She was a disruptive employee--going around my back and angling to move up the ranks. Even so--here's how not to handle the situation.
Some lessons in business cause you personal pain. Others cause pain only to those around you. And, a few cause pain to pretty much everyone.
This is one of those cause-everyone-pain stories.
In my former life as a corporate manager, there was one particular decision I made that sent ripples through my team for at least a year. In some ways, my management career never quite rebounded and I remained gun-shy about personnel decisions for quite a while. It taught me more about how to handle problems than any of the good decisions I made during that time.
The Problem Employee
It all started with one particularly disruptive employee. She had aspirations to move up in the ranks, but I questioned her abilities. She started taking on work from other department heads without my knowledge. She would try to redirect things that other employees were working on. Worse, she would chastise me at every turn, usually in front of the entire team. This went on for several months.
What would you do? I'm not an attorney, but at the time I knew I had to follow a rigid process to fire her that involved written and verbal warnings, which I did. In the end it came down to one simple fact: she was not listening to me anymore and she was causing disruption.
At the time, when there was a conflict in the workplace, my tendency was to withdraw. This is not the best plan of action. Years later, I can look back and say the situation was quite unique and, in many ways, proved to be an invaluable learning experience. What I actually felt at the time was more like a vicegrip on my brain: keeping the employee around would cause more conflict but firing her would create even more problems. My "fire" would likely backfire.
Most people do not run toward conflict. Instead, it's natural to run away from it. As a kid, you learn when you touch a hot stove it is best to back your hand away quickly. In my situation, I figured ignoring the inevitable was the best option. "Time heals all wounds" I told myself at the time, not realizing that this was not about a wound at all.
Disruptive employees cause the wound--and they rarely self-heal. I've seen a few cases where an openly hostile employee makes a turnaround. I also know there are medical issues and emotional upheavals that can arise. But with this employee, the issue was obvious: she wanted my job. After the warnings, there was no option left but to fire her. On the spot. Immediately.
I told my immediate boss, who said I should make it happen that afternoon. I emailed the HR department to let them know what was going on. (I didn't ask for their permission.)
"Well, I have some bad news," I told her. "I have to let you go."
That did not go over too well. She stormed out of my office--and right over to HR. She met with one of the other department heads. Strangely, both of those meetings led to her being allowed to keep working. She eventually pressed the issue in court and won. In fact, she started working as a middle manager at my own level of responsibility.
You can imagine what it was like to meet her in the hallways.
So--short of making this all seem like a riddle, because these events really did happen, how do you think this should have been handled? What's a better way to fire someone?
Since that experience, I've come up with a few ideas. One is that I should have met with HR and explained what was going on. I should have given HR the time they needed to investigate and to communicate with everyone else on the HR team about what was going on. I should have met with the department head that had given her some work on the side. And, most importantly, I should have talked to the legal counsel for the company about potential repercussions.
As a manager, I was more interested in wielding power at times than communicating. Good leadership is about covering your bases. I only covered a few. My team witnessed how poorly I handled the situation and, as a result, started wondering if I had the chops to lead them after botching this situation. Because the employee stayed on, she also kept causing disruption for me for another year--removing her from the team didn't help at all.
But the real killer? I was wrong about her. She excelled in her new job, proved her ability as a middle manager, and continued working there long after I was out the door.
There was a lesson, though. I found that leadership is sometimes about keeping your hand on the stove. It's painful, but that's what makes leadership hard. I was taking the pain for the team. I found that conflict comes up at times in the workplace that requires constant, intentional, and complete attention. I learned that communication is hard but has to be holistic. I learned that leaders can't run from conflict. By focusing on the problem and resolving it, leaders prove why they are in charge in the first place.
Part of his legacy is knowing the difference between assertiveness and leadership.
In his autobiography, Long Walk to Freedom, Nelson Mandela likens leadership to shepherding, of all things: "He stays behind the flock, letting the most nimble go out ahead, whereupon the others follow, not realizing that all along they are being directed from behind."
Harvard Business School professor Linda Hill has spoken and written about this concept of leading from behind for years. In her view, leading from behind is an essential skill for great leaders. Here are two key components to leading from behind:
1. View leadership as a collective activity. An ideal leader knows how to cultivate a setting in which others can step up and lead, Hill tells Harvard Business Review.
"This image of the shepherd behind his flock is an acknowledgment that leadership is a collective activity in which different people at different times--depending on their strengths, or 'nimbleness'--come forward to move the group in the direction it needs to go. The metaphor also hints at the agility of a group that doesn't have to wait for and then respond to a command from the front. That kind of agility is more likely to be developed by a group when a leader conceives of her role as creating the opportunity for collective leadership, as opposed to merely setting direction."
2. Don't confuse displays of assertiveness with leadership. If you do, you might overlook some great potential leaders in your organization, just because they happen to be less vocal or showy in the way they get things done. "Because they don't exhibit the take-charge, direction-setting behavior we often think of as inherent in leadership, they are overlooked when an organization selects the people it believes have leadership potential," Hill says.
As an example, she cites Taran Swan, who worked for Nickelodeon Latin America. When Swan's team made presentations to upper management, Swan calmly sat on the side and let team members do the talking. She'd occasionally speak up to support or claify a point.
One of Swan's supervisors warned her about her inclusive approach. He told her, "'You're making a career mistake. You're not going to get ahead if you do this. It would be better if you came by yourself and made the presentations,'" Hill recounts. In the supervisor's view, Swan's behavior wasn't leader-like. But her results were: Amidst highly unstable market conditions, her team managed to build Nickelodeon's presence in Latin America and to meet its overall budget.
In short, there are times when great leadership means letting go of whether others, including your supervisors, perceive your actions as leadership-worthy.
Certainly, this is one trait to remember about Mandela, and to keep in mind when considering leadership development in your own organization. "All too often, little things--taking the lead in a presentation, appearing to know more than you do--are still seen as markers of leadership potential," Hill concludes. "When in fact they may represent traits that are the opposite of what we need in a leader today."
A new report from analysts at the bank suggest the digital cryptocurrency is on its way to becoming a major player in electronic payments.
For the first time since the mysterious Satoshi Nakamoto created Bitcoin in 2009, a major Wall Street bank has issued an opinion on the cryptocurrency--Bank of America is betting on Bitcoin's legitimacy, according to a report released today.
Bank of America Merrill Lynch claims Bitcoin may "emerge as a serious competitor" to cash in e-commerce and digital money transfers.
The decentralized, peer-to-peer network, does not require a central clearinghouse or financial institution to clear transactions. All Bitcoin users need is an Internet connection and Bitcoin software to make payments to another public account.
But will it become an internationally-recognized currency? In order to so, Bank of America says Bitcoin needs to become a "major player" in both e-commerce transactions and money transfers, and maintain an exchange value "close to silver." Bank of America says their analysis estimates Bitcoin's worth to be a maximum of $1,300.
But, considering it flew up to $1,242 the day after Thanksgiving (passing the value of an ounce of gold and hitting a peak of 9,000 percent gain for the year), it is at a risk of "running ahead of its fundamentals," Bank of America reports.
Below, read the report's findings on Bitcoin's advantages and disadvantages.
Low transaction costs.
As Bitcoin is a peer-to-peer network, where transactions are verified by independent "miners" (who are rewarded with newly minted Bitcoins for their work), there is no need for a central clearinghouse or financial institution to act as a third-party to financial transactions. This means Bitcoin carries a very low transaction cost. By bypassing financial institutions, Bitcoin offers users a new and theoretically cheaper electronic payment method.
Transparency and security.
Although Bitcoin has a close anonymity to cash, every transaction is recorded on a public ledger. This makes Bitcoin easier to track than cash, the report says, since each digital coin contains an electronic record of every transaction it has gone through since it was mined. The public ledger and each Bitcoin activity record offers "a level of transparency that is not available with cash," the report says. "Having a full history publicly available guarantees that a buyer actually owns the number of Bitcoins he or she wants to spend, preventing fraud," the report says.
Bitcoin supply mimics gold.
