Notes on Startups, or How to Build the Future

FINDING VALUE IN UNEXPECTED PLACES

When you start a new business in an industry that already exists, writes PayPal founder Peter Thiel in his book Zero to One, you are adding more of something to the world that’s already there. You are going from 1 to n, he writes. But when you start a business that is unlike any other business on the planet, you are truly creating something new. In Thiel’s terminology, you are going from 0 to 1.

And you want to be the “one.” Thiel is not a fan of competition — not just because of the required battle for customers but because competition makes companies focus on competitors more than customers. “If you can recognize competition as a destructive force instead of a sign of value, you’re already more sane than most,” he writes.

Thiel uses the ongoing battle between Microsoft and Google as an example. Originally, he writes, there should have been no reason for a fight. Microsoft was operating systems and office applications, while Google was a search engine. Then the two companies developed an obsession about each other. “The result?” Thiel writes. “Windows vs. Chrome OS, Bing vs. Google Search, Explorer vs. Chrome, Office vs. Docs, and Surface vs. Nexus.” The battles were bloody, and the companies, Thiel writes, paid the price by watching Apple surpass them both in dominance. In January 2013,Apple’s market capitalization was $500 billion, while Google and Microsoft combined was $467 billion. “Just three years before, Microsoft and Google were each more valuable than Apple,” he writes. “War is a costly business.”

Building a Monopoly

For monopolies, the situation is quite different. You can charge the prices you need to make the profits you want. There are no competitors driving down those prices. It’s true, as Thiel explains, that monopolies would be bad if nothing changed: They could command any outrageous prices they wanted with no recourse for customers. But in the dynamic world of business, where unhappy customers represent an opportunity for a new competitor to enter the space, monopolies are motivated to create value for their customers, he writes.

There is no simple recipe for building a monopoly, but according to Thiel, there are several elements that entrepreneurs should look for. These include

Proprietary technology. As a rule, proprietary technology should be 10 times better than the nearest technology.

Network effects. This means other users are using the technology. Facebook works because everybody is on Facebook. But it’s important that early users still find the product valuable even on a small scale (e.g., Facebook was just for Harvard students at first), because it will take some time to scale any product.

Economies of scale. Not all businesses benefit from economies of scale. Going from one yoga studio to 10 doesn’t really yield economies of scale: you just need 10 times more instructors. The best startups have economies of scale built into the business model — Twitter, for example, can build up to 250 million users without making any significant changes to its operations.

Branding. You’ll want to create your own unique brand. But be careful to start with substance before brand.

To make these elements work in creating a monopoly, Thiel writes, you need to start small. Look for those groups of people who have a need that is not fulfilled by any one company. Avoid the big markets: Yes, there are lots of customers, but also lots of entrenched competitors. Once you have your niche market created, he writes, it’s time to scale up… carefully. eBay didn’t jump from Beanie Babies to industrial surplus. It continued at first to cater to small-time hobbyists until, Thiel writes, “it became the most reliable marketplace for people trading online no matter what the item.”

Beyond how-to steps, Thiel does not ignore the importance of mindset and thought processes. In one brilliant chapter, Thiel talks about those who have a definite view of the future (they know what is going to happen) and those with an indefinite view: the future is inscrutable, so why bother to prepare for it. To Thiel, indefinites rule the world. Entrepreneurs have a different worldview, however. They intend to make the future they seek.

Filled with insights ranging from financial advice to philosophical discussions, Zero to One is one of the most thoughtful books on entrepreneurship on today’s shelves.

Take Back Control with These Three New Summaries

Feeling as if you have no control over your work or job duties can lead to job stress. When the stress of constant connection and rapid changes in the marketplace start affecting your performance at work, applying new processes to your daily routine could bring great success. Learn how to take back control and handle the high demands by developing mindfulness, collaborating with others, and knowing when to think like a rookie with these three new Soundview Executive Book Summaries.

overworkedandoverwhelmed

by Scott Eblin

Overworked and Overwhelmed by Scott Eblin

Top leadership coach Scott Eblin provides simple routines to reduce stress and sustain peak performance and a personal planning framework for creating desired outcomes. Overworked and Overwhelmed offers practical insights for any professional who feels like his or her RPMs are maxed out in the red zone. Eblin makes his practice of mindfulness simple to offer actionable hope for today’s overworked and overwhelmed professional.

