Why you should think of your employees as Allies in the future of work

The rules of work have changed. Gone are the days where you spend your whole career at one company that gives you a great pension and a retirement party.  And yet, we still act like that’s the case when we hire people, and in how we approach managing them.

We live in the world of “at will” employment. Layoffs and “it’s just not working out” discussions are always just around the corner.  Meanwhile, many employees job hop from company to company always searching for greener grass.

When talking to candidates, we interview them expecting to hear how committed they are to anything the company wants, even though both sides know a lifetime commitment is pure fantasy.

Why are we lying to ourselves?

Rather than be in denial, we should accept the new rules and take full advantage of them. That’s what Reid Hoffman, Ben Casnocha and Chris Yeh advocate for in their new book, The Alliance I just read.

The current system is bad for everyone. The-Alliance-Managing-Talent-in-the-Networked-Age

It creates major problems for both the company replacing team members regularly and the former employees who see their tenures cut short.

The worst parts about replacing team members are:

  • They leave when you don’t expect it.
  • You have no plan for what to do without them.
  • Work is left incomplete even if they give some notice.
  • Their knowledge and experience is lost from the company.

And for the employee, the worst parts are:

  • Unfinished work and incomplete milestones that now can’t be put on their resume.
  • Less development in their career as companies fear to invest in them.
  • Damaged relationships due to resentment over the first 2 items.
  • Distrust in every employer they have going forward.

Hoffman, Casnocha, and Yeh advocate for a new system that considers employment as an Alliance: a mutually beneficial relationship, without the empty promises of long term employment.

Why You Should Think of Your Employees as Allies in the Future of Work

In an alliance, both sides work together for mutual benefit. This means shifting your thinking on employees. It’s a lot more than, “do this work and I pay you.” Instead, the relationship is, “I help you grow, learn, and tackle these challenges, and the company benefits from that work.”

The authors call this a Tour of Duty. You select a length of time (a year or two up through 5+ years) and a set of goals for them to achieve with core responsibilities. The agreement is that you will help them have a Tour that is of interest and value to them, and they will do good work for your company.

By agreeing on the time frame and what the Tour entails, you eliminate many of the biggest problems for both sides:

  • Employees now have a clear set of goals and milestones and a plan to get there.
  • Employers have more certainty how long they can count on having an employee.
  • Employees have a clear point where they can cleanly transition out if they want.
  • Employers can plan ahead as a tour is about to complete, avoiding any surprises.
  • Both sides have more certainty and a clear commitment to one another.

Now the end of a Tour is not the end of someone’s employment. What Reid Hoffman found with Linkedin, was that people were often hungry for new Tours. It provided opportunities to quickly progress people onto tracks for major leadership roles (they call them Foundational Tours), or give them a new, interesting, challenging job different than what they just completed.

Either way, you can keep renewing the Tours as long as there’s a good fit between company needs and employee interests. And if there’s not a clear fit at the end of a tour, you can have a very smooth transition for both sides, allowing the employee to find work elsewhere without hurting the company or vice versa.

Your people want tours. You just don’t know it.

As I’ve been working on my app for managers, I’ve spoken to a lot of employees in addition to managers. What I keep hearing over and over again is how frustrated people get over a lack of progress in their work.

Employees want to grow and learn new things. They want to be challenged. They want to be recognized for their good work, and feel like they’re working towards something greater than just a list of tasks for the day. When they don’t feel that progress, they feel stifled and quickly lose motivation. Not long after, they’re looking for the door.

Tours address all of these issues. A Tour:

  • Creates a clear set of goals to achieve in a role.
  • Creates a set end point where new opportunities can be explored.
  • Ensures a discussion about an employee’s goals and how they fit into the company.
  • Necessitates regular check ins to be sure progress is made on a Tour and will be completed on schedule.

Planning Tours take effort and have big payoffs.

Planning Tours for your team members doesn’t happen by accident. It’s why they wrote the book and are building a site around the idea (www.theAllianceFramework.com).

You have to have healthy discussions with each team member and plan out a path for them. What can they achieve in a few years? How does that align with their long term goals? What are the measures of success for a Tour for them? Do those goals interest them? If those are questions that are foreign to you, you need to start discussing them.

The best time to have these discussions is during your 1 on 1s.

With so much work to do, so many short term priorities to address, who has time for this? But if you want to keep your best people motivated and engaged and level up your team as a whole, you need to make time for these discussions. That leaves 1 on 1s as your best chance to have the time (You are having 1 on 1s, right?).

You’re already hopefully having candid conversations in 1 on 1s, so it’s time to shift part of each 1 on 1 to work on aligning their long term goals with their current roles and responsibilities. It won’t happen all in one meeting, but you can slowly put together a plan over a series of meetings.

You’ll see the benefits quickly.

Once you start this process, pay attention. Watch closely. The more you align someone’s work with their goals the more motivated they will be. Show them how the work you’re asking them to do gets them closer to what they want and they’ll work harder to help you with what you need.

It’s no mistake. It’s the Alliance at work. As Hoffman, Casnocha, and Yeh, write,

“Every employee relationship should be bidirectional in nature; it should be clear how the employee benefits and how the employer benefits.”

That’s because it creates the best situation for productive, happy work. And the Tour takes that to its greatest outcome by sustaining that over a multi-year period.

Are you creating aligned work for your team? Are you engaging your team towards mutual benefit? If not, learn more in The Alliance and start doing Tours at your company.


Get LighthouseLooking for a system to track your team’s long term goals and break them down into the near term goals you need?

Want to have more effective 1 on 1s that build towards alignment like what’s described in the Alliance?

Then sign up for Lighthouse, the app for managers.