Bitcoin was designed to have a finite supply in the world, like that of gold. This protects its value from governments and banks. As it was designed, the smallest unit of Bitcoin--1 Bitcoin--contains 100 million Satoshi. As of right now, the current supply is 12 million Bitcoins. The market cap for Bitcoin is 21 million Bitcoins--which Bank of America measures as just 57 percent of its eventual total. As more people "mine" Bitcoins, or solve the mathematical equations, more will become unlocked and flow into the market.
Limited anonymity in the black market.
Although sites like Silk Road--which sells anything from heroin to guns on an eBay-like platform that only accepts Bitcoin--have helped tarnish its already murky reputation, BOA says it is not a perfect currency for criminals. "[The] fact that all Bitcoin transactions are publicly available and that every Bitcoin has a unique transaction history that cannot be altered may ultimately limit its use in the black market/underworld," the report states.
Bitcoin's volatility is one of its main disadvantages--making people believe it's just another Tulip Mania of technological proportions. "Bitcoin's role as a store of value can compromise its viability as a medium of exchange. Its high volatility, a result of speculative activities, is hindering its general acceptance as a means of payments for online commerce," the report says.
A big downside for businesses is the fact that its value fluctuates every day, which means your business is "effectively internalizing the costs of its volatility" if you do not give change in Bitcoin, the report says. In August, it was at $100. Today it is just above $900. If your business accepts Bitcoin, you can lose or gain money depending on the day. When online illicit drug marketplace Silk Road's first version was shut down by the FBI in October 2013, Bitcoin's price plummeted 15 percent. But after the positive Senate hearing, it rose 50 percent. But, Bank of America says it should get more stable after it is more widely accepted.
Hackers steal Bitcoins.
Bitcoin exchanges, like BTC China, OkCoin, and Mt. Gox are required for converting traditional money into Bitcoin. This does pose a risk, for users are transferring their money from their bank accounts to third-party accounts, which are not protected by the FDIC. Users' Bitcoin wallets are in "start-up exchanges" in China and elsewhere, which are often targeted by hackers, Bank of America says. There is also risk of the exchanges just stealing the money before it is converted into Bitcoin. The risks are great, especially if your business is heavily involved in the trading of Bitcoins. Your wallet could get hacked, or even worse the exchange you use. The Bitcoinica exchange's and BIPS exchange's systems were both hacked recently and lost $16,230,000 and $1,135,000, respectively.
Bitcoin is not a legal tender.
Another big obstacle to Bitcoin's international acceptance is the fact that it is not a legal tender. "Unlike fiat money, nobody is under any obligation to accept Bitcoins as a means of payment," Bank of America says. "Therefore, its value is only as good as the perception of its worth by its users." Just like in the 1600s, when all of a sudden the price of tulips crashed, Bitcoin could suffer the same scenario. Concurrent with repeated cyber attacks and volatility that make users lose money, a perception that Bitcoin is worthless could pop the bubble.
The risk of government regulation.
Bank of America says it is unlikely that the government will promote a new currency, especially one as suspect as Bitcoin. As the U.S. government is trying to figure out where Bitcoin fits into its tax and payment system, regulation of any kind would increase its transaction costs--offsetting one of its major benefits.
Landing an angel is a huge boon to a new company. But you ought to know what to expect.
Nothing makes startup founders salivate quite like the thought of a cash infusion. Especially if you utter the phrase "angel investor." But what exactly can angels, who invest their own funds directly into early-stage businesses, do to help?
Plenty, says Dave Berkus, former chairman of Tech Coast Angels (and two-time Inc. 500 alum), as long as their pockets allow it. Here is a list of what angel investors can do for entrepreneurs, and what they can't.What Angels Can Do
This point is obvious, but crucial nonetheless, as angels typically provide anywhere from $100,000 to $1 million, with the average being about half a million dollars, says Berkus. Individual investors tend to average a little less than what angel investing groups like to see, which is $50,000 a year. Regardless, "no entrepreneur should just take money,” warns Berkus. “There are too many groups of angels that can offer much more.”
Help With Time Management
As important as managing your money is managing time, says Berkus, before adding, "the faster to market and more efficient a company is, the less money is going to get spent.” An angel can step in to help a product get to market on time, train employees, and figure out what (and who) should receive resources.
Angels are known for opening up doors, be it to salespeople, mentors, or potential board advisers, says Troy Knauss, president of the Angel Resource Institute. Adds Berkus: "I have 1,500 contacts, most of whom I know personally. A young entrepreneur can't even begin to have that number." Connections are integral when creating a board of advisers to help steer the company, just as they're key when finding the right manufacturer to make your product at a lower cost. "If you have a biotech company, the angel investor might have connections that can help you figure out the path to get you to an earlier exit," says Knauss. Perhaps he'll also know how to get past regulatory red tape.
Sure, it's cheaper to get products to market than it was 10 or even five years ago, but most entrepeneurs are inexperienced at running a business. They're going to make mistakes, and each one is bound to cost money, says Berkus. An experienced angel brings expertise to the table that can make the company that much more successful. Some may even help draft a business plan, as Knauss did for one startup he worked with. "They were trying to raise $5 million in venture capital, but their plan showed they couldn't be profitable," he says. "So we looked at a different plan that let them retain much more and grow the company into something successful."What Angels Can't Do
Supply Enough Money
"Angels will work with a company, sometimes in a sleeves-rolled-up manner that exceeds even that of a venture capitalist," says Berkus. "But most angels invest and expect that to be the last time." Although it takes a lot of money to become a private investor in the first place, they "can't supply enough money to get startups beyond the usual issue of breaking even and into the marketplace if the product or service requires a heavy investment," says Berkus. "They can only the prime the pump, and that puts the investor at risk, just like the entrepreneur."
Those requests for more due diligence might just be a VC's polite way of saying, "Thanks, but no thanks." Here's how to read between the lines.
When we pitched VCs for my first company, FlightCaster, we received 52 rejections before we got our first term sheet. Every time I got a rejection, I asked for feedback.
Some VCs said our market was too small. But I found that odd, because travel is a global $500 billion market. Plus, lots of other travel startups were receiving VC backing, and presumably those VCs cared about market size.
Some VCs told us they weren't experts in the travel sector, and so they wouldn’t be a good match for us. But I found that odd, because they were invested in all sorts of esoteric industries, and they didn’t seem to be experts in those either. Plus, I later saw those same VCs invest in other travel startups.
Some VCs said, “We like you, but we need to do some more due diligence on the space.” Then they asked us for a bunch of hard-to-get stuff--market research, traction metrics, and better proof of growth. But even when we got them this information, they still didn’t say yes.
What's Really Going On?
Over the course of 52 rejections, I got tons of feedback on our startup. I spent incredible amounts of time responding to that feedback. I’d like to think that all this work responding to feedback and improving on our pitch made us better, but the VC firm that we ended up getting our first term sheet from didn’t care about any of that. In fact, they didn’t even request it. As we were proceeding past the third meeting, I asked them if they wanted our due diligence pack that was filled with juicy market research data, growth metrics, and industry overviews. One of the VCs, Sunil Bhargava, responded quite easily, “I don’t need any of that. I’m betting on you.” We signed the term sheet, and he became our lead investor.
I’ve been thinking about that recently. The big difference between Sunil and those other investors wasn’t that I magically found a VC that was willing to take a bet on me instead of getting preoccupied with all these other due diligence items. The real insight is that the single biggest reason those other VCs didn’t invest in me was that they didn’t believe in me.
Reading Between the Lines
All of the concrete feedback about market size and traction and metrics, that was just their polite way of saying they weren't interested. In fact, several of those investors who rejected me for FlightCaster are now investors in 42floors. And now that I have talked to them about this, they’re willing to be frank with me.
We can both acknowledge the fact that I am a different founder now than I was then. Several of these investors put money into 42floors when we hadn’t figured out our vision for the product or done any market research. Several of them don’t even know that much about commercial real estate. But they had seen me grow as a founder, and they were willing to bet on me. I do wish they had been more frank when they rejected me at FlightCaster, because I wouldn’t have gone off on so many wild goose chases. But I can give them a pass on that, because it’s incredibly hard to tell someone that you have no faith in him or her.
