Scott Savage’s Blog

CNBC recently ran a rather patriotic “Keeping America Great” interview with Warren Buffett and Bill Gates. I don’t normally read much from these guys, but there was one comment from Buffett that really struck a chord for me.

BUFFETT:  First of all, I’d say marry the right person. [LAUGHTER]  And I’m serious about that.  [APPLAUSE]  It will make more difference in your life.  It will change your aspiration, all kind of things.  It’s enormously important who you marry.  Beyond that, I would say that do what you would do if you were in my position, where the money means nothing to you.  At 79, … I work every day.  And it’s what I want to do more than anything else in the world.  The closer you can come to that early on in your life, you know the more fun you’re going to have in life and really the better you’re going to do.  So don’t be driven where you think the last dollar is presently or anything of that sort.  And then also go to work, if possible, for an organization or an individual that you admire.  I mean I offered to go to work for Ben Graham because there was nobody I admired more in the business than him.  I didn’t care what he paid me.  When he finally did hire me in 1954, I moved from Omaha to New York and I didn’t know what I was getting paid until I got my first paycheck.  But I knew I wanted to work for Ben Graham.  And I knew I would jump out of bed every morning and be excited about what I would do and I would go home at night smarter than I was in the morning.  Go to work at a job that turns you on and a person that turns you on and institution.  [APPLAUSE]

I am determined to base the decisions I make  this year on this quote.

From MarketingCharts.com

Online media is growing up. All the big media players (News, Fairfax etc.) are currently fighting it out with the new kids on the block, online pure plays (Google, Microsoft, Realestate.com.au etc.). The prize is the rapidly growing pool of online advertising revenue, predicted to pass the US$50 billion mark next year. Historically the provider with the most content has attracted the most consumers, in turn attracting the most customers. Eventually this network effect lead to breakaway market leaders establishing dominance and gradually raising the market barriers of entry. Holding all the content was a licence to print money.

Slowly general search tools like Google and Bing, as well as vertical specific search sites like Zillow, started gaining momentum. They established themselves as “middle men”, generating advertising while helping people more efficiently find the content they were looking for. They were not interested in hosting or contributing content, but rather focused on the delivery of that content. They realised that the front-end distribution is where the money is at, not at the back-end creating content. Google in particular understands this, and the publishers do not. The publishers hate that Google News provides a beautiful user interface to access their content easily and for free, yet despite their threats they do not block Google’s bots because they need a strong online delivery channel and half their traffic comes from search engines.

This style of reluctant symbiotic relationship also appears outside news content, it is extending further into real estate and videos to name just a few. Microsoft are attempting to flip the relationship by making Bing Video index Google’s YouTube content and Google Maps is indexing real estate content.

The big media content creators have recognised one thing at least, for the partnership to work each participant has to have a stake in it’s success (or failure). Licencing deals, share stakes and other structures are occurring left, right and centre as the various players align themselves. This “sorting out” period has amusing side effects, like media companies being on both sides of the legal fence. Eventually the flurry of deals will subside and the media companies will realise that YouTube is no different to their old printing press and delivery operation, it is a necessary distribution channel that takes a commission. If your printing press operator decided to make your boring black and white rag and turn it into a glossy high end publication that successfully retailed at twice the price (despite having the same content) then good luck to them, in the end you benefit from a more valuable distribution channel.

For now we are faced with more sabre rattling by the media companies, constant partnership renegotiation’s and declining print revenues. As with any market forces, the digital media market will eventually reach an unsteady equilibrium. Some sort of duopoly with Google/Microsoft as the distribution channels, and the old media companies aligned behind them as the content creators. It is unlikely that the print rivers of gold will be seen in one place again, but sharing these rivers over a wider and more competitive landscape will benefit consumers. Sooner or later content producers will realise that revenue is a balance between consumption price and volume, withholding content only encourages piracy and other forces that undermine their progress to a fair and efficient new distribution channel.

Seth begins his speech by saying he is going to go fast. I was initially sceptical, but now I have watched this video three times and I am still finding resonating ideas within it.

A good product should sell itself. Good products will get recommended. A personal recommendation is more valuable than a website lead. And so the circle continues. Now back to watching the video again…

How many companies clearly define their culture and HR policy in a public way? Jack Welch of GE famously held the view that the bottom 10% of the company should be fired every year, but in the days of labor shortages that would be frowned upon. That’s why it was refreshing for me to see this slideshow from Netflix. Have a read for yourself, although be warned it is quite long and detailed:

So what do I think? Firstly it is awesome that a company publishes this kind of presentation, everyone should be proud of who they work for and have no problems articulating that to the public. I don’t think there are many companies who are so upfront, open and honest about who they are (in many cases even being aware would be a great start).

In particular I liked:

• “adequate performance gets a generous severence package” - provocative but also highly motivating to myself at least. There is nothing better than being in a team where you know everyone cares as much as you do, and nothing worse than putting your heart into something that sits in someone’s “to do” list.
• Brilliant Jerks -  the cost to teamwork is too high. I have had managers who make excuses for a brilliant jerk because they hate the thought of rehiring for a person that is currently letting them put their feet up.
• Rare Responsible Person – Doesn’t wait to be told what to do, Never feels “that’s not my job”. Everyone should pitch in, no-one should feel territorial. If I am struggling I will put my hand up and ask for advice, and I expect others to do the same and welcome my input.
• Value simplicity – No-one can manage lots of small products successfully. Focus on what works, and keep making it work even better.
• High Performance People make few errors - Hire well, trust your people to do their job. Don’t cotton wool bad people and have checks and balances to make sure they don’t do damage. That adds huge amounts of waste and overhead.
• Control through context- Managers should communicate a clear strategy and whatever happens within that strategy is up to the employee.

