Brian Grey Blog

I read with great pain the recent Wall Street Journal article touting the growth prospects of a major U.S. corporation that are being driven through exports of its products to India.  More on that in a moment, but first I need to set the stage with a comment about the Import side of the U.S. export-import equation with India.

Now I don’t profess to be any kind of expert in the area of H1-B Visas, but I have previously managed employees who were working here in the U.S. on such visas.  And I subscribe to the general theory that labor markets should be open so that an efficient flow of resources can exist to help foster new businesses that are based on technologies that require specialized skills from such workers.

That’s a fancy way of saying that if (as is oftentimes the case) there are highly educated and proficient people in India (e.g. say software or Web engineers for example) then I would suggest it’s a good long term growth policy of the U.S. to support a robust H1-B Visa program whereby these accomplished workers help build new companies and jobs for multiple workers beyond the “imported” folks.

Clearly in a time of rising U.S. unemployment this point of view isn’t widely held.  With places like Detroit experiencing an unemployment rate north of 50% you’re not going to see the Obama administration vault the H1-B issue to the top of their “to do” list.  It’s actually a small victory that Obama’s peeps are taking meetings with officials from India as reported by the Wall Street Journal’s LiveMint reported back in the spring.

Okay, but here’s where the Indian government should be crying for some kind of quid pro quo.  Just this week the very same WSJ reported how focused the U.S. company YUM brands is these days to expand its various franchises like KFC and Taco Bell in to India to fuel its long-term growth.  Mmmmmm!…Naan bread tacos and curry-fried chicken wings.  I’m booking my next trip to Bangalore now!

I’m just saying, if the Indian people are willing to let YUM Brands drop all over their country food full of high fructose corn syrup and hydrogenated soybean oil, shouldn’t the U.S. be a bit more giving when it comes to letting highly educated Indian engineers hang out here helping tech start ups grow and prosper.

Hopefully I can find an “expert” to help me properly spice up my Taco Bell Super Gordito with a little basmati rice before their Visa expires?

Anyone who has taken the time to coach a Little League sports team understands the definition of the word “coachability”.  Trying to show a kid how to properly throw a pass or swing a bat never sticks the first time — or even the first 20 times in some cases.  In some instances, coaching a kid never results in a successful outcome.

In the business world this same challenge appears everyday.  Leaders and managers constantly trying to coach their direct reports in various areas:  how to work more effectively with others, how to communicate better, how to prioritize and focus more efficiently…the list goes on and on.  But as every manager can attest, getting people to make the changes you want can at times be as difficult and frustrating to achieve as getting little Jimmy to learn how to swing that damn bat.

A lot of management thinking and literature swirling around today calls out the notion that people are wired with certain talents and that there is little that can be done to affect change in people if they aren’t blessed with talents.  For example, it’s no use trying to get an employee who abhors details to be the top dog in your operations unit.

Okay, in some levels I buy a lot of the “talents” based thinking.  I’ve experienced it first hand managing people who just weren’t suited for their roles or who excelled because they were doing jobs that they were really talented in performing.

But I’m not one to think it’s as black & white as just saying all you have to do is match an employee’s talent to the role they should be playing in an organization.  What this binary thinking leaves out of the equation is the value of “coachability” — the ability for an individual to actually be coached and to improve in various performance areas as a result of being coached or managed effectively.

Now I’m no psychologist, but here are four ways I’ve found to improve coachability in employees:

1) Use Role Models — Just as in sports, one of the best ways for people to learn and improve their own skills is to point out those abilities in others who they see and work around every day.  The power of wanting to emulate skills and talents that others possess is a powerful aspirational force for people.

2) Create an Accountability Culture — Seems pretty obvious why accountability is important, but in the context of fostering better coachability it’s crucial.  When people know that they are accountable for delivering results, they become much more receptive to being coached.  At least their ears tend to work better!

3) Connect Rewards to Outcomes — Again this seems pretty intuitive, but like #2 it has to be in place in order to ramp up coachability in your people.  Organizations that reward employees — e.g. financial compensation or increased responsibility — for measurable outcomes — e.g. closing key deals or shipping a product on time — have a better chance of coaching people towards those outcomes.

