Lessons from The Green Hell

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The brief straightaway provided a short but much-needed respite from navigating the seemingly endless number of turns I’d been negotiating. But a couple of seconds later, I was going through the same procedure for the 400th time: look for the apex of the turn, brake, downshift, check the mirrors, ease into the curve. I had my line picked out, all was zen, until a second check of my rear view mirror showed me that they were gaining, and fast. A pack of three 911s, all in hard-core, track-specific GT3 spec. I blinked and they were next to me, the BRAPAPAPAPPPP!!! of nearly 1,500 combined HP thundering in my eardrums and passing with just inches to spare. German wolves out on the hunt.

It was just a normal day on the Nurburgring, also known as The Green Hell. But it was my first time there, and the experience felt anything but normal. Considered one of the most challenging and dangerous race tracks in the world, the Nordschleife (North Loop) of the Nurburging features 154 turns, is nearly 13 miles long, and has over 1,000 feet of elevation change. All nestled in the dark green forests of western Germany. It’s not a place for the faint of heart, as the ‘Ring has claimed over 200 lives over the years:

The Ring is an incredibly unforgiving place. With the exception of a handful of bends, there’s no run-off: if you fail to make a bend, you’re going to hit something hard. Worse, most of the bends and crests are blind, so the chances of one accident leading to a second one are also relatively high. – Ben Lovejoy, instructor for 9 years

3 BMWs, a Corvette, and a Porsche walk into a curve...

3 BMWs, a Corvette, and a Porsche walk into a bar…

Even on the afternoon I drove, there had already been 4 accidents that morning. And two more during my own session. Since I managed to both survive and not wreck (not even once!) during the course of six laps, I wanted to share some thoughts that only an adrenaline and danger-soaked afternoon can provide:

Find your limits and push them

They say that it’s better to drive a slow car fast than a fast car slow. Why? Because driving well within the limits of your car really just isn’t that much fun. You need a bit of tire squeal to make you feel alive. But that doesn’t mean going out with reckless abandon from the first turn. It means that each lap, you push yourself a bit further until you’ve found just how fast you can navigate a bend before your tires start to protest. And you try to drive right at that level. In control, but at the limit. If you don’t find yourself smiling by then, you’re doing it wrong! Work life is the same way. If you’re always taking on projects that are easy and involve no risk, you’re just going to have another boring day at the office. Only by taking on challenges that are outside of your comfort zone are you really going feel alive.

Swallow your pride

With any skill, there is always going to be someone better than you. Driving is no exception. And at 100+ mph, it would be very easy to put your car into the wall by trying to keep up with someone who’s simply a better driver. But that doesn’t mean the temptation isn’t strong. You have two options: get pissed by comparing yourself to faster, more experienced drivers, or have fun by focusing on the continual improvement of your own skills. Outside of a car, it’s equally easy for me to find others with more talent, greater accomplishments, or who are just plain smarter. Dwelling on that would be poison, though. But focusing on how much I’ve improved since last year, last month, last week? Always a positive reinforcement.

Focus on the big picture

The best way to make it quickly and safely around the track is to think of all 154 turns as a series of connected movements, not as bunch of individual curves. More often than not, one turn begins just as another has ended. Your speed, line, and position from the preceding turn have an enormous impact on your ability to take the following one. So if you don’t plan ahead, you’ll find yourself continually unprepared for what comes next. Isn’t life the same way? Many of the decisions you make today will affect the options available to you down the road. Valuing the long-term effects over the short-term consequences is a skill I think most of us which we did better, race car drivers included.

Experts are your friend

If someone’s better at something than you, look at them as an ally, not an enemy. If they’re better, they can teach you. And if you can get taught, you’ll improve much faster. Which is why I hired a 27-year old German race car driver to show me the ropes. On a race course, he’s called an instructor; in business he’d be called a mentor. In either case, someone who can help you avoid mistakes that he’s made in the past is invaluable. Don’t be afraid to find someone like this and learn from them, even if they’re younger than you!

If I’m lucky enough to my wife let’s me drive the Nurburgring again, perhaps I’ll have some more thoughts to share. But in the meantime, I’ll simply leave this for you here: a 1987 video of a RUF CTR doing what’s regarded as one of the most impressive laps on the ‘Ring of all time. You’re welcome:

Startup Lessons from A Game of Thrones – Part 1: Tyrion Lannister and Getting Shit Done

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George R.R. Martin’s novel series, A Song of Ice and Fire, (or for you viewers at home, A Game of Thrones) is chock full of interesting characters and situations. So much so, that I felt compelled to write a few posts about the lessons that startups can draw from them.