What Viktor Frankl can teach us about managing teams

Viktor Frankl is a psychologist, author, and Holocaust survivor. In his seminal book, Man’s Search for Meaning, he advocates for everyone to find their meaning of life. This is no small task for anyone, let alone helping someone else discover it, but it is the most important thing anyone can find if they want to be happy and successful.

Frankl’s 3 ways to discover your meaning are:

  1. Creating a work or doing a deed.
  2. By experiencing something or encountering someone.
  3. By the attitude we take toward unavoidable suffering.

As a manager and leader, you have people working for you who are giving almost half of their waking life towards your company. Fortunately, many of those tasks can fit into Frankl’s 3 ways.  To keep them motivated and engaged, you must find ways to align their meaning with the company. With a little work, this can be achieved.

How to align your employee’s work & meaning

1) Give them ownership

Have you ever been given a task that someone had everything spelled out to a T how to do it? How motivated were you to work on that? If it was something important to you, it likely felt very stifling to not be able to do it how you saw fit.  Don’t do that to your employees. Give them the opportunity to use their skills to accomplish tasks in the way they choose.

2) Help them see the big picture

People join companies for many reasons, and a company’s core mission is often one of them.  Once they’re settled in their job and the day to day grind, it can become easy to lose sight of that mission that attracted them in the first place. Don’t let that happen! Repeating yourself as a leader is very important, especially if it’s reinforcing the core mission.

3) Connect the company mission to their tasks

Having everyone on your team understanding the company’s core mission is important. Tying their specific job to that mission is just as important. When someone feels like what they do really matters and they can see the impact, you create a powerful, motivating feedback loop. And if you manage someone in a low level job and don’t think you can tie their work to what matters, you should watch this.

4) Listen to their personal goals

It’s not all about the company. Your employees have hopes and dreams of their own. The more you can align those dreams with their work and show them how the company furthers their goals, the more motivated they will be. Humans have a natural urge to work on things bigger than themselves and a company is an amazing vehicle for this if you seize the opportunity.

What about the suffering?

Yes, Frankl believes suffering in life is not only inevitable, but essential. It is during times of suffering that we grow the most.  If you’ve ever worked long hours on a project, you can empathize with how major challenges can help you grow tremendously. Often, you work those hours because you were motivated in some way, likely one or even all 4 of the above reasons.

Frankl loved a particular quote by Nietzsche that captures it well:

“He who has a why to live for can bear almost any how.”

It is when people lose their why that they can no longer endure the how that they are facing. At work, long hours or a project they’re struggling with can wear them down without the above alignment. When this happens, everyone loses as they will start looking for other jobs and their work output will rapidly decline.

Are you giving your team the whys they need?

 

A Guide to Finding Your Meaning of Life

The last six months have been a challenging journey for me. I’ve been searching. I’ve been trying to find my unique path in life. I’ve questioned what my calling really is.

Call it being a little lost. Call it a quarter life crisis (a couple years late). Call it whatever you’d like, but for me it has been an incredibly important, personal journey to determine what I should do with my life and finding the next steps to make me truly happy & fulfilled.

This wasn’t something I wanted to talk about (much less write about). However, after yet another conversation with a friend going through the same thing, I realized I really need to share some of the things that helped me get to where I am.

Here’s a few things that really helped me.

1) Read These Books

Everything you’re thinking about has been a challenge for others before. There are experts who have devoted their lives to these subjects and books are a great way to learn from them at your own pace. I read a lot and all of these came highly recommended by friends and mentors, so trust me, they’re helpful.

Mindset by Carol Dweck

Growth means knowing you’re always learning and that even the best were a novice at some point. Never say, “I can’t do that.”  This attitude is an important one to adopt as you find your path: Just because it’s your path, doesn’t mean it will be easy. Mindset will help you understand how to approach the big, scary dreams you have with the right attitude.

So Good They Can’t Ignore You by Cal Newport 

“Find your passion” is the message of Generation Y and I think it’s led many of us astray. There are many things we each are passionate about, but not all of them should be more than a hobby. So Good They Can’t Ignore You will help you figure out what you’re great at and how to do more of it while building a fulfilling life.

Man’s Search for Meaning by Viktor Frankl 

Only 1 in 12 men sent to a concentration camp survived the Holocaust. The author was one of them. From that experience and a lifetime as psychologist, Frankl has some powerful views on life and the importance of having a personal Why. He also reminds us that suffering is a part of life; as much as the American media makes us think we’re all supposed to be happy 24/7, there’s value and growth in struggling with the right things.

2) Find Your Must

I was fortunate to catch Elle Luna’s amazing talk on Finding Your Must when she originally gave her talk in October and am so glad the talk is recorded for all to see. I’ve shared the video with countless friends since. Watch it here: http://vimeo.com/77436516

As you go through those books, it’s important to listen for that voice inside you for what it really wants. In the case of Elle, she was a successful designer at Mailbox (bought by Dropbox), but was having dreams pulling her in another direction.

Just as important is Elle’s awesome article on First Round Capital’s amazing blog called, “What to do at the Crossroads of Should and Must.” This came at the perfect time for me as I was interviewing for jobs I thought I *should* take while working on a startup I felt I *must* work on. I am coincidentally no longer doing the should and focused on the things I feel I must do.

There is a lot of material in the article different than her talk so I encourage you to check out both.

3) Buy a Notebook

This doesn’t have to be anything special. Just get one of those old school spiral-bound notebooks with lots of pages and your favorite writing form (pen, pencil, sharpie, etc).

Start Writing.

Once you have the notebook, sit down alone and start writing anything that comes to mind. Just get everything swimming in your head out and write until you’ve filled a few pages. Do this every day.