Here are a few tips to help figure out whether you’re getting honest feedback from potential investors:
1. Get a great advisor. This person should be a peer of yours, who is 12 to 18 months ahead of you. This is not an industry veteran. It’s not someone who sold their company for hundreds of millions of dollars. This should be someone who is good at playing the game that you’re playing, and they’re just a little bit ahead of you. This person is most likely to tell you frankly what’s going on.
2. Listen for repeating criticisms. If you truly have some problems, whether with the product or the market size, smart VCs will continue to see them. However, if the feedback you receive feels contradictory, then it may just be noise.
3. Find a good back channel. If you’ve done your networking right, you hopefully know people in common with the investors you’re pitching. Ideally, one of them gave you your initial introduction. That’s the person you want to go to, to try and figure out what went wrong. Most investors will chat with your reference, and the real story will come out. You still may fall victim to getting sugar-coated feedback if your friend feels bad for you, but at least you have a better shot of getting it than trying to get it from the investor directly.
In an Inc. Live Chat on Thursday, the co-founder and CEO of HubSpot sat down with Inc. and shared his experience raising venture capital and what he learned in the process.
Don’t worry, raising venture capital is hard for everyone--even those with a distinct advantage and knowledge-base like Brian Halligan, the co-founder and CEO of HubSpot.
Halligan, who has also authored two books, Inbound Marketing and Marketing Lessons From the Grateful Dead, worked in venture capital before he co-founded the inbound marketing company HubSpot in 2006. On Thursday, Halligan joined an Inc. Live Chat with Inc.com Deputy Editor Allison Fass and shared his genesis as an entrepreneur, his experience raising venture capital and what he learned from the process.Starting Again
“I was an entrepreneur in residence at a venture fund and that’s a really interesting gig… I got to see how the sausage is made inside a venture fund,” said Halligan in the live chat. “It was actually a lot different than I thought, so it was very useful.”
It was while he was working in venture capital that Halligan came up with the idea to start HubSpot. During the ten months Halligan worked at the fund, it was his directive to work with small companies to help them grow. He quickly learned that the traditional marketing model was broken.
“They all had that same marketing playbook. This sort of tried and true 1990’s old school playbook and the more I watched the playbook; the more I came to the conclusion that the plays didn’t work anymore,” Halligan said. “People were sick and tired of being marketed to and sold to.”
So Halligan and Dharmesh Shah founded HubSpot with the intention of rewriting the marketing playbook. This meant the duo needed money to fund the startup and set out to get it from VCs as so many startups do. Today, HubSpot has a reported $131 million in funding--of which $100 million is from high profile VCs. But, according to Halligan, raising capital wasn’t easy for the startup.Look, It's Just Hard
Halligan stressed that raising capital was difficult for him even with his background in the VC space and that movies and television make it look a lot easier than it actually is. He specifically referenced the Social Network as being one instance where Hollywood got raising capital wrong.
“In reality, it’s a bear to raise capital,” said Halligan. “Even I was a total insider in the game and I had a heck of a time raising our Series A.”
Halligan walked through the process of raising capital from VCs, starting with the first meeting. He said this meeting is always with a principal--never a top dog in the firm.
“You have about a 50/50 chance of convincing that principal that you have a good idea, a good market and a good team,” he added.
If you do catch the principal’s attention, next comes a meeting with a partner. Which if you are lucky doesn’t lead to a meeting with other partners typically according to Halligan, but will get you an introduction to one of the partner’s colleagues that runs one of his companies before you are finally accepted into the fold and meet the other partners. In other words--it is an uphill climb.
“By the time you are through with all of the meetings, the [chance of getting funded] it’s like one-over-two to the tenth power,” said Halligan. “It takes a lot of time.”
So what are Halligan’s pointers for raising capital?
Get the geography right
He stressed that you need to approach the right firms--firms that actually care about investing in a startup in your area.
“Let’s say you’re in Baltimore, it is pretty unlikely that a Silicon Valley venture capitalist would fund--at least a series A--round in Baltimore,” said Halligan. “It is very unlikely, so you have to get your geography right.”
Get the firm right
According to Halligan, it is vital that you are approach the right type of VC firm. If you want an early stage investment, be sure you don’t ask a firm that typically does late stage investments, and vice versa.
But he also added that securing top tier investors in the early stages is important. If you get investments from top tier firms--he brought up Sequoia as an example--other investors will follow.
“If you go with a second tier investor, the top tier guys tend to turn their nose up at you. They shouldn’t but they do,” Halligan continued.
Get the partner right
Even once you have the other two in place, you need to make sure that within the VC firm you pick the right partner to make your case to. The partner you approach should have a background compatible with you company and experience in the area.
“Say that that partner has a background in biotech, hat partner in biotech is not going to invest in a marketing software company," said Halligan. “At the end of the day, if that partner is going to stand up to his partners and tell them that they are doing this deal and convince them, he has to have some domain expertise and background. You need to find the partners that really get your space.”
Click here to watch a playback of the Live Chat.
At a recent TED conference, Facebook's Sheryl Sandberg recently discussed the importance of greater workplace equality.
Facebook's Sheryl Sandberg proposed that the business community strikes a word from its vocabulary.
"We need to get rid of the word 'bossy' and bring back the word 'feminist,'" Sandberg said Thursday on stage at TEDWomen, which took place in San Francisco. She was referring to the difference in attitudes toward men and women who assert themselves in the workplace, according to a TED blog post.
Men who speak up are generally viewed as good leaders, while women are often called "bossy," for doing the same. "That little girl's not bossy. That little girl has executive leadership skills," Sandberg said.
Sandberg is well known within the TED community and beyond for a presentation she gave in 2010 called "Why We Have Too Few Women Leaders." The talk has more than 3 million views. During TEDWomen, Sandberg shared a little bit about what was going through her head when she wrote it.
"The subject matter wasn't her first choice; in fact, Sandberg recalls that she'd had absolutely no intention of talking about anything so personal," according to the blog post. But she changed her mind, rationalizing that for things to improve for women in business, it's necessary acknowledge how hard change can be.
So what's changed since 2010? In terms of pay and gender equality, not that much. At best, women are paid 77 cents to a man's dollar, a number that hasn't changed since 2002, according to the blog post.
But Sandberg believes that she and other women have managed to make small gains through their message. "Everywhere I go, CEOs, mostly men, say to me, 'You’re costing me so much money,'" Sandberg said, referring to the fact that many women are asking for more pay. "To them I say, I’m not sorry at all."
Think you're smarter than a VC? Village Capital lets the entrepreneurs decide who gets funding. It's a plan so crazy, it just might work.
Ross Baird has a problem with the status quo in Silicon Valley.
"Silicon Valley is supposed to be so innovative, but people spend a ton of time making apps just so we don't have to call to make dinner reservations," he says. "It makes yuppies' lives more convenient, but it's not actually solving world problems."
It's because of this beef with business as usual that Baird launched Village Capital. It's a new type of incubator and investment fund that not only backs companies that do aim to solve world problems, but it also chooses which companies it funds in an entirely different way. That is, it doesn't actually choose the companies, at all. Entrepreneurs do.
How It Works
Since it was founded in 2009, Atlanta-based Village Capital has pioneered a unique peer investing model that puts entrepreneurs in charge. The firm has sponsored 23 programs in seven countries worldwide, where founders come together for three months to develop their business ideas, much like a traditional incubator. The difference is, at the end of those three months, it's the other entrepreneurs in the cohort who decide which business gets the final investment.
Baird conceived of this unique approach while working at the impact investment firm Gray Ghost Ventures. He was frustrated by the fact that the venture capital model, as it exists today, favors companies that can promise investors a quick exit.
"The companies people fund look more like Facebook and LinkedIn than the kinds of companies that may take a longer time to build, but would have disproportionately positive benefits for the world," he says. "The problem we think we've diagnosed is the way people support entrepreneurs today in the capital markets."
Because the other entrepreneurs in the cohort don't stand to make a return, their decisions are based less on planning a quick exit and more on the potential impact that start-up could have. Of course, that doesn't mean they overlook financial viability altogether. Three times a session, every startup in the cohort grades every other startup on 24 different metrics, ranging from potential for profitability to ability of the product or service to create change. (Companies aren't allowed to grade themselves.) The two startups ranked highest on the last assessment are the ones who get funded.