Let’s start with Tyrion Lanninster, aka The Imp. Caution… spoiler ahead. Tyrion’s never had a lot going for him. A misshapen dwarf who’s been all but disowned by his family, Tyrion’s rarely enjoyed the respect of others.  While Tyrion’s immediate family is made up of avarice-driven, power-hungry, and cunning individuals who’ve jockeyed themselves into dominant positions in society, Tyrion spends his days drinking and whoring out of sight.

Tyrion in his element

That changes though, though, when the circumstances of war install Tyrion as Hand of the King. Tyrion is just as surprised as anyone at obtaining the second most powerful position in the kingdom, and he uses the opportunity to earn the respect he’s never had. The task isn’t easy, though: the king himself is Tyrion’s own nephew Joffrey, an immature and cruel boy who despises Tyrion even though he’s the very man he should rely on to help him run the kingdom.

But before long, Tyrion learns how to manipulate Joffrey through a combination of intimidation (“I’ll geld you, I swear it…” he threatens Joffrey once) and distraction (giving Joffrey a fancy crossbow to show off). While short of stature, he’s not short on wit. In the ensuing months, Tyrion finds himself running the affairs of the kingdom while the king is preoccupied playing with his toys.

This is exactly where Tyion needs to be some time later, when the city of King’s Landing is about to be attacked by rivals. While Joffrey should be the one making war plans, he’s too busy having his fiancé beaten and generally being a prick to make meaningful preparations. And as much as Tyrion hates Joffrey, he hates the idea of having the city sacked and his family thrown out of power even more. With the prospect of a loss looming on the horizon, Tyrion switches to full-on “Get Shit Done” mode…

He orders every blacksmith in the city forge a massive chain that will cut invading ships in two. He cajoles the ancient order of pyromancers make 10,000 jars of a hugely volatile substance called wildfire – enough to blow up the entire city of they’re not careful. He burns down the shanties surrounding the city walls to keep them from being used by the enemy as ladders. He has catapults built and sends men out to harass the enemy, all without the knowledge or consent of his incompetent nephew. Though untrained as a soldier, Tyrion even leads a band of soldiers to defend the city gates, while men with twice his size and experience flee to safety.

Wildfire: the napalm of Game of Thrones

It’s not not to be impressed by The Imp. He had the gall to deal the ineffectual and narcissistic King (and technically his boss) enough blows to keep him out of the way. He had the foresight to initiate some defensive tactics that others overlooked. And he had the guts to rush into battle despite his physical disadvantages. Without him, King’s Landing may have in fact been overtaken. Doesn’t he sound like someone you’d want on your side?

Thankfully most of us don’t have the disadvantages Tyrion had to deal with: a unsavory physical appearance, a family that’s rejected you you, and a 13-year-old egotistical and insecure boss. Now think of the challenges you’re dealing with at your own startup. Do any of them seem nearly as bad? No?… So what’s keeping you from being like Tyrion and Getting Shit Done?

Can the Bible teach us how to build great startup teams?

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“Individuals don’t build great companies, teams do,” is a popular saying in the startup community, thanks to Mark Suster. Indeed, of all factors contributing to startup’s success: product/market fit, sufficient funding, competitive barriers, and so on – none are relevant without a good team in place.

But how do you know when you have a good team? The challenge with team building is that there are quantitative ways of assessing its health. You know when you need to raise money by looking at your balance sheet. You know that you’re on track for a product/market fit when customers start giving you money. But how do you know that your team has the right composition?

There’s a useful concept that comes from an unlikely source: the Christian church. I promise that this post won’t be about converting you to one religion or another, but keep an open mind. In his book, “Building a Discipling Culture“, author Mike Breen developed a concept called the Fivefold Ministries. The idea stems from the five core roles that are outlined Ephesians 4:11-16 – apostle, prophet, evangelist, pastor, and teacher:

11 Now these are the gifts Christ gave to the church: the apostles, the prophets, the evangelists, and the pastors and teachers. 12 Their responsibility is to equip God’s people to do his work and build up the church, the body of Christ… 16 He makes the whole body fit together perfectly. As each part does its own special work, it helps the other parts grow, so that the whole body is healthy and growing and full of love.

