Dylan Salisbury’s weblog

What are some ways older entrepreneurs can be successful?

The HP Garage. Photo © BrokenSphere / Wikimedia Commons. Photo page on Wikimedia Commons. licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license

First off, this is a trick question — Thanks to Kevin Holmes for pointing me to the Kauffman Foundation’s study of successful high growth entrepreneurs – the average age is 40!

However, most of the great advice online for entrepreneurs is geared toward young high-tech founders. One of the most widely read forums, Fred Wilson’s AVC blog, had a great discussion recently about how to support female tech entrepreneurs, starting from an assumption that women who are ready for entrepreneurship are older than the prototypical male tech start-up founder. Wilson’s post was in turn inspired by this call to action by Tereza Nemessanyi.

Setting aside the gender aspect of the discussion, many older entrepreneurs cannot just quit their jobs and launch their company based on their own faith, savings, or even sponsorship by a business incubator such as Y combinator. Here are some of the things older entrepreneurs can do:

1. Prepare your finances. Risk tolerance is a weakness vs. a young entrepreneur, but is doesn’t have to be your achilles heel. Even joining a well-funded start-up carries a risk of a salary interruption. Set aside some savings. Talk to your spouse. Quantify the kinds of risks you are willing to take.

2. Deepen your industry knowledge. B2B start-ups need deep understanding of a business pain point and customers’ view of the value proposition. As Y Combinator’s Paul Graham blogged: “The worst ideas we see at Y Combinator are from young founders making things they think other people will want.” Use your age and your experience to your advantage.

3. Network smart. You’re not at Harvard surrounded by the next generation of world leaders, so be deliberate. What kind of partners and mentors will you need if you start a venture in 3 years? Now take those criteria to LinkedIn and find some actual people in your network. Find a way to reach out to them.

4. Educate yourself. Of course, there are a million ways to do this, from self-structured reading to peer organizations to school. If you work for a large company you may have more options and support available. I did an evening MBA program — not very expensive after employer support, and I found a new peer group of 30- and 40- somethings who are also thinking creatively about advancing their careers.

5. Parents, embrace the Kids In Bed part of your workday, 9:00 p.m. to 1:00 a.m. or whatever part of the night you can use for work. Leave work on time and have a guilt-free dinner with the family, knowing that your creative mind is being refreshed for a second wind at night. If you are relaxing to Jay Leno or Jimmy Fallon every single night, you are letting some of your most productive time slip away.

That’s it for now. I hope my friends and I continue to add to this list.

I’m not an expert in this field, but these are some suggestions I gave a colleague from Santa Clara University that I thought would make a nice blog post :)

To use social media for business-to-business marketing, consider:

1. Who are the decision makers for consideration or final purchase of the product?
2. Who are the major influencers in the industry (industry leaders or journalists)?
3. How do the above people use social media?

You could measure your results based on how many people in the decision maker group you engage with, and whether you get influencers to positively mention your product.

For example, if you are selling a high performance web load balancing appliance, you would want web developers to know about it, and you would want Om Malik to write about it. Twitter would be a good way to reach these folks.

If you are selling commercial A/C units, you probably want to reach facilities managers. This group will not be as active with social media as Om Malik’s readers, but LinkedIn and Facebook may give you ways to reach them and measure how many of your audience self-identify as a facilities manager or have a similar job title.

I would appreciate further suggestions, as well as specific ideas for how to identify members of your target group in a non-high-tech market.

Disclaimer: This post isn’t a comprehensive account of the visit or a balanced view of the business. It’s a post about the concepts at the top of my mind the next day.

Ocean Mist Farms in Castroville hosted a field visit for undergrads and grad students affiliated with Santa Clara University’s Food and Agribusiness Institute on May 8, 2010. We were hosted by Joe Pezzini, Ocean Mist’s COO and a third generation farmer and Tim Driscoll, GM of harvesting company Valley Pride. Ocean mist grows vegetables and sells to retailers and institutional buyers.

We visited fields where bundled spinach and romaine hearts were being harvested and packaged. The students were immediately struck by how many healthy-looking green leaves were left in the soil after harvest. For the spinach, large leaves of about the same size are bundled together by the workers, and smaller leaves fall are left behind. Bagged spinach is harvested using a different process that uses more of the smaller leaves. With romaine, the sweet heart is the product being harvested, and the larger outer leaves are left. These spinach and romaine leaves will be tilled back into the soil.

Lean operations

Harvesting activity varies according to customer orders, which may change the day of the harvest. So, the farm is trying to “pull its inventory” out of the ground “just in time” to meet customer orders, literally. I was expecting to see an example of what operations folks call a “postponement strategy,” in which unfinished products are kept in generic form until the latest possible time, but the only postponement I saw was on the ground, where the produce is growing.