The peer investing model has yielded some interesting data points not found in traditional venture capital investing. For instance, women-run companies are far more likely to get funding through peer investing than through traditional funds. That, Baird says, should get investors' attention, since women-run companies, recent research suggests, deliver higher returns to investors.
"The market is undervaluing a specific asset which is women co-founded businesses," Baird says. "Women, we find, tend to under-promise and over-deliver. Men tend to over-promise and under-deliver. In the entrepreneurship world when you have two minutes, over-promising helps." When women get to pitch over three months to a room of their peers instead of two minutes to a panel of investors, in other words, they get a fairer shake.
To date, 350 entrepreneurs have participated in Village Capital's international programs, and 32 have received investments. Among them are companies like MobileWorks, which works with corporate clients to outsource clerical and administrative work to low-income virtual workers. Kickboard, formerly called Drop the Chalk, is another star Village Capital alum and Inc. 30 under 30 finalist, which makes software to help teachers better track student performance. Another promising recent company, SevaMob, offers healthcare and insurance to people living in poverty in India and Africa, but its health workers also collect anonymous data on the people they treat, which SevaMob can sell to major corporations interested in developing world markets.
Obviously, these are companies that not only have a social impact, but could have a financial one, too. After all, Village Capital isn't a wholly altruistic endeavor; it's seeking investment from both high net-worth individuals and impact investing firms that are willing to be a bit more patient about returns. Village Capital's stake in the companies is usually somewhere between 5 and 10 percent. As for just how long the firm is willing to wait for an exit, Baird says they're flexible--they'll even do a revenue-share agreement that pays the firm back slowly.
"We're trying to build different kinds of structures that make fiduciaries comfortable with backing companies that could create the world we live in," Baird says.
If it's true that what happens in New York City could ripple out to the rest of the country, you might want to pay attention to the Big Apple's next mayor, Bill de Blasio.
On the campaign trail, the sitting public advocate of NYC ran on a platform of stamping out inequality--offering to help bolster the middle class and end policies that crowded out this constituency in recent years. In the campaign address that would serve as the defining moment of his candidacy, de Blasio referred to NYC over the past few decades as a tale of two cities--where the gap between the rich and the poor is vast and becoming more so.
While surely this talk is welcome news for more than a few business owners, others fear that he would rain on their parade--an outcome that could still come to pass but isn't as likely as people think.
First, a bit of background: For the past 12 years, Michael R. Bloomberg, a billionaire businessman with a passion for numbers, has served as NYC's mayor. During that time, many entrepreneurs have chosen the Big Apple to base their businesses while giant companies like Google have expanded their footprints. The city itself has not only blossomed as a prominent tech and startup hub, it's also become what Bloomberg himself touts as "the safest big city in America" and tourism has skyrocketed.
Naturally, Bloomberg had his misses in the eyes of the business community--among others, the letter grades for restaurant hygiene and citywide bike lanes confounded some owners. But mostly, business under Bloomberg was humming.
"New York was notorious for insider deals and being closed to innovation. So, Mike rewrote the book," says Jigar Shah, founder of SunEdison and partner at Inerjys, a clean-tech investment firm in NYC. "From car sharing to solar and energy efficiency, to bike sharing, New York is a more innovative, friendly place to entrepreneurs."
The combination of seeing Bloomberg's departure and the arrival of de Blasio, a far more populist politician who has called for raising taxes on the wealthiest New Yorkers, has frayed nerves.
Notwithstanding his more flamboyant stump speeches, de Blasio does have some solid business-friendly ideas. Among other proposals, he has promised to crack down on "nuisance fines" for minor infractions, offer technical assistance to immigrant entrepreneurs and establish economic development groups in every neighborhood
Contrary to what some entrepreneurs and business owners think, the end is not near for NYC's thriving tech and business communities. In a recent article in the New York Times magazine, Adam Davidson spoke with Benjamin Barber, a political theorist and author of If Mayors Ruled the World.
As it turns out, Barber believes that political leanings don't matter much when actual governance comes into play, as mayors tend to be far less dogmatic once they take office than their counterparts in Congress. "The distance between Bloomberg and de Blasio is not as great as the media--and the two men--have made out," he says. "Being a mayor is about solving problems and not about striking ideological poses."
Wall Street and business owners may be quaking in their boots, but de Blasio's policies likely won’t be as severe as people think.
Just consider his proposed tax hike on the wealthy. To make way for the introduction of universal pre-K and after-school programs, de Blasio is proposing to raise income-tax rates on those earning more than $500,000 by one half of one percent to 4.4 percent from 3.9 percent. That would amount to an enhanced tax on just 40,000 New Yorkers--not exactly fanning the flames of a nascent socialist revolution.
To be sure, these are still early days, as de Blasio hasn't even taken office yet. And though it's certainly possible that he will alter the landscape of what it means to be a business owner and entrepreneur in New York City, it might also be a good idea to reserve judgment until a later date.
Like many of his predecessors in NYC and elsewhere, de Blasio is pragmatic. He's not likely to gift-wrap the city's tax base and ship it off to Connecticut any time soon, for instance. Nor would he go out of his way to crush the city's burgeoning startup scene.
The Big Apple's future mayor may be as ideological as they come, but he's also a politician with deep roots in NYC and a vested interest in keeping it healthy. This isn't to say that you stand idly by if you don't like something City Hall wants to push through--especially when newfangled startups are concerned. (Think, Airbnb's recent brush with a New York regulator.) But writing off this mayor--and the next few years under his watch--may be premature.
If what happens in New York City does in fact harbinger what's to come elsewhere, it's probably safe to say that startups and the business community in general will remain on solid ground.
This year's best leadership advice from Inc.'s top columnists.
Inc.'s most insightful columnists dished out great advice on how to be a better leader this year. In case you fell behind in your daily reading material, here's this year's most poignant pearls of wisdom to help you lead your start-up through the New Year.
Les McKeown, best-selling author and CEO of Predictable Success, advises that one of the worst things a leader can say is, "Don't bring me any surprises." Guess what happens when you tell people not to bring you bad news? A ticking time bomb waits for you to find it after it's too late. Train your employees to bring you bad news when it breaks.
There are certain words that you should never describe yourself with while writing on your company's website or on social media. Jeff Haden, leadership expert and columnist, says you should never describe yourself with hacky clichés, overblown superlatives, and breathless adjectives like "global provider," "authority," "passionate," "curator" or "innovative." "Never take credit for things you are supposed to do--or be," Haden says.
Every great leader has their own dogma, a principle or set of principles laid down by an authority as incontrovertibly true. Kevin Daum, Inc. 500 entrepreneur and best-selling author, says that every successful leader--from Steve Jobs to Warren Buffet--promote a distinct philosophy. "Leaders must have unbending principles that guide them and their companies, or people will simply take any path that suits them," he says.
Leigh Buchanan, editor at large for Inc. magazine, says the days of uber-masculine and commanding leaders are over. Multiple studies have shown female leaders out-perform their male counter parts. "Control is a mirage. The most effective leaders right now--men and women--are those who embrace traits once considered feminine: Empathy. Vulnerability. Humility. Inclusiveness. Generosity. Balance. Patience," she says.
Successful leaders need help to manage their employees. Marc Barros, co-founder and former CEO of Contour, says this ability to find new leaders can be crystalized in one interview question: "Tell me about the last person you fired." Barros explains if the candidate, "'I haven't fired anyone,' it's obvious this person's a bad fit. You can't build a great team without occasionally deconstructing and rebuilding it. And while every leader makes mistakes, if he can't admit, correct, or move on from them, you don't want him or her at your start-up," he writes.
Entrepreneurs founding their own companies may know how to be effective managers, but it takes a few secrets to be an effective leader, says Peter Economy, the bestselling author of more than 60 leadership books. He says his four secrets to "awesome leadership" are to know how to energize employees to be productive, empower staff by encouraging growth within a constructive work environment, support and "shield employees from the fallout of organizational politics and avoid blaming individuals for failure," and communicate thoughtfully and listen actively.