The concept here is pretty straightforward: each person has been given their own set of talents and abilities. Only by “unifying” these talents together can a group of people establish change. In the case of the Ephesians, it meant building a young church in the face of adversity. In the case of a startup, it means creating a new company in the face of risk and competition.

Let’s look closer at these five roles and see how they apply to startups:

Apostles – Thought leaders and visionaries, apostles are those who break new ground and challenge others’ view of the world. In the New Testament, the Twelve Apostles were those Jesus chose to establish Christianity. Tasked with developing a new religion in the face of very real persecution, the apostles of the early Christian church faced tremendous adversity in their task. Can you guess what the corollary in startups is? It’s the CEO and early founders: those who attempt to forge a new idea into a viable company. While company founders don’t have to face the risk of death in their pursuits (let’s hope!) their role requires a bold attitude and the ability to keep moving forward in the face of skeptics and competitors. While any startup requires it’s share of apostles, this role isn’t sufficient to get a company off the ground, as we’ll see in a moment.

On track to disrupt at least a couple industries, Elon Musk is a classic Apostle.

Evangelists – Evangelists make it their purpose to tell others about their beliefs and vision. They don’t necessarily set the vision (that’s up to the apostles), but they diffuse it, multiplying the reach of the apostles. Like apostles, though, evangelists also have to face doubters. They must possess the ability to win others over through intellect, empathy, charisma, and persistence. Evangelists in the early Christian church were responsible for converting others to Christianity. Their counterparts in startups are the salesmen, corporate developers, and marketers, who “convert” new relationships into partners, customers, and investors.

One of the early tech evangelists, Guy Kawasaki.

Prophets - This may seem like a stretch for startups, but not when you look deeper at the meaning of the word. It’s Greek root prophetes simply means “inspired preacher or teacher”.  In the Biblical context, prophets were inspired by God and cast a vision of what they believed would happen in the future. Relying on perception, intuition, and feeling, prophets are not unlike artists, who challenge our view of the world with their artwork. In the startup sense, prophets can take the form of consultants and advisors, often in the form of futurists. These visionaries look at how industry, technology, culture, politics, and other macro forces are interacting, and they predict what the world will look like in the coming years. While not as focused on implementation as other roles, prophets play an important part in helping startups challenge existing ways of thinking.

H.G. Wells told us much about what the future may look like.

Pastor - Pastors are simply those who care for others. They guard, protect, and nurture those in their custody. In the early Christian church, pastors were responsible for caring for young Christian communities that needed steady guidance and encouragement. In a startup, the needs of the young team are not much different. Faced with uncertainty about the future and lacking the cohesiveness that comes from working with others for a long period of time, startup teams need to be nurtured. A startup “pastor” may take the form of a special employee who has the rare talent of bonding people together, or in a more formal role, such as a human resources lead. In any role, pastors are crucial to developing and reinforcing a healthy company culture.

One of today’s leaders in developing a great company culture, Tony Hsieh.

Teachers - anyone who has a desire to know the truth and impart it to others can considered a teacher. Early Christians needed teachers to convey the lessons of Jesus and explain how they could be lived out in daily life. While we tend to think of teachers today as those formally employed as such, teachers in a startup can take many forms. It’s an engineer who helps his team understand a new technology. It’s the manager who makes sure his team understands the priorities of the company. It’s the analyst who looks closely at the way her company’s product is being used and provides insight into opportunities for improvement. And it’s the designer who helps his company adopt a common visual language in its products.

Leene Gade is awesome – head race engineer for Audi and the first female in that role to win the Le Mans 24 Hours, she knows how to teach her mechanics a thing or two.

As you’ve read this post, you’ve probably thought of a few people on your team who fit into these roles. Take a few minutes and review everyone who’s a part of your startup. Do you have strong players in each? Is everyone in a role that’s suited to their talents? What areas is your team lacking in talent?

Now consider what a team with solid players in each role would look like. You’d have a rich blend of people who can lead the formation of the company and set its vision (apostles), gain customers and advocates (evangelists), understand the future of your industry and your company’s role in it (prophets), keep employees empowered and happy (pastors), and ensure that the team is working on the right things and has the knowledge to execute (teachers). A pretty strong crew indeed.