The field operations includes final product packaging. We saw romaine hearts going into a department store’s branded resealable consumer bag. This also simplifies the necessary recordkeeping to track a consumer package to the field and the actual work crew that performed the harvest.

Within hours of harvesting, all produce is cooled to its shipping temperature and placed in the refrigerated wherehouse, where it is ready for pick-up by the customer’s shipping agent.
Most impressive, the entire operation will move to Southern California when the harvest season shifts. This includes many of the people, the harvesting equipment, and these large ice-making units.

Vertical integration

Ocean mist is considered to be a vertically integrated vegetable grower, which extends from planting the seed to delivering to trucks hired by its grocery store customers. But, there are some exceptions to what an industry outsider would see as vertical integration. Ocean Mist does not own all of the land it grows on. Harvesting operations, including hiring farmworkers, is handled by a separate company, Valley Pride. Labor contractors are used throughout agriculture but in this case Valley Pride is part of the same corporate family.

Management practices on the ground.

“On the ground” also has a literal meaning in this company. There is skill and teamwork required for the harvesting we saw, and each work crew is kept working together during the season and in subsequent years as much as possible. The top management looks for operations improvements by meeting directly with workers from each crew, without the foremen present. Almost everybody in the Ocean Mist and Valley Pride organizations speak fluent Spanish. The foreman and supervisor that we met had each been with Valley Pride for more than 20 years, and I believe each had started as field workers.

Consumer marketing

Ocean Mist devotes a lot of its marketing effort providing consumer marketing data to its customers, trying to help them sell more Ocean Mist products to consumers. This is a focus for many companies that sell indirectly to consumers through retail channels such as supermarkets.

Industry changes

By far the biggest changes for the leafy green industries have come since the 2006 E. coli outbreak. The industry went much further than addressing contamination between grazing animals and agricultural fields. There’s a consensus that the damage to consumer confidence in bagged salads and spinach was far greater than it could have been if better tracing, industry communication, and crisis management practices were in place.
The major response was industry’s creation of the industry group LGMA to improve safety practices. The first chairman was Ocean Mist’s Joe Pezzini, who led our field visit. Ocean Mist engages in regular emergency simulations to practice and test its processes.

More

Ocean Mist’s web site has videos showing the kinds of harvesting we watched:

Romaine Harvest Video from Ocean Mist Farms.

Spinach Harvest Video from Ocean Mist Farms.

I caught Spirit Airlines’ president on MSNBC today explaining the company’s decision to charge a fee bags stored in the overhead compartment. He had a great explanation that is coming out waaaaaaay to late, which I’ll paraphrase:

The company is going to save money by reducing turnaround times. Dealing with overhead items causes a lot of time before take-off. We’re passing this savings on to customers with an average $40 price cut, and if having an extra bag is important to you a $30 charge is reasonable.

If that’s all true, the industry has a pretty horrible media plan. Customers can get behind efficiencies if they understand what’s going on and they’re treated with respect. The industry should have tried to educated consumers about costs and turnaround times before adding on any baggage fees at all. But for this move, the P.R. battle was already lost, so long ago that legislation against the industry is already being drafted.

This series of posts examines how a Balanced Scorecard framework can be used by a high-technology start-up to establish strategy.

1. Introduction: Types of strategies and related research.
2. Learning and growth perspective: Hiring.
3. Internal business process and customer perspectives: Minimum winning goal.
4. Financial perspective: Align the goals of management and investors.

Enjoy!

Fourth post in a series on applying Balanced Scorecard concepts to start-up companies.

Many BSC measures for investor perspective use traditional financial accounting metrics such as net profits or return on equity employed. However, many start-ups have success in early years that results in only meager financial results. Revenue growth may be accompanied by even larger expense, resulting in growing losses year after year. To make matters worse, many legitimate start-ups have a strategic plan that includes no revenue at all during the first years of the company’s existence.

Experienced venture investors understand this situation, so the dilemma can be resolved by considering other objectives and metrics important to the company’s investors. In fact, it is not uncommon for investors to define nonfinancial milestones which must be met before additional funding is supplied to a venture (Quillen, 2003).

In an ideal situation, the Minimum Winning Goal for the internal process perspective will also be agreed-upon goals between the key investors and the management team. This will eliminate the temptation for management to make poor strategic decisions to placate investors. This can also result in more productive discussions about corporate strategy in the boardroom. Venture investors often bring a wide network of business connections and other resources as potential assets to their portfolio companies, but these resources will not be effectively deployed if the investors and management have different views of the company’s short-term strategic goals.