4) Be Consistent in Your Coaching — People become coachable by being coached.  Too often we expect people (or athletes to continue the sports example) to learn a skill or technique after a single coaching session.  In a business environment, the role for the leader/manager is to continually coach.  To recognize that it may take 20 lessons for an employee to become a better communicator.  Ultimately, it’s when someone is coached and is then successful that they become coachable and attain a level of coachability that can be built upon in the future.

Yesterday I spent most of my day visiting a company and taking part in their quarterly board meeting. What I love about the board meeting in the context of a startup is the mix of vision, strategy and detailed tactics that a diverse group of people discuss for generally three hours (or in our case yestetday a bit more than that).

On one level there is an anticipation around getting updated on the latest operating metrics of the company. Revenue, deals, customers, and other dashboard metrics that measure the progress the company is making in it’s core business under its current business plan. And the realization that what may have been considered part of the core business a couple months prior at the last board meeting may no longer be considered core – by either management or the board’s directors. Hopefully there is consensus on the topic of what’s “core”.

At the other end of the spectrum is the discussion around the long term strategic path and vision for the company. Questions need to be addresses like:

• “Where can the Company create a unique market offering?”

• “How big can this opportunity be for the Company?”

• “What does the Company need to do to make this vision a reality?”

Ultimately, the Ying and Yang of the board meeting is finding the right balance between these two agendas. In many cases companies are racing hard with heads down to get to profitabilty under their current model, and in today’s economic climate what board member doesn’t want that kind of focus? Conversely, everyone in the room wants to go after the big play and the path that hopefully leads to the bigger exit. So the board meeting becomes an art of balancing this near term Ying with the longer term Yang.

So how did yesterday’s meeting go? I will be honest, navigating a board meeting feels much more like an art than a science. More than once in yesterday’s session I felt both sides of my brain volleying back and forth, always mindful that there are more opportunities for any company to chase than there are time and resources to chase those opportunities, and that in that context there are real pressures to get to profitabilty as quickly as possible.

I look forward to the next board meeting where I can practice this art a bit more.

Leadership may indeed be one of those things that you just can’t describe.  You know, one of those “I know it when I see it” types of things.  A role that is part art, part science — but not necessarily something that can be defined by specific qualities or characteristics.

Well, to that I say hogwash (I really wanted to use another term here, but I think the foul language filter would have blocked it, and besides, it’s not often I have use for the term “hogwash” in a blog post).

There has to be a way to identify some characteristics that separate leaders from others, whether we think of these “others” as individual contributors (that HR friendly term for employees who don’t manage people) or managers (that other HR term for people who, well, manage other people, like individual contributors).

But let’s be sure to NOT use the term “leader” interchangeably with “manager”.  A leader is indeed a manager, but it doesn’t by default follow that a manager is a leader (feels a bit like one of those math properties doesn’t it?).  In fact, this seems to be a subtle point that companies, boards, and investors often overlook.  So with that premise, allow me to offer three distinct characteristics that separate leaders from managers.  Please feel free to add to my list — I am sure I will add to it over time!

1.  Integrity

Dictionary.com defines integrity as an “adherence to moral and ethical principles; soundness of moral character; honesty”.  If your manager doesn’t fit this definition on a personal level, he or she will never be a leader.  Managers who don’t act with integrity at all times set a tone for their groups or organizations — a tone that ultimately undermines what those groups or organizations represent in the eyes of employees, partners and customers.  Think back to two managers you’ve worked for in the past — one who you would say had integrity and one who lacked integrity.  Which of those two managers were you most committed to following?

2. Selflessness

Again, let’s start with Dictionary.com’s definition for selflessness as “having little or no concern for oneself, esp. with regard to fame, position, money, etc.; unselfish.”  In today’s society and ever evolving digital age, this may be one of the most difficult characteristics to exhibit as a leader.  Everyone has an ego.  Everyone yearns to be lauded for their achievements.  Everyone wants to be given credit where credit is due.  How else do you get to advance in this Andy Warhol world of fifteen minutes of fame otherwise?  Actually, the true leader knows that his/her job is to move the group or organization forward — and that the only way this happens is through the efforts of an entire team.  Nothing motivates the members of a team more than knowing that their efforts are valuable and that their successes will be rewarded (with more responsibility, autonomy and even money).  Conversely, nothing sucks the wind out of an organization’s sails faster than a manager who positions himself/herself as the sole brain, creative genius and decision maker within the company.

