Appraisals, the GE way

During our five years at GE, Chad and I went through a rigorous appraisal process. Through open, honest and frequent feedback we learned a lot about ourselves and about how others view us. A key aspect of the process was that our managers and mentors actively supported our development on a daily basis, there were no surprises during formal reviews. It is the only GE practice that we copied into our new organization in its entirety. Startups don’t usually have rigid processes, but this is one that we think other startups owe to their teams and themselves. So here is how it works:

Step 1 – One manager talks with everyone on the team about the person being reviewed

Step 2 – One manager writes up a review based on 5 criteria:

Critical thinking – Clear thinking, problem solving, creativity
Expertise – Knowledge in a specific practice area, technical skills
Communication – Able to communicate in a clear, concise, respectful and persuasive manner
Execution – Getting stuff done, fast. Completes what they say they’ll complete, when they say they’ll complete it
Leadership – Autonomy, being a positive/motivational force on the team, mentoring others

The key in the formal write-up, is that each area must include at least one positive observation and one “development opportunity.” For each comment, specific real world examples are required. For every development opportunity, the manager must come up with an action plan for the person to improve. Its the manager’s responsibility to help the person improve through continuous coaching.

Step 3 – All managers discuss and tweak the appraisal and decide how to deliver it effectively.

Step 4 – The appraisal is delivered face-to-face, and ample time is given during each portion for a discussion. Points are not belabored, each development opportunity is delivered candidly. How an appraisee receives and acts on feedback is extremely important. If they are extremely defensive, or get upset, this becomes a serious development opportunity.

Step 5 – The entire team reviews the managers using the same process from steps 1-4. A manager always delivers the feedback to the other manager based on the team’s consensus. This ensures the team is honest with their feedback and not afraid of retaliation.

The entire process is repeated on a regular basis, usually every 2 months. Do you have some questions on how you can better integrate this process into your team? Shoot us an email and we’re more than willing to give you some forms and advice.

Appraisals, the GE way

5 lessons before launching your startup

“Nine to five is how to survive – I ain’t trying to survive… I’m trying to live it to the limit and love it a lot”

-Jay-Z

Last week I had a discussion with someone considering leaving their job to launch a startup.  They wanted some honest feedback on their business model. It occurred to me that objectively evaluating a startup idea is a skill that can only be learned through experience and that I finally felt marginally comfortable giving advice on the topic. After 8 months of making mistakes, listening to great mentors and thinking through many ideas it felt great to give back. For those of you I haven’t spoken with, I wanted to jot down some of the key lessons I’ve picked up along the way.

1 – Understand your goals – You need to be honest with yourself about whether you want a massive business or a lifestyle supporting income source.  All your thoughts about the startup must flow through the answer to this question.

2 – Passion – If you are creating the next big thing, realize you’ll need to have the passion to devote 70+ hours a week for 3-5 years to make it a success. Is this an industry and product you will stay excited about? Note that I’m not saying the product has to be sexy, plenty of people make huge profits on products others didn’t even consider working on.

3 – Test instead of talk – Try to test your idea without spending money and time on development. If your core-product is a consumer website, there are ways to test your prototype extremely cheaply. Once its built, give it to customers and ask them if they are willing to pay for it. Try to avoid the echo chamber of your friends and family. Their support will carry you through the tough times, but they are terrible judges of what constitutes a great business idea.

4 – Financial resources – You need to eat, you need a roof and you need to provide for your family. If you can’t do this while devoting the time and effort for a startup, then its not for you. Getting funding is a long and arduous process and will likely require that you’ve already gotten traction with your product.

5 –  Product-Resource Fit (Viability) – What resources do you need to make your company successful? Do you have, or can you acquire, the skills, money and other resources needed to implement your idea? Be optimistic but honest. In order to make your dream a reality you will need to fully believe you can do it.

A lot of you are founders of companies, use that comment box to talk about your own lessons or expand on mine.

5 lessons before launching your startup

What kind of company culture are we building?