 

the reciprocity advantage

by Bob Johansen and Karl Ronn

The Reciprocity Advantage by Bob Johansen and Karl Ronn

Leading forecaster Bob Johansen and business developer Karl Ronn share a model for creating new growth for your business using the underutilized resources you already own that you can share with others. They describe a model for collaborating to do what you can’t do alone. The Reciprocity Advantage shows readers how to leverage new forces like cloud-served supercomputing into scalable and profitable growth for your organization.

 

rookie smarts

by Liz Wiseman

Rookie Smarts by Liz Wiseman

In a rapidly changing world, constant learning is more valuable than experience or mastery. Leadership expert Liz Wiseman explains how to reclaim and cultivate the curious, flexible, youthful mindset of a rookie in order to keep up with what’s needed from employees. In Rookie Smarts, Wiseman details the four modes of the rookie mindset that lead to success.

Give Everything, Quantify Nothing, and Create Something Greater Than Yourself

IN SEARCH OF THE ROMANTIC ELEMENTS OF WORK

Viktor Frankl published his seminal book, Man’s Search for Meaning, more than 60 years ago, but it is only recently that presence of meaning and purpose have become a workplace and work-life focus. Today we expect more from our job than a paycheck. We expect a sense of fulfillment — a sense that we are doing something important and good. We want to be happy at work. In a meandering, 250-page exploration called The Business Romantic, veteran marketer Tim Leberecht takes our yearnings at work a step further: Through business and work, he declares, we are seeking romance.

Taking the Long Way Home

It is not surprising that in the big data, ubiquitous high-tech world of the 21st century, people might yearn for a bit of romance — romance as in mystery, danger, discovery, joy, ambiguity. Most of us, however, would not think of the business world as the location for this romance.

For Leberecht, however, business is the perfect venue. He notes that we are all immersed in business — as leaders, workers and consumers — every day of our lives. We have closer relationships with our colleagues than with our neighbors and even spend more time with them than with our loved ones. And it is not just the social aspects of business that are important, but also opportunity. Through business, he writes, we can make a difference; we can make the world a better place. And so much more.

We can find nostalgia, for example. In a chapter entitled Take the Long Way Home, Leberecht explores the emergence of nostalgia in business. One example is the rapid rise of the Maker Movement, where people have the opportunity to relive the joy of craftmaking. Even the most modern of our new products are in a sense nostalgic. The tablet allows us to directly touch what we are working on. Facebook, Twitter, Instagram and Pinterest are based on the age-old desire to share with others.

Giving more than you receive is another of the “rules of enchantment” that form the core of the book. Leberecht quotes the work of Wharton business school professor Adam Grant, whose book Give and Take explored the role of giving in a business context. Grant found that companies that fostered giving behavior in their employees benefited from improved employee performance, notably in areas such as collaboration and innovation.

Filled with a wide variety of stories from business around the world, Leberecht presents in The Business Romantic a compelling call-to-arms to break the business-as-transaction mold and infuse the workplace with romantic elements that will engage and inspire employees and their leaders.

And this romance does not only involve trendy, cutting-edge companies or industries. One of the most compelling stories in the book is from an early chapter in which a businessman remembers his first memories of work: helping his father prepare for the day at a wondrous place called the office. Every morning, as a boy he would watch his father carefully choose his suit for the day, slick down his hair with Vitalis, then walk ceremoniously toward the front door, where the boy would hand him his briefcase. “And then I watched him disappear into the dark, cold, Connecticut morning,” the businessman recalls. Today that businessman follows his own strict morning ritual. “The office no longer seems magical,” the man tells Leberecht “but my morning ritual — and the way it evokes the spirit of my father — decidedly does. We still get ready together every single morning. We are, together, men of business.”

Book Review: Why Motivating People Doesn’t Work … and What Does

If you feel that your efforts to motivate employees are falling short, you are not alone. Senior consulting partner for the Ken Blanchard Companies, Susan Fowler, reveals that motivating people doesn’t work because they are already motivated in Why Motivating People Doesn’t Work … and What Does. Fowler helps leaders understand what they can do to go beyond traditional styles of motivation to help people not only be more productive and engaged but to bring a sense of purpose to their work. This book is now available as a Soundview Executive Book Summary.