3. Vision

Integrity and selflessness are “must haves” for leaders.  They are the foundational blocks on top of which leaders can truly command the respect and support from their employees.  However, the component that enables a leader to take a team up the hill is vision.  Leaders need to be able to articulate a strategic vision for their group or organization that is bigger and bolder than simply making this quarter’s P&L.  Face it, employees over invest their time in an organization when there’s a real vision for how the company can become something really big and impactful.  Better yet, that vision should represent something that can be measurable, like being #1 or delivering a product or service offering that is unparalleled — and the vision should be built in large part by the organization’s collective genius and hoisted up at every turn by a high integrity and selfless leader.

These are three core characteristics of what defines a leader in my eyes.  I’d love to hear your list?  And rest assured that I’ll cycle back to this list and add a few others as I continue to spend time with both leaders and managers.

Living in San Francisco I have pretty much written off Safeway as a grocery shopping option.  I mean, c’mon, it’s just not cool to shop at there.  Maybe when I’m in a pinch and need a gallon of milk, sure I’ll zip over to the Market Street Safeway.  Or if I need to get cash from the Wells Fargo, a coffee from their mini Starbucks, or a lottery ticket (how else am I going to pay for my kids to go to college?), okay, I’ll do the Safeway thing.  But they have disappeared from my grocery shopping radar, replaced by the ever cool Whole Foods Market and Trader Joe’s outlets sprinkled around the City, and the plethora of neighborhood specialty markets like Harvest and Real (“Expensive”) Foods.

But Safeway may have enticed me to comeback based on what I read this morning.  Their CEO Steven A. Burd wrote an Op-Ed piece in the Wall Street Journal outlining how the grocery store chain has turned their employee health care plan somewhat on it’s head by introducing novel concepts like accountability and incentives into the equation.  The quick summary of Safeway’s health-care program is that employees can receive significant discounts on their monthly premium payments by actually being healthy.  Basically, Safeway is thinking of it’s health-care plan more or less analagous to the way auto insurance works.  Why should the employees who don’t want to get healthy (e.g. the “bad drivers”) cause premiums to be increased for the healthy workers (e.g. the “good drivers”)?

Now I know that many people will read Burd’s article and claim how unfair it is to people who for whatever reason can’t pass the health tests that would result in lower premiums.  (In fact, an interesting sidebar with the Safeway program is the fact that it doesn’t apply to union workers).  And while I am sure there are cases where heredity may predispose someone from being able to lower their cholesterol through diet and exercise or otherwise pass the tests that qualify them for a discount, I also suspect a lot of the critics of what Safeway is doing just don’t want to be held accountable for a significant portion of what they pay for health insurance.  For employees who receive healt-care benefits from their employers, this perk has become an entitlement that in their mind comes without the requirement that they quit smoking, start exercising and/or get their hand out of the Doritos bag.

As Burd explains, Safeway has been able to essentially keep it’s health-care costs flat over the past four years (compared to an average 38% increase in company health-care expenses nationwide), there are other real benefits from Safeway’s approach here.  The company is clearly prioritizing healthy living as a core element of Safeway’s culture and exposing employees to information they might not otherwise have access.  In turn, this has to increasingly manifest itself in the form of happier, more productive and more retainable employees.  Now all of these so called “soft” employee-level benefits have to lead to a business benefit eventually, right?  Well, over the past 5 years Safeway’s stock has actually outperformed Whole Foods (though, Krogers has outperformed Safeway, so maybe Krogers is keeping treadmills and ellipitical machines in the back of their stores for lunch break workouts?).

The more far reaching takeaway from the Safeway example is that with all of the debate bubbling up around national healt-care legislation, a grocery store chain of all places has institued a very basic principle that would be worth inserting more broadly into the national dialogue.  Accountability and incentives need to be important concepts addressed in the health-care debate, and when used properly as in the Safeway example, they can be very powerful tools to help naturally guide us towards being a healthier, more competitive workforce that ultimately isn’t directing more than 1/5th of our resources to health-care spending.

