Rational Idealist

I never liked haggling, so I was terrified when I first heard there are places you can visit, like Arab countries, where sellers get literally mad at you if you don’t participate in their ritual of arguing, going away, being disappointed, and after some time eventually settling on price of the already ultra cheap piece of pottery.

Running a business of my own, I slowly learned that the art of negotiation is a good skill to have, and one you never stop improving. It is a social game that demands whole person to contribute. Not just oral skills, body language, imagination, improvisation are equally important, as well as intelligence and empathy to be able to guess and predict opponents motives and lusts.
So eventually I also realized the true source of rage for those Arab merchants – by ignoring their custom, you refuse them opportunity to practice their skills.

But, i believe there is a even a higher cause, a systemic function to this ritual, that makes it universal across all human societies, and most visible in the ones based on trade. Haggling and negotiating is ultimately about setting the price, or value of an object or service. Since the value of goods and services is something we made up and is not their natural attribute, it can exist only trough infinite debate, that is constantly questioning and confirming it’s place and value for the society at large.
By refusing to haggle, you also refuse to participate in this culture-wide debate and refuse to make society better. Anybody on the other side should be insulted with such ignorance.

Now, this is true in cultures like traditional arab was/is. I am not trying to say that we should all start haggling in supermarkets. In western world, it is often illegal not to be able to quote a price and stick to it. Let’s take a brief look at what happened here.
The process of figuring out the optimal price was, just like everything else, converted into science. Today, the science of marketing and market research is responsible for going out on the field, analyzing audiences, identifying markets, and defining price points that are optimally aligned with targeted market segments willingness and ability to pay.

Because we have built theory that can calculate optimal price and because we have trained society to conform to the model, haggling is not necessary anymore. Even more, it became unwanted, a bad word. If as a seller you don’t know exactly how you price your service, it means you didn’t do your homework. Instead, you are wasting my time as consumer, because you were lazy or incompetent of reading my mind.

Granted, I am exaggerating. We also have supply-demand game mechanism built into the theory, and all of this is more true for store-sold goods for mass consumption than for services and luxury items, but still, i believe that culture-wide mind shift is apparent and profound.

And understanding the origins and history of contemporary phenomena always helps hacking them 😉

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Staffing is one of the most important aspects of company growth, and arguably most crucial factor in transformation of a startup into a stable company. The entrepreneur has to always know more than just who’s performing and who isn’t. The entrepreneur has to know who in the company is in the right place, who will be capable of managing teams as they grow, who has the capacity to see beyond the current state and will be pushing the company to the next level.

The evolution of a startup from staffing perspective is a repeating cycle of: (1) hiring people who see beyond the current state, (2) working hard and discovering the right way to incorporate their knowledge into your specific case, to streamline and optimize operations.

It’s really just these two focuses. And the CEO’s job is to always know where in the cycle the team is, what is the next milestone and what kind of talent will see over it.

In my company, Zemanta, I use a method to track our capacities, that shows me just that. It is implemented as a table (not spreadsheet), that maps persons (employees) into roles, according to their experiences.

I believe there is a rather fixed set of roles every company will eventually have to fill. It is probably even possible to formalize it to the point where you could predict the staff requirements based on desired yearly revenue.

Let’s take a look at an example evolution.

Startup company at inception

A typical tech startup might begin with a simple structure: business and tech co-founders. Their capacity matrix will be simple, but overwhelming:

It shows us two founders performing all business tasks with no external help. Note that capacity is not the same as performance. Performance will be based on many external factors, but dependent on time the particular employee has. In the presented case, both founders are severely over-stretched, and can perform reasonably well in just one or two roles, while the rest will be on back-burner.

Most important in this stage is that the founders have senior capacity in leadership. Everything else will be in flux, but without this they will never be able to attract and direct additional team members.

If the company has this kind of capacity matrix, it will inevitably be a technology and product company with good public recognition but poor business performance. Main challenge and milestone in this stage will be attracting early clients or investors, that will enable growing the team to really start working on the services/products.