What you write about will change. I’ve written about everything from passions to frustrations, forgiveness to regrets, startup ideas to objective views of the past. Every bit of it helped in different ways and brought my mind out of places I was previously stuck.

After awhile you will find you may have less of an urge to write. That’s okay. Know that the notebook is there to release things when they’re stuck inside. It needs an outlet. Don’t bother reading what you’ve written either; some of it won’t be nice things, but there’s a good chance getting it out will help you move on. At least for me, this journey was as much about finding what’s next as it was letting go of things holding me back.

Now, I don’t write in the notebook every day, but when I have something I need to get out of me, I stop what I’m doing and grab the notebook to start writing. I also use it when I’m stuck on something and need to explore an idea. It is this exploration that helped me arrive at what I’m excited to be working on today.

You can learn more about this process here: http://www.dr-jane-bolton.com/support-files/the-artists-way.pdf

4) Read The 12 Week Year

Another book? Yes. The ideas that you’ll be piecing together from the above books, the great stuff from Elle Luna, and writing will make you ready for this book. This is the book that will help you put it all together and figure out how you can really execute on that scary, ambitious *must* that’s dying to get out of you.

The 12 Week Year by Moran & Lennington

On the surface it looks like another pop-self-help book, but it has an important process that will help you clearly define who you want to become and how you can get there.

They ask you who you want to be in 10-20 years, then what you want to be in 3 years to put you on a path to get there, and finally how to find the actionable steps you can take in the next 12 weeks to begin. Following their exercises and examples helped me sew together all the ideas that I had generated from the rest of my journey.

5) Don’t Fear Failure

The first thing you try probably won’t work. Taking the first step to get out the door though is very important. Every thing you try will add new skills, new perspectives, and new people to your life. All of those will combine to bring you closer to your end goal, even if that’s not entirely clear. Don’t be afraid to quit and try something else.

I was an Electrical Engineer in college who realized he didn’t want to be one.  I tried to start a hardware company with some friends (it failed). Then I started Greenhorn Connect, a modest success that gave me a platform for developing skills in marketing, hiring, managing, product and sales. This helped me get jobs first at oneforty (the now-defunct app store for Twitter) and then to move to SF to join KISSmetrics. In both jobs, I learned a ton. Between those two jobs, I tried consulting (the only thing I liked was the money) and a bunch of startup ideas that went nowhere (hint: the moving industry is not a great place to build software).

Most recently, I spent last fall diving into the world of 3D Printing and just never found the right team and idea in the nascent industry. This led me to job hunt again, which is when a lot of the above journey of discovery began.  It was only then that I realized what I really want to do now.

Every step in the journey has been important in helping me get here.  I’ve embraced the fact that this could be another failed step, or the one that puts it all together.

Conclusion

If you really work at it, if you really think about the ideas in the books above and challenge yourself to write what’s in your heart, then I believe you’ll have some things to go on to find the next steps in your uniquely fulfilling life.

I have realized both the good and the bad in my life has taught me important lessons and prepared me for what’s next. In my case, that’s writing a book about How to Build Customer Driven Products based on what I’ve learned from the jobs I’ve had, the consulting I’ve done, and the great mentors I’ve met along the way.  It also means patching up a few relationships I made mistakes with and have much better perspective on now. Most importantly to me, it’s realizing that I’m a founder at heart and that I’m now working on an idea I’m driven to work on every day: helping people be better managers.

I can’t guarantee these tactics will work for you, but working through all of the above and with the help of some great friends I’ve gotten to a satisfying place.  If you’ve asked these questions of yourself before, I’d love to hear what helped you in the comments. This post is for all those coming after us that could use help on figuring out their journey.

Why you should read 100 books

When I was fresh out of college with a internship at E Ink (maker’s of the display screen for the Amazon Kindle) I emailed the founder and then CEO, Russ Wilcox, to see if he would meet with me to give me some advice on entrepreneurship. Lucky for me, he was willing to schedule a meeting before my internship ended. You can read the full story here, but one of the best pieces of advice he gave me during our meeting was simple, yet powerful: Read 100 Books.

At the time it almost didn’t make sense and led to more questions than answers. What books? Why that many? How fast? By when?

I remember frantically writing down a bunch of book titles he started mentioning and then he stopped me and said the important thing was that they were on a diverse set of topics with different viewpoints instead of any specific books. He suggested trying to read 5-10 on categories like sales, marketing, leadership, negotiation, etc.

Mission Accomplished.

5 Years and 4 months after that conversation, I’ve finally hit the number and now looking back, I realize it’s one of the most important pieces of advice I ever received. I would not be where I am today if I hadn’t read as much as I have. Reading 100 books has done all the following for me:

  • Helped me better understand the responsibilities of coworkers (especially important as a product manager and startup founder).
  • Being comfortable in a conversation on just about any subject due to what I’ve read.
  • Rapidly improved my skills in key work responsibilities helping me accelerate my career and avoid costly mistakes.
  • Met other great people who also read regularly.
  • Given me the confidence and framework to help me learn anything.

If you’re reading this, I encourage you to also read 100 books. But realize it’s not about the number, but a routine of reading regularly that will serve you well throughout life.

Here’s my quick advice on how to make it happen and make the most of it:

1) Read what you can apply immediately.

I’ve managed to read a wide variety of books that have helped in my career and I’ve always chosen books based on what my current challenges and interests are. This has helped me apply concepts I pick up as I read a book, usually over the span of 2-4 weeks, depending on the length.

