Category Archives: Business

This week Steve Newcomb and Ben Horowitz both wrote dynamite posts on hiring and business.

In Steve's post, he sets up the topic this way:

What happens when founders try to sleep at night is this: their mind spins uncontrollably between scenarios that result in a glorious success and scenarios that result in a burning death crash.  Most founders I know ride a fine line between seeming to be in total control and going nut balls.  

All I can say is welcome to the club – you're normal!  

Whenever people ask me how I make it through, I always say the same thing.  Sit down and write down the shit storms that you are worrying about and divide them into two list.  Those that are under your control and those that aren’t.  Then focus on the list that you can control.  If you stare at that list long enough you’ll realize a commonality.  That the solution to every single one of them begins with having a team that is rock solid, one that isn't afraid of challenges and one that believes in you as a founder.  If you do this one thing right, it will steady you and calm your mind enough to face and conquer any challenge.

Focus on things you can control is a lesson one can never hear too many times. Steve says the answer to all of a founder's worries is to have a rock solid team behind you. Very generalizable. In the post he goes on to offer a rich list of tips for how to recruit and retain a killer team. Read the whole thing.

Ben Horowitz's post is intriguingly titled: If You've Never Done the Job, How Do You Hire Somebody Good? CEOs often hire people to do jobs they've never done and never could do. You're hiring domain experts. But if you're not a domain expert yourself, how to evaluate the candidate? That's the set-up for an excellent analysis on hiring.

One of his early points is that you should figure out what strengths you need from a candidate and focus on that:

The more experience you have, the more you realize that there is something seriously wrong with every employee in your company (including you). Literally, nobody is perfect. As a result, it is imperative that you hire for strength rather than lack of weakness. Everybody has weaknesses; they are just easier to find in some people. Hiring for lack of weakness just means that you’ll optimize for pleasantness. Rather, you must figure out the strengths you require and find someone who is world class in those areas despite their weaknesses in other, less important domains.

Then he suggests coming up with a list of questions for different types of candidates that cut at the heart of that specific domain (sales force, operational management, etc).

He notes the usefulness of front door references:

For the final candidates, it’s critically important that the CEO conduct the reference checks herself. The references need to be checked against the same hiring criteria that you tested for during the interview process. Backdoor reference checks (checks from people who know the candidate, but were not referred by the candidate) can be an extremely useful way to get an unbiased view. However, do not discount the front door references. While they clearly have committed to giving a positive reference (or they wouldn’t be on the list), you are not looking for positive or negative with them. You are looking for fit with your criteria. Often, the front door references will know the candidate best and will be quite helpful in this respect.

Matthew Yglesias discusses the follies of occupational licensing, citing the case of whether barbers ought to have licenses to set up shop:

If you just assume optimal implementation of regulation, then regulation always looks good. But as I noted in the initial post the way this works in practice is the boards are dominated by incumbent practitioners looking to limit supply. One result is that in Michigan (and perhaps elsewhere) it’s hard for ex-convicts to get barber licenses which harms the public interest not only by raising the cost of haircuts, but by preventing people from making a legitimate living. States generally don’t grant reciprocity to other states’ licensing boards, which limits supply even though no rational person worries about state-to-state variance in barber licensing when they move to a New Place. In New Jersey, you need to take the straight razor shaving test to cut women’s hair because they’re thinking up arbitrary ways to incrementally raise the barrier to entry.

In principle, you could deal with all these problems piecemeal. But realistically this sort of problem is inevitably going to arise when you pit the concentrated interest of incumbent haircutters against the diffuse interest of consumers. It’s hard enough to make sure that really important regulatory functions related to environmental protection, public safety, and financial stability are done properly.

In the comments section of Marginal Revolution, there's a link to Dan Klein's PowerPoint on occupational licensing. I spent five minutes flipping through the slides and learned a lot about the issue and about how economists think about topics such as this. Highly recommended. I learned, for example:

• Occupational licensing affects 29% of U.S. workers
• There are three levels of control: registration (an official list of providers), certification (if you want to use the official title you have to be certified), and licensing (you cannot do business unless you have a license).
• Popular rationale for licensing includes helping consumers find trustworthy providers because consumer cannot judge quality and safety before and (sometimes) after the fact.
• Official stance on licensing: protects consumers. Skeptical stance: protects incumbents from competition.
• Voluntary supply of assurance: certifications, word of mouth, brand names, warranties, etc.
• Studies consistently support the skeptical stance on OL. Reduces supply, increases prices; no quality difference net net, sometimes even a worse quality among licensed practitioners; depresses wages.
• Licensing boards made up mostly of existing practitioners in the industry and they spend most of their time prosecution unlicensed practitioners, regardless of quality. In-group ethic is strong.
• Another example of the persistence of a bad status quo thanks to concentrated benefits, diffused costs.