And the competence matrix tells us that the only way to do this transition successfully will be to find some help for the founders to do things right…

Seed stage – proving the product

Where it will go from there really depends on specifics of the business. For instance, one of the first actions might be outsourcing:

Company in this stage can afford some to spend some money on making the core team more efficient, but the flexibility of working with outside help is much appreciated, since you are still proving that the work has long-term sense. Depending on the type of product you might invest in limited number of developers.

Company’s main focus is still on product and partly marketing and business development. Key milestone to reach will be implementing key metrics that will demonstrate commercial value of the service/product and inventing the specifics of the revenue model.

The competence matrix suggests that the only way to reach next stage will be acquiring knowledge/experience/people in business side – at the end of seed stage, the company is severely over-resourced on product and technology side.

Growth – stability and focus on sales

Next might be professionalizing the development part, by hiring full time staff and possibly even engineering lead, and finding seasoned sales person to kickstart the pipeline:

Now, a year in, we have a decently operational company, that is starting to generate revenue, the founders can focus on monitoring the changes in the competitive landscape and the CEO’s job for the next few months (years) will be making sure the roles are performed optimally.

Company becomes sales-oriented and is all about implementing the revenue model, where VP Sales is the key person that will have to overlook, improve, do all the hard work and earn his own staff.

The Sustainable Company

The ultimate state every company should strive for, the state where company works as a stand-alone system is something like:

At this time, every role has a senior manager, reporting to seasoned CEO. Everyone has well defined job descriptions and knows their role in the mechanism.

Most companies never get to this stage – they either stop growing at earlier stages, fail or get acquired. My thesis is that those that fail do so because they fail to find the people that could take them to the next level when timing is right.

Conclusion

We’ve followed a path of a fictional company on the path from idea to professional organization, which was really a process of converting inspiration into experiences. As the company’s focus moves from proving the idea, building the product, implementing the revenue model to stabilizing all aspects of operation, the right staffing will be the key driver of those transitions.

Quite possibly I’ve missed some other important roles. But I hope I managed to convey the main points:

• CEO’s job is figuring out the details of the path between initial state (first table) and final goal (last table)
• the areas you need top performance should have dedicated personnel, ideally seasoned
• this same method can also be used to evaluate staffing in any sub-department

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It’s been ages since I last blogged here, mainly because I write too many emails these days. I actually wrote IMAP client to analyse this phenomenon, and it turned out I process something like 1000 emails per week. By process I mean read/write incoming/outgoing. I’m sure most of people doing business online these days are even worse-off.

So being a startup product guy, I was thinking what’s wrong with it and how to make it useful again.

I realized that there is only one thing missing in the whole email protocol. One simple concept, that has been around since human beings started communicating – ability to flag the messages with level importance. Sure the ‘urgent’ flag exists, but I believe it is not used because of a design mistake.

Think old-fashioned mail: there we have a three-part structure of the service:

1. Sender can choose to send the package as ‘normal’ or as ‘priority’, depending on how important it is for him that it is delivered timely. Yes this was due to logistical limitations of the medium, but it also protected receivers from getting overwhelmed.
2. At the same time, the receiver doesn’t have to pick the mail up immediately.
3. And for truly urgent things we have telegrams

These ensure that all possible situations are covered – ability to send, control of own time, emergency situations.

Now, in digital world we can flag messages as ‘urgent’, and the only people really using this are PR spammers. So what went wrong? At the same time we completely dropped the (2), with an explanation that the receiver can choose to read at will. I believe this should be handled appropriately based on the social relationships.

So here are the two things email protocol lacks:

• Social flagging: If my wife sends me email, I want to know about it immediately, and I’m ok if I read everything else only every hour or so. Right now, because of the way email works, I can only choose to see everything all the time. It’s great that the web can be real-time, but if it is all-time it starts to cause serious productivity problems.
• Different urgent: Sometimes my wife will send me message she knows is not urgent and she wouldn’t want to bother me with it while at work. Because of the way email works she can only choose to send it now or wait and remember to send it later. The founding fathers of e-mail screwed up severely – in a real-time medium the internet today is we need the NOT-urgent flag. Most email programs don’t make it easy to do delayed sending, and it wouldn’t really solve this issue anyway, because I might be interested in reading non-urgent email during my lunch break.

