Book Short:  Go Where They Ain’t

Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, by W. Chan Kim and Renée Mauborgne isn’t bad, but it could literally be summed up by the title of this post.  I think it’s probably a better book for people who aren’t already entrepreneurs.

That said, there are two chapters that I found pretty valuable.  One is called “Reconstruct Market Boundaries,” which is a great way of thinking about either starting a new business or innovating an existing one.  It’s a strategy that we’ve employed a few times over the years at both Return Path and Authentic Response.  It’s hard to do, but it expands the available territory you have to cover.  The classic Jack Welch/GE “we don’t just sell jet engines, we sell AND SERVICE jet engines” which expanded their addressable market 9x.

The other useful chapter was “Get the Strategic Sequence Right.”  The sequence of questions to answer, according to the authors, is:

• Will buyers get enough utility out of it?
• What’s the right price?
• Can you cost it low enough to make good margin?
• Are you dealing with adoption hurdles?

The reason I found this sequence so interesting is that I think many entrepreneurs mix the order up once they get past the first one.  It’s easy to start with market need and then quickly jump to adoption hurdles, cost things out, and go with a cost-plus pricing strategy.  The book documents nicely why this order is more productive.  In particular, pricing first, then costing second, is both more market-focused (what will people pay?) and more innovative (how can I think creatively to work within the constraint of that price point?).

The common theme that’s most interesting out of the book is that new frameworks for thought produce killer innovation.  That’s clearly something most entrepreneurs and innovators can hang their hat on.

Book Short: Tech Founder? Varsity Basketball Captain? Both!  At the Same Time!

Ben Casnocha’s My Startup Life has some of the same appeal as The Mousedriver Chronicles (which I reviewed years go here) in its tale of a startup, its successes, failures, and lessons learned. If you like that kind of book or are starting a company and are looking for kindred spirits, it’s a good book for you.

Ben’s story is more remarkable in some ways because he started his eGovernment software (SaaS of course) company Comcate at the age of 13. That’s right, 13. When I was learning how to shave, having a bar mitzvah, and dealing with acne and a voice dropping at terminal velocity. Starting a business was the furthest thing from my mind. Though to be fair, teenage entrepreneurs are a featured new demographic in Mark Penn’s Microtrends (also worth a read). Perhaps if I were Ben’s age today, I would be a startup junkie, too.

I’ve had the pleasure of meeting Ben a couple times via Brad — I think Brad MUST have been a lot like him 20ish years ago. The advice in the book is good and relevant and incredibly mature for a 20-year old, and Ben, I mean that in an impressed way, not a patronizing one. It’s not necessarily revolutionary, but it’s a very quick and light read if you like the genre/premise.

Book Short:  Internet Fiction, part II

I hate to write a lame post, but here’s what I wrote earlier in the year about Eliot Peper’s first Internet thriller, Uncommon Stock:

Eliot Pepper’s brand new startup thriller, Uncommon Stock, was a breezy and quick read that I enjoyed tremendously. It’s got just the right mix of reality and fantasy in it. For anyone in the tech startup world, it’s a must read. But it would be equally fun and enjoyable for anyone who likes a good juicy thriller.

Like my memory of Hackoff, the book has all kinds of startup details in it, like co-founder struggles and a great presentation of the angel investor vs. VC dilemma. But it also has a great crime/murder intrigue that is interrupted with the book’s untimely ending.  I eagerly await the second installment, promised for early 2015.

Having just finished that second installment, called Uncommon Stock: Power Play, basically I want to say “ditto.”  Power Play was just as good as the first book, and now I can’t wait for the third. Where the first installment’s startup focus was around funding and founder dynamics, this one’s startup focus was around shipping product and customers. The thriller part was just as juicy.

It’s also kind of fun reading about the Boulder startup scene, especially from a writer who doesn’t and who has never spent a ton of time there. He gets some things remarkably accurate with crisp descriptions. I was kind of hoping for a cameo by Brad, at least in the form of a throw-away comment about the “long haired homeless-looking investor in the corner of Frasca.”

Book Short:  Why Not Both?

Craig Hickman’s Mind of a Manager, Soul of a Leader talks about how tapping the natural tension between managers and leaders allows an organization to achieve its best.  It covers dozens of topical areas and for each compares how a prototypical manager handles the area (practical, reasonable, decisive) vs. how a prototypical leader handles it (visionary, empathetic, and flexible).  Of course, the book describes the ideal organization as “balanced an integrated” between the two extremes.

My take for startups, a topic not addressed in the book, is that the job of the entrepreneur CEO is to be both manager and leader, and try to do both roles effectively without driving the team nuts.  The book says that “managers wield authority, leaders apply influence.”  Entrepreneurs have to be comfortable with both styles.  Thanks to my colleague Stephanie Miller for giving me a copy of this one.