When I was moving to SF to run product at KISSmetrics, I started out with a great book on Product Management, then dove into a few books on design, before finding myself diving into sales, marketing, leadership and strategy books depending on what was happening at work and my personal life. Every time, I found great ways to build on what I read in my life around me which has helped tremendously with retention and understanding.

2) Get good recommendations.

Not all books are created equal. In fact, most books are pretty terrible, especially business books. There are gems out there though, so it really pays off to ask others who read what the *best* books are they’ve read on a subject. This has saved me tons of time on books that aren’t worth my time. This is why I made a list reviewing of all the books I’ve read  and some of my all time favorite books for entrepreneurs here. You’ll also occasionally find posts about books that CEOs like Jeff Bezos has his leaders read, which are usually great.

3) Build a routine of reading.

I read on public transportation. First it was riding the T in Boston and now MUNI around SF. I love this for so many reasons:

  • It gives you something to look forward to even when a bus commute might be lengthy.
  • A book won’t get stolen like your cell phone might be when you have it out as you play Angry Birds/check Facebook, etc.
  • It gives you bite size chunks of reading as most rides are 10-30 minutes…just enough for a chapter or two.
  • A book is a great way to get just a little bit more personal space on a crowded bus.
  • It’s a great warm up and cool down to your work day if you read during your commute.

If that’s not an option for you, build a routine around it in some other way. Maybe it’s 20 minutes before you go to bed, while you eat breakfast or perhaps audio books while you drive to work. It is the routine of always reading something that will carry you through that many books over the years.

4) Carry your book around with you.

Nothing sparks a conversation like someone noticing what you’re reading. Often those that notice read a lot too, which is a great way to make friends and you can get more recommendations for books from them. This also means that if a friend is running late, you always have a productive way to fill the time.  I brought Dale Carnegie’s “How to Win Friends and Influence People” with me to Bootstrap Live and ended up talking with Andrew Warner and the guy next to me about how much we all loved it.

5) Write all over your books.

Despite working in technology, I still prefer physical books in my hand. I underline, I highlight and dog ear all my books. Something about it helps me with retention of what I read. Even if you prefer to read on a tablet or Kindle, be sure to take notes and challenge yourself to think about how to apply what you’re reading. It helps a lot to review books you’ve read before when you have that subject come up. It’s amazing to me how often past events line up as examples (or counter-examples) of something I’m reading. I’m always sure to take a moment to consider it and write it down in the book.

6) Always make progress.

Life doesn’t always go as hoped or planned. There are times of frustration and stagnancy both personally and professionally in all our lives.  I’ve found one of the best things for me is knowing that no matter what is happening in my life I’m always learning because of what I’m reading. I can always look back and see progress there.

It has also helped that when I’ve had down times, if I read something related to it like a book on happiness or successfully navigating your 20s, I’m actually being proactive about the problem and getting advice from someone great who took the time to research and write a book about the subject.

Remember, this is not a race. The point of reading all these books is to absorb all the ideas and skills shared in the books, not race to the end.

I’ve heard some people like to skim books and think that doing things like reading the opening and closing paragraphs of a chapter and reading headlines in the chapter is enough. They’re either reading the wrong books or missing out on some deep lessons.

As a wise man once said, “Anything worth doing is worth doing well.” It is the journey to 100 books that I both enjoyed and grew tremendously from…not the milestone of specifically 100 that matters to me; I haven’t stopped reading and won’t anytime soon. My Amazon Wishlist is longer than ever (please suggest the best books you’ve read in the comments!) and I can’t wait to learn through more great books for the rest of my life.

3 Books Every Investor Should Read

As an entrepreneur, when I consider the ideal investor I would like to have, it’s a lot more than someone with money. I want them to have characteristics like:

  1. Able to make smart bets: Investments are largely made when it’s too early to tell with certainty who or what will win in a market. 
  2. Add value and insights: This is more than replaying personal war stories and biasing from your own experiences.
  3. Asking good questions: Someone who pushes founders to take a step back and recognize the things that matter often comes more from asking questions than providing answers.

Being great at those three things is no small task. Fortunately, there’s been some great books written that can supplement the knowledge and know-how of even the most veteran entrepreneur or get a new investor off on the right foot. These are books I’ve read and re-read because they’ve providing so much value to me and I believe can specifically help investors as well.

The Innovators Dilemma by Clayton Christensen

Disruption is a brutally abused word in tech these days. Clayton Christensen brings it back to reality and explains how it really works in this classic written in the 90s (and has arguably gotten better with age).

As an investor this is critical so you can call BS on an entrepreneur that claims they’re disruptive, but really are hopeless. This book will help you understand not only how to recognize disruptive technology in its earliest days, but what it means to get in the market, grab a position and successfully grow and take down the incumbents. Benjamin Tseng, a Bay Area VC, has a great post also discussing the value of this book for investors here.

Investor Scenario: A founder claims they have a disruptive innovation and are telling you about their immediate mass market plans, The research in Christensen’s book will help you guide them a better approach or to pass on the deal.

The Master Switch by Tim Wu

Over the past 100 years, communication platforms have dramatically changed and evolved. During this time, we’ve seen the emergence of the telephone, radio, television, email, the internet and more. Without fail, every time one of these new mediums emerged, they fought an uphill battle to eventually win the market.

This book goes perfectly hand in hand with Innovator’s Dilemma by walking you through how many technologies were slowly commercialized and changed the world. By the time you get to the end the patterns will be impossible to miss and priceless to match against what you see in new markets emerging (some of which you hopefully can invest and place strong bets on).

Investor Scenario: A founder has a transformative technology. Knowing the patterns of past innovative companies, you can help them anticipate resistance they may face both in the market and legally.

