Short Term Profit Taking vs. Long Term Value Creation

Reid recently penned a piece about Carl Icahn’s ambitions to split PayPal off from eBay, and the broader difference between the short-termism of Wall Street vs. the long-termism of Silicon Valley. The piece generated a lot of attention and it advances some some important ideas. Give it a read. My favorite line: “Innovation comes from long-term thinking and iterative execution.”

The Power of the Word “Yet”

Suppose your boss pulls you aside and tells you: “You don’t have the right skills for the project.”

Then suppose a different situation, where your boss tells you: “You don’t have the right skills for the project, yet” or “You don’t yet have the connections to make this deal happen.”

The word yet makes all the difference in the world. In the first example, you feel like a dud. In the examples with “yet,” you feel like you may not be ready now, but you could be in the future.

Carol Dweck, the Stanford professor who’s researched the idea of a “growth mindset,”elaborates:

By [using the word “yet”] we give people a time perspective. It creates the idea of learning over time. It puts the other person on that learning curve and says, “Well, maybe you’re not at the finish line but you’re on that learning curve and let’s go further.” It’s such a growth mindset word.

As Chris Yeh points out, when you’re mentoring or helping someone, you want to emphasize the idea of on-going improvement. He offers two more “yet” examples:

“You haven’t been able to find a replicable sales model…yet. But each program your startup tried has taught you something, and you’re refining your approach.”

“You haven’t been able to play that violin piece without mistakes…yet. But every time you practice, you’re getting a little better.”

Bottom Line: Next time you need to criticize or offer feedback to a colleague, add the word “yet” — and you’ll be encouraging a growth mindset.


A single word can carry an entire thought. In a previous LinkedIn post, I noted that basketball coach Gregg Popovich inspired his players to work hard with the phrase “I want some nasty.” The word “nasty” brings the idea to life.

(Originally posted on LinkedIn)

Experts Take Notes.

Recently, Mark Zuckerberg addressed a large auditorium of young entrepreneurs in Silicon Valley. He shared lessons from his journey and his perspective on the state of the internet industry. Every seat was taken, and the 20-somethings who aspired to entrepreneurial greatness were listening with rapt attention.

According to my friend who relayed this story, there were two older folks in the front row who stood out: John Doerr and Ron Conway. They are both legendary investors in Silicon Valley.

They stood out not just because their gray hair shimmered in the sea of youth around them, but because they were the only people in the audience taking notes.

Isn’t it funny, my friend told me, that arguably the two most successful people in the room after Zuckerberg were also the only two people taking notes?

As I wrote in the excerpts from the Five Elements of Effective Thinking, experts understand simple things deeply. They return to the basics, over and over again. eBay CEO John Donahoe is widely regarded as one of the premier execs in the Valley right now and I’m told is an avid note-taker to boot. He recently said on LinkedIn, “Great leaders are never too proud to learn.”

You could argue people have different approaches to capturing nuggets of wisdom and committing those nuggets to memory. Sure. But I’m skeptical of passive learning. If you don’t write down what you’re hearing and learning, what the odds you remember it? I take lots of notes in paper mole skin notebooks; every week or so I go back with a different color pen and circle the key sentences; I then transfer these ideas to Evernote files on my computer; and finally, I blog/tweet/publish/email out the crispest, most important ideas or quotes. And this is nothing compared to Tim Ferriss’s extreme “take notes like an alpha geek” system, which is worth learning about.

You might argue people like John Doerr and Ron Conway are old school. Most young folks today, you’d say, aren’t going to be using pen and paper in the first place. Fine. The actual technology/process is not as important as having a repository, and preferably having a system that reinforces retention.

I thought about this broader idea the other month when I visited the University of Washington business school the other month. I was giving the keynote talk in the afternoon, but I set my alarm clock early to catch the morning keynote from my friend Charlie Songhurst. I know from personal experiences that Charlie is unusually insightful. As he delivered his keynote to the MBAs in the audience I noticed something peculiar: almost no one was taking notes–on paper or on tablet or computer. Well, I was. A few other people were. But most weren’t. There was plenty to write down, to be sure. It was an insightful talk. What gives? My theory: The audience was mostly students. Experts — or those who have deconstructed what experts do — take notes. Novices don’t see the point.


