E Pluribus Unum – A Rallying Cry for National Service

This post previously appeared in Real Clear Defense.

 

The Latin phrase E Pluribus Unum – Out of Many, One – is our de facto national motto. It was a rallying cry of our founders as they built a single unified nation from a collection of states. It’s a good reminder of where we need to go.

Today as our country struggles to find the common threads that bind us, we need unifying, cohesive, collective, and shared national experiences to bring the country together again.

Here’s what we’ve done to get started.

And why I did it.

————-

Pete Newell, Joe Felter and I met over coffee in 2016 to discuss our common goal – how to get students in research universities who would never consider working on national security problems engaged in keeping the country safe and secure.

Today, our contribution to national service, Hacking for Defense, turned five years old. In this class, students learn about the nation’s emerging threats and security challenges while working with innovators inside the Department of Defense.

The result? The class teaches students entrepreneurship while they engage in what amounts to national public service. From our single class at Stanford, Hacking for Defense is now taught at 47 U.S. universities having graduated 500 teams and 2,000+ students.

Why Serve?
My interest in starting Hacking for Defense was rooted in my long belief in service – not just paying taxes or voting, but actual service. I had a great career as an entrepreneur, but always believed that at some point in your life you need to serve others – whether it’s God, country, community, or family. And I did so in my stints in the military and public service and as an educator.

Disconnection
Looking back it’s clear that our country was far more cohesive when millions of us had to physically share space and live and work with others who didn’t think like us or talk like us. The Air Force turned out to be the first melting pot I would encounter (Silicon Valley the next) where individuals from different classes and culture had the opportunity to share a common goal and move beyond the environment they grew up in. At each base I was stationed in, I hung out with a group that tutored each other, read books together, went on adventures together and learned together. And while most of us came from totally different backgrounds (before the Air Force, I never knew you put salt on watermelon, that Spam was food or muffuletta was a sandwich), as far as the military was concerned, we were all the same.

But a half-century ago, the country started to disconnect from each other and our government when we eliminated national service. In 1973, near the end of the Vietnam War, the U.S. ended compulsory military service and has since depended on an all-volunteer military.

One result of this experiment: the risk for the sons and daughters being sent into harm’s way is no longer evenly distributed across all segments of society. Many American families no longer have a personal vested interest in our nation’s decisions about foreign policy.

The unintended consequence of this decoupling is seemingly perpetual wars (we’ve been in Afghanistan for two decades). And with our country focused for two decades on fighting non-nation states – Al-Qaida and Isis – Russia re-armed and China has built weapons that have negated our strengths, matched our military, and threaten democracy around the world.

Even more corrosive to the nation is that without any type of mandatory national or public service – not just military service – we eliminated any unifying, cohesive, collective, shared national experience, or shared values.

Values
Instead our values are shaped by what we read on social media, where we find an echo-chamber of others who think like we do. Technology that was supposed to bring us together has instead sold out the country for partisanship and division, for profit over national interest. Others found it politically and/or financially profitable to create distrust in the government institutions that protect and bind us. The result is that we’re easy targets for disinformation by adversaries intent on undermining our government and its institutions.

The world isn’t a benign place. Our freedoms and values need to be defended. Throughout history the capacity of human beings to think up new ways to kill one another has proved endless. My parents, along with millions of others, lost parents, siblings, and extended family in Nazi-occupied Europe. Volunteering for national service for me was a partial payback for the country that welcomed them, sheltered them, adopted them, and allowed them to become Americans. And as much as we wish it and try, we will not eradicate violent conflict in our lifetimes or even in our children’s lifetimes. Today, the struggle for freedom and human rights continues across the globe. Ask the Uighurs, or the people in Hong Kong or Tibet what happens when their freedom is extinguished.

A Contribution to National Service
Five years ago, listening to Pete and Joe talk about the problems the Department of Defense (DoD) faced reminded me of what I noticed inside the parts of the government where I was now spending time. While there were smart, dedicated people serving their country, few of students from the schools I was teaching at were there. Few of my students knew what the DoD or other branches of government did. It just wasn’t part of their lives.

It dawned on us that building on the last national curriculum I created – the National Science Foundation I-Corps, we could hit the ground running and create our own version of a national service. We envisioned a national Hacking for Defense program across 50 universities.

It’s taken five years, but I’m proud we’ve accomplished just that. The class is now adding 1,000+ students a year, many of them choosing to change career paths to work in national service or the public sector after graduation.

Still, there’s much more we can and must do.

While my entrepreneurial career allowed me to work with people who built great products and companies, my national and public service careers connected me to those who’ve dedicated their lives to serving others. And I’ve concluded that a life lived in full measure will do both.

We need to scale the existing national and public service initiatives –AmeriCorps, YouthBuild, PeaceCorps,U.S. Digital Service, Defense Digital Service, and conservation corps– that today only reach 100,000 people. We need to offer every high school and college graduate – all 4 million of them – a shared national experience.

In the face of forces working to tear us apart, we must remember that we are stronger together, more resilient together, more successful together, than we are apart. Our challenge is to bring unity back to a nation that is built on different backgrounds and beliefs. E Pluribus Unum – Out of Many, One.

Hacking for Defense is our contribution to what hopefully will be a much larger effort to help unify the country.

Lessons Learned

  • E Pluribus Unum– Out of Many, One
  • We need to find the common threads that bind us
  • We need unifying, cohesive, collective, and shared national experiences and values will help bring the country together again
  • Hacking for Defense is our contribution

The Rapture Happened but I Wasn’t Called

Last Friday the Secretary of Defense abruptly fired half of the Defense Business Board.
For some reason, he forgot me.