Build for Everyone and You Build for No One

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Imagine that you’ve headed to your local Ford dealer, trying to find a new ride. An overly friendly salesman approaches, wearing the requisite Ford-branded polo shirt. “Welcome! What can I help you with today?”, he grins at you. You start to explain that you’re looking to replace your old Camry, but before you can say more, he interrupts. “Great! We have just the car for you. It’s called the Ford Everyone.” Looking around the dealer, you now notice that there’s a strong similarity among most of the cars. They all look just alike… they are all alike you realize, confused. The salesman goes on. “We designed the Everyone to suit all needs. We knew that some people want to pull a boat, and it can kind of do that, as long as it’s not too big and there aren’t too many hills. We also realize that others are looking for something more luxury oriented. Look at those leather seats! Oh, but to keep the cost under $15,000 (hey not everyone’s rich!), there’s no A/C. No worries, though, doors aren’t included either, so you’ll get all the airflow you need. If fuel economy is your thing, the Everyone has you covered. Its 3 cylinder engine gets 40 MPG! Of course it only goes 50 mph, but who needs to highways anyway? Got hot rodding in your blood? Well, it’s kind of a hot rod, just look at the flames we put on the hood! And we know how important family is. Did you know that the average family has 2.4 kids? Guess what? The Everyone has 2.4 seats in the back!” This sounds pretty ridiculous, and it is. No car manufacturer would try to make something that pleases everyone (OK, maybe there are a couple exceptions), because no one would buy it. Yet this is the same struggle that startups go through when trying to find product/market fit. If an pre-product startup employee tells you he knows exactly what he’s building and who it’s for, don’t believe him! No one knows for sure until their idea is validated by customers who give you money in exchange for what you’re selling. But the test process can be just as confusing as it is helpful. Early beta customers provide all manner of feedback, often conflicting: “make it red! make it blue! I need it to have 2.4 seats! I don’t want any seats!” Since it’s so exciting to know that anyone is using your Beta Whatchamacallit v0.9, the temptation is to respond to all customer feedback as though it’s sage wisdom. And while customer feedback will indeed the most source of guidance for your product, trying to accommodate all of it will please no one and result in a mediocre product. So what to do? Here are three thoughts: 1. Make a guess and cast your net. Early on, you won’t have any customers, and certainly no feedback from them. But you still need to think hard about who your product is for, and why they’ll care about it. Write out your assumptions about a prototypical customer: we’re building this to help a owner/operators single-location restaurants reduce the cost of managing inventory. You might be wrong, but defining your target early on gives you something to reflect against later on. 2. Encourage and catalog feedback: Your first customers won’t all fit exactly within your target audience. Some will be friends, family, neighbors. The test period is messy like that. And if you have a dozen beta users, you’ll probably hear a dozen different ideas on what you should do differently. That’s OK. Don’t worry about whether feedback is what you want to hear or if it even makes sense. Just ask, listen, and share what you hear with your team. 3. Hone in. Go through this exercise enough and you’ll start to see where you can focus. The customers who most need what you’re building will be the ones who give you the most ardent feedback and ask the most difficult questions. But they’ll also be the ones who think that what you’re doing is useful enough that they’ll also keep using your product and even recommend it to their friends. It’s with these folks that you have the strongest chance of success. Especially if your beta product is very beta (i.e. it’s 3 PM and you can’t believe it hasn’t crashed yet today), you’ll find that your customers who need the product the most will be the most forgiving if something goes wrong. That will change one they start relying on the product, but that’s a topic for another post. We went through this at my startup just this past year. We have a product that’s generally designed to help local business with word-of-mouth marketing. In some locations where we thought it would be a home run, it bombed. But another vertical ended up being hugely responsive, and we decided to focus there. We catered our branding and design just to this group, and we ended up being featured on an industry podcast, getting some extra-nice treatment at some industry events, and even had people ask to come work for us! Along with that, we saw a solid amount of organic growth. We know that in the long-term, our customer base will be much bigger than this specific industry. But because we have found a customer that truly loves what we offer, we’re focusing primarily on them for the next chapter of our company’s growth!

Can an app get you hooked on sleep?