Growing up in Oregon I remember how adamant my dad was when it came to landscaping around our house.  His primary goal was to avoid having to mow a lawn at all costs.  I guess the fact that when he grew up he had to shove a push lawn mower around a pretty big yard left a negative yet indelible mark on him.  As a result, he opted for a barkdust yard covered with rose bushes, pine trees and other plants.

For me as a kid I never had to mow a lawn, yes.  But I can tell you that I spent a hell of a lot of time pulling weeds.  What I remember about those Saturday or Sunday weed pulling sessions was how some weeds were pretty easy to yank out, while others seemed to grow so fast and expansively that I never really could get ahead of them.  In some ways, “weeds” are a good metaphor for startups — maybe a way to think about how to assess startups in the current economic environment.

Take for instance the fact that some of the most successful weeds growing in our yard didn’t require us to water or feed them.  They just grew organically (no pun intended).  One could say that these weeds were very capital efficient.  A good lesson for startups today.  Get something going with your product and business concept with as little outside love and support as possible.  I personally love the stories of startups that took a few hundred thousand dollars of angel or friends & family money and were able to grow themselves in to a profitable business.  Maybe the folks at Survey Monkey fit this example?

Another characteristic of successful weeds from my Oregon days was whether a weed stayed low to the ground and expanded horizontally versus sprouting up vertically.  The most frustrating weeds to deal with were the ground huggers — they threw their roots down across a wide area, much like startups that grow fast by being applicable to a broad base of users or customers as opposed to a narrow or singular market.  Twitter is today’s marquee example of a weed that doesn’t have an overly complex root system (e.g. product feature set) but it appeals to an ever widening range of users and use cases.

And of course the most telling example of a successful weed was its persistence.  Some weeds I could yank out and pretty much know that I wouldn’t see them back around the yard ever again.  But the real sticklers were the ones that even after a full day of pulling them out came back within a couple days.  Startups need to be persistence in this way given that they’re always being yanked at by competitors and customers.  The teams that can take a few hits, pivot in a different direction and find a new patch of barkdust to grow in so to speak, are the weeds, I mean startups that are most interesting to back.

Maybe I should create a Facebook app called “If you were a startup company, why kind of plant would you be?”.  Anyone who answers:  “A weed”, might be worth meeting for coffee?

Here we are in late May which means that the Major League Baseball player draft is just a couple weeks away.  Many years ago I spent a couple springs running around the Bay Area scouting college and high school baseball players for the Chicago White Sox.  What I came to learn pretty quickly about scouting was the mix of art and science that went in to the task.

The science part was pretty straight forward.  A radar gun could measure a pitcher’s fastball — 90 mph was considered Major League average, while a stopwatch could measure a player’s speed — 4.3 seconds from home plate to first base for a right handed hitter was considered Big League average.

Once I got past the scientific elements of scouting, what become most fascinating to me was how much scouting really boiled down to assessing those elements of a player’s performance without a radar gun or a stopwatch.  Watching an 18-year old high school senior and having to determine how far he could go in his pursuit of becoming an MLB All-Star has to be one of the most difficult tasks in all talent scouting.  How could you really determine whether these less than fully developed teenagers could hit 30 home runs or win 20 games in the Bigs?

Several years after my tenure as a White Sox scout I’ve had the luxury of comparing what goes in to selecting and drafting players for a professional baseball team to what goes in to selecting team members for a business.  What’s not surprising to me now is how similar these two efforts are in three important qualitative dimensions.

First, you have to look at every player based not on the position they are playing when you see them, but based on the position that you think they will ultimately be best suited to play.  In baseball terms, this may mean seeing a kid playing first base who could actually be a great catcher.

In a business setting, this may be seeing someone in a sales role who is actually better suited to be in a marketing role that actually supports the sales team.  I can think of a number of cases in my managing experience in which we either miscast a team member — by asking a team member to do things that they weren’t good at or by not taking advantage of talents that a team member possessed.

So Rule #1 is:  Pick players based on the position they should play, not the position they are currently playing.