He appointed former Trump campaign officials Corey Lewandowski and David Bossie as chair and vice chair and nine other new members. (Update: the new chair is Chris Burnham and the new vice chair is Kiron Skinner. Both are current board members.)

The Defense Business Board is one of several advisory boards that serve as the pleasure of the Secretary of Defense. The business board is just what it sounds like – leaders from business who could offer best business practices to the department and nation.

Other defense advisory committees include Policy, Innovation, Science, Military Personnel Testing, Women in the Services, and on Sexual Assault. Each of these boards/committees is supposed to provide the Defense Department with the best nonpartisan information and advice available.

The reason I joined was to offer the Secretary of Defense insights that could transform and leapfrog the status quo, not just make us incrementally better. Not just 10% better advice but 10x advice.

After multiple board meetings I still couldn’t tell you what political party any of the board members were in, nor did any of them let their party affiliations color any of their advice. We were all volunteering our time to serving our county.

Over the last year the administration began replacing members of every defense advisory board with party loyalists.

Below is my resignation letter to the Secretary of Defense.


K&S Ranch
Pescadero, California
December 7, 2020

Acting Secretary of Defense Christopher Miller

I volunteered to serve on the Defense Business Board because our nation faces an unprecedented set of challenges. For the first time in a century, the United States is no longer guaranteed to win the next war. We face authoritarian governments in China, in Russia, in Iran and North Korea, governments that not only oppress their own people, Tibetans, Uighurs, those in Hong Kong, but that offer the world a dystopian vision of control.

The national power of a country – its influence and footprint on the world stage – is more than just its military strength. It’s the combination of a country’s diplomacy (soft power and alliances,) information/intelligence and its military and economic strength.

Nations decline when they lose allies, decline in economic power, they lose interest in global affairs, have internal/civil conflicts, or a nation’s military misses disruptive technology transitions and new operational concepts.

For the last century the U.S. was a global power that represented much more than just a strong nation. It stood for a set of values that set us apart. Freedom of speech and worship. Freedom from fear and the collective belief that we are one people with a continual aspiration to a more perfect union. To the rest of the world, we were the shining city on the hill, a beacon of justice and opportunity to emulate and aspire to.

When other nations required loyalty pledges to a party and launched ideological purges of their best and brightest, we recognized that they did so because they were weak. Their ideas and values could not withstand dissent or discussion. We celebrated what made the United States strong was that we embraced diversity of thought and acted collectively in the nation’s interest.

In exchange for ideological purity, the abrupt termination of more than half of the Defense Business Board and their replacement with political partisans has now put the nation’s safety and security at risk.

My service to the Department of Defense was a service to the country not to a party.

I hereby tender my resignation.

Steve Blank

What’s Missing From Zoom Reminds Us What It Means to Be Human

Over the last month billions of people have been unwilling participants in the largest unintentional social experiment ever run – testing how video conferencing replaced face-to-face communication.

While we’ve discovered that in many cases it can, more importantly we’ve discovered that, regardless of bandwidth and video resolution, these apps are missing the cues humans use when they communicate. While we might be spending the same amount of time in meetings, we’re finding we’re less productive, social interactions are less satisfying and distance learning is less effective. And we’re frustrated that we don’t know why.

Here’s why video conferencing apps don’t capture the complexity of human interaction.


All of us sheltering at home have used video conferencing apps for virtual business meetings, virtual coffees with friends, family meetings, online classes, etc. And while the technology allows us to conduct business, see friends and transfer information one-on-one and one-to-many from our homes, there’s something missing. It’s just not the same as connecting live at the conference room table, the classroom or local coffee shop. And it seems more exhausting. Why?

What’s missing?
It turns out that today’s video conferencing technology doesn’t emulate how people interact with others in person. Every one of these video applications has ignored a half-century of research on how people communicate.

Meeting Location
In the physical world the space and context give you cues and reinforcement. Are you meeting on the 47th floor boardroom with a great view? Are you surrounded by other animated conversations in a coffee shop or sitting with other classmates in a lecture hall? With people working from home you can’t tell where the meeting is or how important the location or setting is. In a video conference all the contextual clues are homogenized. You look the same whether you are playing poker or making a sales call, in a suit or without pants. (And with video conferences people are seeing your private space. Now you need to check if there’s anything embarrassing lying around. Or your kids are screaming and interrupting meetings. It’s fatiguing trying to keep business and home life separate.)

In the real world you just don’t teleport into a meeting. Video conferencing misses the transitions as you enter a building, find the room and sit down. The same transitions are missing when you leave a video conference. There is no in and out. The conference is just over.

Physical Contact
Second, most business and social gatherings start with physical contact – a handshake or a hug. There’s something about that first physical interaction that communicates trust and connection through touch. In business meetings there’s also the formal ritual of exchanging business cards. Those all are preambles to establish a connection for the meeting which follows.

Meeting Space Context
In person we visually take in much more information than just looking at someone’s face. If we’re in a business meeting, we’ll scan the room, rapidly changing our gaze. We can see what’s on desks or hanging on the walls, what’s in bookshelves or in cubicles. If we’re in a conference or classroom, we’ll see who we’re sitting next to, notice what they’re wearing, carrying, reading, etc. We can see relationships between people and notice deference, hierarchy, side glances and other subtle cues. And we use all of this to build a context and make assumptions—often unconsciously —about personalities, positions, social status and hierarchy.

Looking in a Mirror While Having A Meeting
Before meeting in person, you may do a quick check of your appearance, but you definitely don’t hold up a mirror in the middle of a meeting constantly seeing how you look. Yet with the focus on us as much as on the attendees, most video apps seem designed to make us self conscious and distract from watching who’s speaking.