We need email client that understands standard emails and ships them once per hour and priority that is delivered immediately. We need it on both ends – the senders and the readers. And I should be able to state mail from whom I want to see as soon as it arrives, and which should be delivered every hour.

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My superb time-management skills were being challenged last month by a great new amount of responsibilities, so I decided to finally start working on articulating my time management framework.

When you think of time management, it’s really mainly about two things:

1. figuring out what’s important and what not
2. sticking to it

Now, the first point is very dependent on your field of work / focus, but the latter is all about discipline, which in my case is mainly about memory. My usual thought cycle has three stages: acknowledge something is important, forget it immediately, suddenly remember after two days and do it. And every 10 minutes I remember the next thing, and work on that… I got used to this and hasn’t failed me to often. 🙂

However, some things simply have to happen regularly and predictably – like weekly sales review, monthly roadmap review, or calling the parents. If you fail to do it regularly, nobody will really notice until the whole process stops working.

I’ve tried using regular calendaring solutions for this, but it’s just to rigid – there is no way the sales review will happen at the same day of the week and the same hour. So why even bother with rescheduling process? And the post-it notes are great, as long as there is less than 50 things on them, and as long as the tasks on them are one-time tasks.

So I decided to try a different approach – a meta-calendar, that will outline everything that should be done every day, every week, every month, every year. So every morning I simply glance at this timetable and check what should I have done this day of the week and this day of the month. Here’s how it looks (I’ve left some entries in for better idea):

… and you can also download OpenOffice.org source file…

Now, I just wish I knew enough Javascript to be able to convert this to web-based app, where I’d have simple point-and-click editing of the cells, auto-sync with my Google Calendar and Remember the Milk and maybe a morning coffee report 😉

Further reading:

• Time Management (slideshare.net)
• The Other 8 Hours (myventurepad.com)
• Time Management – How do you manage your time and boost productivity (startups.com)

first task on my recent move to NYC was finding an apartment, which me and my girlfriend performed really well at – three days to fly-in, search, decide, move. it was a complex multi-variant decision process that involved a lot of walking and interacting. I don’t think we could have done it faster.
next task was paying the rent. sounds trivial, specially in this digital age and in this most-advanced country in the world, right?
well, the landlady wanted me to pay with a ‘certified cheque‘, which for us, being from Euprope where we banned bank cheques decades ago, was (a) unknown concept and (b) obsolete concept. but the affirmative nodding that accompanied the instruction scared us, and we really only wanted to cook a homey dinner.

so, since I own a HSBC.UK account, i figured: they claim to be the world’s local bank, for sure they’ve solved this problem. and I went to ask what this cheque thing is.

• they said no problem, you give us cash, we give you piece of paper, and we’re done.
• but I don’t want to carry thousands of dollars around, can you take it of my hsbc.uk account?
• no.
• mhm. so what now?
• can’t do it, sorry, goodbye.

… felt strange. there must be more to international banking than this. so I walked half the town again, to another branch. their answer was different:

• sure, you open US bank account with us, order money transfer, when it lands we can give you all the cheques you want. oh, and would you consider paying extra for our premium account?
• mhm, wait, what do you mean ‘when’ it lands?
• well, we are just the receiving end, it’s up to your UK branch to send it.
• ok, ok, let’s open this account and i’ll call my branch to check.

… so we did, and in that 1 hour that it took to fill out all the papers i’ve learned that it can take up to 4 business days to wire the money. and i was ordering it on friday afternoon, which meant my landlady could be waiting for the cheque 6 days, because i had money transfered from hsbc to hsbc!
well, it couldn’t be helped, i emptied out ATMs and collected everything we had on us to at least pay the security. we moved in, cooked a tea and chilled. and then it hit me:
why haven’t I simply wired the money to her directly?
…
I could simply print out a confirmation of transaction and save us both the trip to the bank. well, to be honest, it is because she wanted it so, and that’s simply due to an obsolete custom of banking with pieces of paper.
the moral of the story: never listen to instructions, they are usualy not optimal. think outside other people’s boxes.