Tribal Leadership by Logan, King & Fischer-Wright

A book on culture to go hand in hand with two on innovation cycles? Absolutely. While there are other books out there I’ve rated higher on culture, none are more powerful for an investor.

You only get a limited amount of time with a founder and their team, so knowing how to quickly tell the difference between a strong team culture and one struggling is huge. What makes Tribal Leadership special is how it helps identify the key words that you can listen for to tip off how a company is really doing. 

Armed with this information, you can help a founder get back on track if some of the team has issues.  It can also help you decide if you should pass on an investment that looked good otherwise; a motivated, excited team will be significantly more productive, work longer hours and help recruit the best talent. You need those for the characteristics for a company to hit deadlines and win the market.

Investor Scenario: You visit one of your investment’s offices. If you overhear employees talking about their excitement for the mission, they’re operating at a high level. If instead they’re complaining about how much their work or a project sucks, you may want to ask the founder some questions.

——-

Unfortunately, many business books are a complete waste of time. Luckily, gems like the 3 books above exist and help tremendously to educate us, change our perspectives and diversify our knowledge on important subjects. I’d love to hear any great book recommendations in the comments for investors or entrepreneurs.

Why Travis Kalanick is going to be a Transportation Rockefeller

{Ed. note: I’ve been a big fan of Uber since I attended their Boston launch dinner where they shared a lot of the behind the scenes of their operations. Since then, when I ride in Ubers, I can’t help but strike a conversation with the drivers. This has helped me learn the inner workings of their market in addition to the press we’ve all seen.}

I’ve always believed you can learn a great deal from studying the past. While times may change, innovation cycles and the way society handles disruption is often very similar (I highly recommend The Master Switch if this concept interests you). While the oil industry may be very different than the urban transportation market, I think there are a number of parallels between legendary leader of Standard Oil, John D. Rockefeller, and Uber’s CEO, Travis Kalanick. Knowing this, we can make some very interesting predictions on what the future holds for Uber.

The Legendary Mr. Rockefeller

John D. Rockefeller was one of the most successful entrepreneurs of his generation. Thanks to his rapid dominance of the oil industry, he was a multi-millionaire in 1870 when the average worker was making just $2-$3 per day and amassed a net worth of over $1.5 billion by the time he retired decades later. He accomplished this through repeated innovation and reinvention of his core business as well as expansion to control as much of the market and his supply chain as possible.

There was also a dark side. Rockefeller had a habit of clashing with the press and fighting with regulators over his aggressive business practices.  He crushed his competition through these practices, often giving them the choice to be acquired at a profit or ruthlessly run into the ground. He would often brazenly share his financials with them showing just how strong a war chest he would have against them. After acquisition, he would turn newly acquired business owners into spies and pawns for the benefit of Standard Oil.

You can criticize such tactics, but not the results of Rockefeller’s efforts. In order to create such a monopoly, he had to have a ruthless side. If he was not aggressive with competition and regulators, his growth would not have been as rapid. Travis appears to have a similar approach to business which is a big part of why I believe Uber has such strong potential for a new monopoly.

Uber: A modern, emerging monopoly

With Uber close to a new $361 Million+ financing round at a stunning $3.7 Billion valuation, Travis Kalanick has the funds necessary to dominate the transportation market in cities around the world and at a stunning pricing (less than 5% of his company for that $150Mn). Per their website, they’re approaching 40 cities now with over $125 million in revenue expected this year. With 5 in shh! early launch mode, that means that each city is already generating an average of $4 million in revenue annually.

Taking a quick look at world population figures for major cities, it appears there are 450 cities with at least 1 million people living there (and thus could be good markets for Uber). Doing simple, back of napkin math, that equates to over $1.8 billion in potential annual revenue.  Some of those cities may not be suited for Uber (see Vancouver), but looking at how Uber continues to grow even in its home city of San Francisco 4 years later,  it’s not unreasonable to believe that city revenue average may be 2-3 times as high in years to come.

Crushing the competition

2 key competitors stand between Uber and Rockefeller-like industry domination: ride sharing apps and taxi cabs. Both are at a distinct disadvantage to Uber.

Ride Sharing Apps

The main ride sharing apps in play are Lyft and Sidecar. To date, Lyft has raised $75 million and operates in 5 US cities, while Sidecar is in 6 cities, but only has raised $10 million. Rumor has it, the latter has struggled to raise their next round of funding to keep up in this transportation arms race.

To combat this competition, Uber is doing a few brilliant things:

  1. UberX exists in every city that Lyft or Sidecar is in (LA, Boston, SF, Seattle, Chicago, DC) by following the Burger King strategy:

    Uber has said that it will consider offering ride-sharing services in markets in which it operates if a competitor has launched and is operating for 30 days without any direct enforcement against it. It’ll consider that “tacit approval.” – TechCrunch 4/12/2013

  2. Uber is aggressively advertising to recruit away their drivers:

    Anti-Lyft ad on a bus in San Francisco              (credit Om Malik)

  3. Uber does not discourage drivers from using UberX and another ride sharing app. I’ve noticed some drivers having multiple phones in their cars, one for each service. This is a huge advantage for Uber that has had a multi-year head start on figuring out logistics and optimization for drivers and riders. In the end, drivers just want as little idle time as possible to maximize money they make, which means Uber has a chance to make them feel Uber is all they need.
  4. Uber cut their prices on UberX to be price competitive with ride sharing as well as go head to head with Taxi prices (more on this in a moment).

Taxis

The taxi owners are the ones that fight Uber the most. There was actually a protest earlier this week in SF because of it. They protest, because they’re being disrupted. But you have to ask yourself what’s really being disrupted?