There’s an old rule of thumb that if you have something really important you need done, ask for help from the busiest person you know. Here’s an analogous rule: if you want to identify the most senior, knowledgeable people in an audience, look for the people who are taking notes and asking questions.


While taking notes in a large auditorium in front a keynote speaker is a no brainer, note-taking in a 1:1 meeting is a bit trickier. A few years ago, I wrote about the pros and cons of taking notes in a 1:1 conversation. One risk is it can make the conversation seem more transactional than is ideal. And it can also introduce a power dynamic if only one person (and not the other) is taking notes. Still bias yourself to take notes in a 1:1, but tread a bit more cautiously.

(Photo credit: Geekcalendar)

(This post originally appeared on LinkedIn)

Simple Yet Hard, Public Market Investing Edition

Anyone who touches public market investing sings endless praise for Warren Buffett. But how many public market investors invest like Buffett — that is, actually employ the same strategy to generate superior returns? Remarkably few, it seems.

The Mutual Fund Observer recently profiled the Bretton Fund and interviewed its manager Stephen Dodson:

In imagining that firm and its discipline, [Dodson] was struck by a paradox: almost all investment professionals worshipped Warren Buffett, but almost none attempted to invest like him.  Stephen’s estimate is that there are “a ton” of concentrated long-term value hedge funds, but fewer than 20 mutual funds (most visibly The Cook and Bynum Fund COBYX) that follow Buffett’s discipline: he invests in “a small number of good business he believes that he understands and that are trading at a significant discount to what they believe they’re worth.”    He seemed particularly struck by his interviews of managers who run successful, conventional equity funds: 50-100 stocks and a portfolio sensitive to the sector-weightings in some index.

Stephen says:

I asked each of them, “How would you invest if it was only your money and you never had to report to outside shareholders but you needed to sort of protect and grow this capital at an attractive rate for the rest of your life, how would you invest.  Would you invest in the same approach, 50-100 stocks across all sectors.”  And they said, “absolutely not.  I’d only invest in my 10-20 best ideas.” 

The obvious question is why this is. There are various incentives that distort fund managers’ behavior, certainly. But my guess is that a large number of public market investors think they’re investing like Buffett, but they’re actually not disciplined enough to follow the value strategy all the way. It’s no wonder the average returns from actively managed mutual funds (versus index funds) are so disappointing.


I should note that Steve is one of my closest friends. And not just because he’s made me money from my being an investor in the Bretton Fund.

Learning to Own the Room

I recently attended an Own the Room public speaking and communication course in New York.

I’ve done a lot of public speaking, from enterprise software sales pitches in the early days, to paid keynote speeches more recently. But I’ve never formally trained. I’ve relied on some natural ability, decent content, and feedback from friends/clients along the way.

Over the past year, I felt like I hit a plateau in my verbal communication/presenting skill. I also came to the more general realization — described in my recent blog post on investing in yourself — I should be investing aggressively in my existing strengths. So I flew to New York and participated in the intensive Own the Room bootcamp, which had been referred to me by several people in my network.

It was phenomenal. I learned so much. Here are some reflections.

The native speaker who can’t write or understand grammar. When I took Spanish classes in school in California, there were always a few near-native speakers — immigrants whose parents spoke Spanish at home. Their accent was perfect and conversational pattern fluid, but occasionally they would unknowingly make very basic grammatical errors. They were never taught grammar; they couldn’t spell many words they spoke. Going through this course, I felt like I was that native Spanish speaker: when I speak or verbally communicate, I do a fine job most of the time, but now I know I make some really basic mistakes. Until this course, I wasn’t aware of the mistakes, let alone how to improve them. I’d argue that many business execs with a natural flair for speaking fall into this camp. They’re quite good, but they won’t get to great without stretching themselves beyond their natural ability.

The bootcamp model. I’ve blogged about the bootcamp model of learning. Own the Room definitely fits that mold — a couple super intensive days focused on a single topic. I still seek a framework by which you can evaluate when a format of learning fits the type of learning — i.e., I think a bootcamp model works well for public speaking, but not for language learning, say.