Unfortunately not all important milestones to investors will also be useful internal process goals. An extreme example may be the investor-focused goal of hiring an experienced CEO who can lead the company through a growth phase that the current management team is not prepared for. This is a valid goal of strategic importance that venture investors should rightly care about, but it would not be appropriate to focus internal process efforts throughout the company on CEO recruitment.

Corporate venture capital organizations have certain interests not always shared by other venture investors. Accel Partners, a firm that operates traditional venture funds as well as assisting with CVC activities, defines the following unique goals for CVC units: Discovery of innovative technologies, creation of relationships with entrepreneurs, and expansion of markets for existing products (Accel Partners). The latter goal in particular may be appropriate for any Investor perspective scorecard but not found on the Internal Process scorecard.

References in this post:

Accel Partners. (n.d.). Corporate Venture Capital: An Untapped Weapon.

Quillen, J. L. (2003, February). Creative Use of Milestones Can Unlock Venture Capital.

Third post in a series on applying Balanced Scorecard concepts to start-up companies.

As noted in (Burgelman & Siegel, 2007), many start-ups can be categorized as being founded either on technology innovation or on an unmet market opportunity.

What are relevant measures for the internal business perspective? If the company was founded on technology innovation, management must be sure that innovative lead is maintained to support a sustainable competitive advantage. This might be measured in terms of raw technological and research progress such as patent filings and development of prototypes. It may also be defined in terms of having a substantial portion of the leading researchers in a niche field employed by the company.

If the company was founded on unmet market opportunity, this perspective may be served by a traditional BSC approach of identifying the core business processes necessary to meet customer needs.

For the customer perspective, both types of ventures are characterized by entry into emerging customer markets. Accordingly, acquiring initial customers or growing the customer base may have more strategic importance than increasing the satisfaction of early adopters. Additionally, appropriate metrics for customer satisfaction may not be well known because customers are still learning about the product or technology.

In many ventures, a focus on satisfaction of existing customers may not be adequate, so the company may consider the question “how do likely customers view the company’s and its products?” This may lead to a heavy focus on deep understanding of market segments and scrutiny of which prospects are targeted by sales and marketing activities.

(Burgelman & Siegel, 2007) identify a trap that ventures can fall into if the internal process goals are simply defined by customer acquisition. Company leadership may react to failure by choosing a more immediately promising customer segment even if this sharply changes the company strategy. The risk is that the “venture team will move from one grandiose but vague vision to another, or it will continue to focus on a set of feasible but fairly limited and unconnected milestones along a road that leads to nowhere”

To avoid this drift of strategy, ventures are encouraged to define a Minimum Winning Goal (MWG). An appropriate initial MWG will achieve some sustainable advantage and achievable in a 12- to 18- month time frame, enough to hold leadership accountable without placing too much limitation on the company to react to changes in its target markets. According the authors, an appropriate first goal will be “limited enough to be vigorously pursued with the company’s available financial and human resources, but big enough to provide a solid foundation for defining the MWG for the next 2 to 3 years.” (Burgelman & Siegel, 2007, p. 11)

Consumer-oriented businesses often need a critical mass of customers in order for the expected “network effect” of the company’s services to create value for the entire customer base. The clearest examples of this are media companies developing social networking products. For these companies, it may be appropriate to use metrics such as total number of customers and activity per customer, because the risk of poorly defined customer goals will not be as significant as in other companies. Such companies may find that utilization of effective networks of customers is key to maintaining an edge over competitors (Voelpel, Leibold, Eckhoff, & Davenport, July 2005).

References in this post

Burgelman, R. A., & Siegel, R. (2007, Spring). Defining the Minimum Winning Game in High-Technology Ventures. California Management Review, 6-26.

Voelpel, S. C., Leibold, M., Eckhoff, R. A., & Davenport, T. H. (July 2005). The Tyranny of the Balanced Scorecard in the Innovation Economy. 4th International Critical Management Studies Conference, Intellectual Capital Stream. Cambridge, U.K.

Second post in a series on applying Balanced Scorecard concepts to start-up companies.

Start-ups differ from almost all mature organizations in the expected amount of growth through hiring. This provides a number of challenges for the Learning and Growth perspective. A start-up will have relatively less emphasis on improving the learning of existing employees, and more emphasis on recruiting talented individuals and successfully incorporating them into the company. Start-ups must hire executives and senior managers, which may need different techniques for recruiting and monitoring than individual contributors.