In conversations with drivers who have quit their cabs to become UberX drivers, I learned the following:

  • Cab drivers pay anywhere from $120 to $150 each day to drive their cabs. That’s over $30,000 per year if you worked it like a full time job.
  • It’s not unusual to work a 12 hour shift and not make your whole fee back in fares.
  • Cab companies force you to work brutal shifts at hours like 4am to 4pm.
  • Cab companies will not help you in any way if you have problems during your shift.
  • Cab companies can take months to pay you for credit card transactions (Now you know why drivers often break the credit card readers).
  • Dispatchers rarely will give you a rider and may provide incorrect information.

Now contrast that with Uber:

  • Uber takes 20% of each ride. Drivers are profitable from the first ride of the day.
  • Uber provides drivers with heat map data of the best places to locate themselves to get ride requests.
  • Uber’s mobile app sends you riders to pick up. No more searching for people flagging them down on busy roads.
  • Uber pays drivers weekly.
  • Uber takes care of their drivers (a driver had a passenger using a stolen credit card. Uber called them, had them stop driving the person around and still paid him for all the driving he had done).
  • Uber lets drivers make their own hours.
  • Uber handles all payments. No more carrying cash or dealing with credit card readers.

Is it any wonder that a former taxi dispatcher I recently had for a driver told me that for the first time, cab companies are needing to advertise they need drivers? He also mentioned that he knows some SF Taxi lots have as many as 30-40 cars a day now that aren’t getting taken out. Five years ago, that would have been absolutely unheard of. Today, it represents the beginning of the end for the cab industry.

So to crush the Taxi side of their competition, Uber is doing the following:

  1. Dramatically improving the work experience for taxi drivers (see above). This steals the employees right out from under the cab companies.
  2. Going to price war via UberX and specifically marketing that it’s “10% lower than Taxi prices.”
  3. Maintaining high standards for drivers. You’re fired at Uber if you drop below a 4.7 Star rating. This means that as Uber steals the best drivers from the cab companies, an increasing percentage of remaining cab drivers will be the smelly, violent, rude nightmare cab rides. This will not help their reputation or market share.
  4. Entering new markets as a Trojan Horse. Today, only 10 of the 40 markets Uber operates in have UberX. They first come in as a higher priced option of black cars, which have stronger legal standing and can be sold as less of a direct threat to cabs. Once established with a strong base of users, Uber can launch UberX. When cabs complain, there’s a strong user base to be rallied as public support for Uber (Travis’s go-to tactic) and pent up demand to be satisfied and taken away from cabs.

More than a one-trick pony

Rockefeller made his money initially simply drilling for oil and then soon thereafter refining it.  However, he soon realized he could make more money by building his own oil pipelines (thus no longer needing the costly railroad tycoons) and finding new uses for his oil (at one time gasoline was a waste product, then he met an early inventor of the first cars). Looking at Uber, you can see that same potential being realized.

Uber has already expanded their service offerings in various cities with the most diverse being in Paris:

Uber Paris Vehicle Options

Uber Paris Vehicle Options

As Travis recently said, “If we don’t give the consumer choice, the consumer is going to go elsewhere.”

At the same time, the pitch that Uber has for their long term dream is already leading to interesting experiments:

“We like to think of Uber as the cross between lifestyle and logistics, where lifestyle is what you want and logistics is how you get it there,” - Travis Kalanick

You can see this logistics play not just in how they deliver a car to a rider in an average of 3 minutes or less but in their experiments to deliver ice cream in 30 cities and BBQ in Austin. And as much as you may think they’re a publicity stunt, they were charging $30 in San Francisco for 4 basic ice cream truck items, so they definitely were profitable (what else would you expect from such a pure capitalist?). A brand with strong loyalty and a premium reputation stands to have great margins on everything they do.

So what’s in Uber’s future?

We’ve seen many monopolies before in our American economy, but never has anyone consolidated the transportation market like Uber is on its way to doing. Today, cab companies are generally owned on a city by city basis that puts them on a level playing field with their state and city governments. When Uber is finished putting the cabs out of business, they will suddenly have power in every major city they control. A city government against a multi-national, extremely profitable corporation may prove to be an unfair fight.

Travis may seem like a white knight for disrupting the awful cab system, but he may turn out to be a different kind of ruthless monster when he’s the one in full control based on what we’ve already seen from him and what Rockefeller did as he captured 90% of the oil market.

Based on this, here’s what I predict the future holds:

1) New taxes and regulations

In the end, no city, state or national government ever found a new industry they didn’t feel the need to write new laws and regulations for and to tax. I know Travis will fight this tooth and nail and it will likely use up some of the good will that the company has due to their great brand, customer service and flawless app performance. I expect the new CPUC regulations announced are just the beginning.

At the least, every city will be looking to replace any lost revenue they used to receive from Taxis. Should these regulations and taxes be enacted, I expect Uber will pass along any costs that are incurred from them and try to leverage their user base to complain about them to politicians as they’ve done many times before.

2) Uber will acquire or crush Sidecar in the next 12 months

Just like Rockefeller used to go to lesser competitors and show them his full power and offer them the option of join or die, I expect Uber to do this with Sidecar. Conveniently, they both will have Google as investors now, which should help facilitate a deal and signals an unlikeliness that Google will put more money into Sidecar. They would be wise to take such an offer as Rockefeller made many of his former competitors rich as Standard Oil shares skyrocketed in value. Those that didn’t take Rockefeller’s offer were driven to bankruptcy.