The next variable in building a great team is being able to look beyond the “best athlete” syndrome to the “ability to play” quality.  How many times have we seen a sports team pick the player who is the biggest, fastest and strongest athlete under the assumption that they can “teach him how to play the game” versus picking the physically under assuming athlete who seems to always be in the right place, making all the plays?

In a business setting this is hard to measure — particularly in bigger companies where politics and ego can cloud the assessment of the true players who really “make all the plays”.  That said, if managers look closely enough and really spend time with their people they’ll be able to pick these key contributors out of the crowd.

So Rule #2 is:  Invest heavily in people who really make things happen — even if they’re not the flashiest or most credentialed.

Finally, perhaps the most difficult element to assess for a pro baseball scout is the element that in baseball vernacular is referred to as “make up”.  A player’s make up is a non-scientific mix of characteristics that include elements like leadership capabilities, mental toughness, poise, competitive drive, perserverence and other similar qualities.

In a business setting this notion of “make up” is most crucial.  Who are the people on your team you can really rely on in tough times?  Who are the potential people managers and leaders in your company?  Who are the employees most committed to the vision and mission of what your company does every day?  This goes far beyond the notion of trying to simply assess whether someone will be a good “fit” with the current team.  Ultimately, this concept of “make up” is what I believe separates successful teams and businesses from their less successful competitors.

So Rule #3 is:  Hire people with stellar “make up” and get rid of people with poor “make up”.

I had the opportunity to make a quick trip out to visit one of our portfolio companies at the end of this past week.  The goal was to spend some time helping them distill their digital strategy down to a nice tight operating plan.  As I have come to learn in the past several months, this is a special part of the VC’s job — a part that some VCs seem to put more emphasis on than others.

Taking the redeye is never optimal, but spending a day with an early stage start up is more envigorating than a double mocha latte by far.  As is often the case, the company in question finds themselves running in several directions chasing the opportunity ahead of them.  So the goal is a focus, focus and more focus.  Breaking down the drill in to three steps is a way to help any group go from what seems like an overbearing set of strategic options to a refined operating plan that can be pursued over the near term while at the same time helping the company filter all future opportunities in to an “above the line” and “below the line” set of prioritization.

And what are these three steps?  I think of them as Goals, Sprints and Iteration

1. Set clear and measurable goals

This may seem obvious, but it is often the part that is most overlooked.  I start with the financial goals — these are the ones that typically decided success or failure right?  Pretty straight forward stuff like “how much revenue do you need to generate to get cash flow positive?” is a good place to start and keep coming back to during the planning session.  You need these numbers laid out in a simple way so that everything that follows can be built up to support getting to these goals.

And as for how far out these goals stretch, in a start up I like thinking about 6-month and 12-month planning windows.  Yes for the board meetings and other investor related conversations you will need to lay out a 3-year plan, but in the day-to-day operations it’s the 6-12 month window that you need to focus on and execute against.

2. Define a sprint every 30 days

Depending on the stage of the company, this list may be product focused, BD focused and/or sales focused.  Either way, what I’m talking about here is coming up with a very concise list of what needs to get done across the company over the next 30 days.  And, more imporantly, the 30 days window is used to focus on an even shorter subset of this list to see what kind of traction you can actually get, particularly in the context of trying to close partnerships or sales (e.g. revenue producing) deals that will help validate the assumptions you built in to your financial plan.

I like this 30-day cycle because it fits with today’s notion of doing product development in similar “sprint” cycles and it keeps the company thinking about how they have to be in a mindset of ‘urgency’ to get stuff done incrementally to reach the 6 and 12-month targets.

3. Rinse, repeat and iterate

The company needs to be in a mindset where everything operates as an iterative loop.  While the 12-month plan needs to be fairly concrete, the 30-day “sprints” within that window are repeatable events that provide actual feedback that can be used to revise how the group intends to reach that annual plan.  This is the nature of how start ups essentially “course correct” or “keep tinkering” until they get on a hyper-growth path.

But without a conscious “rinse and repeat” mindset it sometimes becomes too easy for start ups to either stay on an aimless path that burns cash without delivering the traction that can deliver either another round of investment or the ultimate goal of reaching the cash flow milestone.