One of Netscape’s founders, entrepreneur and investor Marc Andreessen estimates that roughly half of executive hires are successful, and the best CEOs will take at least three months to identify and replace the other executives (Andreessen, 2007). Chris Paisley, former CFO of 3COM and board member of venture-backed companies, said that this three-month estimate is accurate because it takes that long to assess the performance of any newly hired manager (Paisley, 2009). Even if the estimations of Andreessen and Paisley are pessimistic, the important conclusion is that simply the filling of executive positions is not an adequate metric for executive hiring.

A scorecard measure for successful executive hiring is difficult to define. It may be appropriate to assign a skilled human resources professional to assess the success of each newly hired executive through interviews with the executive’s subordinates and peers. As suggested by Andreessen and according with BSC principles, the CEO must be prepared to react to poor evaluations by quickly replacing the recently hired executive. This may be the single part of the BSC which should be confidential, shared only between one or two top executives, the board of directors, and the person performing the executive evaluations.

Successful growing technology companies have been known for setting very high standards for bringing new employees into the company. Two of the most famous technology company founders of all time, Bill Gates and Steve Jobs, are both known for evangelizing the motto “A players hire A players, and B players hire C players,” meaning that lowering the hiring standards a small amount would eventually lead to a very significant drop in the quality of employees (Spolsky, 2000) (Zito, 1983). During its most prolific stage of hiring, Google was well known for its very thorough candidate screening process and demanding interviews (Vogelstein, 2004).

Accordingly, scorecard measures must evaluate the quality and performance of new employees in the first months after being hired. Paisley also recommends following up with every employee who leaves the company voluntarily after about two months after separation to get a candid assessment of why the employee left (Paisley, 2009). Management should be prepared to react to problems by seriously changing recruiting, screening, and interviewing practices in any part of the organization.

References in this post

Andreessen, M. (2007, August 28). The Pmarca Guide to Startups, part 8: Hiring, managing, promoting, and firing executives.

Paisley, C. (2009, February 2). (D. Salisbury, Interviewer)

Spolsky, J. (2000, March 23). Command and Conquer and the Herd of Coconuts. Joel on Software.

Vogelstein, F. (2004, December 24). GOOGLE @ $165 Are these guys for real? Fortune.

Zito, T. (1983, September). How to Hire Insanely Great Employees. Folklore.org

First post in a series on applying Balanced Scorecard concepts to start-up companies.

It is widely known that a majority of start-up companies fail early in their life cycle. This may be an unavoidable result of risks associated with developing new technology and entering emerging markets. Balanced Scorecard (BSC) is a commonly known system for developing and implementing strategy for large corporations. However, there is no corresponding widely communicated approach to establish and manage a successful start-up strategy while mitigate the various risks that are particular to new ventures. The conventional wisdom is that venture capital investors mitigate these risks by preferring to back experienced entrepreneurs.

In a few upcoming posts I’ll discuss how the BSC approach to developing and managing corporate strategy can be applied to a technology-driven start-up company. Although methodologies for developing and implementing a BSC program have been widely documented in articles such as (Kaplan, 2000), special factors must be considered in setting goals or measurements for each of the four BSC perspectives for such a company. I’ll examine these challenges and present some recommendations for developing the elements of BSC and for evaluating corporate strategy in the context of the four BSC perspectives.

Categorization of start-up strategies

(Burgelman & Siegel, 2007) differentiate between ventures founded from technological breakthrough and those founded from insight into market need. In the former category, the early life of the company is spent turning technology into a practical product, and engaging with potential customers to understand how to the innovation can best be marketed and sold. Strategic success for these companies may be defined by maintaining innovative leadership and establishing initial sales.
In contrast, companies that are founded to capitalize on a new market opportunity are often concerned with being the “first mover” into a promising market segment.

These companies are more likely to define early strategic success in terms of sales, market growth, and competitive positioning.

Related research

There are few or no public accounts of a Balanced Scorecard being developed during the early stages of a technology-driven start-up company. In the late 1990’s Siemens AG took a Balanced Scorecard technique to develop and manage its Corporate Venture Capital (CVC) unit, Siemens Venture Capital. Although this scorecard was used to run an investment unit rather than to run an operating company, some of the lessons from the Siemens experience may be applied to a start-up that is funded by venture capital. Fundamentally this BSC experience can be used to help understand the goals of venture investors and how they differ from investors in established companies.

Siemens Venture Capital decided to combine the Learning and Growth and Customer perspectives into a single “Strategy and Market Perspective” because the processes for satisfying the unit’s customers were highly “people-related.” Goals in these sections focused on relationships between organizations, and measures included number of events attended, number of co-investments, and response times to external communications (Bassen, Blasel, Faisst, & Hagenmüller, 2006, p. 430).