3) Violence will emerge between cab companies and Uber

I’ve heard a few stories about slashed tires and intimidated drivers in SF and LA. Given that many of the cab companies are run by individuals with alleged mob ties, it’s not unreasonable to believe that as they keep losing drivers and fees, they may turn to more than political pressure and legal routes to fight Uber. If this happens, I expect Travis will be extremely public about it and use his favorite weapon, the media and his loyal customer base, to decry such actions. The question is if any will come after Uber the company, not the drivers (let’s hope I’m wrong here). I’d have good security at the Uber offices if I were Travis.

4) New revenue models will emerge from Uber

On the positive side, I expect Uber to continue to do experiments like the Ice Cream trucks. I could see more food delivery, perhaps Santa suits for Santacon or a partnership with stores to pick up and deliver something you order. They could also go deeper on the corporate services side beyond their current employee perks system launched in February.

On the negative side, I expect that if Uber does reach full monopoly they’ll take advantage of it in their pricing not unlike their holiday surge pricing. The fact that they have so many passionate advocates for a premium brand will only help them in both cases; the margins will be great on future forays into other types of logistics or delivery, and any mistakes will have room for forgiveness (like surge pricing during natural disasters).

5) An acquisition bidding war between Amazon and Google

With the latest valuation being estimated at over $3.7 Billion, there are very very few companies that can still pay out a price to justify acquiring Uber. Google and Amazon both have good reason to be interested and have the financial standing to potentially do it:

  • Amazon: Just like Uber takes pride in its logistics efforts, Amazon does the same in shipping items around the world from their sophisticated warehouses. As they push for same day delivery, a service like Uber and it’s underlying technology would be invaluable. Jeff Bezos is listed as part of the Series B financing, which further demonstrates the potential interest level.
  • Google: Google has invested heavily in Google Maps both with their impressive redesign for iOS this year and the major acquisition of Waze, the real time traffic tool. Add to this their ongoing investment in self-driving cars and suddenly you can see a world where Google provides self-driving cars for the Uber service in the future. Google’s alleged investment in this round shows their deep interest in Uber and willingness to pay at a high valuation.

In the end though, Travis, with his love of Ayn Rand, does not strike me as someone who would want to sell to anyone at any price. Both Amazon and Google make potential excellent future partners and his unique vision for the world and approach to doing business seems best suited for the driver’s seat.

Rockefeller not only didn’t sell until he wanted to retire and focus on philanthropy, he vigorously fought the anti-trust efforts to break up his oil company (which could one day strike Uber if they truly dominate transportation). That sounds like just the path I’d expect someone as bold as Travis to follow.

As an entrepreneur and heavy Uber user, I’m excited to watch all of this play out. Given Travis’s brazen attitude and flair for theatrics, I expect this to be very entertaining ride for us all.

What do you expect the future holds for Uber and Travis?

Thanks to Hiten Shah and Ryan Durkin for reviewing this post.

How to Become a Better Leader Instantly

Whether building a career at a large company or starting your own, if you want to advance and grow, soft skills like leadership are just as important to develop as hard skills like programming languages and sales tactics. Despite being a species evolved to live and work in groups, most of us struggle to effectively communicate with and motivate others. This is unfortunate, given how important and helpful a skill it is to master.

I’ve been studying leadership for a while and there are many techniques for motivating and effectively working with others. Many take some practice and skill. Fortunately, there are a few things you can do to very quickly develop your skills, which I was reminded of as I was recently reading the excellent book, “Fierce Conversations: Achieving Success in Work and Life One Conversation at a Time.”

One tip in particular stood out as something I’d heard many times before and I realized it’s the single easiest, yet important tactic to learn:

Give specific praise regularly

Animal trainers around the world know the best way to train animals is through rewarding good behavior. Just think about the last time you were at Sea World and the seals and dolphins got fish and other treats after each trick they did.

While humans are much more complex creatures, we still like rewards, just often in a different form: praise. Because this praise is written or verbal, the key is to be specific.  Don’t just say, “Good Job.” Instead, you’ll want to pull out exactly what was good so they know to do it again. Some simple examples could be:

  • “Great work on the folder feature, Susan. I really like how you made your code clean and easy to follow with comments explaining each section of the code.”
  • “Your report on quarterly earnings was great, Tom. Your graphics were perfect for explaining to the board how we recovered from the rough month.”

After praise like that, I guarantee you that Susan will continue to comment her code and keep it clean and Tom is much more likely to keep investing time to make great graphics for his reports.

This type of praise is powerful for a few reasons:

1) People want to feel appreciated.

Assuming you like your job even a little bit, you want to do good work. There are parts where you’ll put in extra effort. People just want to be recognized for that hard work and that will motivate them to do more of it. Think back to a time someone thanked you for a great job on a project you slaved over for weeks. Give others that feeling.

2) The absence of praise will be felt.

When someone does subpar work and you give no praise, they will notice and want to work harder to seek your praise they previously enjoyed. On the other hand, if you don’t praise people regularly, they are less likely to continue to put in the extra effort on projects. We have all had those moments where we went the extra mile on something and were disappointed when no one noticed. Chances are, you didn’t do it again for that boss or coworker. Don’t be that kind of manager.

3) People want to be noticed.

Especially in the startup world, it’s easy to take great work from your team for granted. Everyone just ships feature after feature, marketing content over more content and keeps grinding. This is also why celebrating wins as a team matters; it’s an opportunity to recognize both the collective efforts of the team and specifically who made major efforts to help the team get there. This is the key to making people feel like they’re “part of something bigger” that draws so many to the lower pay and longer hours of startup life.

Can you remember the last time you praised each member of your team? Were you specific with them or just a vague, “Good job”?

This is just one of the awesome tactics you’ll learn in the book, Fierce Conversations. It covers many excellent topics and will help you understand how to have productive and often difficult conversations effectively with others in both your personal and professional life. I scored it a 9 out of 10 on my ratings scale and highly recommend it.