This may seem overly simplistic — and in a way it is, but that’s kind of the point.  Too often companies that face the constant struggle of trying to manage an overwhelming list of priorities with a relatively small set of resources falls in to the trap of constant planning and trying to cover everything.  The reality is that the former keeps them from actually getting out and “doing” things that will inform them as to what really matters and what doesn’t which helps them with the latter challenge.

Bet you thought I was talking about Dan Rosensweig didn’t you?  Nope, I haven’t circled back with Dan R just yet — I’m sure he’s working on his guitar work leading up to his new gig.

No, the Big Dan I’m referring to is my old Yahoo! pal Dan Finnigan — former head of Yahoo! Hot Jobs and current CEO of Jobvite.com.  Dan’s one of those guys who I always enjoy catching up with because I really admire people who know their business cold — and Dan knows more about the recruitment/career listings category than anyone I know.

He’s also one funny dude.  I actually think he may have missed his calling as a comedy actor!

From an investor perspective, meeting up with Dan reminded me how much “investing” is about making bets on people — particularly leaders.  When you find a smart, passionate leader who knows how to manage, that’s a really great place to start.  As a content guy, I don’t know diddly about Dan’s category, but he’s definitely the kind of CEO that every investor would love to place in one of their companies.

Go Big Dan!

A friend shot me an email this morning with the NY Times piece about current challenges facing the Video Gaming industry, and as I read the article I couldn’t help but feel like I was reading an article that may have been written in the late 90′s — about the Music industry.

Seems like the big boys in the Video Game industry have boxed themselves in to a hits driven business model where the production costs have created an almost untenable hurdle to long term growth and profitability.  Forget the console developers for a second and just look at the publishers — EA, Activision, 2K, and the like all have to spend in the multi-millions of dollars per new title just to produce a game that then has to be marketed for millions more in an effort to sell more than a million copies — the magic number for reaching at least break-even these days.

Wow, that’s quite a bit of risk for these studios to be taking on a title by title basis.  Especially compared to the rapid fire development cycle that continues to emerge in creating games for emerging platforms like the iPhone or the good old fashioned PC-based Internet.

Is it fair to compare say EA to a record label?  Maybe.  But the gaming companies may have a bit of daylight to run towards when compared to the dismal path that the music folks have been forced down for the last several years.

If you think of the Internet as “the console” and you think of game publishing as a never ending “consumer product development” exercise, there exists what might be a highly scalable business model for gaming companies.  The new publishing and business models being formed by guys like Social Gaming Network, Playfish and Zynga — and by extension Facebook — feel like the future of gaming.

On one hand these Internet based publishers can develop and iterate on game titles much more rapidly and in a financially more efficiently manner than the big studios who are stuck building high production value hits on the next versions of super charged hardware like the XBox, Wii and Playstation.  This transformation makes game development feel a lot more like the agile product development evolution that has come to web publishing.  Might this mean the skill sets of game studio producers will merge with those of Web site product managers?  Seems like this may already be happening.

Coming out of this product evolution lies the promise of a potentially more scalable business model.  One that can tap in to multiple revenue streams — not just a reliance on selling plastic wrapped units at retail for north of $60 a pop.  Games are now being built to attract audiences — particularly given the social and viral aspects that Internet games (whether they are played on the PC or a mobile device) facilitate.  Audiences are more flexible monetization platforms once they attain sufficient reach and “targetable” dimensions.  Revenue streams in the form of sponsorships, standard media, lead generation and virtual goods can all be applied to a gaming experience that exists online across both the PC/Mac and smart phone universe.

And the  business model doesn’t have the built-in end-of-life that exists in today’s video game publishing world when the next wave of consoles rolls out, rendering the latest software version obsolete.  A Web based product and business model for gaming can evolve it’s product, audience and revenue opportunities in a cumulative manner — and can do so in terms of incremental marginal costs as opposed to the significant fixed cost step ups that exist in the traditional console driven ecosystem.

So while the gaming business seems to be facing a similar transformation that the music business begin to contemplate over a decade ago, it appears as though there may actually be a profitable path by which game companies can migrate their business.  Though it may be a different set of companies that arrive at the new game business paradigm ten years from now than the brands we know and love today?