Month: December 2004
As everyone, we’re completely stunned and overwhelmed by the accounts of the tsunami tragedy. Tim Miller pointed me to fellow Boulderite Scott Raderstorf’s blog on his experience at the Golden Buddha Beach in Bangkok. Scott’s photo’s and account of the experience are humbling. Fortunately – unlike so many others – they are safe.
Ah – two of my favorite topics – running and entrepreneurship. Lucy Sanders – the executive director of The National Center for Women and Information Technology – sent me an article on a study from Ball State University that found entrepreneurs who ran regularly were more successful in sales, external goals, and internal goals. The study also found that regular weight training was positively correlated with success on external and internal goals (but not sales).
Time for a run.
Amy gave me an awesome coffee table book yesterday called Family Business. I devoured it last night after dinner. She told me it was a Christmas present – if all Christmas presents are like this I might actually start liking Christmas.
Family Business is a story by Mitch Epstein of the Epstein Family businesses (retail furniture store and real estate) in Holyoke, Massachusetts. Mitch tells the story in both words and amazing photographs of how the American Dream ultimately failed Mitch’s father Bill Epstein. It is simultaneously heart warming and heart rendering and probes family, business, and a father-son relationship in unique ways.
As I read the book and looked at the pictures, I kept being reminded of my dad’s father Jack Feld. Jack was the patriarch of our family as I grew up – our own personal Jewish Archie Bunker. Jack died a few years ago but I could easily see Jack in Bill Epstein.
As a kid, we used to trek down to Ft. Lauderdale, Florida on a regular basis to visit Grandpa Jack and Grandma Pauline. I was the oldest of the grandchildren (there are four men – me, my brother, and my two cousins) so as the oldest, I got the best and the worst of everything. Last weekend when I was in Aspen with my Uncle Charlie, his kids (Jon and Kenny), my brother Daniel, and our wives, our talk turned to Jack Feld stories one night. My contribution included reminding everyone how – when Jack got home from work at his clothing factory – he’d always kick me out of his chair, which happened to be the one comfortable chair in the living room.
Jack ran a clothing business all of his life. I don’t remember what it was like when he lived in New York (I was too young), but I visited his factory in the worst part of Miami several times. His company was a wholesaler – he made the stuff with sequins and pleats that was bought by clothing manufacturers to turn into retail goods. We used to joke that it was the crap you bought off the rack – he’d remind us that it was “real clothing by the big guys.” His factory was in a warehouse on a run down block that I was scared to walk down alone. There wasn’t a machine in the building made after 1960 (“I don’t trust anything that was done after 1959”) and the air conditioning consisted of a series of huge exhaust fans hung at the top of one wall. Jack got up every day of the work week (Monday to Friday), drove 30 minutes from his house in Hollywood Hills to his factory, worked until 3pm, and came home by 3:30pm. Every day. No matter what.
I was always surrounded by business as a kid. Jack had a company. My father was a doctor who had his own medical practice. He and my mom created a number of companies – Feld Properties (to manage their real estate investments, including a bunch of rental houses my mom managed), Feld Investments (presumably to manage their investments), and other “Feld X” companies I can’t remember any more. It’s probably no huge surprise that my first company was called Feld Technologies (named after my dad – of course) and my Uncle Charlies’ company was named The Feld Group.
Jack always loved to give advice. He lorded over us and encouraging us in his own special and unique way. As a 15 year old, his advice pissed me off, although I never had the courage to say some derivative of “Grandpa – leave me alone” (e.g. “go screw yourself”, or our family favorite “go shit in a hat.”) As a 25 year old, I remember sitting in full attention, soaking up every word about his business, what he did,what he learned, and what I should do.
At some point, his son the doctor (my dad) and the typhoons (me and Charlie who had our own businesses at the time – we were never tycoons – always typhoons presumably something to do with hot air) became the center of his business attention. He was endlessly proud of us, which was often motivating but always endearing.
Growing up, the idea of a family business was central to my way of thinking. I was surrounded by self-made people who created businesses out of nothing but ideas and hard work and who dedicated much of their life to the success of their work. When I started my first company at 19, it never occurred to me to get a job – I just did what seemed to come naturally to me. Twenty years later, as I turned the pages on Family Business, its easy to remember where this came from. As I read, I could hear Jack’s words. As I looked at pictures of Bill Epstein, I could almost see Jack if I squinted just right.