Book Short: The Most Rapacious Guys in the Room

I just finished The Smartest Guys in the Room, by journalists Bethany McLean and Peter Elkind. This is the story of Enron, and what a tale it is! The book is a good quick business novel read. It reminded me a lot of Barbarians at the Gate, except that it made me far angrier. I’m not sure if that’s because I’m at a different place in my career now than I was 10 years ago and therefore have a different appreciation for what goes on in companies, or if the Enron guys were just far worse than anyone surrounding RJR Nabisco. But in any case, as my Grandpa Bill would have said, this one certainly raised my hackles.

Anyway, I can’t even get into the details without working myself into a frenzy about these crooks, but suffice to say there are lots of “what not to do” lessons in this book, starting with CEO Ken Lay’s wuss-like, disconnected approach to leading the company and ending with CFO Andy Fastow’s insane rationalizations for using the company as his own piggy bank. Anyway, I thought it would just be easier to just list out a few simple things to look for in your own company if you’re concerned you might be having some financial scandals within.  You know you have a problem if…

– Your company has 3,000 off-balance sheet special purpose entities, including 800 in the Caymans

– Your CEO has waived your company code of ethics twice so that the CFO could negotiate deals for his own profit against the company

– Your President combatively calls an analyst an asshole on an earnings call when asked why the company couldn’t produce a balance sheet and cash flow statement with its income statement and earnings release

– Your staffers meet someone from your auditor and say “oh, you’re the guy that won’t let us do something”

– Your accounting department becomes viewed as a major profit center because of its treatment of revenue

It’s truly astonishing what these bozos thought they could get away with. Thank God they’re going to jail. Thanks to my colleague Patty Mah (a friend of the author) for this book.

Wither the News? (Plus a Bonus Book Short)

It’s unusual that I blog about a book before I’ve actually finished it, but this one is too timely to pass up given today’s news about newspapers.  The Cult of the Amateur: How Today’s Internet is Killing Our Culture, by Andrew Keen, at least the first 1/2 of it, is a pretty intense rant about how the Internet’s trend towards democratizing media and content production has a double dirty underbelly:

poor quality — “an endless digital forest of mediocrity,”

no checks and balances — “mainstream journalists and newspapers have the organization, financial muscle, and and credibility to gain access to sources and report the truth…professional journalists can go to jail for telling the truth” (or, I’d add, for libel)

So what’s today’s news about newspapers?  Another massive circulation drop — 3.6% in the last six months.  Newspaper readership across the country is at its lowest level since 1946, when the population was only 141 million, or less than half what it is today.  The digital revolution is well underway.  Print newspapers are declining asymptotically to zero.

Don’t get me wrong.  I’m an Internet guy, and I love the democratization of media for many reasons.  I also think it will ultimately force old media companies to be more efficient as individual institutions and as an industry in order to survive (not to mention more environmentally friendly).  But Keen has good thoughts about quality and quantity that are interesting counterpoints to the revolution.  I hope at least some newspapers survive, change their models and their cost structures, and start competing on content quality.  The thought that everyone in the world will get their news ONLY from citizen journalists is scary.

I’m curious to see how the rest of the book turns out.  I’ll reblog if it’s radically different from the themes expressed here.

Update (having finished the book now): Keen puts the mud in curmudgeon. He doesn’t appear to have a good word to say about the Internet, and he allows his very good points about journalistic integrity and content quality and our ability to discern the truth to get washed up in a rant against online gambling, porn, and piracy. Even some of his rant points are valid, but saying, for example, that Craigslist is problematic to society because it only employs 22 people and is hugely profitable while destroying jobs and revenue at newspapers just comes across as missing some critical thinking and basically just pissing in the wind. His final section on Solutions is less blustry and has a couple good examples and points to offer, but it’s a case of too little, too late for my liking.

Book Short:  a Corporate Team of Rivals

One of the many things I have come to love about the Christmas holiday every year is that I get to go running in Washington DC.  Running the Monuments is one of the best runs in America.  Today, at my mother-in-law’s suggestion, I stopped i8n at the Lincoln Memorial mid-run and read his second inaugural address again (along with the Gettysburg Address).  I had just last week finished Doris Kearns Goodwin’s Team of Rivals:  The Political Genius of Abraham Lincoln, and while I wasn’t going to blog about it as it’s not a business book, it’s certainly a book about leadership from which any senior executive or CEO can derive lessons.

Derided by his political opponents as a “second-rate Illinois lawyer,” Lincoln, who arrived somewhat rapidly and unexpectedly on the national scene at a time of supreme crisis, obviously more than rose to the occasion and not only saved the nation and freed the slaves but also became one of the greatest political leaders of all time.  He clearly had his faults — probably at the top of the list not firing people soon enough like many of his incompetent Union Army generals — but the theme of the book is that he had as one of his greatest strengths the ability to co-opt most of his political rivals and get them to join his cabinet, effectively neutering them politically as well as showing a unity government to the people.