Non-Verbal Cues
Most importantly, researchers have known for at least fifty years that at least half of how we communicate is through non-verbal cues. In conversation we watch other’s hands, follow their gestures, focus on their facial expressions and their tone of voice. We make eye contact and notice whether they do. And we are constantly following their body language (posture, body orientation, how they stand or sit, etc.)

In a group meeting it’s not only following the cues of the speaker, but it’s often the side glances, eye rolls and shrugs between our peers and other participants that offer direction and nuance to the tenor of a meeting. On a computer screen, all that cross person interaction is lost.

The sum of these non verbal cues is the (again often unconscious) background of every conversation.

But video conferencing apps just offer a fixed gaze from one camera. Everyone is relegated to a one-dimensional square on the screen. It’s the equivalent of having your head in a vise, having been wheeled into a meeting wearing blinders while tied to a chair.

Are Olfactory Cues Another Missing Piece?
There’s one more set of communication cues we may be missing over video. Scientists have discovered that in animals, including mammals and primates, communication not only travels through words, gestures, body language and facial expressions but also through smells via the exchange of chemicals and hormones called pheromones. These are not odors that consciously register, but nevertheless are picked up by the olfactory bulb in our nose. Pheromones send signals to the brain about sexual status, danger and social organization. It’s hypothesized odors and pheromones control some of our social behaviors and regulate hormone levels. Could these olfactory cues be one additional piece of what we’re missing when we try to communicate over video? If so, emulating these clues digitally will be a real challenge.

Why Zoom and Video Teleconferencing is Exhausting
If you’ve spent any extended period using video for a social or business meeting during the pandemic, you’ve likely found it exhausting. Or if you’re using video for learning, you may realize it’s affecting your learning by reducing your ability to process and retain information.

We’re exhausted because of the extra cognitive processing (fancy word for having to consciously do extra thinking) to fill in the missing 50% of the conversation that we’d normally get from non-verbal and olfactory cues. It’s the accumulation of all these missing signals that’s causing mental fatigue.

Turning Winners Into Losers
And there’s one more thing that makes video apps taxing. While they save a lot of time for initial meetings and screening prospects, salespeople are discovering that closing complex deals via video is difficult. Even factoring out the economy, the reason is that in person, great salespeople know to “read” a meeting. For example, they can tell when someone who was nodding yes to deal actually meant “no way.” Or they can pick up the “tell me more signal” when someone leans forward. In Zoom all those cues are gone. As a result, deals that should be easy to close will take longer, and those that are hard won’t happen. You’re investing the same or more time getting the meetings, but frustrated that little or no forward progress occurs. It’s a productivity killer for sales.

In social situations a feel for body language may help us sense that a friend who’s smiling and saying everything is fine is actually have a hard time in their personal life. Without these physical cues—and the loss of physical contact—may lead to a greater distance between our family and friends. Video can bridge the distance but lacks the empathy a hug communicates.

An Opportunity for Innovators to Take Video Conferencing to the Next Level
This billion person science experiment replacing face-to face communication with digital has convinced me of a few things:

  1. The current generation of video conferencing applications ignore how humans communicate
    • They don’t help us capture the non-verbal communication cues – touch, gestures, postures, glances, odors, etc.
    • They haven’t done their homework in understanding how important each of these cues is and how they interact with each other. (What is the rank order of the importance of each cue?)
    • Nor do they know which of these cues is important in different settings. For example, what are the right cues to signal empathy in social settings, sincerity, trustworthiness and rapport in business settings or attention and understanding in education?
  2. There’s a real opportunity for a next generation of video conference applications to fill these holes. These new products will begin to address issues such as: How do you shake hands? Exchange business cards? Pick up on the environment around the speaker? Notice the non-verbal cues?
  3. There are already startups offering emotion detection and analytics software that measure speech patterns and facial cues to infer feelings and attention levels. Currently none of these tools are integrated into broadly used video conferencing apps. And none of them are yet context sensitive to particular meeting types. Perhaps an augmented reality overlay with non verbal cues for business users might be a first step as powerful additions.

Lessons Learned

  • Today’s video conferencing applications are a one-note technical solution to the complexity of human interaction
    • Without the missing non-verbal cues, business is less productive, social interactions are less satisfying and distance learning is less effective
  • There’s an opportunity for someone to build the next generation of video conference applications that can recognize key cues in the appropriate context
    • This time with psychologists and cognitive researchers leading the team

In a Crisis – An Opportunity For A More Meaningful Life

Sheltering in place during the Covid-19 pandemic, my coffees with current and ex-students (entrepreneurs, as well as employees early in their careers) have gone virtual. Pre-pandemic these coffees were usually about what startup to join or how to find product/market fit. Though in the last month, even through Zoom I could sense they were struggling with a much weightier problem. The common theme in these calls were that many of them were finding this crisis to be an existential wakeup call. “My job feels pretty meaningless in the big picture of what matters. I’m thinking about what happens when I can go back to work. I’m no longer sure my current career path is what I want to do. How do I figure it out?”

Here’s what I’ve told them.


In a Crisis – An Opportunity to Reflect
If you’re still in school, or early in your career, you thought you would graduate into a strong economy and the road ahead had plenty of opportunities. That world is gone and perhaps not returning for a year or more. Economies across the world are in a freefall. As unemployment in the U.S. passes 15%, the lights are going off in companies, and we won’t see them back on for a long time. Some industries will never be the same. Internships and summer work may be gone, too.

But every crisis brings an opportunity. In this case, to reassess one’s life and ask: How do I want to use my time when the world recovers?

What I suggested was, that the economic disruption caused by the virus and the recession that will follow is one of those rare opportunities to consider a change, one that could make your own life more meaningful, allow you to make an impact, and gain more than just a salary from your work. Perhaps instead of working for the latest social media or ecommerce company or in retail or travel or hospitality, you might want to make people live healthier, longer and more productive lives.