Demand feedback. “What did I do well? What could I do better next time?”After every module exercise, we “demanded feedback” from our partner or small group or coach by asking these two questions. This is a general learning theme, of course, but was emphasized to such a degree in Own the Room that it stuck with me more than anything else. (“What could I do better next time?” is an example of ‘feedforward’ instead of ‘feedback’ as Marshall Goldsmith calls it — constructive feedback focuses on what you can do better next time.)

Presence comes from change. Dynamic leaders have presence. It’s a hard thing to define. When do you feel someone’s “presence” in a room?  You feel presence when they change. Change their physical position. Change the volume of their voice. Change the speed of their voice. Change their point/topic. Change = presence. A huge learning.

Voice modulation and pauses. I discovered in the class two key weaknesses in how I verbally communicate. First, I don’t employ pauses enough. The rightly timed pause can make such a difference in how a point lands in the audience. Second, I don’t modulate my voice. I don’t use the full range of volume. I’m too monotone too often.

“Imagine…” Paint pictures with words. Paint pictures with words. Paint pictures with words.

Here’s a video of highlights from the first day of the course I attended.

And here’s a clip of Bill Hoogterp, owner of Own the Room, teaching voice modulation and body language:

How Busy People Find Time to Think Deeply

(Originally published on LinkedIn, where there are 300+ comments.)

During the first presidential campaign Michelle Obama was worried her husband’s schedule allowed him “no time to think.” You hear the same from business executives who traverse impossibly packed days.

But how many people budget serious thinking time on their calendar? Few. After all, what would you actually do during time set aside to just “think”? Sit in a chair, stare straight ahead, and ponder the world?

Indeed, it’s not a challenge you confront head-on. As Alain de Botton says, “The mind may be reluctant to think properly when thinking is all it is supposed to do; the task can be as paralyzing as having to tell a joke or mimic an accent on demand.”

If you want to do more proactive, deep thinking, you want to obliquely engage in two kinds of activities.

Directed Thinking Activities

Write. Famed author Joan Didion says, “I don’t know what I think until I try to write it down.” Amazon CEO Jeff Bezos preaches the value of writing long form prose to clarify thinking. Unless you’re a professional writer, writing is not always about the written output; it’s about the thinking that happens as you attempt to communicate. Do not assume you have to share your writing with others for it to be time well spent.

Read a book. Don’t read an executive summary or two-page cheat sheet. Read a full book. It’s not about the content of what you’re reading — in most business books, there’s not much new anyways — it’s about the quiet time you’re spending by yourself. Unless you’re a professional book reviewer, reading is not about reading; it’s about thinking. It’s about hearing yourself think.

Undirected Thinking Activities

“Undirected” thinking time involves activities that are themselves minimally mentally taxing, and conducive to creative thinking about other things.

Drive to and from the office. Driving a familiar route = good thinking time. “When Joan Didion moved from California to New York, she realized that she had done much of her thinking and mental writing during the long drives endogenous to the Californian lifestyle,” Steve Dodson once noted. I’m the same. I can’t tell you how many decent thoughts I’ve concocted in my head while driving on the 101 or 280 freeways in the Bay Area.

Take your dog for a walk. Same as driving, but safer.

Take extra long showers. You’re free from distraction, you’re engaged in a monotonous activity that doesn’t require active focus, and you’re in a different environment. Sounds like the perfect place for a creative thought.

Stare out of airplane windows. Travel journeys of any sort are the midwives of thought. “Few places are more conducive to internal conversations than moving planes, ships, or trains…Introspective reflections that might otherwise be liable to stall are helped along by the flow of the landscape,” says Alain de Botton. On the topic of airplane windows and thinking, I always call to mind this picture (right) of Bill Clinton, having a moment.

Organize your office/room/house. Tidy up documents, pick up around the floor, rearrange books. It’s an excellent foil to serious thinking.


When do you find time to think deep thoughts amid the day to day chaos of professional life?

(Photo credit: Flickr)

“What Would I Need to Believe For This to Be the Right Decision?”

Long time readers know I love easy-to-remember questions, litmus tests, proxies, rules of thumb that make navigating a complex and uncertain world a little bit easier.

Dan Shapero, a VP at LinkedIn, wrote a good post recently about a way to bring clarity to a decision making process.

If you’re faced with a choice of whether or not to do something, just ask yourself, “What would I need to believe for this to be the right decision?” This simple question is incredibly clarifying.

