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.

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Categories: career, corporate america, economy, innovation

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]

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Categories: corporate america, economy, innovation

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.

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Categories: career, corporate america, innovation, investing

I wrote this recently in reply to a question posted on Quora.com.  If you haven’t checked out Quora yet, go check it out.  Quora is a great example of a business model based on Clay Shirky’s concept of cognitive surplus.  I like the execution because they make it easy to share your knowledge and also make it social enough that it motivates people to contribute more.

Q: If a merchant offers you a discount when you apply for their credit card, how much should it be worth to go for it?

A:
Short answer: minimum $100 offer value
Long answer:
3 filters to use
1 – What is your current credit score?
2 – Are you getting a major loan (house, car, boat, etc) anytime soon?
3 – Are you making a larger purchase from this vendor in the future?

If the answer to 1 is “I don’t know” then just say no to all of these offers in general.  Go to a site like creditkarma.com and check your credit for free without a “hard” inquiry.  ”Hard” and “soft” exist.  Google it if you don’t know the difference.  If your score is 700+ then proceed to question 2.

If the answer to 2 is “yes”, then you should also just walk away.  $100 or whatever isn’t worth a few extra hundred in interest on that new loan because you dropped your score just under 720 with some dumb “offer” you “took advantage of”.  If the answer to 2 is “no” then proceed to question 2.

Many of these offers are one-time offers only good at that store on the initial purchase when the card is opened.  This is where question 3 comes in.  For example, 5 years back I bought a furniture set at Macy’s signed up for a card and got 20% off.  $2-300 in my pocket.  Yesterday I asked about a coupon that was valid only for Macy’s cardholders.  My account had gone inactive but, no problem sir we’ll open it right back up for you and you’ll save $14.  No thanks, I am thinking about some new furniture down the road.  Probability I buy furniture from Macy’s again * expected value of future deal > $14 so this is a pass for me.  You do the calculations for your scenario.

If its not a one-time deal with a vendor, you have decent credit, and no plans for major new loans in the works, then go to town.  It will impact your credit if you do a number of these.  For that reason, I don’t do these for less than $100 as plenty of them come along.

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