I pointed out that if you’re coming out of school or early in your career you have an edge –  You have the most flexibility to reevaluate you trajectory. You could consider alternate vocations – medical research or joining a startup in therapeutics, diagnostics, medical devices, or digital health (mobile health, health IT, wearable devices, telemedicine, and personalized medicine). Or become an EMT, doctor or nurse.  Or consider the impact remote learning has had in the pandemic. How can you make it better and more effective? What are ways you might help to strengthen organizations that help those less able and less fortunate?

Here are the steps you can take to get started:
Use the customer discovery methodology to search for new careers.

  1. Start by doing some reading and research, looking to the leading publications in the field you’re interested in learning more about. News sources for Digital Health and Life Sciences are different from software/hardware blogs such as Hacker News, TechCrunch, etc.

If you’re interested in learning more about a career in Life Sciences, start reading:

If you’re thinking about educational technology start by reading EdSurge

And if you’re thinking about getting involved in social entrepreneurship, read The Stanford Social Innovation Review as well as the social entrepreneurship sections of publications like Entrepreneur, Inc., Fast Company and Forbes.

  1. Get out of the building (virtually) and talk to people in the professions you’re interested in. (People on the front-line of the Covid-19 fight (e.g. first responders, health care workers) might be otherwise engaged, but others in the field may be available to chat.) Learn about the job, whether they enjoy it and how you can get on that career track.
  2. Get out of the building physically. If possible, volunteer for some front-line activities. Think about internships in the new fields you’re exploring.
  3. If you’re thinking of starting a company, get to know the VC’s. They are different depending on the type of startup you’re building. Unlike in the 20th century where most VC’s financed hardware, software and life sciences, today therapeutics, diagnostics, and medical devices, are funded via VC firms that specialize in only those domains. Digital health crosses the boundaries and may be founded by all types of firms. Get to know who they are.

Some of the Life Science VC blogs and podcasts:

For edtech the VC firm to know is Reach Capital

  1. Inexpensively pivot your education into a new field. An online education could be a viable alternative to expensive college debt. Coursera, EdX and ClassCentral have hundreds of on-line classes in medicine, health and related fields. Accredited universities also offer online programs (see here.) If you’re in school, take some classes outside your existing major (example here.)

My advice in all of these conversations? Carpe Diem – seize the day.

Now is the time to ask: Is my work relevant?  Am I living the life I really wanted? Does the pandemic change the weighting of what’s important?

Make your life extraordinary.

Lessons Learned

  • Your career will only last for 14,000 days
  • If you’re still in school, reconsider your major or where you thought it was going to take you
  • If you’re early in your career, now is the time to consider what it would take to make a pivot
  • In the end, the measure of your life will not be money or time. It’s the impact you make serving God, your family, community, and country. In the end, our report-card will be whether we left the world a better place.

You’re Not Important to Me but I Want To Meet With You

If you’re a busy startup founder, you’re likely delegating the task of scheduling key meetings about things you want/need to your admin. This is a mistake.

That’s because the dialog you have in setting up the meeting is actually the first part of your meeting, not some clerical task. Treat it this way and you’re much more likely to achieve the objective you’re hoping to. Here’s why:


A few weeks ago I got an email from a VC friend asking me to talk to a founder at one of his startups. The founder had sent him a note, “We’d love to partner with Steve on getting his frameworks and templates from his books – The Four Steps and The Startup Owner’s Manual – onto our product. Can you connect us to him?”

I told the VC, of course, and sent an email to the founder suggesting a couple of dates.

In response I got an email from him telling me how busy he was, but his admin would coordinate some dates for us…

If this doesn’t strike you as a red flag of a relationship that was broken before it started, and an opportunity wasted, let me point out what went wrong.

Who’s Doing the Ask?
Outside of a company there are two types of meetings; 1) When you want something from someone, 2) When they need something from you.  This meeting fell into the second category – a founder wanted something from me and wanted my time to convince me to give it to him. Turning the scheduling over to an admin might seem like an efficient move, but it isn’t.

What Message Are You Sending?
A startup CEO handing me off to an admin sent a few signals.

First, that whatever his ask was really wasn’t that urgent or important to him. Second, that he didn’t think there was any value in forming a relationship before we met.  And finally, that he hadn’t figured out that gathering data in premeeting dialog could help him achieve his objective.

Instead, skipping the one-on-one dialog of personally setting up the meeting signaled to me that our meeting was simply going to be a transactional ask that wasn’t worth any upfront investment of his time.

Why, then, would meeting be worth my time?

What Gets Missed
When I was in startup, I treated every pre-meeting email/phone call as an opportunity for customer discovery. If I wanted something from someone – an order, financing, partnership, etc., I worked hard to do my homework and prepare for the meeting.  And that preparation went beyond just finding mutually agreeable meeting times.

 Early on in my career I realized that I could I learn lots of information from the premeeting dialog. That initial email dialog formed the basis of opening the conversation and establishing a minimum of social connectivitywhen we did meet.

I always managed to interject a casual set of questions when I was setting up a meeting. “What type of food do you like? Do you have a favorite restaurant/location?” If they were going be out of town for a while, ask if are they traveling on vacation? If so, ask “where?” And talk about the vacation.  And most importantly, it allowed me to confirm the agenda, “I’d like to talk about what our company is up to…” and telegraph some or all of the ask, “and what to see if I can get ….” Sometimes this back and forth allowed both of us to skip the meeting completely and I got what I wanted with a simple email ask. Other times it laid the foundation for an ongoing business relationship.