BTW it's interesting to see Yglesias's liberal readership bash him in the comments section, even though his sensible less regulation idea ahelps (via lower prices) poor people who consume the services and helps the (generally speaking) poorer people who want to start businesses like barber shops. One commenter, after the onslaught of negativity toward Yglesias, writes: "The left once again reveals itself as not pro working class, or pro woman, or pro black, or pro muslim, or pro oppressed group of the day, but merely the voice of the state." A later commenter says the right doesn't even pretend to care about the oppressed. Both sentiments contain a truth. I think a better way to split the political left and right is comparing the Tragic and Utopian View of the World.

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Here's my older post on the Case Against Credentialism, which covers similar themes.

Paul Graham wrote a popular essay a year ago contrasting the "Maker's Schedule" with the "Manager's Schedule":

The manager's schedule is for bosses. It's embodied in the traditional appointment book, with each day cut into one hour intervals. You can block off several hours for a single task if you need to, but by default you change what you're doing every hour.

When you use time that way, it's merely a practical problem to meet with someone. Find an open slot in your schedule, book them, and you're done.

Most powerful people are on the manager's schedule. It's the schedule of command. But there's another way of using time that's common among people who make things, like programmers and writers. They generally prefer to use time in units of half a day at least. You can't write or program well in units of an hour. That's barely enough time to get started.

Marc Andreesen wrote a post a couple years before Graham recommending a something similar: as much as possible don't keep a schedule, don't agree in advance to meetings that can interrupt the most important to-do of the current moment.

It's true that for some creative pursuits you need long, uninterrupted stretches of time to get work done. I try to batch my calls / meetings for just this reason. But one twist: if you have literally nothing on your calendar for a day — and for enthusiasts of the Maker's Schedule, this is the goal — procrastination becomes easier, in my experience.

When I have nothing on today's calendar it's easy to dick around during any one of my morning routine stages: wake up, breakfast, email, workout, shower, lunch. If I don't have any anchor external commitment, I can say to myself, "If I start real work at 2 or 3 PM, what does it matter?"

By contrast, if I have a call scheduled at 1:30 PM (my usual time for doing calls), I keep focused on swiftly moving through my morning routine in time to do the call. Otherwise, my whole day is thrown off. Then, when the call's finished, I'm ready to immediately dive into real work for the rest of the afternoon / night. (I'm up until 1:30 AM.)

Bottom Line: The idea of a day totally free of any external commitments or obligations sounds good in theory yet increases the likelihood I procrastinate. On the other hand, a day full of meetings or obligations means I get nothing done. The optimal point is one or two obligations which mark the passing of the day and create a sense of urgency about how I spend the time that's all mine.

When people set goals they usually define clear, measurable outputs. E.g.: “Today I’m going to write 1,000 words” or “This afternoon I’m going to finish QA testing this version release.”

But this approach doesn’t work as well for tasks of considerable complexity where what’s required of you is uncertain. Projects where there’s a clear end-goal but it’s in the distant future. The specific intervening steps, and the time required for each step, are unknown.

I’m involved in such a project right now. When I work on it I set goals around how many hours I want / need to spend. My daily goal might be: “Spend four hours working on [specific thing related to general project].” Then I’ll put my head down and make progress. And if I spend four solid hours, I consider the goal met. I am very disciplined about making sure I only count time that’s real work — if my mind wanders or if I get distracted, I turn off the clock.

As I’ve set time-allocation goals I’ve figured out the maximum amount of time I can realistically apply toward different types of tasks in a given day. I can usually do at most 4-5 hours of “hard focus work” and 4-5 hours of “light focus work” (email, blogging, Skyping) per day. A big variable for people is whether meetings fall into “hard focus” of “light focus.”

Bottom Line: The right kind of goal setting depends on the person and projects involved. For long-term projects where the specific steps and time necessary for each step are uncertain, setting short-term time allocation goals works well for me.

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All inbound email to me is now automatically marked as “read.” No more bold messages that scream to be opened. I would find myself opening the bold messages even before I had finished dealing with an older email. Thanks to Cal for this idea. I reccomend trying it.

…the history of strategy as a struggle between two definitions, strategy as positioning and strategy as organizational learning. The positioning school, led by Harvard’s Porter, sees strategy making as the choice of where you want to compete, in what industry and from what spot within that industry, and how—on price, with distinctive products, or by finding a niche. The organizational-learning school, by contrast, maintains that no company that’s already up and running can choose its strategy as if it had a blank slate. Almost gleeful in its derision of the positionists—at least its leading spokesman, McGill’s Henry Mintzberg is—the learning school also argues that virtually no strategy ever works as originally planned. The point, they say, is for the company to set off in one direction, learn from the response it gets from markets and competitors, and then adjust accordingly.

That’s from The Lords of Strategy by Walter Kiechel. Full review forthcoming. Here is Mintzberg’s book The Rise and Fall of Strategic Planning.