this drive is a terrible way to gather data.  When interviewing customers adopt the socratic method - ask questions and avoid making any declarative statements all together.

6 - Not asking for the introduction

Every good conversation you have should send with an ask for introductions to others.  At any stage if you have one person that likes you, your idea, or your product, use them to find similarly minded people.  Birds of a feather flock together, so one fan can usually lead you to more.

7 - Not having a plan

Engineers are often guilty of the 'build first ask questions later' mentality.  Building is the most expensive way to validate an idea.  Create a step-by-step plan which ends with coding - require a high barrier of proof before building anything other than mockups.  We use the rule of 10 - 10 customers must say yes before we move on.  In this model we'll talk to at least 30 customers before coding.  Here's what we follow:

Customer Development Pipeline

Note: after the first couple interviews we lump the first three steps together.  Just be careful to ask them in order so you don't influence the user's perception of the problem with your solution.  Also, drop customers from your funnel if their needs start to diverge from the pack.  You don't need to make everyone happy - just 10.

Finding Founders Post @ HIPPO Reads

 

There’s a new Hippo on the block in high quality content.  After being introduced to Hippo Reads by founder Anna Redmond I’ve really enjoyed learning through their curated content. 

In each ‘curation’ an industry expert leads you through a rich array of secondary content in an essay format.  With topics ranging from Healthcare to Justice the breadth of content and voice of the curators make Hippo Reads a great digital escape where readers can explore a new topic in just a few minutes.

If you want to read more check out their most recent piece on Entrepreneurship (by yours truly): Finding Founders.

How to Hire Great Developers

A recent conversation highlighted the challenge of hiring great developers.  It’s a tough market – demand for technical talent is exploding and the supply isn’t increasing to compensation.  As the talent war heats up prices increase, and even finding talent is hard since nobody good is every looking (they’re choosing between offers). 

Really, this boils down to a sales process.  There’s prospecting (find the people you want) and closing (convincing them to join you!).  While by no means the end-all in recruiting, here are some tactical tips and tactics that have helped me:

Prospecting

• Friends – by far the best resource is friends and friends of friends.  Ask around the people who already know and like you to see if they have someone in their network they can connect you with.  If it’s a good fit everyone wins!
• Presentations – there are a ton of opportunities to give presentations at local meetups and events.  This is a great way to get in front of a bunch of people and get them excited about your company  (which you should be doing anyways!)  The best networking will happen when people come up to you afterwards – talk about qualified leads!
• Online Press – there are a multitude of online press organizations out there.  You should be active pursuing coverage in all of them.  Especially the locally targeted tech ones will be actively read by developers.  If you make a good enough pitch this will bring the most motivated team members through the door.
• LinkedIn – last but not least!  Look around on LinkedIn for the talent.  See if you're connected, if not it’s worth buying the contact options.  People are usually quite responsive if you make a respectful pitch.

Qualifying

• Portfolio – what has this developer done? One the job and on the side are both important.  Have the skills you need been demonstrated?  If not I wouldn’t make the hire. 
• References – this should be obvious, but is often missed.  Ask past employers, colleagues, and just anyone you can about the person.  Will they be a good fit for your team culture?  Will they stick around?   How can you motivate them?

Closing

• Have the whole team sell them.  Through in person meetings, 1:1s and group emails – make sure they feel desired by the entire team – not just a hiring manager.
• Make a great offer.  People in general and technical people in particular are usually 1x or 10x.  The best are worth 10x more than average.  So take compensation off the table.  Make them an offer they can’t refuse (say 2x).  It’s worth it.
• Sell the mission.  Most developers make more than enough money (and have for their entire careers).  They are good because they are smart and seek interesting problems and fun products far above anything else.  Talk about your past wins and future ambitions.  Show them how their work will change the world.
• Learn to code.  Nothing is worse than a non-technical person trying to close a technical one.  It just doesn’t work well.  Even if you know a little it will help build the trust that you, to some extent, appreciate their talent.

How Powerful Are You?

At startups we often eschew the notion of politics and power. However, it is an inescapable reality of living as the social creatures we are. As I set on a class on exactly this topic: Power and Influence the professor highlighted the best yardstick for power I’ve heard to date:

Who comes to me for advice?

This metric is particularly effective because it neatly captures both dimensions of trust – Competence and Character.  In order to trust someone’s advice you need to believe in their competence (they will provide you with good data) and their character (they have your best interests at heard.  One without the other (ill intentioned intelligence or well intentioned ignorance) is misleading at best.

Take a couple minutes to map our who trusts you. By these metrics what does your network look like?  How powerful are you?  And, most importantly, how do the people in your circle of trust map to your needs in the relationship (top) row of the Framework for Happiness?

F-ing up Feedback

Through some really challenging conversations with advisors I’ve gotten the kick in the pants to re-evaluate my management style. The conclusion I came to was the biggest area for growth was in feedback (irony knows no bounds!).  Giving feedback is hard and temporarily uncomfortable, so it’s something I often postponed to big mile stones.