The key difference with this approach is in understanding that the dialog in setting up the meeting is actually the first part of your meeting.

Of course, in a company with 1,000s of people, it’s possible that the CEO is too busy to get on email or to call someone whose time he wants for every meeting. However, CEOs of major corporations who are winners will get on the phone or send a personal email when there’s something that they want to make happen.

Lessons Learned

  • The dialog in setting up the meeting is actually the first part of your meeting
  • Don’t miss the opportunity
  • If you want something from someone, don’t outsource scheduling your meeting

Don’t Get Left Behind As Your Company Grows

If you’re an early employee at a startup, one day you will wake up to find that what you worked on 24/7 for the last year is no longer the most important thing – you’re no longer the most important employee, and process, meetings, paperwork and managers and bosses have shown up. Most painfully, you’ll learn that your role in the company has to change.

I blogged about this earlier here and got the chance to talk about the topic at the Startup Grind conference.

Below is a video of the talk.

1:40: Having The Talk: How I lost my job after helping the company succeed
5:30: You need different skills as your company grows
6:47: A visceral blow: What just happened?
8:02: How I blew an opportunity
9:55: What you’ll feel if this happens to you
15:40: Why there should be no job titles at your startup
18:00: Why founders often come from dysfunctional families — and what that means for them as a company transitions
22:39: If you can see your future, you can change your future

How to Keep Your Job As Your Company Grows

I know a change is going to come

If you’re an early employee at a startup, one day you will wake up to find that what you worked on 24/7 for the last year is no longer the most important thing – you’re no longer the most important employee, and process, meetings, paperwork and managers and bosses have shown up. Most painfully, you’ll learn that your role in the company has to change.

I’ve seen these transitions as an investor, board member and CEO. At times they are painful to watch and difficult to manage. Early in my career I lived it as an employee, and I handled it in the worst possible way.

Here’s what I wish I had known.


I had joined MIPS Computers, my second semiconductor company, as the VP of marketing and also took on the role of the acting VP of Sales. During the first year of the company’s life, I was a fireball – relentless in creating and pursuing opportunities – getting on an airplane at the drop of a hat to fly anywhere, anytime, to get a design win. I worked with engineering to try to find product/market fit (big endian or little endian?) and get the chip designed into companies building engineering workstations – powerful personal computers, all while trying to refine how to find the right markets, customers, and sales process. I didn’t get much sleep, but I was having the time of my life.

And after a year there was good news. Our rent-a-CEO was being replaced by a permanent one. Our chip was nearing completion, and I had convinced early lighthouse customers to design it into their computers. I had done amazing things with almost no resources and got the company on the radar of every tech publication and into deals we had no right to be in. I was feeling 10 feet tall. Everything was great… until the new CEO called me in for a chat.

I don’t remember much about the details, but I do remember hearing him tell me how impressed he was with what I had accomplished so far, then immediately the visceral feeling of shock and surprise when his next words were that now the company needed to scale, and I wasn’t the right person to do that… Wait! What??

For a minute I couldn’t breathe. I felt like I had been punched in the gut. How could that be?  What do you mean I’m not the right person??? Hadn’t he just listed all the great work I had done? He acknowledged it was a lot of progress but offered that it was a flurry of disconnected tactics without a coherent strategy. No one knew what I was doing, and I couldn’t explain why I was doing it when asked. “You’re just throwing stuff against the wall. That doesn’t scale.” I was speechless. Wasn’t that what the first year of a startup was supposed to be like?

Scrambling to save my job, I regained the power of speech, and asked him if I could be the person to take the company to the next level. And to his credit (which I only appreciated years later) he agreed that while he was going to start a search, I could be a candidate for the job. And to top it off he got me a coach to help me understand what taking it to the next level meant. In preparation I remember buying all the management books I could find and reading what little literature there was at the time about how small company management transitioned into a larger one.

And herein lies the tale….
I vaguely remember going to lunch with my coach, a nice white-haired “old guy” who was trying to help me learn the skills to grow into the new job. The problem was I had shut down. Even as we were meeting, I was obsessively thinking about the change in my role, my title and my status. “I don’t get it, I did all this work, and everything was great. Why does anything have to change?”  But I never shared any of how I felt with my coach. To do this day I am really embarrassed to admit that I have no idea what my coach tried to teach me over multiple lunches and weeks. As we went to lunch, all I could think about was me and how I was being screwed. I literally paid zero attention. In my righteous anger I was unreachable.

I shouldn’t have been surprised, but yet again I was, when a month later the CEO said, that the report from the coach said, “I had a long way to go”. The company was going to hire a VP of Marketing. I was devastated.

I quit.

It’s Not About Change – It’s About Loss
If you had asked me a decade later what had been going on in my head and why I handled this so badly, I would have simply said, that: 1) I was resistant to change, and that 2) I had made this all about me and never once considered that our new CEO was rightAll true – to a point.

It took me another decade to realize if I had been really honest with myself it wasn’t about fighting change at all. Heck every day something new was happening at our startup. I was agile enough to keep up with innumerable changes and I was changing lots of things myself. It was actually about something much more personal I wouldn’t admit to myself – it was that these changes made me fear what I was losing;

  • I felt a loss of status and identity – I had been judged inadequate to continue in my role and my stature and the value of my skills and abilities had dropped.
  • I felt a loss of certainty – I was now competing to hold a job I thought was mine forever in the company. At least that’s what I thought my business card said. Now I was adrift and didn’t know what the future held.
  • I felt a loss of autonomy – Up until now I used my best judgment of what was needed and I was doing what I wanted, when I wanted it. I was fine making up a strategy on the fly from disconnected tactics. Now we were going to have plans and a strategy.
  • I felt a loss of community – we had been a small tight team who had bonded together under extreme pressure and accomplished amazing things. Now new people who knew none of that and appreciated little of it were coming in. They had little trust and empathy with us.
  • I felt the process lacked fairness – no one had warned/told me that the job I was doing needed to change over time, and no one told me what those new skills were.