Leading is easy when everything is going as planned. But when your leadership ability is tested--when an employee wrongs you or fails horribly--you need to have already mastered the skill of forgiveness, entrepreneur and bestselling author Kevin Daum says. "The leader who can forgive and rebuild the trust and confidence of the team is the leader who can overcome any challenge or obstacle," he says.
Building trust between you and your employees is the best way to get them to work hard. Geoffrey James, the author of the world's most-read sales-oriented blog "Sales Source on Inc.com," says in order to win their trust you need to coach, not command; tell the truth; follow through; take blame but give credit; don't badmouth; walk the talk; and listen more and talk less.
People aren't actually afraid of making decisions. They're afraid of regretting the ones they make.
Pushing decision-making down the corporate ladder to employees can be a hallmark of good management. But consider this finding from a recent study: 53 percent of people would prefer to flip a coin and "randomize" a decision than to make one themselves.
The paper, "Flipping a Coin: Theory and Evidence," by three German academics, also reports that 28 percent of the study's subjects were liable to change their mind about a preferred outcome if asked twice. The responsibility that comes with making a choice, the authors say, can just be too much.
To the authors, this indicated the power of regret in the apparently common problem of responsibility aversion. They write:
Our proposed explanation for the choice of randomization is fear of regret from taking the wrong decision. The decision-maker feels less regret if [a] bad choice is due to a random outcome.
If indecisiveness is a problem at your company, you can use these three strategies to help get better at pulling the trigger.
1. Get rid of fear.
Easier said than done? Maybe. To actually make it happen, check out consultant Doug Sundheim's advice on the HBR Blog Network for eliminating fear of failure from any organization:
- Define smart failure
- Reward smart failures
- Make your approach to risk-taking transparent
2. Realize that life ain't fair.
The study's authors cite previous studies in suggesting that that some people prefer to have their choices made for them because they fear their decision will be seen as unfair. They're right. A good decision maker uses his or her best judgment and takes in supporting insight and data, but it's their decision and therefore inherently unfair. Recognizing this reality is an important step toward empowering people to make decisions.
3. Force the issue.
This advice comes from behavioral economist Dan Ariely. When battling indecisiveness, he says, deadlines can only help. Using the example of a group of friends wondering what to do on a given night, Ariely says:
To overcome this problem, I would set up a rule that limits the amount of time that you are allowed to spend searching for a solution, and I would set up a default in case you fail to come up with a better option. For example, take a common good activity (going to drink at X, playing basketball at Y) and announce to your friends that, unless someone else comes up with a better alternative, in 10 minutes you are all heading out to X (or Y).
To be sure, Ariely's example features a decision of little consequence. It's probably safe to say experiments like this are probably left better off alone when it comes to choices that could have a significant effect on the future of your company.
Drew Houston knows a thing or two about finding success the first time around. Here are the things that helped him along the way.
Drew Houston, co-founder and CEO of Dropbox, knows that it only takes one great idea to start a successful company. And he believes being a first-timer isn't a bad thing--in fact, you have some inherent advantages over serial entrepreneurs.
After writing the original code for his cloud-based file-syncing service at a bus station in Boston in 2007 after he graduated from MIT, Houston and co-founder and CTO Arash Ferdowsi have built a business with 200 million users who save more than a billion digital files, photos, and videos every day.
The MIT-duo, with only one degree between the two (Ferdowsi dropped out to start Dropbox), addressed an annoying pain point--needing a thumb drive or email attachment to share files between devices. They've even had the pleasure of saying no to a buyout offer from Steve Jobs.
Below, read the four tips he dished to First Round Review, a blog published by the VC firm of the same name, on how to be a first-time success.
Find a 'worthy' problem.
Houston says that the first step to founding a scalable company is to focus on one problem that many people have. Here's how he defines a "worthy problem."
Be proud that you're a beginner.
Being a first-timer gives you a fresh perspective, Houston says, so "own being a beginner." Some of the most successful tech companies, from Google to Facebook to Apple, were all started by first-timers. A wide-eyed, optimistic entrepreneur isn't as easily tainted by the it's-impossible-attitude, he says. "A lot of really great, innovative things have happened when people just didn't know it wasn't supposed to be possible," Houston says.
Don't assume incumbents can do it all.
If you think the tech giants are capable of solving every problem, you'll never start your own successful company. Sometimes, it doesn't pay to be the first in your industry. Friendster and MySpace were bested by Facebook. What if Sergey Brin and Larry Page didn't make Google because they thought Alta Vista and Ask Jeeves were good enough? "People make basic assumptions based on what they have now. But you have to ask yourself, is this really what people are going to be doing in five years? Houston says. "Very few people ask themselves what they would actually want instead if they could wave a magic wand. What if there could be this magic folder that you could access from anywhere and never need to back up?"
The movie evokes what made Mandela great, from his time as a hotshot defense attorney to when he became a humanitarian leader.
Nelson Mandela wasn’t always Nelson Mandela. And in Mandela: Long Walk to Freedom, Justin Chadwick’s glossy biopic based on the former South African president’s memoir, it’s clear he was as human as anyone, even if history tends to forget.
Early in the film we see the man, played by the excellent British actor Idris Elba, as an amateur boxer and hotshot defense attorney in Johannesburg in the '40s. Even then, he has the power to magnetize those around him, although as he makes clear over dinner with friends in the African National Council, he wants no part in anything he can’t do himself. He is a selfish man, intoxicated by women, and in his mind, hard work and education are the only true paths from dispair.
Mandela eventually comes to realize that he's at his strongest when has other shoulders to lean on. Later on, when he learns his eldest son, Thembi, has been struck and killed by an automobile, it is a close friend who comes to his jail cell to offer kind words. And it is that cohort, along with six others imprisoned with Mandela for 27 years, who lifts his spirits with jokes and a knowing grin when they’re hammering rocks in prison.
In the 1990s, when the president of South Africa invites Mandela to his office for a private visit, Mandela consults with his friends. The president is willing to grant him freedom in return for calling an end to the black-on-black violence plaguing the country. But as tempting as that sounds, Mandela refuses to make a decision alone, instead deciding to hold a vote with his friends. One man, he says echoing a sentiment made earlier in the film, cannot accomplish what many can.
With his towering presence and stricken, world-weary eyes, Elba deftly conveys the nobility of the great man's cause to end apartheid in South Africa. Early on in the film, he delivers several speeches that not only draw the attention of beautiful women, including the future Winnie Mandela, Nelson's second wife and eventual adversary, but his peers, who are incited to action.
Given Elba's dapper suits in those scenes, the future president probably looked good doing it. But Mandela also had an incredible speaking voice and a knack for touching on the things that mattered most to his people: their families, freedom, and a voice in the government. "I refuse to see a government that will not see us," he says in one scene as he's burning his identification papers. Soon, a group of villagers crowded around him are doing the same.
The conceit of Long Walk to Freedom seems to be that Nelson and Winnie were the only ones responsible for South Africa's transformation. But at the same time, South Africa is instrumental in Nelson's own metamorphosis. The film opens with a scene of Mandela as a teen in a rustic village, and a short time later shows his mother, a simple tribal woman who is ashamed of her young son's philandering. Although the film fails to fully explore this era, it strives to convey that Mandela was someone who never lost touch with his roots. That much is evident in the sweeping panoramic views of the country and Mandela's African chant for freedom.
When Mandela raised his voice, Africans knew he was speaking for them.
Don't let cultural folkways get in the way of a big business negotiation. Here are three tips to be more sensitive local mores.
When it comes to overseas business negotiations, much can get lost in translation.
A team of three U.S. business school professors studied the differences between how North Americans and Asians settle conflict and negotiate--and if you plan to expand globally you may want to listen.
Jeanne Brett, professor at Northwestern University's Kellogg School of Management, Kristin Behfar, an associate professor at the Darden School of Business at University of Virginia, and Jeffrey Sanchez-Burks, a professor at the University of Michigan Ross School of Business, say that both Westerners and Easterners need be aware of their inherent differences in business communication.
"In much of the West, it is considered maddeningly inefficient to talk around an issue, whereas East Asians tend to view direct confrontation as immature and unnecessary. That difference amounts to a frustrating cultural divide in how people solve problems at work," the team wrote in the Harvard Business Review.