Over the past few weeks Chad and I have been recruiting engineers to join our Card Gnome team. It has forced us to be introspective and verbalize our company culture to prospects. It has been illuminating to look at how our personal belief systems have manifested themselves into an operating entity. It comes down to 4 core tenants:

Passion/Motivation: Life is short so we believe it should be spent doing things we are passionate about. We truly believe that intrinsic motivation produces the best long term value and we foster that in ourselves and others. Money by itself is not a motivator, only an indicator that your business has added value. We are trying to build an amazing organization of passionate individuals, therefore acceptance of mediocrity is unacceptable.

Independent Debate: Chad and I are both fiercely independent thinkers with nearly opposite personalities and core skillsets. Our debates are epic but always respectful. We put all the details on the table and force each other to justify our thinking. It has given us a deep appreciation for how the other person thinks, which only serves to make the debates more honest. At the end of each debate though we come to a conclusion and agree on a path forward. I cannot, at this moment, think of a situation in which we were not in complete agreement on the correct decision. There is very little grey area, we both agree that a decision is the correct course or we keep talking. Compromise has its place, but it generally doesn’t build a compelling product.

Experimentation: We  are wiling to implement our ideas purely to learn what will happen. In fact, adding printed cards was originally one of these ideas. A few people had asked whether we could print our eCards for them and so we decided to give it a try. A week later, after receiving amazing feedback from consumers and artists, we decided to change our core business. Other trials have been failures, but the freedom to try something new is what makes us entrepreneurs, and heck its fun.

Respect for others: Our company is not just about profits, its also about meaningfully improving the lives of our customers, employees, partners and ourselves. When we make decisions we think deeply about how the decision will effect our stakeholders.  Making them happy and treating them fairly is the only way to build a great company.

We haven’t written a formal values statement yet, and there are certainly things I’ve left out, but this post is a good start. Use the comments below to let us know what you think about it.

What kind of company culture are we building?

Pivoting to success

A pivot is the term for a company that changes its business model in order to take advantage of an opportunity.  The opportunity is often only visible after the founders have progressed with their initial concept enough to learn about their market and its needs. Many of the hottest companies today, from YouTube (which started as a dating site) to Flikr (which was a videogame) are examples of great pivots.  The founders in these companies tested their hypothesis and realized they wouldn’t work, so they moved in the direction that would. The affectionate name for this is “failing fast” and its a good thing.  Chad and I did just this about 3 weeks ago when we changed our underlying business model.

Our previous idea was a marketplace for creative messaging services, from funny eCards to custom phone calls from voice impersonators.  What we found was that people wanted ways to interact, but our product offering was too wide.  We were talking with too many different target markets. We needed a much more narrow product offering which would enable us to target just one demographic and build a core user group. Our customers and artists told us repeatedly that they were interested in printed cards.  We heard “I love the eCards but I want you to mail it as a real card” and “I hate going to the store to buy cards, I end up not sending them! Can you make some of your eCards available to print?”

We started researching the greeting card market and realized that it is massive. Over 7.5 billion greeting cards are bought each year in the US, representing a $11B market with over 3,000 independent publishers. Only a handful of small companies currently print and mail cards from a web marketplace and none of them are executing the concept particularly well.  Chad quipped that we could do to greeting cards what NetFlix did for videos, bring the card buying process online.  As soon as that came out of his mouth, we both instantly realized the market potential.  We were hooked.

That was 3 weeks ago.  Since then we’ve repurposed our website and launched the new features as a minimum viable product.  Try it out, you can actually have us print and mail a card for you right now. Don’t forget to let us know what you think of this new direction in the comments.

Pivoting to success

Is a character flaw an enabler or disabler

I have my fair share of flaws and all of you reading this do to.  The greatest professional gift that I was ever given was from my previous job where I was under the microscope each and every day and was “reviewed” by my peers and direct managers multiple times a month.  It gave me a distinct understanding of my own shortcomings, helped me improve, and ultimately gave me a thick skin.  Most of my biggest issues flow directly from a condition known as ADHD (Attention Deficit Hyperactivity Disorder) that I’ve had since I was a young child.  As I’ve learned about myself, I’ve also learned to control many of the negative effects and have come to view my condition as an enabler of my success and not a disabler as most people do.  If you follow a strategy that plays to your strengths and pair with people that have the exact opposite strengths it produces a powerful combination.  Let me explain.