Mitch Epstein – thank you for creating this wonderful book and giving me these amazing memories. Amy – thanks for the Christmas gift. And Jack – I miss you.
Amy and I go out together for “life dinner” on the first day of every month. We spend dinner reflecting on the previous month, thinking about the month to come, and grounding ourselves in our relationship in the midst of our active lives.
A friend of ours sent the following list of questions that he and his wife sit down and talk through every year. It’s a great list and will be the subject of at least one dinner next week (ok – the reading question might need its own evening.) I thought it was worth sharing.
- What were the significant events of the year?
- What were my accomplishments?
- What trips did I take?
- Who was I closest to?
- What significant reading did I do?
- What gave me joy?
- In what ways did I grow?
- What personal gifts did I use to serve this year?
- What did I learn this year?
- What in my life is dying (literally or figuratively)?
- What in my life is rising (literally or figuratively)?
- What are my goals for the next year?
Charlie Feld’s latest leadership article for CIO Magazine is about How to Inspire Your Team. It’s a quick read that explains the value of trust (table stakes – you’ve got nothing without it), hope (fuel for achievement), enjoyment (sustenance for high performance), and opportunity (individual growth is required for people to work at peak levels.) It’s well worth reading and sending around to your leadership team.
I’m been in Hotchkiss, Colorado with Amy the past few days enjoying the run up to Christmas. Amy has family here (on the western slope of Colorado near Grand Junction) and we’ve been hanging out in this town of 800 doing what you’d expect.
It’s pretty useful to head over the continental divide every now and then and remember what small town America is like. The houses do NOT have high speed Internet (so – I’m typing this at Weekender Sports – the local sporting good store owned by Amy’s uncle – surrounded by all the snowmobiles and guns one could ever want.) I managed to find the local coffee shop which does a nice Starbucks imitation, but I’m yet to find any democrats. That said, the people here are delightful and I always am welcomed as family, which takes the edge off this cranky jewish boy at Christmas time (years of therapy haven’t managed to cure me of my annoyance at not getting gifts on December 25th and I’m too stubborn to just accept fate.)
So – I’ve been reading.
I started with The Runes of the Earth – Stephen Donaldson’s newest book (book seven) in the Thomas Covenant Chronicles. This sent me back to eight grade sitting in study hall devowering Donaldson’s books between fantasizing about how I was going to kick all my friends butts at Dungeons and Dragons. Donaldson has mastered the epic fantasy – I’ve read them all – and I think he’s the best (Zelazny comes in a close second for me.) Thankfully Donaldson decided to write “the final trilogy” – this is the first book and it lived up to my expectations. If you are a fantasy fan, give Donaldson’s Thomas Covenant Chronicles a try – but start with the first one – Lord Foul’s Bane
Next up – Wil Wheaton’s magnificent Just A Geek. I’m not a Star Trek: The Next Generation fan, so I missed the whole Wil Wheaton / Wesley Crusher thing. I saw Wil’s book referred to by enough bloggers that I grabbed it one day just to see what it is about. Wil is great – he mixes a real book, his blogs, and his personal evolution in a captivating, hilarious, and endearing way.
Since Wil managed his own Movable Type-based web site, I decided I should learn PHP (since I recently PHP-enabled my site.) PHP 5 was a good start and – as expected – PHP is pretty simple, but extremely powerful. Now – I’ve just got to figure out what I want to do with it.
Jenny sent me the publishers proof of Leg The Spread. This is a fascinating romp through the Chicago Merc (and other Chicago exchanges) from a woman’s point of view. While it reinforces a truism that male traders are generally disgusting creatures, it’s extremely well written, gets underneath the personalities in the trading pit, and highlights a handful of incredibly powerful women and how they’ve adapted and succeeded in a male-dominated, testosterone-laden scene. I’ve never been to the Merc, but whenever I see it on CNBC, I’ll think of it differently.