“You can use all your power attempting to motivate people, but it won’t work if you want them to experience an optimal motivational outlook. Shifting to an optimal motivational outlook is something people can do only for themselves,” writes Fowler. She presents a tested model and course of action that will help leaders guide their employees toward the type of motivation that will increase productivity and engagement. Her Optimal Motivation process shows leaders how to help people meet their needs for autonomy, relatedness and competence for long-lasting motivation. Of the three, relatedness is about our need to feel like we are contributing to something greater than ourselves. This is important for leaders to help their employees feel like all their work matters to the organization as a whole.

Fowler concludes her profound thoughts on motivation by re-thinking five beliefs, which she states erode workplace motivation. These eroding beliefs include: It’s Not Personal; It’s Just Business, The Purpose of Business Is to Make Money, Leaders Are in a Position of Power, The Only Thing That Really Matters Is Results, and If You Cannot Measure It, It Doesn’t Matter. As a leader, you can activate optimal motivation for yourself to become a role model for others in your organization with the insights in Why Motivating People Doesn’t Work … and What Does.

Becoming the Boss

NEW RULES FOR A NEW GENERATION

Lindsey Pollak, author of Becoming the Boss, is a Gen Xer (born between 1965 and 1982), and she will be the first to tell you that Gen Xers are not going to make a huge difference in the world. The reason: there just aren’t that many of them. After the massive boomer generation (born between 1946 and 1964), the next generation that will make a significant impact on the world is the equally massive Gen Y, or “millennial” generation (born between 1982 and 2000). Millennials are already stepping into leadership roles and will soon dominate the top ranks in government and business. Becoming the Boss is a manual for members of the millennial generation about to step into leadership positions, if they haven’t done so already.

Advice for Future Leaders

Pollak’s first piece of advice for these future leaders is to be the “CEO of You.” In two chapters (entitled “be” and “be.com”), Pollak describes how to build an offline and online personal brand, covering everything from handshakes to eliminating your online presence of any negative images. She also offers an in-depth step-by-step plan for building the most effective LinkedIn profile.

In other chapters, Pollak covers

  •     Communication. Millennials must also know how to mix high-tech and “old school” communication methods — it’s still important to know how to carry on face-to-face conversations.
  •     Managing. Pollak writes that today’s managers have new challenges, such as dealing with a workforce that is more diverse than ever before. With command-and-control leadership no longer acceptable (or workable), today’s manager must also be more transparent and open with their employees and colleagues than in the past.
  •     Prioritizing. Given the multiple, 24/7 digital forms of communication, generation Y is the “busiest and most stressed out generation in history,” writes Pollak. Effective time and information management is key, and that means being able to prioritize and delegate as well as avoid losing too much energy on stress. One suggestion: cut down on trivial decisions by, for example, laying out your clothes the night before or having the same breakfast every weekday morning. It may not seem like much, but research shows such trivial decisions take a toll.
  •     Connecting. Pollak suggests that millennials looking to move up gather a “rotating advisory board” of about five different types of mentors: traditional mentors, who share their wisdom; co-mentors, who are traditional mentors who teach but also learn from the younger people they are mentoring; sponsors, that is, people who can actually offer you that promotion or work on your behalf; peers, who are in your shoes; and (a very generation-specific suggestion) Mom and/or Dad — as long as they stay in the background!
  •     Continuous growth. Pollak closes the book with a reminder that everyone must continuously strive to stay current and improve. Among her recommendations: Stay humble, commit, change jobs and, a bit surprisingly, “make yourself feel old.” “You’ll be amazed at how fast the next generation sneaks up and you’re the one complaining about ‘kids today,’” Pollak tells her Gen Y readers. The answer: you’ll continue to grow if you develop relationships with interesting people who are “young and hipper than you are.”

Pollak is the author of Getting from College to Career, a book she was inspired to write as a result of her own experiences. In Becoming the Boss, Pollak, an independent consultant and speaker, again builds on her own experiences to lay out a thoughtful and comprehensive overview of the skills and attitudes any millennial will need if they ever have any hopes of becoming the boss.