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Hooked: A Guide to Building Habit-Forming ProductsUnless you want whatever product you’re working to be ignored, go out and read Hooked: How to Build Habit-Forming Products, by Nir Eyal. It’s a short primer on the nuts and bolts of how products ingrain themselves into our everyday routines. As Nir puts it, “the ultimate goal of a habit-forming product is to solve the user’s pain by creating an association so that the user identifies the company’s product or service as the source of relief.” In the book, he outlines four components of a truly additive product:

  1. Trigger
  2. Action
  3. Variable Reward
  4. Investment

I wanted to see how well an app I regularly use stacked against these criteria. It’s an app called Sleep Cycle, which uses my phone’s accelerometer to measure the quality of my sleep each night. I’ve been using it pretty religiously for several months now, so I think it’s safe to say that it’s a habit forming product. Let’s see if it meets all of the criteria…

Trigger

There are four types of triggers outlined in the book, but just two apply here: internal and owned.

Internal is “When a product becomes tightly coupled with a thought, an emotion, or a pre-existing routine…”. Considering that I sleep everyday (it’s a great way to fend off insanity if you haven’t tried it), that’s a pretty solid internal trigger. I go to sleep; I am triggered to use Sleep Cycle. Since the app also serves as my alarm clock, it’s actually ingrained into two routines.

Owned refers to triggers that “consume a piece of real-estate in the user’s environment.” The app lives right there on the first page of apps on my iPhone home screen, so it does provide a trigger this way. For a phone app, though, “taking up a piece of real-estate” is pretty much a given, so I can’t give the app any extra credit here. However, app notifications fall under the umbrella of owned triggers, and it’s interesting that the app doesn’t offer any. I would think that setting up a simple reminder to “Turn on Sleep Cycle” at a set time every day would be a no-brainer.

I’ll give the app a 6 out of 10 here – the nature of the app lends itself well to routine, but it could go a lot further to remind new users to keep using the tool.

Action

The book references the Fogg Behavior Model, which says that “a given behavior will occur when motivation, ability, and a trigger are present at the same time and in sufficient degrees.”

We’ve already touched on trigger, so how about motivation and ability?

It’s easy to find motivation to sleep given the right circumstances.

Eyal defines motivation it as “the level of desire to take that action.” For a first time user of the app, the primary motivation is to “sleep better” (it works by waking you up during the correct point in your sleep cycle). That’s an interesting proposition (who doesn’t want to sleep better), but it’s fairly vague in terms of what that actually means. Further more, the App Store page used to market the app doesn’t go a long way to really sell you on the concept.

Ability is simply how hard it is for a user to take an action. E.g. using Craigslist vs filing your taxes. Sleep Cycle is pretty easy to use, simply turn it on and place the phone facing down on your mattress. However, to get real benefit from the app, you need to use it consistently, and there’s kind of a steep learning curve to wade through all of the reports. You also have to make sure the phone is plugged in, which is a pain if you’re just exhausted and want to go right to bed! Of course the final step can be pretty tough (you actually have to go to sleep), but that’s not the app’s fault!

Let’s give it a 5.

Variable Reward

“Without variability, we are like children in that once we figure out what will happen next, we become less excited by the experience,” Eyal says. This is why the math behind slot machines is so important. If you simply won a small, fixed prize for every, say, ten spins, the experience would get dull pretty quickly. Apps are no different.

This is where Sleep Cycle really shines. Each morning when you wake up, the app rates your sleep quality on a scale of 0 to 100. 100 being a perfect night’s sleep, and 0 being, well, miserable. Yes, I did get a perfect 100 once; it took me 9 hours 29 minutes back in December. My worst was a 29%. That was a rough morning. Most days it hovers around 80%.

But the great thing about the sleep “score” is that it makes you feel as though you can “win” at sleep. It’s literally a game. You really don’t know what your score will be in the morning (you might have a vague sense if you were up all night worrying how you’ll pay back that Mafia loan), so each morning starts with the itch to satisfy your curiosity about how well you did.

I’ll give Sleep Cycle an 8 here.

Investment

Eyal points out how several studies have shown that we tend to over-value things that we’ve spent more time doing: “Of course everyone likes hearing the accordion, I’ve practiced every day for the past 8 years!”

One of the ways investment manifests itself is through the accumulation and interaction with data. And boy does Sleep Cycle have the data. Not only is it measuring sleep quality each night, but it tracks quality by day of week, duration in bed, the time you went to bed, and more. You can even add something called “Sleep Notes”, which are basically tags assigned to each night. For example, if you regularly each 5-alarm chili, you can set up a “5-alarm chili” Note. The app will compare your sleep quality on days you ate said chili to days you had a normal diet. After a while, you might see that your chili feasts cost you major sleep points, and you’ll decide to back off the Tabasco a bit.