Since I was a young child I was the kid with too much energy and too little patience and focus.  Unlike many of you, my thoughts are not linear.  My mind jumps extremely quickly from one thing to another which makes doing things that require attention to detail very difficult.  The jumping is not illogical, its just takes a different path than most people think along.  For instance, if we are talking about a business concept I’ll likely be thinking about your company and a few others that have related underlying concepts.  Clearly I miss some of the details and thats a distinct weakness.  On the flip side, it makes me really good at brainstorming, comparative analysis and creative problem solving.  I don’t need a lot of explanation to get the point, in fact I usually get it far before its made and so I’ll sometimes be an interrupter.  Waiting around for a point I already understand doesn’t work for me.  Is that presumptuous to assume I understand what people are talking about? Probably, but after 27 years of experience I’d say I usually have the point correctly.

The hyperactivity part of the disorder gives me a distinct preference for trying things versus thinking them through.  I do things twice as fast as most people but also screw up twice as often. At the end of the day its usually the exact same outcome and time as someone using a more step-by-step approach.  Most people say that my approach is wrong, that I should correct it.  My old managers always brought up mistakes I made with details.  What I’ve found is that when I pair my impulsive doing tendencies with someone like Chad who is a deliberate thinker we tend to get things done super quickly and without major mistakes.  A great example of this is when Chad and I put together a ceiling fan.  He immediately started reading the directions while I had already started putting in the screws.  As I made mistakes he would point them out and we’d move on.  It worked pretty damn well, and that fan went up super quickly.  So is this flaw a disabler? I’d argue no if you understand it and correct by pairing with someone who is a thinker.

Its obvious that in many environments my flaws would be crippling and probably inhibit professional and personal advancement. In my previous job, I was acutely hiding certain character traits and not acting myself in order to advance.  One of the unspoken reasons of moving to Boulder and getting into the startup world was my belief that this environment and profession plays to (and values) my specific strengths.  At the end of the day, everyone has different issues to to contend with and how we choose to face them and leverage them has a direct impact on our happiness and success.  Do any of you have “flaws” you consider to be enablers in some sense?

Is a character flaw an enabler or disabler

Rejection is my yardstick of success

I get rejected a lot. Not only do I get rejected a lot, but I get rejected in a lot of different ways, too. I get rejected with unanswered “cold call” emails, and by politely worded “not interested” responses and everything in between.  I get a constant stream of rejection and when it’s not making me depressed, I savor it as much as the success.  Getting told no tells me that I’m pushing for more than I deserve and its a good yardstick for measuring just how far I’m pushing the envelope.

I want to be clear though that rejection and failure aren’t the same thing.  In his last blog post, Andy Ellwood talks about the benefits of failing spectacularly as a way of overcoming one’s fear of failure in general and becoming a better entrepreneur.  Not purposely failing, but doing something you half expect to fail with the confidence and purpose of something who thinks they will succeed.  Rejection is a very similar concept but where rejection is generally a private occurrence, failure tends to be an embarrassing public event.  Instead of publicly realizing you are wrong, rejection are a series of small failures that test your personal resolve to continue and teaches you what works and what doesn’t.  If a big named entrepreneur or other VIP doesn’t respond to my emails its not a failure, its a learning opportunity.  What did I do differently with those that did respond? It also indicates that I’m pushing the boundaries of what I’m able to accomplish.  Chris Dixon summed it up really well in a recent blog post when he said “if you aren’t rejected on a daily basis you aren’t trying hard enough.”