Here’s an example: I’m trying to decide whether or not to prioritize the development of a new product. In order for that to be a great idea, I would need to believe the following assertions:

1. We have the team capable of building the product

2. Customers will buy the product at an attractive price if we build it

3. We have the distribution to reach potential customers at a reasonable cost

4. None of our competitors can replicate this offering in the next 12 months

5. There are no higher priority development opportunities for the R&D team

Simple and powerful.

How to Get Useful Feedback on Your Projects: Avoid Like/Dislike

When you show someone a plan, product demo, or piece of writing and ask for feedback, you might ask, “How do you like it?” If you don’t ask this explicitly, it is often the implied question in a feedback session.

But whether the other person likes whatever it is you’re working on is frequently irrelevant. And, in fact, asking this question can distract both of you from the real goal: discovering practical steps to improvement.

When Reid and I were writing The Start-Up of You, we asked for feedback from several friends on drafts of the manuscript. During the first round of feedback, we were genuinely curious if others liked it because we weren’t sure how much work we had left to do. Folks came back and said they didn’t like several portions of it, and that was useful: we learned we had months of work left. During the second round of feedback, I did not ask people if they liked it, because I knew by then we still had work ahead of us. Instead, I asked, “What are three specific ways you think we could improve the manuscript?”

See, once we realized we had more work to do, hearing whether someone thought the current draft of the manuscript was great or not great was irrelevant. What was helpful was how you actually make the text better. Maybe that meant making a good manuscript great. Maybe that meant making a bad manuscript simply average. Either way, better is the right mantra in an environment of continual improvement.

What’s more, opening with the “like” question can actually be counterproductive. Ask somebody who was in the audience, “What’d you think of my speech?” and you will probably get some variant of “good,” especially if the person is of lower status. Any specific tips that follow will be under this potentially sugarcoated guise. Or, if they say they didn’t like it, you could get defensive or argumentative. Ask instead, “What is one thing I could have done better in the speech?” and you’ll jump right into something that’s potentially actionable–and avoid a potentially awkward like/dislike evaluation.

Bottom Line: If you know there’s still work to do — on your draft essay, on your public speaking skills, on your product — ask people for one or two specific ideas on how they’d improve it. Focus their mind exclusively on practical, specific changes that they think would lead to improvement.


I wrote a long essay titled “Behind the Book” summarizing other lessons learned from the process of publishing The Start-Up of You.

(Photo credit: Flickr. This post originally appeared on LinkedIn.)

Political IQ is Like “Overall Athleticism” and “Court Vision”

James Fallows, who’s one of the most consistently level headed and clear bloggers on current affairs, has a post up with two good yet different points. The first point is a worthwhile one about the role of “culture” in a country’s success.

The second point is about “political IQ”:

Political talent includes the ability to tell your immediate audience things it wants to hear — without offending people beyond that audience, who in today’s panopticon age will inevitably hear anything troublesome you say. At its crass extreme, this is the “dog whistle” — sending a coded signal that the general public will miss but only a select group of listeners will recognize and respond to. Less crassly, it is a skill both Ronald Reagan and Bill Clinton demonstrated in managing to appeal to some groups without alienating too many others. Barack Obama took such heat for his “people get bitter” comments four years ago because they violated this rule. For him it was a rare exception….

Here is the point I am building to. Three months before the election, it is fair to wonder about Mitt Romney’s basic skill level as a politician. I am not talking policy and substance, which I will do later. I’m talking about the counterpart to what coaches call “overall athleticism,” “court vision,” “ball sense,” even “football IQ.” In politics this includes an ability to read audiences, to self-edit and self-correct in real time, and to sense effortlessly how your words will sound to people on the other end. Right after Sarah Palin’s pick four years ago I guessed that she was going to have trouble with the surprisingly onerous demands of a national campaign. Now I am struck that we’re still seeing indications of limits on Romney’s “political IQ.”

“Court vision” and “ball sense” exist in a business context too, and I think it goes beyond polish. I’m reminded of my post a couple years ago on the “it” quality — the total package of qualities that so surpass simply “smart” that you’re left saying the person has the “it” factor.

When Talent Can Easily Find New Opportunity, How Do You Retain Talent?