Real life example: I switched to a new mattress in early November, and my sleep quality consistently improved since then. Money well spent!

Sleep Cycle gets a 9 out of 10 here; the longer you use the app, the more valuable (and interesting) it gets.

Summary

If we average out these scores, Sleep Cycle gets a 7/10. That’s not a terrible score, but the app could much improve it’s use of triggers to encourage new users to use the app regularly. It’s the kind of product that if the user wants to make using it a habit, it’ll probably happen. But for the curious user who downloads the app on a whim, they’re unlikely to be turned into a habitual user through the “hooks” of the app alone.

If you haven’t read Hooked yet, give it a read. It doesn’t commit the sin that most business books commit of being way too long, but there’s enough useful information in there to be valuable to almost any reader. Cheers!

Your New Job: Are You a Savior or an FNG?

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You may find yourself living in a shotgun shack 
You may find yourself in another part of the world 
You may find yourself behind the wheel of a large automobile 
You may find yourself in a beautiful house with a beautiful wife 
You may ask yourself, well, how did I get here?

- The Talking Heads, Once In a Lifetime

…and you may find yourself hired for a new job at a startup, in which case you might ask yourself, “well, what do I do here?”

This post is about exactly that.

First, imagine that all new hires are lined up on a spectrum. At one end you have the FNG; at the other The Savior. Who are these people and which one will you be?

FNG stands for “F**king New Guy”. It’s the guy who just shows up clueless, doesn’t know the culture, lacks any sort of useful knowledge (or the wherewithal to share it), and generally gets in the wayYou never really like this guy because he doesn’t know why he’s there, and neither do you. He stands around and just does what he’s told, and it’s exactly who Charlie Sheen’s character, Chris, became in the 1986 classic film, Platoon:

On the other end of the spectrum lies The Savior, the genius whose transformative insight or wisdom forever changes the way his company works. It’s the person every company aspires to hire. Unfortunately, finding a Savior is about as easy is spotting a unicorn. In the movie Moneyball, the Oakland A’s get lucky and identify one in Jonah Hill’s character, Peter. By looking at the struggling baseball team’s player selection process in an entirely new way, Peter completely reworks the way the team recruits and helps turn the organization around:

Obviously, no one envies Chris and few wouldn’t love to be as insightful as Peter, but what really separates the two? Here are three factors:

Attitude

The Moneyball clip doesn’t reveal this, but Peter started exploring new ways of selecting players long before he had any real influence on the A’s. He wasn’t hired to be “influential”, but he didn’t wait for his boss’s prompting before engineering an entirely novel player selection methodology. He just did it. The fact that Peter was at his first job and in a relatively junior position didn’t stop him, and it shouldn’t stop you. Just because you’re new and/or junior doesn’t mean you can’t start asking lots of questions and figuring out where you can add value. If you’re waiting around for someone to tell you how you can help, you probably won’t be around for long.

Perspective

Your naivety in a new industry or at a new company may be your greatest strength. In fact, it’s not at all uncommon for outsiders to use their unique perspective to help companies do things no one thought possible. Witness Steve Jobs’ disruption of the music and mobile phone industries; the exploits of Sir Richard Branson, who said, “My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them… “; and Alan Mulally, who brought Ford back to profitability despite having no experience in the automotive world. You may not be a captain of industry, but if treat your “new guy” perspective as an asset, you’ll go far.

Environment

Sometimes, the culture of a startup has just as much of an influence on how effective new hires are as anything else. The Vietnam military culture that Chris faced in Platoon certainly didn’t foster the development of new recruits, so fresh soldiers were all but guaranteed to be FNGs. Ask yourself: does the company you’re planning to join encourage new ideas and different ways of thinking? Have they asked for your perspective on problems they’re currently tackling? Do the people you interview with ask for your critiques on how the company can improve? If the answer to any of these is no, then don’t work there. Chances are, your new ideas won’t go very far. Instead, find a company who values your input, even if your ideas aren’t as helpful at first because you lack context.

Startups are quick to hire, and quick to fire, so hopefully this post moves you a bit less of an FNG and slightly more of a Savior. Good luck!

Will Non-Profits Participate in the Sharing Economy?