However, through much reading, adjustment, trial and error I’ve settled on three Fs for feedback:

Fast – Give the feedback in the moment.  Immediately after the action everything is fresh in the recipient’s mind.  This is the best time to trigger reflection and growth.

Frank – Be brutally honest.  Any beating around the bush or ‘cushioning’ to save someone’s feelings only obfuscates your messages and robs the recipient of a valuable learning opportunity.  That is not to say you need to humiliate the person with mean or public feedback.  Just deliver an objective statement in private, answer clarifying questions, and leave to let the recipient reflect.

Frequent – Do this often.  My biggest failing was to wait for big milestones. It’s important the feedback is separated from performance/compensation review.  Frequent feedback builds the trust that the information is simply there to help – nothing else.  This will take the pressure off and enable the person to respond positively.  Also frequent feedback cuts up changes into small chunks – making it easier for the recipient to internalize and adopt.

If you’d like to read some more on this topic from a truly great mind – one of the most pithy descriptions of good feedback comes from Ben Horowitz: http://bhorowitz.com/2012/10/17/making-yourself-a-ceo/

So go forth and F up your feedback so you don’t f**k up your team.

Breaking the Silence

In the first of many Harvard Alumni Entrepreneurs events I plan to attend Michael Beer discussed on The Silent Killers to Strategy Execution.  The foundation of the talk was that there are insidious issues that pervade organizations of any type and prevent sustained success.  In order to create an enduring business executives need to continually bring these issues to the surface and face them head on.

• Create trust based relationships.  Start by creating the culture with your employees and it will flow through to your customers and investors. 
• This makes me wonder if quarterly volatility is an indication of a stock’s quality (are people trusting in the people or trading on quarterly results).
• Expose misalignments and make them discussable.  Learning and governance is the structure that should be designed to surface performance and psychological alignment issues.  “Trust can speak to power about leadership and organizational effectiveness”.  This is why many companies hire consultants.  But do you really want to outsource something that should be your core competency?
• People at the top are the biggest champions of the status quo. If you’re currently in change any change is all downside risk.
• Silent Killers
• Unclear strategy values, and conflicting priorities
• Extreme leadership style – top down or laissez faire
• Poor coordination
• Often seen as the hub and spoke systems – relying on one point of management and communications
• Inadequate leadership skills/development
• Closed vertical communication resulting in low trust and problem solving

So, how do we get a productive conversation going?  Honest collective and public conversations.  Have this conversation on a regular basis and explicitly call out discussions for any historically known silent killers in your organizations.  Have an intermediary fitness task force that connects senior leadership team to the broader organization.

Helpful rules for great feedback and bring out the unvarnished truth

• Perception is fact.  Don’t argue about veracity.  If employees are saying it you need to deal with it.
• You can’t ask for sources.
• Management can choose the taskforce – they need to choose people they trust.
• Task force members need to follow up with the organizational members they spoke with to let them know that the message was delivered.
• Feedback session layout – this physical layout offers a sense of communal security (together in the center) with management as observers on the outside. 

The taskforce provides the dialog and open feedback. Surveys don’t surface issues – they measure them.  And, as an added benefit – this will help you to develop talent.

While much of this is from the perspective of larger organizations, however, it is all applicable to startups.  Startups are intensely political and personality driven organizations powered by faith in the mission.  This often clouds management’s ability to collected feedback (despite having a flat organizations).  Consistently having honest collective and public conversations will ensure that you keep learning and continue to grow a healthy organization at any stage.

Building an Enterprise Netflix Style

A recent TechCrunch Article introduced the Netflix Culture with the quote from Sheryl Sandberg that this was “The Most Important Document Ever to Come Out Of The Valley”.  While overblown (Moore’s law anyone?) the monster 128 page deck does contain some gems:

• The valley of death for big companies comes from scaling up complexity with procedures.  These procedures enable mediocre employees to persist while making the business more inflexible.  This creates a cost effective juggernaut that has no ability to respond to market conditions. 
• I’ve seen this in every single big company I’ve been around.  Netflix makes the big bet that they can survive by having a team of superstars with a high degree of flexibility who fanatically drive down business complexity. 
• Treat you team like a pro sports team. Keep only superstars in specific positions your team needs.  Cut everyone else.
• In the same vein – pay them like superstars.  Everyone should be paid at the top of their market worth and employees should be ‘re-hired’ every year at the appropriate salary.  This is HUGE.  If I stayed an engineer at Microsoft I’d have to get 2-3 promotions to get to the same base as the incoming class of college hires from my alma mater. Ridiculous and common for almost any big company.  This is the leading cause for folks to bounce around the big five tech companies.  What an inefficient process.  
• Give up the complex expense policy.  Make the process transparent (so everyone can see what you spend on), but don’t try and legislate every single spending rule.  Microsoft wouldn’t buy me a GPS ($150), but it would expense one on rental car ($1000/yr).  Go figure.
• “If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders.  Instead, teach them to yearn for the vast and endless sea.” –Antoine De Saint-Exupery The Little Prince
• Netflix seeks to create well aligned but loosely coupled teams.  With really high performers, if you can get them behind the mission, and take compensation off the table (by paying ridiculously well), they can dedicate manic focus to doing the right thing.  Make it about the work.