What was going on?
Researchers have found there’s a link between social connection and physical discomfort within the brain. “Being hungry and being ostracized activate similar neural responses because being socially connected is necessary for survival. Although a job is often regarded as a purely economic transaction, the brain experiences the workplace first and foremost as a social system.”

Looking back over the decades it’s clear that the new CEO was right. Even though these losses triggered something primal, I did need to learn discipline, pattern recognition, time management, separating the trivial from the important and the difference between tactics and strategy. I needed to learn to grow from being a great individual contributor to being a manager and then a leader. Instead I walked away from learning any of it.

I probably added five unneeded years to my career.

What should I have done?
Today it’s understood that all startups go through a metamorphosis as they become larger companies. They go from organizations struggling for survival as they search for product/market fit, to building a repeatable and scalable business model, and then growing to profitability. And we are all hard-wired for a set number of social relationships. This mental wiring defines boundaries in growing an organization – get bigger than a certain size, and you need a different management system. The skills needed from employees differ at each stage.

What I wish I knew was that if you’re an early company employee, it’s not likely that the skills you have on day one are the skills needed as the company scales to the next level. This sentence is worth reading multiple times as no one – not the person who hired you, the VC’s or your peers -is going to tell you when you’re hired that the company will likely outgrow you. Some (like your peers or even the founders) don’t understand it, and others (the VCs) realize it’s not in their interest to let you know. The painful reality is that products change, strategies change, people change…things have to change for your company to stay in business and grow.

What should my CEO have done?
When my CEO was explaining to me how the company needed to change to grow, he was explaining facts while I was processing deeply held feelings. The changes in the organization and my role represented what I was about to lose. And when people feel they’re going to lose something deeply important, it triggers an emotional response because change feels like a threat. It’s not an excuse for my counterproductive behavior, but explains why I acted out like I did.

Startup CEOs need to think about these transitions from day one and consider how to address the real sense of loss these transitions mean to early employees.

Loss of status? It’s almost impossible to take away a title from someone, give it to someone else and still retain that employee. Think hard about whether titles need to be formal (VP of Engineering, VP of Marketing, VP of Sales, etc.) before the company finds product/market fit and/or tens of people – as you can almost guarantee that these people won’t have those roles and titles when you scale.

Loss of Certainty? Startups and VC’s have historically operated on the “I’ll deal with this later” principle in letting early employees know what happens as the company scales. The common wisdom is that no one would want to work like crazy knowing that they might not be the ones to lead as the company grows. I call this the Moses-problem – you work for years to get the tribe to the promised land – but you’re not allowed to cross over. The company needs to give formal recognition for those individuals who brought the tribe to the promised land.

Loss of Autonomy? This is the time you and your employees get to have a discussion about the next steps in their career. Do they want to be an individual contributor? Manager of people and process? Special projects? These shouldn’t be random assignments but instead, offer a roadmap of possible choices and directions.

Loss of Community? Your original hires embody the company culture. Unless you have them capture the unique aspects of the culture, it will become diluted and disappear among the new hires. Declare them cultural co-foundersHelp them understand the community is growing and they’re the ambassadors. Have them formalize it as part of a now needed on-boarding process as the company grows. And most importantly, make sure that they are celebrated as the team that got the company to where it is now.

Loss of Fairness? Just telling employees “a change is going to come” it is not sufficient. What are the new skills needed when you scale from Search to Build to Grow – from tens to hundreds and then thousands of people? How can your existing employees gain those new skills?

Lessons Learned

  • VC’s, Founders and CEOs now recognize that startups grow through different stages: Search, Build and Grow
    • They recognize that employees need different skills at each stage
    • And that some of the original employees won’t grow into the next stage
  • But while these changes make rational sense to the CEO and the board, to early employees these changes feel like a real and tangible personal loss
    • Loss of Status and Identity
    • Loss of Community
    • Loss of Autonomy
    • Loss of Certainty
    • Loss of Fairness
  • CEOs need to put processes in places to acknowledge and deal with the real sense of loss
    • These will keep early employees motivated – and retained
    • And build a stronger company
  • For employees, how you handle change will affect the trajectory of your career and possibly your net worth

This post appeared in AngelList

Why Founders Need a Moral Compass

I’ve been thinking why the ethical boundaries of todays founder/VC interactions feel so different then they did when I was an entrepreneur. I’ve written about the root causes in an HBR article here and an expanded version here. Worth a read.

Stanford eCorner captured a few minutes of what I’ve been thinking in the video below.

If you can’t see the video click here

This 1 Piece of Advice Could Make Or Break Your Career

There’s no handbook on how to evaluate and process “suggestions” and “advice” from a boss or a mentor. But how you choose to act on these recommendations can speed up your learning and make or break your career. Here’s what to keep in mind:


I had a team of students working on an arcane customer problem. While they were quickly coming up to speed, I suggested that they talk to someone who I knew was an expert in the area and could help them learn much faster. In fact, starting in the second week of the class, I suggested the same person several times – one-on-one, in class and in writing. Each time the various team members smiled, nodded and said, “Yes, we’ll get right on it.”  Finally, eight weeks later when they were about to fly across the country to meet the customer, I reminded them again.

When they returned from the trip, I asked if the advisor I suggested was helpful.

I was a bit surprised when they replied, “Oh, we’ve been trying to connect with him for a while and he never responded.”  So, I asked:


Team,
As per our conversation about the lack of response from your advisor John Doe -please forward me copies of the emails you have sent to him.