What did you get out of it? Does your company even have a policy or statement on culture?

I was looking for good Product Management reading material, and was referred by a friend to the book “Getting Real” by 37Signals.

What did I like?

This book gets straight to the point, there is no bullshit whatsoever and it makes no apologies for that. Equally there is no room for bullshit in the product; decide a goal, keep the budgets tight, keep the team tighter, listen to the customer (at least when they bang down the door) and just execute the hell out of what you are doing.

This book is a reminder that building a product is not just about technically executing. Many usability, sales, HR and marketing issues must be addressed to deliver a successful, well-rounded product. You need to reflect this well-rounded nature too, everyone should take support calls, think of usability, write blog posts etc.

What didn’t I like?

There are however some minor things I don’t agree with. I think exit surveys are valuable, there should be a formal suggestion gathering and prioritisation process and there is a limit to how much information you should place online. If you have a mass appeal, generic app then I think these rules are a little different to someone developing a niche app for a specific market. Apart from these few items, I was nodding the whole way through the book.

Conclusion

This book embodies the entrepreneurial spirit of today’s web app developers. Put your heart into the app, and then put your app out for everyone to see. If you are a motivated person who wants to focus your vision and energy, then this book is for you.

PipeNetworks have survived ANZ pulling the plug on their finance and have emerged from a share trading halt to announce that Project Runway is pushing ahead. It is great to see that even in tough financial times that profitable and well founded projects can still get through with smart companies banding together. It represents more than just a great opportunity for these companies though, overseas traffic charges are one of the major things keeping a floor under Australian internet prices. In fact it can be argued that cheaper overseas traffic will have more effect on Australian internet prices than the NBN project. Maybe with Project Runway, an NBN without Telstra and a canning of the internet filtering scheme we can actually get somewhere. It’s Christmas time, time to wish for miracles.

As far as I am concerned, having a website without having a CRM/sales system behind it is like having a shopfront with no shop. People can view your products, but they can’t offload their hard earned cash. Why do that to yourself?

Unfortunately it seems that companies need to literally see people banging on the store door (via hits, emails, phone calls etc.) before they will open the store. How many customers have you missed in that time? You’re paying for the store location, so why not fit it out inside?

Salesforce announced at Dreamforce that they are taking this view to another level. Your website should be linked into the core of your company. Every process your company runs should be accessible (and deliver value) to the customer at all times. Zdnet give it good coverage, but I think Smoothspan explains it best. The basic premise is know your customers, and then deliver the best experience you can to them. CRM’s have always tried to get close, but it requires a company to be completely online and committed.

It is all happening in the world of Australian Online RealEstate tonight! The Realestate.com.au board have announced the immediate departure of their long serving (since 2001) CEO, Simon Baker. This was a huge surprise, although the fact that he sent out about 50 LinkedIn recommendation requests to people (myself included) late Friday night should have been a bit of a warning. Anyway at least Domain isn’t having the last laugh, their website is currently completely broken, simply stating that “an unexpected error has occurred”. I would say their support team are going to wake up to hundreds of thousands of error emails and a big headache tomorrow.

Some would say this is the silver lining to a US economic slowdown, a clean out of global mega-companies that prevent local competitors from entering the market. Starbucks seems to be the first to suffer publicly, with an announcement to close 61 of their 84 stores in Australia. The few stores that they are keeping (for now) are listed in this PDF. Looks like they are focusing on their more profitable inner city markets in Sydney, Melbourne and Brisbane.

Some commentators have had very strong words for Starbucks, particularly Chris Berg from The Age. He wrote an article putting Starbuck’s demise down to the vibrant coffee culture already present in Australia. It seems to me that Starbucks failure is a case of producing a sub-par product, rather than any local competition. Gloria Jeans for example is just as commercialised as Starbucks and has continued to grow rapidly over the last six months, but maybe they get a bit more local help.

Hopefully we are going to see more cases where fundamentally better products prevail. One could argue that GM and Ford are heading down this path too. I am definitely not anti-american either, I would love to work in the US at some stage in my life. I am simply an engineer, so I like to think that the best product will win at the end of the day; regardless of the marketing and sales pitch surrounding it. I have been in business long enough to know this isn’t always true, but cases like this make me feel less naive and more motivated to put that extra bit of effort into everything that I produce.

A company culture is something that is very difficult to describe, let alone create. One of the blogs I read, systematicHR, posted up an interesting response post which covers the top-down flow effect that a CEO has on company culture. I think the closing lines sum it up very nicely:

The CEO absolutely defines culture whether they intend to or not.  HR then further defines what that strategy will look like.

So what are some ways that a CEO can do this? Well I like realestate.com.au’s approach of having a CEO blog and bi-annual company conferences where the CEO presents the company achievements, strategy and goals. Just engaging in this open communication helps create an open culture, but the real key is in the actual organisational strategy. As the post says, this strategy will directly dictate culture and will change depending on the nature of the business.

Having worked in a sales organisation almost 5 years I would say there is a very fine line between a competitive and a demoralising organisational strategy (and therefore company culture). The nature of sales people and cycles makes this line a fluctuating target. The two biggest things I believe are:

• Consistency – client spread, discipline, sense of fairness
• Communication – Competitive but still collaborative (teams help)

In the end I guess the key is to clearly communicate and inspire passion for what you do. People will pick this up whether it is active or passive and positive or negative. The moral of the story is be aware of your influence.