I find online blog-related survey’s peculiar since they have so much selection bias built in (e.g. the bloggers are going to be the ones responding, who pass around the surveys, just like I’m doing here.) However, as my mother says, I’m shameless, so it’s with little trepidation that I make it know to readers of my blog that Fast Company is doing a survey on best venture capital blogs. Vote early and often.
In my first company (Feld Technologies), we wrote customer software for medium sized businesses. This was back in the late 80’s / early 90’s – pre client/server (remember dbase, Paradox, Access, Clarion, and DataFlex.) It was hard – and our goal – as I’ve said before on this blog – was to suck less.
I just had an email exchange with one of my companies where I said “if this takes ZERO engineering on our side other than packaging and support and ZERO licensing fees” then I’d support chasing after a specific opportunity in the near term. The answer back was “there is potential for SOME engineering.” The debate ensued.
At Feld Technologies, I used to walk down the hall and ask folks “how things were going.” The most common answer from our consultants and engineers was “OK.” After a while, I realized OK could mean anything from “it’s great – I’m on plan, on budget, kicking ass, and feeling good” to “my life sucks, I just broke up with my boyfriend, the client is a shithead, the last build is completely broken, and I want to kill Joe because he’s such an asshole when he gives me feedback on my code.” SOME is similar – it could mean “all I’ve got to do is spend an all-nighter and all is well” to “it’ll take our entire engineering organization the next 12 months.”
At Feld Technologies, we outlawed the word OK. Whenever someone used it, a sit-down meeting was generated to find out what was really going on. SOME – and plenty of other words – are the same. Outlaw them – don’t make decisions based on vagueries.
I was at a Rally Software board meeting where we spent a chunk of time finalizing and approving the 2005 operating plan. A big part of the discussion – not surprisingly – was on the sales ramp and the corresponding expense base (and timing of opex growth throughout the year based on a prediction of sales growth and performance.)
Rally started shipping their product in mid-2004. So – 2005 is their first full year of product ship. They have a nice, active customer base that is growing as expected. The growth curve is ambitious (but achievable) for 2005 – f they make plan, they’ll have a great year. However, their operating expense ramp (pre-board meeting discussion) assumed they made the sales plan. The guys running Rally are responsible and know how to sandbag a plan, so we’re confident that they won’t pull the trigger on hiring if they don’t see the sales ramp happening. The going in proposal (and plan) assumed they hit their numbers relied on management backing off hiring if they missed their numbers.
I’ve been involved in over 100 companies. None of them ever have made their operating plan on their first year of product ship. Occassionally they outperform, but they almost always underperform for some reason. The reasons are often logical and non-fatal, but the dynamic that gets created is one where the business is always “behind plan.” This sucks.
I made the strong point that I actually care LESS about “making our 2005 revenue plan” then I do about learning why people are interested in what we do, why they turn into real prospects, why they become customers, and why they buy more stuff from us. I know – with certainty – that our 2005 revenue forecast is wrong – we just don’t have enough data to have any precision on it. So – I want to learn the “why” in 2005 – not that “what.”
We do have a sales force to comp, a team to motivate, and a plan to achieve. So – the “what” is important. However, in my experience, the way to calibrate things is to set up the operating plan so you are in a position to increase opex as you are successful vs. having to back off spending (or hiring) if you fall short of plan. I’d rather go to a board meeting mid-year where the management team says “we’ve hit our revenue ramp so far this year so we want to pull some head count adds forward” vs. the meeting that says “we missed our revenue ramp so we’re holding off hiring folks in the plan.” The nuance is subtle but the dynamic is important – as you succeed, you get to apply more resources; if you don’t reach your goal, you haven’t assumed more resources (e.g. we can’t hit the goal because we need the resources.)
It also reinforces the focus on the “why.” If we fall short of plan, we’ll focus on “why.” If we exceed plan, we’ll rejoice, talk about “why”, and add more resources. However, we won’t spend a lot of time agonizing over “what we should do because we missed plan.”
The first full year of product ship for a software company is a very defining year. I’ve seen way too many of my VC cohorts believe that the operating plan and forecast is gospel and spend all their time in year one of product ship (and usually year two of the business) focusing on the quantitative financial metrics rather than understanding how things actually work in the business. Financial planning is imprecise early in a business – a smart executive team understands this and sets the right expectations and parameters around it.