Thanks

Steve


The reply I received was disappointing — but not totally surprising.


Dear Steve, 

Unfortunately, I believe our team has painted the wrong picture due to miscommunication on our part. It was our responsibility to reach out to John Doe, but we failed to do so.

We did not attempt to reach out to him up until Week 8 before our flight, but the email bounced. We got caught up in work on the trip and did not follow-up. What we should have done was to clarify the email address with our Teaching Assistant and attempt to contact him again.

Best regards,

Taylor


Extra credit for finally owning that they screwed up – but there was more to it.

Combine Outside Advice with Your Own Insights
Upon reflection I realized that this student team was missing a learning opportunity. They were soon heading for the real world, and they had no idea how to evaluate and process “suggestions” and “advice.”  Ironically, given they were really smart and in a world-class university, they were confusing “smart” with “I can figure it all out by myself.”

Throughout my entrepreneurial career I was constantly bombarded by advice – from bosses, mentors, friends, investors, et al. I was lucky enough to have mentors who took an interest in my career, and as a young entrepreneur, I tried to pay attention to what they were trying to tell me. (Coming into my first startup from four years in the military I didn’t have the advantage of thinking I knew it all.) It made me better – I learned faster than having to acquire every bit of knowledge from scratch and I could combine the data coming from others with the insights I had.

Have a Process to Evaluate Suggestions and Advice
Here was my response to my student team:

Dear Team:

Throughout your work career you’ll be getting tons of suggestions and advice; from mentors – people you don’t work for but who care about your career and from your direct boss and others up your reporting chain.

  1. Treat advice and suggestions as a gift, not a distraction
    • Assume someone has just given you a package wrapped in a bow with your name on it.
    • Then think of how they’ll feel when you ignore it and toss it aside.
  2. When you’re working at full speed just trying to get your job done, it’s pretty easy to assume that advice/suggestions from others are just diversions. That’s a mistake. At times following up on them may make or break a career and/or a relationship.
    • The first time your boss or mentor will assume you were too busy to follow up.
    • The second time your boss will begin to question your judgment. Your mentor is going to question your willingness to be coached.
    • The third time you ignore suggestions/advice from your boss is a career-limiting move. And if from a mentor, you’ve likely damaged or ended the relationship.
  3. Everyone likes to offer “suggestions” and “advice.” Think of these as falling into four categories:
    • Some bosses/mentors offer “suggestions” and “advice” because it makes them feel important.
    • Others have a set of contacts or insights they are willing to share with you because they believe these might be useful to you.
    • A few bosses/mentors have pattern-recognition skills. They’ve recognized the project you’re working on or problem you’re trying to solve could be helped by connecting with a specific person/group or by listening to how it was solved previously.
    • A very small subset of bosses/mentors has extracted some best practices and/or wisdom from those patterns. These can give you shortcuts to the insights they’ve taken years to learn.
  4. Early in your career it’s hard to know whether a suggestion/advice is valuable enough to spend time following up. Here’s what I suggest:
    • Start with “Thanks for the suggestion.”
    • Next, it’s OK to ask, “Help me understand why is this important? Why should I talk to them? What should I learn?” This will help you figure out which category of advice you’re getting.If it’s a direct boss and others up your reporting chain, ask, “How should I prioritize this? Does it require immediate action?” (And it most cases it doesn’t matter what category it’s in, just do it.)
    • Always report back to whoever offered you the advice/suggestion to share what you learned. Thank them.

If you open yourself to outside advice, you’ll find people interested in the long-term development of your career – these are your career mentors. Unlike coaching, there’s no specific agenda or goal but mentor relationships can result in a decades-long dialog of continual learning. What makes these relationships a mentorship is this: you have to give as good as you are getting. While you’ll be learning from them – and their years of experience and expertise – what you need to give back is equally important – offering fresh insights to their data.

If your goal is to be a founder, having a network of mentors/advisors means that not only will you be up to date on current technology, markets or trends, you’ll be able to recognize patterns and bring new perspectives that might be basis for your next startup.

Lessons Learned

  • Suggestions/advice at work are not distractions that can be ignored
    • Understand the type of suggestions/advice you’re getting (noise, contacts, patterns, insights)
    • Understand why the advice is being given
    • Agree on the priority in following it up
  • Not understanding how to respond to advice/suggestions can limit your career
  • Advice is a kickstarter for your own insights and a gateway for mentorship
  • Treat advice and suggestions as a gift, not a distraction

Why Entrepreneurs Start Companies Rather Than Join Them

If you asked me why I gravitated to startups rather than work in a large company I would have answered at various times: “I want to be my own boss.” “I love risk.” “I want flexible work hours.” “I want to work on tough problems that matter.” “I have a vision and want to see it through.” “I saw a better opportunity and grabbed it. …”

It never crossed my mind that I gravitated to startups because I thought more of my abilities than the value a large company would put on them. At least not consciously. But that’s the conclusion of a provocative research paper, Asymmetric Information and Entrepreneurship, that explains a new theory of why some people choose to be entrepreneurs. The authors’ conclusion — Entrepreneurs think they are better than their resumes show and realize they can make more money by going it alone.  And in most cases, they are right.

I’ll summarize the paper’s conclusions, then share a few thoughts about what they might mean – for companies, entrepreneurs and entrepreneurial education. (By the way, as you read the conclusions keep in mind the authors are not talking just about high-tech entrepreneurs. They are talking about everyone who chooses to be self-employed – from a corner food vendor without a high school diploma to a high-tech founder with a PhD in Computer Science from Stanford.)