Because Siemens’s strategy including developing technology that could eventually increase the profits of the entire company, the financial perspective included actions to create value that would not immediately be realized at profit contribution.

The internal process focus addressed the challenge of running a small but worldwide organization of knowledge workers. Measures and actions targeted successful and productive communication within the organization.

During the first seven years of its BSC process, the most significant changes to Siemens Venture Capital’s BSC were to adjust the goals of the strategy/market and internal process perspectives to react to changes in the venture capital industry (Bassen, Blasel, Faisst, & Hagenmüller, 2006, p. 434).

References in this post

Burgelman, R. A., & Siegel, R. (2007, Spring). Defining the Minimum Winning Game in High-Technology Ventures. California Management Review, 6-26.

Kaplan, R. S. (2000, September-October). Having Trouble with Your Strategy? Then Map It. Harvard Business Review, 167-176.

Bassen, A., Blasel, D., Faisst, U., & Hagenmüller, M. (2006). Performance measurement of corporate. International Journal of Technology Management , 33 (4), 420-437.

This is a post about what I learned from participating in the 2008 EC Elevator Pitch contest organized by Entrepreneurs’ Connection at Santa Clara University.

First of all, huge thanks to the team that organized the event, which included Venkat Jonnalagadda, Meher Shah, Swetha Sirupa, and other members of the Entrepreneurs’ Connection.  Thanks also goes to the contest judges, B.V. Jagadeesh from Inventus Capital Partners, and SCU Professors David Weir and Carl Steffens.

Most of what I learned came from preparing for the contest and including recent lessons from Professor Desmond Lo’s Marketing Strategy course.  What I gained afterwards was mostly a confidence boost and some contacts, because I won the contest (woo hoo!)
This contest required a pitch for a company or contest that hadn’t yet been launched.  I had to consider some of the most important aspects of a new venture such as

• Identifying a large market opportunity
• How a small company could build a sustainable competitive advantage
• A first offering to use to lanuch the company from seed capital

But I didn’t deal with some other real-world concerns, particularly:

• How I would recruit a founding team.
• Appropriate amount of primary research or prototype to do before launching or asking for venture capital.

For this contest, I started with a couple of product ideas that had been kicking around in my head.  I looked for marketing research to support their viability, until I hit on a larger market opportunity that I could articulately defend — a difference between how.small and medium-sized companies spend on IT, and a new category of products that could save one of them money.

From there, I worked backwards to define a strategic competitive advantage that could support the survival of a new venture, and reworked one of my original product ideas — now instead just being an interesting idea, I could pitch it as a way to enter a multi-billion dollar market!

Putting a 2-minute speech together was another difficult task.  I also worked backwards in the final pitch, from market opportunity to copmany competitive advantage to product.  It barely worked as a 2-minute speech, I ran out of time and almost missed an important part of the product description.

If I make a similar pitch, I think I will omit a lot of the competitive discussion, because it’s extremely likely to to be the subject of follow-up questoins.  I would try to have a few great twenty-second answers prepared to those follow-up questions.  That way I would come to a two-minute presentation armed with three minutes of pitch.

And before I would pitch for any serious money, I hope I would remember how much I gained from the focused prep for this contest, record myself practicing, get feedback from colleagues, and get delivery ideas from other elevator pitches such as the TechCrunch elevator pitches that can be found on YouTube.

This is the first in a series of posts about learning and working effectively as a member of an MBA class project team. In the gradute business programs at Santa Clara University’s Leavey School of Business, group project work is fundamental. This started with some feedback I provided to Professor Terri Griffith who quoted me in a blog entry of hers recently.

Roles

The effective teams I’ve been on have had the following well-defined roles:

Team leader: Responsible for making sure work is fairly divided, meetings happen, members are aware of what’s expected of them, and any executive decisions that need to be made. Of course it’s still great when decisions are made by consensus. I’ve seen the team leader role can handed off during the quarter, either by plan or because the current leader is overwhelmed — both times it was effective.

Document editor (one per major document): This person is responsible for assembling everybody’s work and for high and low-level consistency of the document. This person needs to be very quick on communication and editing near the document due date. In a time crunch, this person has authority to make editing decisions or rewrite someone else’s work.