The Lean Startup Movement’s Guidebook: The Lean Entrepreneur

I was lucky enough to get an advanced copy of the Lean Entrepreneur* and have been reading it on my commute for the past few weeks. After having spent time reading many other Lean books and blog posts, I’m excited to see this book released. In the interest of keeping a review MVP, here’s why you should, and shouldn’t read this book:

Reasons to Read the Lean Entrepreneur:

1. You’re not fully convinced to use Lean.

This book is like an FAQ on Lean. It beats down all the stereotypes (like Lean is only for software) with specific examples and thoughtful explanation.

2. You want to hear real life case studies of Lean in action.

The authors went to great lengths to get great case studies from everything from hardware companies to commercial cleaning products to prove that you can apply lean to *any type of business*.

3. You want help evaluating how you’re really doing at being Lean. 

One of the best things about this book is that between the concepts and case studies are a ton of checklists that help you see if you’re really properly evaluating your company at each step of the lean process.

Reasons to Not Read the Lean Entrepreneur:

1. You are already a 100% lean practitioner.

I’ve been doing lean basically full time for 3.5 years now and I still learned a lot. You’re bound to learn a few new things.

2. You like detailed, helpful diagrams and pictures.

Sorry, I know we’re all supposed to love @FakeGrimlock, but I’m underwhelmed by his drawings. I don’t think his drawings added much to the book or were helpful other than to give the book a lighter, more accessible feel.

3. You were hoping for the nitty-gritty details of exactly what to do.

This book won’t help you write your customer development interview script (here’s a post for that) nor help you find the phone numbers of your customers. What it will do is answer the critics’s questions and get you asking the right questions about your business.

Overall, I thought this was a solid book that adds a lot to the conversation of the evolving Lean Startup movement. I read a lot of books and this falls in at a 7.5 on my rating scale.

It goes much further and deeper into how to approach actually doing Lean in your business than Eric Ries’s The Lean Startup book. I hope that some of the people at companies with case studies in the book will share some more tactical advice that didn’t fit in this book.

The Lean Entrepreneur came out today. You can dive into Lean best practices and get your copy here.

*Disclosure: Patrick Vlaskovits is a friend of mine and he asked me to review his book.

Lessons in Innovation from the Biographer of Jobs, Einstein & Franklin

Walter Isaacson has written the biographies for some of the greatest inventors of the last 300 years in Ben Franklin, Steve Jobs and Albert Einstein. He spoke at the National Book Festival in Washington DC and I serendipitously stumbled upon his speech on CSPAN2. It was so amazing, I wanted to share it all with you as I found it is on Youtube here:

I highly encourage you to watch the whole thing, but I wanted to highlight two things that stood out to me.

Simplicity is a spiritual quest.

Especially in the tech scene and product world, we talk about simplicity like a Holy Grail of sorts and with good reason; a truly simple product has many advantages in the market and a strong likelihood of success. I think Isaacson captured this very well in his talk when he said,

Walter Isaacson on Simplicity

Often I find myself getting caught up in building something that is infinitely flexible and covers a million use cases and it makes me forget the essence of what I’m trying to build.

Spirituality comes into play because this requires faith; I have to believe that by sticking to the core of what I’m doing and ignoring some attractive features, I’m building the right product. It also reminds me of the effort required to get there; the first few iterations are unlikely to get to perfection. Instead, it is the dogged pursuit of simplicity that helps find the essence of what I’m really trying to create.

Tying these concepts together, and sharing how Einstein and Franklin thought about simplicity in addition to Jobs is a fascinating insight only the biographer of all 3 could do.

You have to be YOU.

After a question from the audience at the very end of the video, Isaacson covers the most important lesson I think we all need to remember as we read all the tech blogs and study successful people:

“Don’t try to just copy any one of them. Biography is understanding our world, our values and how you might apply them in your life.”

No matter who I’m studying or learning from, I try to see what I should learn from them to build on who I am, not try to be them. I will never pull off the design instincts and asshole of Steve Jobs nor the curiosity and mathematical brilliance of Einstein, but I know I can learn skills and approaches from them that will make the best version of me.

My Philosophy on Reading Books

I read a lot of books. For the past 3 years, I’ve averaged finishing a book every 2-3 weeks (thanks to this post inspiring me). Through all this reading, I’ve learned a tremendous amount thanks to a specific philosophy I’ve had on what I choose to read.  Since I just published the organized list of all the books I’ve read and recommend, I wanted to explain how I arrived at this list. These are my strategies when choosing how and what I read:

  1. Only read for purpose – I read books on subjects I want to learn about (i.e.: non-fiction only), so reading is about education not relaxation or escape for me.
  2. Stick to highly recommended books – I ask trusted friends, mentors and observe leaders in tech for books to read. I hate wasting time on a bad book, so I work hard to ensure anything I read isn’t a waste. This is why I include a section in my books list on books not to read.
  3. Read to solve current problems or satisfy current interests - This helps me quickly apply whatever I read to challenges I’m facing in my work and/or personal life.
  4. Write in the margins – If I don’t write down the ideas sparked in reading, I won’t remember nor apply them. It also makes it easier to revisit concepts I found interesting in any book I’ve read.
  5. Read in small bites – I read when I’m on public transportation, which generally means 15-30 minute bursts. This ensures I have plenty of time to think about each concept I read about and absorb as much as I can. Credit to Leo of Buffer for expanding on this subject here.
  6. Share - When I learn interesting concepts or a great book, I share it. The subsequent discussion with others leads to even more learning.

How do you decide what books to read? What motivates you to read?