The authors’ research came from following 12,686 people over 30+ years. They found:

  1. Signaling. When you look for a job you “signal” your ability to employers via a resume with a list of your educational qualifications and work history. Signaling is a fancy academic term to describe how one party (in this case someone who wants a job) credibly conveys information to another party (a potential employer).
  2. Capable. People choose to be entrepreneurs when they feel that they are more capable than what employers can tell from their resume or an interview. So, entrepreneurs start ventures because they can’t signal their worth to potential employers.
  3. Better Pay. Overall, when people choose entrepreneurship they earn 7% more than they would have in a corporate job. That’s because in companies pay is usually set by observable signals (your education and experience/work history).
  4. Less Predictable Pay. But the downside of being an entrepreneur is that as a group their pay is more variable – some make less than if they worked at a company, some much more.
  5. Smarter. Entrepreneurs score higher on cognitive ability tests than their educational credentials would predict. And their cognitive ability is higher than those with the same educational and work credentials who choose to work in a company.
  6. Immigrants and Funding. Signaling (or the lack of it) may explain why some groups such as immigrants, with less credible signals to existing companies (unknown schools, no license to practice, unverifiable job history, etc.) tend to gravitate toward entrepreneurship. And why funding from families and friends is a dominant source of financing for early-stage ventures (because friends and family know an entrepreneur’s ability better than any resume can convey).
  7. Entrepreneurs defer getting more formal education because they correctly expect their productivity will be higher than the market can infer from just their educational qualifications. (There are no signals for entrepreneurial skills.)

Lemons Versus Cherries. The most provocative conclusion in the paper is that asymmetric information about ability leads existing companies to employ only “lemons,” relatively unproductive workers. The talented and more productive choose entrepreneurship. (Asymmetric Information is when one party has more or better information than the other.) In this case the entrepreneurs know something potential employers don’t – that nowhere on their resume does it show resiliency, curiosity, agility, resourcefulness, pattern recognition, tenacity and having a passion for products.
This implication, that entrepreneurs are, in fact, “cherries” contrasts with a large body of literature in social science, which says that the entrepreneurs are the “lemons”— those who cannot find, cannot hold, or cannot stand “real jobs.”

So, what to make of all this?
If the authors are right, the way we signal ability (resumes listing education and work history) is not only a poor predictor of success, but has implications for existing companies, startups, education, and public policy that require further thought and research.

Companies: In the 20thcentury when companies competed with peers with the same business model, they wanted employees to help them execute current business models (whether it was working on an assembly line or writing code supporting or extending current products). There was little loss when they missed hiring employees who had entrepreneurial skills. However, in the 21stcentury companies face continuous disruption; now they’re looking for employees to help them act entrepreneurial.  Yet their recruiting and interviewing processes – which define signals they look for – are still focused on execution not entrepreneurial skills.

Surprisingly, the company that best epitomized this was not some old-line manufacturing company but Google. When Marissa Mayer ran products at Google the New York Times  described her hiring process, “More often than not, she relies on charts, graphs and quantitative analysis as a foundation for a decision, particularly when it comes to evaluating people…At a recent personnel meeting, she homes in on grade-point averages and SAT scores to narrow a list of candidates, many having graduated from Ivy League schools, …One candidate got a C in macroeconomics. “That’s troubling to me,” Ms. Mayer says. “Good students are good at all things.”

Really.  What a perfect example of adverse signaling. No wonder the most successful Google products, other than search, have been acquisitions of startups not internal products: YouTube, Android, DoubleClick, Keyhole (Google Maps), Waze were started and run by entrepreneurs. The type of people Google and Marissa Mayer wouldn’t and didn’t hire started the companies they bought.

Entrepreneurship. When I shared the paper withTina Seelig at Stanford she asked, “If schools provided better ways to signal someone’s potential to employers, will this lead to less entrepreneurship?”  Interesting question.

Imagine if in a perfect world corporate recruiters found a way to identify the next Steve Jobs, Elon Musks, or Larry Ellisons. Would the existing corporate processes, procedures and business models crush their innovative talents, or would they steer the large companies into a new renaissance?

The Economic Environment. So, how much of signaling (hiring only by resume qualifications) is influenced by the economic environment? One could assume that in a period of low unemployment, it will be easier to get a traditional job, which would lead to fewer startups and explain why great companies are often founded during a downturn. Those who can’t get a traditional job start their own venture. Yet other public policies come into play. Between the late 1930s and the 1970s the U.S. tax rate for individuals making over $100,000 was 70% and 90% (taxes on capital gains fluctuated between 20% and 25%.) Venture capital flourished when the tax rates plummeted in the late 1970s. Was entrepreneurship stifled by high personal income taxes? And did it flourish only when entrepreneurs saw the opportunity to make a lot more money on their own?

Leaving a Company. Some new ventures are started by people who leave big companies to strike out on their own – meaning they weren’t trying to find employment in a corporation, they were trying to get away from it.  While starting your own company may look attractive from inside a company, the stark reality of risking one’s livelihood, financial stability, family, etc., is a tough bar to cross.  What motivates these people to leave the relative comfort of a steady corporate income and strike out on their own?  Is it the same reason – their company doesn’t value their skills for innovation and is just measuring them on execution? Or something else?

Entrepreneurial Education. Is entrepreneurship for everyone? Should we expect that we can teach entrepreneurship as a mandatory class? Or is it calling? Increasing the number of new ventures will only generate aggregate wealth if those who start firms are truly more productive as entrepreneurs.

Lessons Learned

  • Entrepreneurs start their own companies because existing companies don’t value the skills that don’t fit on a resume
  • The most talented people choose entrepreneurship (Lemons versus Cherries)
  • Read the paper and let me know what you think

 

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