Schedule

Most projects I’ve been on go through the following stages:

1. Defining who’s in and out of the team.
2. Reading the project material and thinking about the key problems.
3. Writing phase I: Splitting up and working on research or background writing tasks (for example, analyze the competition).
4. Debate and agree on the project’s main conclusions
5. Writing phase II: Write the supporting text and conclusions (for example, describe the recommended marketing mix).
6. Final editing

This has worked well enough so far, but I wonder if there are major alternatives to this two-phase approach. This structure doesn’t guarantee equity of intellectual contribution, but the writing assignments in Phase I and Phase II can be assigned in a way that adds to an overall balance.

Challenges

If a participant has particularly poor writing skills, this isn’t noticed until the end of step 3. The work of improving the writing falls on the document editor by default, and the group doesn’t have an obvious way to allow this person to “redeem” his or herself by taking on a helpful role with less writing responsibility. With the project schedule described in this article, the only way a poor writer can avoid causing a big problem would be to self-identify himself or herself and ask to be paired up with somebody else for writing assignments.

Possible improvements

Professor Griffith recommends that the group get to know each other early over coffee or a beer. That sounds great but with everyone busy, this needs to be scheduled right away! Her post also suggests some alternate facilitator roles, but I’m not sure if a typical project team (4-6 people working over a 10 week quarter) allows for this.

I would really like to identify an alternative schedule to what I described above (which probably has different key roles), so that my next team can explicitly choose methodology A or methodology B based on the project requirements and team members’ interests.

So, I would like to hear more suggestions and I hope to follow up with alternative structures.

Look for another post on tools and technologies.

Does your company have different functions in different geographic locations, or will it hire the best people it can find regardless of where they live and let the geographic structure of the company follow?

Jen-Hsun Huang, CEO and co-founder of NVIDIA, presented many of his thoughts on running an international knowledge-based company the Spring 2008 Leavey Lecture on Monday. Priya Natarajan, President of the student International Business Network interviewed Mr. Huang in a casual conversation dubbed a “fireside chat.” The primary theme of Mr. Huang’s remarks was that NVIDIA let a rather organic worldwide structure form as a result of its early formation as a networked organization and its subsequent pursuit of great talent around the world. Some notes and quotes on the main topics that were discussed are below.

The format for the talk worked really well – Congratulations to the International Business Network for setting this up. At the time, it seemed too much of the limited time was used up at the start by showing a video produced by company employees for a company meeting. But in hindsight the video helped to set the atmosphere for the conversation about the company structure and culture, and this was the most substantive of the three Leavey Lectures I have attended.

Notes on the main subjects of the conversation:

Comparing the role of CEO in a start-up to his role today: There’s no management in the early days of a company because there are no resources to manage. A big part of the job is continually raising money. Another part is leadership. (“Lead. Compel. Evangelize.”) Now that the company is large, leadership remains an important part of his job.

NVIDIA as a networked company: When the company was started in 1993, they found that the only way for everyone to their own e-mail client at their workstation was to use a network of Sun workstations. NVIDIA was started at exactly the right time to be a networked company from the start. NVIDIA started its remote offices in response to finding and hiring people who happened to live in a particular area. Some of these remote offices were, and still are, one or two people working out of their homes.

Cultural differences: Over time, the company acquired what Mr. Huang called global “sensibilities” – an understanding of how to operate in different cultures (countries). This was a recurring theme of Mr. Huang’s talk. These sensibilities apply to developing products that resonate with the culture, managing people working in the culture, and working with customers and business partners in the foreign culture.

Indian parents: Mr. Huang (born in Taiwan and raised in America) got a spirited positive response from the audience after comparing how to deliver an “average” performance assessment in America and how to do it in India. He said that if you simply tell a worker in India that they are doing an average job and meeting expectations, the worker will be very upset and their parents may call you to ask what the problem is. “I have met more employee parents in India than in all other countries combined!”

He recommends delivering an evaluation in China with a speech such as, “I’m really disappointed, because you can achieve such great things, and I expect much more from you than this.” This will be more readily accepted because the worker is probably used to hearing this kind of nagging from his or her parents all the time! [Editing note: I thought he was still talking about India here but another student corrected me.]

Outsourcing: Mr. Huang was rather frank here. First of all, he criticized the culture of other countries for not being aware of why many Americans feel threatened by the effects of globalization on the work force. “In a way, they are taking our jobs.” However, like any modern CEO he believes that by using all of the company’s resources efficiently the company will grow more rapidly and benefit everyone. He used the US health care system as a counter-example of a system in which inefficiencies in the system cause everyone to suffer.

How to best use the workforce in each country: Mr. Huang turned the table on a question of how NVIDIA is able to use the strengths of each country in the overall operations. He presented the examples of coworkers from America who have recently returned to their home country of India or China. Did the Indian suddenly change from a computer architecture expert to a software QA engineer when he got to India? Should the Chinese programmer start working on PCB boards?