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Jeremy Rifkin, a widely published economics pundit, argued last week that non-profts are going to play an increasingly important role as our economy shifts to a zero-marginal cost “sharing” economy.  (Example for the uninitiated: it costs Netflix nearly $0 to stream Ferris Bueller’s Day Off to your TV.)  

We all understand how Netflix works, but why does he think charities will be crucial to this transformation? In his words:

The answer lies in the civil society, which consists of nonprofit organizations that attend to the things in life we make and share as a community… we are constructing an Internet of Things infrastructure that optimizes collaboration, universal access and inclusion, all of which are critical to the creation of social capital and the ushering in of a sharing economy. The Internet of Things is a game-changing platform that enables an emerging collaborative commons to flourish…This collaborative rather than capitalistic approach is about shared access rather than private ownership.

…the new employment opportunities [will] lie in the collaborative commons in fields that tend to be nonprofit and strengthen social infrastructure — education, health care, aiding the poor, environmental restoration, child care and care for the elderly, the promotion of the arts and recreation.

I wanted to examine this a bit further. Are charities really going to be the driving force in enabling “shared access”?

First let’s take a look at a few companies that have been creating this sharing economy in the first place:

Airbnb – the archetypical example, Airbnb lets property owners lease out their homes directly to other travelers. I’ve used this in LA and it was fantastic. Cheaper than a hotel and the homeowner was gracious. Oh, and they’re being valued around $10 billion these days.

ZipCar – allows city dwellers to rent cars by the hour, day, etc. Hopefully they clean out the McDonald’s french fries left underneath the seat by the previous driver. Similar companies include Getaround and Relay Rides, which allow you to rent from individual owners.

Citi Bike – same thing as ZipCar, but for bikes. In NYC only right now. People ride these things a lot more than you’d think!

eBay – ever since I sold used parts of my crusty mountain bike in the early 2000’s, I’ve loved eBay. These days I’m focused on building out my collection of mannequin feet, but eBay is still the ultimate sharing platform.

TaskRabbit – people aren’t just selling goods, they’re selling their time, with services like TaskRabbit.

Fon – even wifi access is now being shared. With over 12 million members who share their home’s wifi with the Fon network, how many do you think are still named “linksys”?

Just Soles – ladies, if you buy a $600 pair of shoes and wear them 4 times before they go out of style, you just paid $150 each time you went out on that lousy date. That’s why Rent the Runway exists: you can rent fashion for the few times you need a special item at a much lower cost per use. Rent the Runway does the same thing for dresses.

That’s just a short list. Shared ownership and distribution is becoming a major trend, but I haven’t seen any non-profits contribute to this movement yet.

Why is that? It has to do with risk.

Any time an organization attempts to forge a new economic model, risk is involved. The risk is that the model doesn’t work, and whatever time and money went into the idea is lost. Zipcar has to face the financial risk of profitably buying, leasing out, and maintaining a fleet of cars in a much different fashion than traditional car rental agencies. Airbnb deals with the liability risk that renters won’t thrash the place where they’re staying. eBay deals with scale risk, as its model doesn’t offer value unless millions of people are using it. TaskRabbit and Just Soles are faced with competitive risk, as the services they offer can be easily duplicated.

However, non-profits are typically very risk averse, and they often aren’t in a position to risk their capital (or even their time) on endeavors that don’t have a clear outcome. Instead, they’re asked to do the things near and dear to donors’ hearts: feeding children, caring for animals, stoping diseases, and saving the rainforest. So it’s no surprise we’ve seen them on the sidelines thus far.

However, I think we will see two things happen as the sharing economy becomes more pervasive:

First, we’ll see a continued rise in alternative corporate structures, such as L3C (a low-profit limited liability company) and B (benefit) corporations. My hunch is that startup-minded individuals will find new ways in which a zero-marginal cost economy can solve social problems. There are already nearly 1,000 B Corporations, and the designation is only a few years old. Organizations like RecycleBank and Better World Books are great examples of this. I wrote about this while ago, and I still believe that the distinction between for-profit and non-profit will continue to break down.

Second, I think that partnerships between for-profit and non-profit companies will be more common. Not every company’s focus lends itself to solving social problems, but that doesn’t mean its investors don’t want to contribute. Toyota Cars for Good and Patagonia are classic examples of companies who’ve created strong support for causes in line with their products and values, even if they’re not tackling those problems head on.

Either way, the shift to a sharing economy will mean that both for-profit and non-profit companies alike will have to adapt. How do you think non-profits will participate in this new model?