This stands in subtle but important contrast to George Washington, who filled his cabinet with men who were rivals to each other (Hamilton, Jefferson) but who never overtly challenged Washington himself.

Does that Team of Rivals concept — in either the Lincoln form or the Washington form — have a place in your business?  I’d say rarely in the Lincoln sense and more often in the Washington sense.

Lincoln, in order to be effective, didn’t have much of a choice.  Needing regional and philosophical representation on his cabinet at a time of national crisis, bringing Seward, Chase, and Bates on board was a smart move, however much a pain in the ass Chase ended up being.  There certainly could be times when corporate leadership calls for a representative executive team or even Board, for example in a massive merger with uncertain integration or in a scary turnaround.  But other than extreme circumstances like that, the Lincoln model is probably a recipe for weak, undermined leadership and heartache for the boss.

The Washington model is different and can be quite effective if managed closely.  One could argue that Washington didn’t manage the seething Hamilton and frothy Jefferson closely enough, but the reality is that the debates between the two of them in the founding days of our government, when well moderated by Washington, forged better national unity and just plain better results than had Washington had a cabinet made up of like-minded individuals.  As a CEO, I love hearing divergent opinion on my executive team.  That kind of discussion is challenging to manage — at least in our case we don’t have people at each other’s throats — but as long as you view your job as NOT to create compromises to appease all factions but instead to have the luxury of hearing multiple well articulated points of view as inputs to a decision you have to make, then you and your company end up with a far, far better result.

Do Business Books Suck for Entrepreneurs?

Ben thinks they do.  Some of his reasons are pretty good, but I’d challenge a few of them, or at least his finer points.

My experience over the years is that while most business books are not geared toward entrepreneurs, a good entrepreneur will figure out how to milk them for what they’re worth quickly and apply key learnings to his or her company. 

The reality is that running a startup or high growth company is a multi-faceted and incredibly dynamic experience, and having a bunch of outside inputs in the form of business book examples and theories can be really helpful. 

Even bad ideas can spur good thinking.

Book Short: Sequel Not Worth It

Mastering the 7 Essentials of High Growth Companies, by David Thomson, was a poor sequel to the solid Blueprint to a Billion [review] [buy]– and not worth reading if you’ve read the original.  It was very short for its price and contained mildly interesting examples of “blueprint companies” that augmented the original book but didn’t uncover any new material or add any thinking to the mix.  Basically, it was like another couple chapters that should have been part of Blueprint.

It is not a bad buy in lieu of the original if you haven’t read either one yet, as Blueprint is a bit longer than necessary, but otherwise, you can skip this one.

On a side note – the author’s interactive scorecard is a decent diagnostic tool (though also, I am sure, a lead gen tool for his consulting business).

Book Short:  And It’s Not Just Because I’m In It

Debbie Weil’s The Corporate Blogging Book is a good super quick read for any CEO or senior executive who is contemplating starting a blog — or even better, for those who have decided not to do so.

Weil’s writing style is great and very informal (blog-like, in fact) – a representative snippet is where she tells readers that there are two types of information to worry about posting on a blog, in her words, “stuff you don’t to reveal and stuff you could get sued for.”  And her range of topics is great and deals with issues head-on. Things like fear of losing control, time commitment, and ghost writing are all well covered.

Chapter 8 also includes a great Cliff’s Notes guide to web 2.0 technologies — RSS, podcasting, wikis, tagging — which is useful if you still Feel Like a Luddite about those things.

I did contribute a couple interviews to the book, as did most of the other oft-cited CEO bloggers like Mark Cuban and Jonathan Schwartz in whose company I am somewhat embarrassed and humbled to be. But don’t let that deter you from picking up a copy if you are in the target audience!

Book Short:  Culture is King

Tony Hsieh’s story, Delivering Happiness (book, Kindle), is more than just the story of his life or the story of Zappos. It’s a great window into the soul of a very successful company and one that in many ways has become a model for great culture and a great customer service model.  It’s a relatively quick and breezy read, and it contains a handful of legendary anecdotes from Zappos’ history to demonstrate those two things — culture and customer service — in action.

As Hsieh himself says in the book, you can’t copy this stuff and believe it will work in your company’s environment as it does in Zappos’.  You have to come up with these things on your own, or better yet, you have to create an environment where the company develops its own culture and operating system along the broad lines you lay out.  I think Return Path has many similarities with Zappos in how we seek out WOW experiences and in our Core Values, as well as the evolutionary path we took to get to those places.  But as much as I enjoyed reading about a like-minded company, I also recognized the specific things that were different and had a good visceral understanding as to WHY the differences exist.

It is the rare company that gets to $1 billion in revenue ever – let alone within a decade.  For that reason alone, this is a worthwhile read.  But if you are a student of organizational culture and believe in the power of values-driven organizations, this is good affirmation and full of good examples.  And if you’re a doubter of the power of those things, this might just convince you to think twice about that!