The rejection comes in many forms.  First there is the blatant rejection, the emails that read “I’m not interested” or some other polite variety of this statement.  These slide right off my back, since the vast majority of these responses come from smaller potential customers, never from potential mentors.   There is also the not so blatant “my schedule is really busy for the next few weeks, how about you follow-up with me then” which tells me they are clearly not interested, but luckily for them I’m a persistent little guy and I mark the date on my calendar for a follow-up.  Then there are the ones that never respond.  The worst though, are the ones that respond to setup a meeting but then either continually push it back or don’t show up.

For all the rejection, there is a ton of success.  To me, networking is both a quality game and a quantity game.  Remind anyone of dating?  You never know where a relationship will lead, so I try to maximize my volume of meetings with the best people possible. The more rejection I receive, the more fantastic connections I’ve likely made.  In other words it all goes back to Edison and his amazing lightbulb. Over one thousand failed experiments, each in its own way revealed a little more of the puzzle that, when finally complete, changed the world.  As Edison said, genius is indeed “10% inspiration and 90% perspiration.”

Rejection is my yardstick of success

The 7 rap rhymes that every entrepreneur should know.

I love listening to rap and hip-hop. The beats are great and the lyrics, while crude, often speak to the entrepreneurial “make something of yourself” story line that I admire. Clearly this isn’t true about all rap artists, and I actually have a problem with a lot of newer mainstream work, but this is certainly true about my old favorites like the Notorious B.I.G and 2Pac.  Yesterday was the anniversary of 2Pac’s death, so it seems like a good time to pull out some insights from a few of my favorite rap lyrics.

1. Mo money, mo problems (Notorious B.I.G.) – The idea that money equals success is very ingrained in the American psyche. Biggie understood, and spoke often, about the differences he felt between his impoverished upbringing and more recent wealth. It is clear that issues of loneliness, trust of others and freedom of movement were among the downsides of having money.  He is not saying greed isn’t good, but he is cautioning about allowing success to change the person that you are and that got you that success in the first place. Listen to this line

2. I don’t mean to sound sleazy, but tease me, I don’t want it if it’s that easy (2Pac) – For many of us, the feeling of accomplishment comes from stretching ourselves. This is as true when doing an alpine ascent as it is when building a business. Being an entrepreneur, or hustler in rap parlance, means that nothing is handed to to you on a silver platter. It does take hard work, risk and resilience to succeed but that is what makes the ultimate success so sweet. Listen to this line

3. Now I can let these dream killers kill my self esteem-or use my arrogance as steam to power my dreams (Kanye West) – There is nothing that puts me in overdrive like someone telling me that I can’t do something. Knowing your strengths, weaknesses, and being confident enough to take the big swings when it feels right is important. Listen to this line

4. No man alive has ever witnessed struggles I survived (2pac) – This one has special meaning to me. Whenever I hear this line, I think of my grandparents who both survived Auschwitz. If they can make it through that hell, rebuild their lives and raise two successful children, what everyday obstacles can’t I get through? The thought of my grandfather’s smiling face is quite literally the image I concentrate on when I’m trying to overcome large obstacles like a mountain peak or calm down before an important presentation. Listen to this line

5. Will Smith don’t got to cuss in his raps to sell records – well I do, so f*** him and f*** you too (Eminem) – It sounds crude, but it has a good point. Every brand has its own target market. It’s better to be true to your core fans and personality than try to be everything to everybody. Listen to this line

6. Don’t speak to fools, they scorn the wisdom of your words (NAS) – I include this lyric because I actually think NAS is wrong. The fact is that smart people are the ones who are listening. Even “fools” have valuable information to share; you just need to listen hard enough.

7. Stay far from timid, only make moves when your heart’s in it, and live the phrase “the sky’s the limit” (Notorious B.I.G) – How many people never take a risk to achieve their dreams? The best entrepreneurs, like the best poker players, understand when to put all the chips on the table. Listen to this line

The rappers that I’ve mentioned above are entrepreneurs and their stories of overcoming adversity, believing in themselves and taking big swings are lessons many of us can learn from.  While they grew up under different conditions, the concepts, the motivations, and the passions are the same. Do you have any favorite lines?  Use the comment box to share them with us.

The 7 rap rhymes that every entrepreneur should know.