While Netflix is certainly an embattled company with some MASSIVE BLUNDERS in its past (that call to question the whole superstar idea), the dream that this deck outlines is one of the first legitimate templates for building a big business with multi-generational potential.

Cheers to you Mr. Hastings!

Culture (2009) from Reed Hastings

VC Overview with Peter Wendell of Sierra Ventures

Our crash course in Silicon Valley began with a thousand foot overview by Peter Wendell of Sierra Ventures.  In addition to the basics of VC, there were a few core points that stood out among all the talks in this subject area I’ve heard:

• Expect 4.5 rounds of financing on average before liquidity.  Shoot to raise 6-12 months of cash (just enough for a inflection point in value)
• Founder groups are usually 1-4 people.  Seek a diverse team that can cover the critical areas of the business (product dev/sales), but maintain agility.
• Founders are the decision makes.  They steer the business.  Employees execute.
• Most founder shares are subject to reverse vesting.  This enables the founders to ‘own’ shares before they are vested.  This allows founders to maintain control and to enjoy favorable taxation (capital gains % vs. regular income %).
• Spend some time on NVCA.org
• The NVCA Year In Review Report is amazing
• As a founder you want to help VCs’ greed supersede their fear.  After this inflection point the checkbook comes out.

• Your investors will be with you for the life of a company. Approach and choose with extreme caution.
• Entrepreneurs should use their ears and mouth in proportion (listen more than you talk).  Chances are if a VC has been investing for years their feedback is valuable.
• Look beyond VC for funding.  Anyone whose interests align with yours are targets (Customers, banks, angles, VC).
• It’s going to be a bumpy (but still worthwhile) road ahead: http://www.nytimes.com/2013/01/14/technology/start-up-investors-grow-wary-of-tech-ventures-after-facebooks-ipo.html?pagewanted=all&_r=0

Book Report: Rework

I’ve long been a fan of the 37 Signals folks.  They really are the heralds of the lean movement.  The build super simple tools to run small companies and they do it using the best practices in the lean movement.  So, I was excited to dig into their book: Rework – a compendium of their best practices.

The book is organized in to 87 lessons that read like blog posts (just a few pages a piece).  Here are my seven favorites:

1- Scratch your own itch – build a product you will use.  Customer research becomes easy and part of your company DNA when you are the customer.

2- Interruption is the enemy of productivity – whether meetings, calls, emails, or colleagues stopping by – these little interruptions make sure nothing actually gets done.  I’m a big fan of arranging my work/communication in blocks. I will code or write for 3-4 hours with my phone off and outlook closed.  It’s good practice to carve out this time for your company on a regular (ie daily) basis.

3 - Go to sleep.  While everyone differs, my world revolves around sleep. Sleeping less makes me stupid and careless – often to the extend that I’m only creating more work for myself down the road.  Sure there are times where you need to pull an all nighter, but usually those events are preventable.  If you’re up all night – you’re doing it wrong.

4 - Welcome obscurity.  I think many misinterpret the lean startup methodologies to mean that you need to launch and build a product asap.  This often leads to a team maintaining the wrong business.  Lay out your theses and do the least amount of work possible to validate them in obscurity.  By the time you’re hunting for PR your business should be rock solid and ready to scale.  If it’s not spend more time on product and none on promotion.

5 – Press Releases are Spam.  Many young companies go chasing big press as a marketing mechanism.  Rework points out that they get far more customers from blogs/trade publications than big media.  In my experience I’ve certainly found this to be true.   I’ve gotten more useful leads from the HARBUS (the HBS student paper) than CNN.

6- Do it yourself first.  I’m a huge fan of this mentality.  I’ve done every job at my startup.  I know what it entails so I know what person I need and I can be a better manager (since I actually understand what they’re doing).  Also, if anything goes wrong, I’m never left helpless or blocked.  I can always pitch in to make sure the show will go on.

7 - Test Drive Employees.  Despite working at Microsoft – famous for their love of the brainteasers and intellectual horsepower tests – I don’t find that relevant to finding good hires at all.  If I’m going to hire for a position I look for comparable experience (ie this person has successfully done a similar job in the past) and then I watch them do their job.  Whether this is a 1-2 hour coding session where they work on a current company problem or even a weeklong period making sales calls – taking the time to watch someone work before hiring is the only way to make sure you’ve got the best candidate.

As the new year rolls in. These are great lessons to live by – the top two will definitely make my list of resolutions!