The network is the computer, or the display is the computer? Mr. Huang presented a vision where the network becomes to ubiquitous as to disappear, and the only part of a computer that the user is conscious of is the display.

The loosely connected organization: Mr. Huang believes that NVIDIA has an “organic architecture” as a company without a well-defined org chart and little emphasis on strict direct reports. He himself has 16 direct reports and is comfortable not having weekly 1:1 meetings with each member of his staff. He believes in using informal e-mail updates to make sure everyone is working in the same general direction, but also having them work towards a few important KPIs (key process indicators). He emphasized that the company relies on innovation and serendipity, which cannot be clearly predicted.

Contributing to multiple products: In an after-speech conversation with some students, he said that the company is able to produce more products than its competitors, but because each employee contributes to many products, an employee may not feel the same sense of craftsmanship that he or she would have from a larger role on one particular product.

Those are the main things I took away from the speech, aside from the fact that Mr. Huang is a very comfortable extemporaneous speaker with a healthy sense of humor. I left out some of the personal stories and I probably missed a few important points.

Altogether, this was a good event to start out the quarter with, and as far as I hope the next lectures are as interesting as this one.

[Editted 2008-04-04 to say that the parental-lecture style of performance evaluation was about China rather than India.]

Recently a student sent around the article “Business Schools May Be Obsolete” to a Leavey student mailing list.

Actually this article reinforced many of my reasons for choosing to go to Santa Clara, and the logic probably applies to many Leavey students:

1. Most of the “MBA is not worth the cost” logic is true but it includes the assumption that the student is taking two years off from a decent career and paying full MBA tuition. Almost all part-time students have chosen to either keep their jobs, allow for the possibility of working while in school, or remaining primary caregivers for their children. As a recent thread on the SantaClaraMBA mailing list has shown, many have employers that are paying a significant portion of the salary as well. Part-time MBA students are paying a cost in lost spare time, increased stress, and short-term career opportunities, but it’s nothing like the assumed cost of putting a career on hold to go full time.

2. For the most part, Leavey students have decided to forgo enrolling in a program with a strong recruiting machine in return for not moving or traveling. Note that there are plenty of part-time students who are willing to travel, I know several accounts of people who’ve flown into Berkeley on the weekends or commuted out of the bay area to attend schools like Duke and UCLA. (Also note that’s a separate group of highly ambitious people who decided not to go full-time). I think this means that we’ve started out the program having put more though into career planning and whether/how our MBA education fits in.

The best thing I saw in the article was actually a link away in another article by the same author which said: “Grad school is a bad way to deal with uncertainty [about your career goals].” I think this is very true with the major exception being an MBA program at one of the top-ranked schools in the world.

But the worst thing in the article had to be… “[if you want to be a CEO] you should be an investment banking analyst first. That’s because being a CEO is really about making decisions with limited information, and that’s what analysts do best.” But aren’t top CEO qualities also being able to influence people, and being willing and eager to accept the consequences of your actions? Being a competitive sports coach or a professional poker player sounds like better preparation, quite honestly. OK, I-bankers also meet influential people, and they spend a lot of time selling things, which are probably also important. Is there a string of investment-bankers-turned-successful-CEOs that I’m not aware of?

A related post is What I learned about business school before starting.

This is the sibling of my what I learned about business school post. Just in case I drop out, I won’t be able to say I didn’t learn anything! At least I got some clarity on:

My goals for business school.

Which include:

• Get business knowledge that well help me progress on my current career path.
• Decide which fork to take on my current career path during the next several years.
• Evaluate and prepare for alternative long-term career paths including entrepreneurship in several different industries.

Unlike many B-school students, “build my professional network” isn’t one of my top goals. I expect improved networking to be a valuable a side effect of reaching my goals. This is because I already have a small network of smart, connected people. I expect to learn things that will let me provide more value to people in my network, and focus my career goals to understand how to better use my network. I do expect my network to grow to include more great people, but that’s not reason enough for me to go back to school.

My reasons for choosing an MBA program to reach those goals

I read some of the literature challenging the value of an MBA program other than as a filter for identifying ambitious career-minded people. Many people start from the point I’m at and achieve similar goals without school, usually by simply deciding to become an entrepreneur and using their network to recruit the best people they know.

I decided that I really wanted to achieve the goals I listed above, and a part-time MBA program is a good match for my personality and career situation. I believe I’ll use my experience in each environment to enhance the other. I’m also counting on my school adventure to be a healthy, satisfying outlet for the intellectually restless and self-driven sides of my personality.