Through their research, Brett, Behfar, and Sanchez-Burks created a basic list of the standard idiosyncrasies between the East and West. Below, read how you can become better attuned to cultural folkways of negotiating.
Listen for cues.
"Look for subtext. If you suddenly realize you're listening to a story or a metaphor, that's a signal," the team writes. In Eastern cultures, subtle phrases or suggestions are more effective than Westerners' directness. Brett, Behfar, and Sanchez-Burks tell of an American entrepreneur who contracted a Chinese manufacturer to build bikes and send them to his buyer in Germany. When he went to check on the bikes before being shipped, he noticed they rattled. Instead of directly saying they need to be fixed, he asked the plant manager to go on a test ride with him. During the ride, he mentioned that they rattled. The plant manager understood and fixed the bikes. "The plant manager apparently picked up on the entrepreneur's culturally sensitive cues and assumed ownership of the problem, because the German buyer received a satisfactory shipment of bikes," they write.
Tone down blunt solutions.
When a problem arises that needs to be fixed, be oblique, the team says. "Suggest a tentative solution. Express it as a question--'Could this be done?'--and not as a given," they write. "Listen for 'that might be difficult' or a noncommittal 'yes,' which may really mean 'no' and certainly suggests that your approach isn't optimal."
Have a third party settle conflict.
In Asia, it is customary to respect social hierarchies. If a conflict arises, a top executive may be used to settle a problem. "Don't be put off by third-party intervention," the trio writes. "Understand that by not confronting you directly, your East Asian colleague is treating you with respect, even while disagreeing with your approach."
Car companies' websites don't always live up to the lofty themes they align themselves with in TV commercials.
At first glance, 2014 looks like a banner year for car sales. Automotive information site Edmunds.com predicts 16.4 million new cars will be sold, the highest single-year sales total since 2009.
But automakers shouldn't activate the cruise control just yet. Edmunds also says 2014 will witness the slowest year-to-year growth since 2009, because the economy hasn't improved enough to impact the hardest-hit groups: young people, lower income households, and the business sector.
That means automotive marketers must connect with a prospective buyer's wants and needs and deliver a credible value proposition in one fell swoop. That's like accelerating from zero to 60 in five seconds.
I took a quick peek under the hoods of a few automakers to see if their website experiences matched what their taglines promised. (A quick caution flag: I drive a BMW M3, and my strategic communications firm represents MINI, so I excluded both brands from my test drive.)
A Sea of Orange
As a rabid NFL fan, I'm quite familiar with the truck commercials that bombard TV viewers during timeouts. They all seem to evoke the same themes: family, patriotism and performance. Ford Explorer's tagline is "Over the river OR through the woods." But its website is so bland, and the orange Explorer on the homepage is so ugly, that I didn't feel like trying either route.
There's also a total disconnect between the off-road experience implied in the brand promise and the online information provided. In fact, only one of six videos on the site even mentioned off-roading. And it was painfully boring. When it comes to making the tagline come alive on the website, the Explorer is anything but dynamic.
Although the Toyota Tundra is a heavy-duty pickup truck, the photo on Toyota's home page makes it look more like an SUV. In fact, it could be the Explorer's doppelganger. The trucks not only look alike, they're also displayed in that same, ugly Brady Bunch retro orange color from the 1970s.
The tagline on the Tundra's homepage reads: "Tow. Haul. Build anything." Not exactly memorable, is it?
But when you click beyond the homepage, the Tundra hits you with another tagline: "Work ready. Family tough." That's one tagline too many. Are we building, towing, towing a family, or what?
Rounding out the truck category is the Chevy Silverado, parked alongside the exact same beach/lake scene as the Explorer and Tundra! Truck marketers must not get out very much. The Silverado's tagline reads: "Find new roads." Original, isn't it?
The entire truck category needs construction on their marketing roads. They look alike. They sound alike. And none of the brands I inspected delivered on their original brand promise. These trucks are a wreck.
A Penny For Your Thoughts
Smart Car is far and away the coolest, savviest and most navigable of the websites I reviewed. The brand delivered on its tagline: "Not just any smart. My smart."
Here's why: On one area of the site, visitors are invited to select what type of driver they are: "joy rider," "big wheeler," "pace car," "bumper humper," or "human odometer."
Intrigued by "bumper humper," I chose that profile. The site informed me that because I use my car to commute to work, I'm always in a hurry (hence the humping), and I travel 44 miles a day--and with gas priced at $3.88 a gallon in my zip code--I should be driving their coupe.
Smart Car tailored this experience for me. They made it My Smart.
Kia promised me it had "The Power to Surprise." The website did back that up to an extent, but the cars didn't surprise me. They were rather bland. And the website itself is traditional and boring, with all of the tabs, columns and corporate information one would expect from, say, IBM. What did surprise me was the list of awards won by Kia cars, from Motor Trend, the National Highway Traffic Safety Administration, Cars.com, and others.
Awards are impressive, but the "Power to Surprise" is confusing. I couldn't find any information about the powerful acceleration of any of Kia's models. And, there is nothing surprising at all about the car's look or design.
Maserati's marketing gurus must know I long to be behind the wheel of their car. Why else would its tagline be: "The absolute opposite of ordinary"? That struck a nerve with me.
Maserati's website isn't ordinary. But, I wouldn't call it extraordinary either. There's a neat compilation of company history, various makes and models, and racing heritage. But when I screeched to a halt to inspect the cool-looking Granturismo, I clicked on a rather odd video. It began by categorizing other high-end luxury brands as nothing more than "….quiet motors sitting atop look-alike boxes." The video reveals a stark white room filled with tiny motors, perched on top of little boxes and humming silently. I guess they're supposed to depict Maserati's competitors, but it sure doesn't work for me.
The Maserati website is a classic example of overcomplicating a very simple message. A luxury car should be sold as a luxury experience. The website should be elegant in its simplicity. The car's beauty should speak for itself. Most importantly, a glamour icon does not bash the competition.
A New Lemon Law
Based upon my experiences, I'd say 2014 might be an even bumpier ride for car markers than even Edmunds suggests. In fact, I'd suggest the AAA, or someone, create a new lemon law that fines automakers who promise one thing in their taglines but deliver a very different experience online.
Is some ill-intentioned user posting fake reviews on your company's Yelp page? Here's how to find out.
The days of consumers wandering aimlessly into establishments--whether it's barbershop, restaurants or drycleaner--unaware of the level of service to expect are over, thanks to the advent of online recommendations.
With services such as Yelp, Google, and the like, a quick run down of pretty much every business is at someone's fingertips and according to a study by BrightLocal, an SEO company, 85 percent of customers check online reviews before a sale. Though these services are an undeniably useful tool for getting more consumers, they can pose a risk: fake reviews. Whether its your competitor writing a nasty review of your customer service, or a user looking to get more clout with the service by falsly expanding their review roster, you have to be on the look out.
A recent post on the Intuit Small Business Blog outlined a handful of tips to spot false reviews. Here are three things from the post to keep in mind:
Look into the username. The username listed with a review can be a solid giveaway for a fake review. When you click on a reviewer’s profile, you can usually see if there are any social media accounts associated with that username. If there are, the review is more likely authentic. A Google search of the username can also come in handy as paid reviewers will likely have written other reviews. Look for simialrities across reviews and any duplication.
Pay attention to style and message. Be wary of reviews that are either extremely negative or extremely positive--especially ones that lack a lot of details. Many exclamation points, capital letters and a lot of personal pronouns are also red flags. These can signal that a reviewer is overcompensating for not having actually tried the product or service.
Keep your eyes open for marketing jargon. A lot of fake reviews will use language that isn’t colloquial or sounds like it could from a press release. Additionally, unatural repetition of the brand or product names can signal that it is not an authentic review as most consumers wouldn't incorporate those.
A story about the collaborative economy that is helping families across the world.
Without DogVacay my Thanksgiving would have been ruined. That’s a fact. And I’m not an investor. I just had to tell this story. It’s a great one about entrepreneurship, friendship and the collaborative economy that is helping families in need across the world.