Talent moves around more and more

Talent in Companies

There used to be a long-term economic and psychological pact between employee and employer that guaranteed lifetime employment in exchange for lifelong loyalty; this pact has been replaced by a performance-based, short-term contract that’s perpetually up for renewal by both sides.

As an individual professional, you aren’t wild about pledging lifelong loyalty to a single company because, thanks to LinkedIn and other services, you can more easily locate new opportunities and you can more easily be found by recruiters and companies. The grass is always greener on the other side; now it’s easier than ever to see that grass, and chase it. Companies, as a result, don’t want to invest in training and developing you in part because you’re not likely to commit years and years of your life to working there — you will have many different jobs in your lifetime.

In the Start-Up of You, we talk about how individual professionals should manage and invest in themselves in light of this more fluid relationship with employers.

But how should companies think about the implications of these expectations? How do companies think about HR and retention? If individuals live the Start-Up of You, it means that if you have 500 employees you do not have 500 individuals ready to be subservient and loyal for life; rather, you have 500 businesses-of-one who are leasing their talent to you at this point in time.

Instead of denying the job-hopping, opportunity-seeking ways of young talent today, it seems wiser for companies to face the reality and embrace it. Help employees develop transferrable skills. Help them build the start-up of themselves. And be very explicit with new hires about the expectations: “We expect you to give us a really strong tour of duty for 2-3 years. When you leave, we expect you to be part of our corporate alumni group. We want you to be part of our corporate alumni network. We want you to help recruit new employees. We want you to be lifelong ambassadors and evangelists for our products and services. But we know you’re super talented and will come upon many other career opportunities while you work here. We know your tenure at the company may not last more than a few years.”

Essentially, try to retain employees for as long as possible, but be frank about their likely brief tour of duty, and be clear that you expect them to be active corporate alumni members for the years after they leave the company.

Talent in Countries

Elites of troubled or poor countries ask themselves: “How we keep our brightest young here? How do we get them to build companies here, be part of the local workforce, and (re)build the local economy?” In Greece, this was the question elites in the country were thinking about. I just returned from a few days in Morocco–it was a huge topic of conversation there, too.

Usually, elder elites appeal to youth’s sense of nationalism / patriotism: “You’re Cypriot. This country raised you. Stay and help grow your country.” Or, as I suggested to some Greek entrepreneurs during my trip there, governments could appeal to the business opportunities associated with societal problems–many problems means there are many potential solutions. Trash collection has become impossible in Athens due to protests; perhaps the wealthy would pay for a private trash collection service?

But if they’re honest, older government officials and businesspeople know that for the average 18, 19, 20 year-old in Cyprus or Morocco there will, on average, be more professional opportunities abroad. Government officials fear that if they acknowledge this fact publicly, talented youth will flee. The problem is, they’re going to flee anyway, or at least try to, because they see the economic dynamism abroad. They watch MTV Cribs.

So here’s a radical view: government and business elites in certain poor/developing/troubled countries should explicitly tell their most talented youth to go abroad. Indeed, help them to do this–pay for it, even. As part of this, forge with them a new social contract. Have them sign a document stating their expectation to return after 5-10 years. When they return, they can share what they’ve learned abroad and infuse their native culture with the attitudes gleaned from the cultures in which they spent their 20’s. Plus, chances are they’ll be even more patriotic upon return. Spending time abroad can remind you how Moroccan, or American, or Greek you really are. You realize how many of your habits are cultural; you feel more affinity for your native culture.

The big difference, of course, between the company example and the country example I’ve mentioned is that once an employee leaves a company, he isn’t likely to return again later, whereas for countries, the point is the emigrant will one day return. But maybe this could be made parallel as well. Bain & Co. and McKinsey famously invite ex-employees back after they’ve gained additional experiences elsewhere.

Bottom Line: Talent seeks opportunity. With opportunity increasingly visible and accessible, talent is moving around more and more. Poor countries should relinquish the idea that they can hold onto all their best young people; instead, send a high profile number of them abroad, and get them to commit to return home later. Company executives, similarly, should relinquish the idea that employees will profess long-term loyalty to their corporation. Instead, they should be explicit with employees about signing up for a tour of duty for a period of time and, from then on, remaining an active ambassador and recruiter for the company as part of the corporate alumni group.