Understanding these reasons helped me understand that it wasn’t important to get into the most prestigious program possible at the risk of stressing my family/work/school life balance. It’s not just that I’m susceptible to burning out so I’m choosing a less-than-ambitious school plan. Keeping my time in balance enough to thrive in all three settings is part of my personally ambitious plan to make the most of this school experience. On the other hand, if my goal had been to land a job at Goldman Sacs, I would not be satisfied going to Leavey and I would not seem so important to continue working as a computer programmer either — one of those future annual bonuses would be more than enough to pay off my massive school debt.

A reason to blog.

A while back I read Seth Godin‘s booklet “Who’s There” in which he listed three types of blogs (just checked, now there’s at least a fourth. But I’m trying to create a first impression blog. I’ll be meeting many new people in a professional context during the next few years. When new acquaintances look for me on the Internet would I hope they first find my Usenet post to rec.gambling.poker in 1996, or would I rather have them directed to something that showcases my professional communication and presentation skills?

Beyond the first impression, a blog like this is also a way to keep up my impression with people I “kinda know.” (Wait a minute, these are the same people in whom Safe Side Superchick is warning my children not to place trust?)

Blogs can be an effecient medium for keeping in touch with friends and family. But quite honestly, most of my friends and family news items are things I don’t want to post on the public Internet. It works out pretty well to distribute them using a century-old worldwide real-time voice communication system. And it’s part of my professional first impression to let you know that I have a family that’s very important to me without putting pictures or too many details on my web site.

* Thanks for putting up with my feeble attempt at giving myself some pre-boom Internet and pre-WPT poker credibility.

This is a sibling to my what I learned about myself post.  Orientation is done and the first day of classes is three weeks away. Before I’m distracted by actual coursework, I’ll note some of the things I learn during my research, application, and preparation processes, such as:

Greed is bad, creating value is good

When I started to read MBA program literature, I thought the phrase “creating value” were code words for “it’s OK to get rich.”
But, eventually I realized that companies and industries grow, they’re players in a positive sum game. In general, ethical business success moves the game forward and creates opportunities for others.

Although newspapers lay off workers as eBay and Google continue to hire, it’s not just a case of money and jobs relocating from one city to another. New businesses are able to start up and survive due to relatively frictionless marketing opportunities. (It’s a little more complicated the see journalism work shifting from large established newsrooms to amateur blogs and professional boutique operations, but that’s a subject for a future blog post or two).

A company CEO isn’t just the lucky guy who scored a job that pays 1000 times as much as the factory worker. The board chose this person as the company’s best chance to increase the value of the shares, possibly even as an alternative to selling the company, and paid the price it took to secure him or her. If the board did a good job, paying a different CEO less money would have been a bad choice, possibly impacting employees and customers.

Also, creating value is key to networking. Although it’s rather obvious, it’s easy to forget. Achievements on a resume can be impressive, but my most valuable contacts remember a positive experience working with me. They might want to recommend me not to repay a favor, but because the recommendations will reflect well on them.

Creating value is also one of the keys to successful blogging. It’s so easy to unsubscribe from a blog – I do it all the time!

There are no books on “surviving business school.”

Browse through the Test Prep section of Borders, and in addition to test prep you’ll see two types of books about law school: How to get into the best law schools, and how to succeed in law school. But for business school, it seems to be all about getting in.

Is this because business programs don’t have academic standards? Not really, but Master’s programs in aren’t supposed to have such high barriers to completion as doctoral programs.

The value of an MBA is often misunderstood

Although a bookstore might categorize them together, an MBA is not the same kind of professional degree as an MD or a JD. Those last two are necessary and sufficient (more or less) qualifications to enter a certain professional field. A PHD is necessary for academic jobs.

But for an MBA degree, where there’s some value in the degree itself (influenced strongly by the school’s reputation) there really isn’t any job that an MBA is a required or sufficient credential for. In business it helps to have knowledge, connections, and experience. An MBA program can be a structured way to progress on all three.
The top schools are part of the MBA recruiting machine, so in a sense an MBA degree can be a ticket to a job interview with certain companies.

Our nation’s current President, its only chief executive with an MBA degree, is widely regarded to have poor leadership and management skills. However the conclusion I draw from his story is one about nepotism in the admissions process, not one about business education.

Business School research is different.

I’m still trying to figure what B-School research is all about, and I guess the academic community is too (Businessweek article). However, I might have been drawn into a PHD program earlier in life if I ever found Computer Science or Math research to be as engaging, readable, and relevant as Professor Erik Lie’s web page summarizing his influential research into stock option backdating.