Every year my family meets in San Diego for Thanksgiving. My three siblings and I make the trek to spend four to five days with the nine grandchildren, my mom, my cousin and few other very close family members. It’s the one time per year that my entire family decompresses and spends high-quality time together. We rent a house through HomeAway and all stay under one big roof.
This year the night before the journey my brother got a call from the person who had committed to watch his dogs that she wasn’t able to watch them after all. Panic ensued as we couldn’t bring the dogs to San Diego, and my brother’s three kids look forward to this great trip all year. They called the local dog kennels with trepidation. Nobody wants to leave their loved ones in a cold, impersonal dog kennel not to mention the costs of doing so.
“Oh shit.” The local kennels were full as many people had pre-booked for vacations. What to do?
I had known about DogVacay since its inception. As I mention I’m not an investor, just a fan. I have a close family member who lost her job and was in need of a bit of extra cash while she looked for work. She started watching dogs in her spare time through DogVacay and was able make ends meet during a tough period.
Companies like DogVacay solve a real need in the market. People who want to travel but don’t want to burden neighbors or friends or don’t want to leave their dogs in a big, impersonal, industrialized dog kennel now have a real choice to leave their dogs in a family home run by somebody with whom DogVacay has fully vetted and ensured of insurance, etc. They can read reviews, see pictures and even talk to the family before confirming.
On the other side, animal loves in need of extra money or stay-at-home parents, the elderly, whoever - can make extra money while just carrying out their normal life routines.
When I realized six members of our vacation crew might be SOL and my own kids devastated that they wouldn’t see their cousins this year, I sprang into action. I don’t own dogs so I wasn’t already a user.
I registered. Easy. I typed in my brother's zip code and ton of houses popped up in his area and I was able to search out on a map view. I then clicked on reviews, looked at pictures and read the owner's descriptions of what they were looking for.
I had to get basic information about my brother’s dogs (size, willingness to be with other dogs, special needs, were they spayed, had shots, etc.) and upload that.
And boom. That easy.
Except … there was a waiting period to have the owner decide if they wanted you. That could take a few hours and believe it or not I didn’t have a few hours. I called 1-855-DOG-VACAY and spoke with Killina Benson from their concierge team and explained my circumstances. She sprung into action and called the house I wanted to book directly (they obviously don’t provide phone numbers for you to call directly although a Twilio integration couldn’t hurt!).
To be totally honest I also called the CEO of DogVacay whom I consider a dear friend and told him about my plight. He was relaxed and told me, “Don’t worry, Mark. Killina will take care of you. That’s what she’s there for - we love situations like this. And there are a ton of dog sitters in Sacramento so I’m sure we’ll be able to help.”
Then my I had to explain to my sister-in-law that she was going to be leaving her dogs at somebody’s house whom she didn’t know. I told her the story of Aaron, the company, the reviews, etc. I could tell she wasn’t totally convinced but was willing to give it a go.
She dropped off the dogs and gave me the biggest thank-you text you could imagine. She told me:
“Mark. I couldn’t believe it. Our host was so comforting. He told me I could stay as long as I wanted to make the dogs feel comfortable. They seemed so experienced and reassuring. Thank you. I feel much better about leaving our dogs here than with a kennel.”
She arrived late that night in San Diego. We already had received photos from the dog watcher reassuring us that the dogs were safe and sound. We proceeded to get one photo every day and it helped calm all nerves.
My History with DogVacay
It’s true that I’m not an investor in DogVacay but I am a huge fan of the CEO, Aaron Hirshhorn and of the company and concept. We met six years ago. He had been working as a strategy consultant post B-school at Monitor and worked closely with a good family friend of mine who recommended I meet him.
We had a shared history. Not only two Jewish boys from Philly, but Aaron was born on the exact same day as me (April 30th) in the same town (Philly) exactly 10 years to the day after my birth. I’ll leave the year out.
We got along and shared stories about the startup market. He wanted to work in venture capital and I was new to the industry and in no position to hire anybody. But we continued to meet over the years and swap experiences. Monitor had a little internal VC group so he got some experience there.
A few years later I was in the position to hire, but Aaron was way more senior than our entry-level positions. So I asked him if he’d consider coming in an an intern of sorts. More like a temporary VC just to get some experience and of course we’d pay him. I saw it as win-win. We got a bit of extra help on company analyses and he got to see a VC from the inside.
We worked together just shy of a year and during that period of constantly seeing startups Aaron made the decision that he actually wanted to be an entrepreneur more than a VC. He and his wife hatched the idea for DogVacay and decided to go for it.
I absolutely loved the idea from day one and told Aaron so. I said, “This category is going to be huge. I’m sure of the value. Like most markets online it will likely be a ‘winner take most’ category so if you’re going to go for it … you better be prepared to win.”
He didn’t have a product or a tech team at the time so it wasn’t really at a stage where I could fund it. He turned to Mike Jones at Science who was newly set up as an accelerator of sorts or a venture studio. Their business model was to help young companies accelerate their launch by helping assemble a team, do initial marketing, provide seed capital and help them raise financing.
Science played that role well and after Aaron hired the key team members and got the product out the door, the business model nailed down and initial users / sitters signed-up, Aaron partnered with the uber-connected Peter Pham of Science who helped him with the VC ropes raising seed capital from First Round Capital and many local LA seed investors and then an A-round from Bill Gurley at Benchmark.
They have raised now a total of $22 million.
I watched all of this from the sidelines with pride. I turned down free “advisory stock” in the early days and told Aaron that I’d much rather just be his independent friend and mentor for anything he needed and that I really just wanted to see him build a successful business for himself and for LA. And I have no regrets - watching a friend succeed is the best form of payment.
And by helping save my Thanksgiving this year. He has paid me in spades. Congratulations, Aaron. And thank you.
This article was originally published on Mark Suster's blog, Both Sides of the Table.
Why employers might not be as generous as the policy implies.
For employees, an unlimited vacation policy can seem like the ideal benefit. For managers, it can be the ultimate recruiting tool.
A small but growing number of American companies are now offering workers the benefit of unlimited vacation days. Under these policies, employees are encouraged to take as much vacation time as they like -- within reason.
That might sound like a recipe for disaster, but human resources experts say it rarely is. Companies that offer unlimited vacation tend to be invested in hiring motivated, responsible employees who will balance taking time off with getting their work done.
"There really isn't a lot of abuse in these plans," said Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management (SHRM). "They work really well in high-performance organizations."
Currently, 1% of companies nationwide offer unlimited vacation, also called unlimited time off, according to data from the SHRM. Another 2% are considering adopting the policy in 2014. The practice is most common among small startups, but has also been implemented by big-name companies like Netflix, Best Buy, and Evernote
Should your company switch to an unlimited vacation policy? We talked to Elliott and Luis Rodriguez, director of HR and people at career site TheLadders (which offers unlimited vacation to its employees), to get their thoughts on the pros and cons of the policy:
1. Employees can recharge. Unlimited vacation policies allow employees to schedule in week or two-week-long trips that might not be possible under traditional policies. Letting workers unplug for extended stretches is crucial for both workers and employers, since research shows that the more you work, the less productive you become.
Unlimited vacation is a good way to incentivize employees to take the break that could bolster their work output. "We ask people to work super hard, and we also give them the ability to take as much vacation time as they wish," says TheLadders' Rodriguez.
2. Workers receive trust and flexibility. Because unlimited vacation relies on employees to take time off within reason, the policy extends its members a certain degree of trust. That can mean a lot to workers. "The employees appreciate the trust and the flexibility that they’re given," says Elliott.
In general, he adds, employees in high-performance organizations respond to that trust by carefully planning how they'll take time off and still complete their workload. They assess when projects are due and when they have gaps in assignments, and tend to request vacation during those periods.
3. Employers can use it for recruiting. From the company perspective, Rodriguez says unlimited vacation is a "talent acquisition tool." The benefit is extremely attractive to potential hires, he explains, which helps companies like TheLadders land top-notch talent. Companies that don't offer a comparable perk, he adds, are "selling themselves short" on finding the best hires in a competitive area like New York City.