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Today is a very special day. For the first time in my life, I had to go to work in my office in the morning. It was interesting, how this occured to only after I’ve already been waking up for some half an hour. Suddenly I had to run, no morning coffee, no tea, no breakfast, no time.
I wasn’t late. In fact, I was the first to show up. *sigh*
We got this office just before we set out for the wild wild west, so in the last months, our head of home office was using it. He had quite some obligations here, so it was very useful for him. What surprised me a bit is, that just looking at it, one can tell that – by the peaceful disorder on one of the desks, by nicely labeled maps of documents, which I had left in a complete mess, by a pack of Cedevita on the shelf.
I felt at home coming to my office today. Then I noticed a strange object on the file cabinet – a plaquete. Right, ‘we’ received some awards in the meantime, and it never occured to me, that they come in physical form. I held it in my hands, just like you are suppose to look at the plaquete, and threw it on the sofa, but with just enough care, that it landed smoothly. Oh, no, no sofa, sorry – I just put it back whre it was.
In another corner I spotted an ever stranger object. Another award, in the shape of a black and colorful monoltyth. I like monolyths, and this one comes in two pieces, that stick together by the sheer force of air. Interesting.
The next task for me will be to find some coffee. And breakfast.
Today is bound to be a good day.

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Live blogging from a 5 hour session with 8 top-level consultants, approached with a problem of sorting out our exact value proposition and market analisys. When we started, they knew nothing (0, zilch, nada) about blogging, now they are happily crunching numbers and designing their spreadsheets to look nice. I am not sure, whether this means they understood what I want from them, or are they simply running under time pressure, but it looks impressive nevertheless.

First I had a briefing for them, they posted some basic questions, then they started brainstorming ideas we went trough three months ago, then they started posting individual questions I’ve been banging my head with last two months, and now I am really curious what they will come up with. It might be, that if they had a couple of days they would progress immensly, in comparison to my performance, even though they lack the market insight and are trying to convince me, to go into advertising.

Hehe, and now their spreadsheets got buggy…

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Nice feature of my job is travelling around different conferences, representing and evangelising my company. Some peopleI know hate this, but i’ve learned to like it. Today I spoke with a german collegue, who explained, that while some others can live most of their proffesional time in one city, because all the relevant partners are in the same place, while he is spending more than half of his time away from his girlfriend. In this sense it really is a bit unfair.

I learned to appreciate the hotel rooms, with all the luxury I won’t have at home for quite some time. There’s nothing like a nice hot bath after a busy day. It is something I can’t afford at home.

I just wish my duckling was with with me all the time.

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Being the head of a social group simply happens to some people. They are silently voted into the function, because of a number of ‘right’ moves in the everyday operations.
These right moves are simply about keeping their head clear at any time, even when the others freak out. Everyone wants someone to comfort them, except the leader, who doesn’t need it, since she simply doesn’t feel threatened by the world. So the art of leadership is mainly about staying rational no matter what.
Collateral damage of being the only one to act sober is to be the only one to make decisions. Even when you don’t really know the right path, others will force you with their big puppy eyes. It is thus imperative to have incredibly good hunch for advice, to know who to trust and when to change course, even if it isn’t obvious. Knowing when to be irrational and stick to some weird gut feeling means more than half of the successful leadership.
I guess it’s about following the intuition when setting the course and obeying the reason when walking up that road, is actually how the human was meant to behave in the wild. Call it fear, hope, wishfull thinking or anything else, the sense of every action remains emotinal, even when the reasons are obvious.

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Running a company, especially a young startup is exactly like cooking. You need to be hard when cutting, tender when stirring, gentle when decorating, subtle with combining ingredients, and most important, you must never think about what you are doing.
In fact, running a young startup is all about cooking and food. Geeks tend to be hyperproductive, so they are likely to avoid other substances and distractions, but they know their food. We all know about the famous Google Chef, recentl I was attending a lecture by the Last.FM guys, who confirmed that the main ingredient of their success have been the lunches they provided their developers in the rough times.
We are currently running on a tight budget aswell, but we still have our Chief Chef and an endless suply of Jaffa Cakes. As long as the spirits are high, the code is compiling.

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