1. It can be hard to implement fairly. The biggest stumbling point with unlimited vacation, Elliott says, is ensuring that all employees are given equal opportunity to take their time off. That comes down to management. The obvious problem is that everyone can't be out at the same time. Companies with these policies, then, need strong managers who can juggle a vacation schedule that is fair to all and effective for the business.
2. Employees might initially take less vacation. Another main problem with unlimited vacation is that many employees don't take advantage of it. Slate's Matthew Yglesias goes so far as to argue that certain companies offer unlimited vacation precisely because they think their workers won't take much time off.
What is known is that people are easily overwhelmed by seemingly unlimited resources. "They become risk-averse or unable to make a decision, which leads them to either make a low-yielding investment choice -- or, worse, not sign up at all," writes former MIT Sloan School of Management professor Lotte Bailyn. With unlimited vacation, she says, "many people decide not to take advantage because it's too hard to figure out the right amount to take."
3. The policy isn't feasible with certain types of jobs. Elliott says that unlimited vacation is most popular in Silicon Valley, and tailored to small companies with results-driven cultures. He thinks employers with large numbers of employees, like manufacturing companies or sales organizations, would have a much tougher time switching to unlimited time off. The same goes for employers with a high percentage of workers who are paid by the hour, and companies that depend on call centers.
This article originally appeared in Business Insider.
Want to thrive on every level? This three-step plan highlights the value of getting out of the office and into the world, or even just the neighborhood.
Roti Mediterranean Grill, a medium-sized chain of 22 Mediterranean style restaurants (mainly in Chicago but with locations in Washington, Maryland, Virginia, and New York), recently announced it’s elevating the quality of its fast-casual food by incorporating sustainable meat and organic products. One of the most significant changes is the restaurant’s switch to antibiotic-free, vegetarian-fed Freebird chickens, raised on family farms in Pennsylvania. It now also uses unprocessed salt mined in Utah, California-produced olive oil rather than canola oil, and hummus made from organic chickpeas.
Why? "Our target customers are young professionals who have their head in the world. They care, and they want to know where their food comes from and will pay a little bit more to have food that is sourced appropriately," Peter Nolan, Chief Brand Officer at Roti told Chicagoist.
In the process of upgrading its menu ingredients, Roti has developed a robust community of reliable suppliers who care as much about the food they are producing as the chain does. Can chicken and hummus really forge a bond between people and businesses? Nolan thinks they can, telling the Chicagoist that businesses can be “nodes of knowledge” that allow people to learn a little bit more, in this case about food, and that generates both interest and appreciation. That’s how businesses can form communities: by dealing with suppliers who share their values and educating consumers about the benefits of what they offer.
Research shows that those who demonstrate an active interest in people (and places) actually improve their cognition and become better innovators. Entrepreneurs are uniquely positioned to reach out to others because they aren’t tethered to corporate schedules and hierarchies, and they have the flexibility of both time and infrastructure to allow for more fluid business relationships. Here are three useful steps:
Get together. Do things as a group and you’ll be surprised how much inspiration will come from, say, something as informal as a weekly walk through a local park or a farmers’ market, or something more organized, such as a community business event. I know a group of storeowners in a cozy New York City neighborhood who get together for a weekly stroll and coffee before opening time. It’s a relaxed 45 minutes where they can swap customer stories, sales strategies, and resources for professional services. Towns and cities have been organizing formal regular events to gather community members and tourists and promote business; Lancaster, Pennsylvania, sponsors First Fridays, a popular arts extravaganza held on the first Friday evening of each month. Art galleries, local boutiques and restaurants, artist studios, museums, performing groups, professional theater, symphony orchestra, and the art college open their doors and get involved.
Broaden your knowledge. Continuing educational opportunities are and should be a robust part of your business life. For instance, restaurant owners can gather to sponsor an expert on Umami flavors and learn more about how to apply that knowledge to their menu selections. While going back to school for an MBA can be a daunting process (it’s expensive and time consuming and you likely don’t need one anyway), many community colleges and other private organizations and institutions offer certificate or vocational programs that require less time and money and enable you to broaden your expertise in a particular field. You’ll also meet like-minded people in these courses.
I have a friend who manages the television careers of health and wellness experts who is getting a certificate in Positive Psychology at Kripalulu, a yoga retreat in Lenox, Massachusetts, not only because she thinks it will help her business but because it will expand it and make her even more effective at her job. The course is taught by one of the founders of the positive psychology movement, Tal Ben Shahar, and blends both in-person meetings and virtual course work. “I feel it’s going to open up a lot of intellectual and networking avenues,” she told me. I have no doubt it will.
Become part of the solution. How can your business solve problems in the community? This may not be a direct money-making idea, but it certainly helps pull a community together and forge important relationships with the people you serve or want to serve. The South African branch of Richard Branson's Virgin Active, a health club, launched a youth development program called Future Crew, which helps local high schools get physical activity back into the school day. That’s the sort of community building that provides a healthy, safe place for people to meet and interact. Imagine if you could find a way for your business to become such a hub, even if only on a monthly basis. Sponsoring local charitable events and becoming a visible presence can really help cement a positive relationship between you and the local population. That will inevitably help you build a strong and successful business--within a strong and successful community.
You might think franchise owners' biggest challenge is the prospect of rising federal and state minimum wages. But something else takes a bigger bite out of their revenues.
Doubtless you've heard of the recent fast food labor protests in something close to 130 cities, not counting additional protests in upwards of 125 other cities. The demand is $15 an hour and an easier time unionizing.
Will these employees get it? Not a chance. But recent activity suggests that $10 or $11 an hour is likely in some big states. Even the CEO of McKinsey & Co. says that income inequality is the biggest challenge to capitalism that exists today. And even conservative businessman and activist Ron Utz in California has called for $12 an hour, with hopes that it would take pressure off government programs for the poor.
Yup, there's likely a big jump in minimum wage rates coming, which means entrepreneurs operating many franchises will likely find themselves screwed. And yet, don't point fingers at the employees. The real money vacuums are the central franchising companies themselves.
The financial mechanics of a franchise can be painful to contemplate. Consulting firm Deloitte & Touche produces a "Restaurant Industry Operations Report" with the National Restaurant Association. It is the result of surveys completed by association members and gives as good a view of the business of the restaurant industry as you might find. The 2010 version is available online.
Let's look at the basic numbers behind so-called limited service restaurants:
- About half the restaurants were independent, 38.6 percent were standalone, and 18.6 percent were restaurants with sandwich, sub, or deli themes.
- Median average check was $8 per party.
- Median food sales per seat were $10,000; media beverage sales were $1,197.
- Median total cost of sales were 31.9 percent.
- Median salaries and wages (including benefits) were 29.4 percent of revenue.
- Median income before taxes was 5.9 percent of revenue.
- About 90 percent of the restaurants grossed less than $2 million, which means, at the very top, profits are about $118,000 for a restaurant. Most will make significantly less.
That is hardly an overwhelmingly large profit margin. Now comes the kicker, which franchise operators know all too well: They must pay money to the central franchisor. Depending on the franchise, that can be lots of money. Look at McDonald's for a moment. Franchise owners pay a service fee of 4 percent of gross sales. Then there's an ongoing royalty of roughly 12 percent.
Next, they pay rent for the location to McDonald's, but that doesn't leave the option of pricing other property as a way to control expenses. The franchisee must also buy its supplies, food, and anything else from McDonald's, and so miss the logical cost control tool of looking at competing vendors.
Add it up, and you're probably at a conservative 20 percent coming off the top, either in the form of actual fees or as likely inflated food and goods costs. There's a reason that McDonald's brought in almost $9 billion in revenue from franchisees in 2012.
Fees from other chains will vary. Burger King charges an average 4 percent in royalty, plus a 4 percent advertising fee. Carl's Jr. charges about 9.5 percent between royalty and advertising. Domino's Pizza? About 9 percent in royalty and advertising fees.
Clearly not all chains are like McDonald's, but often the financial impact is heavy on the entrepreneur. No money for employee raises? No kidding--there's not that much money period. The New York Times mentions a fast food restaurant actually replacing some workers with robots. Perhaps others could, as well. That is, if they could afford to buy the robots.