The switch (2)

“What am I hoping to get?”

Once we’ve admitted to ourselves that we’re doing our work (at least partly) for ourselves, we can think more clearly about our motives by asking “What am I hoping to get from doing this?”

And we’re probably hoping to get several things: the knowledge that we’ve helped someone, the satisfaction of a job well done, that we’ve contributed to solving a problem, or made things a bit better. We might also be hoping to get paid, to be liked and appreciated or admired, to do something we enjoy, or be in a particular place, or spend time with people we want to be with.

Once we’ve uncovered these sources of motivation, we can think more clearly about how we feel about our work and people’s response to it.

“I want to make a contribution”

… is a fine motivation. The next questions are “Who is it for?” and “What do I want to give?” (coming soon).

“I want to be appreciated and admired”

… are motivations that we’re less proud of, but it does us good to notice and admit them, because they’re usually there.

It can be helpful to think about the causal relationship (if any) between these motivations and our contribution. We want to be admired on the basis of our contribution, be it through our professional work, or our kindness as a neighbour. I’m reminded of Adam Smith’s saying:

Man naturally desires, not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love.”

Adam Smith – Theory of Moral Sentiments

This is to say that we want genuine and deserved affection from the people we serve or work with, not wrongly-placed affection (which makes us feel like a fraud because we don’t deserve it).

Recognising this lets us focus again on the people we seek to serve, and on contribution. We start thinking “If I contribute my skill / care / art / humanity in a way that helps people, I’ll be appreciated. If I don’t, I don’t want to be.”

Thinking clearly about this is a step towards freeing ourselves from feeling hard done by or under appreciated – we’re no-longer doing our work for praise or affirmation (Seth Godin points out that there’ll never be enough of this), but because we want to make a contribution, with appreciation as a byproduct.

And we can go a step further: if we only wanted to be appreciated for our contribution, and we feel that we’ve made a contribution but aren’t appreciated or recognised… does it matter?

“I want to get paid… and maybe enjoy the buffet.”

Can go either way. Do you want to get paid through the nose for doing little work? Then you’re not working with contribution in mind, and you’re right to feel uncomfortable.

Do you want to get paid enough that you can keep doing this? This may be a lot or it may be a little depending on your circumstances. You may need to charge quite a lot – it might feel like a lot when you factor in fair wages, health insurance and pensions for your team… But you’ve made the switch from focusing on money to focusing on contribution, and on keeping on contributing.

It’s possible, of course, that there won’t be a buffet, and that people won’t pay you as much as you need or hope for. For one reason or other, your contribution isn’t worth as much to them as you think it is. You may need to change what you do, or change the story, or change your audience, or change who’s paying… and if you still can’t find a way, remember that you’re focusing on contribution, so the question becomes: “How are you going to find a way to do it anyway?”

Your business model might be “I will work a day job and do this for almost nothing,” because you’re doing it to make a contribution. Which is hard, but possible. There isn’t a necessary connection between the work you want to do, and getting paid ‘enough’ – but by looking at things the right way you might just find one.

Marc Andreessen: the test

More from Marc Andreessen’s brilliant interview on The Moment with Brian Koppelman. This time: how breaking into the network in order to get funding isn’t so much a symptom of cronyism as a test of fundamental attributes that a fundraiser will need to be successful.

Marc: In the financing business, like, we are dying to finance the next great startup. Like, people talk about like venture capitalists; it’s you gotta run on these gauntlets to do it or like it’s so, you know, they fund all this…you know, we’re dying to fund the next Google. Like, we can’t wait. So just for god’s sake, figure out a way to build it and bring it to us. Please!

Brian: Right. Though, to get to you, somebody has to be credibly recommended to you.

Marc: Okay, so then this gets to a concept that I talked… So this goes directly what we’re talking about. So you described the process of getting you to read somebody’s screenplay. And basically it’s they have to be a referral. There should be some sort of warm referral.

Brian: Either a referral, or the only other way is over a period of time, you’ve impressed me somehow yourself.

Marc: Yeah, exactly right, independent of this specific thing that you’re trying to create. So, it’s sort of a very similar thing in venture, which is, I mean, there are certain people where it’s just like, the reputation precedes them, and they want to come in to pitch us, we’re gonna take the pitch. And some of those people, by the way, you discover on Twitter. Like, so that’s a real thing.

But more generally, it’s a referral business. And I figured this out early on, when we were starting, I talked to friends of mine at one of the top firms in the industry that’s now a 50-year-old venture firm, one of these legendary firms and they said, in the entire history of the venture firm, they funded exactly one startup pitch that came in cold, right, over 50 years. Now, they funded like a thousand that came in warm and they funded one that came in cold.

And so anyway, so that’s like, okay, well, again, isn’t that unfair? Like, okay.

So that’s why I get into what I call the test, with a capital T, The Test. And The Test is basically, the test to get to us, to get into VC is can you get one warm introduction? Just one. And in our world, you know, your world is agents or whatever or other creatives — in our world it’s an angel investor, it’s a seed funder, it’s a professor, it’s a manager at one of the big existing tech companies, right?

Brian: Someone you think is smart.

Marc: Yeah, somebody I think is smart.

Brian: And knows people.

Marc: But there are thousands of those people out there who I will take that call for.

Brian: Like, I could call you and tell you, but somebody… By the way, I won’t. Let me just say, clearly, I will not!! <laughs> But you have this world…

Marc: You could. Somebody, like, if a director of — I don’t know, there’s like, 1,000 executives at Facebook; Facebook is like a 40,000-person company, it has like, 1,000 executives at Facebook in decision-making capacity — if any one of the thousand calls up and says, “I got this kid I think you should meet.” It’s like, “Yes, I’ll take that meeting.” So it’s like, and again, it’s just one, right?

And so the test is, can you get one person to refer you, right? And it’s like, okay, like… think of the number of ways you could get one person to refer you, you could go get a job and you could go impress a manager and then that manager makes the call.

Brian: That is an incredibly good test, by the way.

Marc: And if you can’t pass the test, The Test, to get a warm inbound referral into a venture firm, then what that indicates is, you are gonna have a hell of a time as an entrepreneur. You are gonna hate being an entrepreneur because guess what you have to do, once you raise money. We’re the easy — I always say like, we’re the easy part of the process.

Once you raise money from us is when the pain begins. And the pain is trying to get other people to say yes to you. The pain specifically is trying to get people to work for you. And they all have choices, right? And so you got to convince them to come work for instead of somebody else; to try to get a customer to buy a product, and the customers are overwhelmed with new products they could buy… and so to actually sell something to somebody. And then at some point, you’re gonna have to raise money again, right? And you raise money from new people each round. At some point you’re gonna have to go get somebody else to say yes.

And so, if you can’t get a warm inbound to us, how are you possibly going to be able to function in the environment in which you’re now gonna be operating, where you’re gonna have to get all these other people to do stuff for you. And so that’s the thing.

Marc Andreessen and Brian Koppelman

Byproduct

Tobi Lütke (@tobi) is the founder and Chief Executive Officer of Shopify. In 2004, Tobi began building software to launch an online snowboard store called Snowdevil. It quickly became obvious that the software was more valuable than the snowboards, so Tobi and his founding team launched the Shopify platform in 2006. He has served as CEO since 2008 at the company’s headquarters in Ottawa, Canada.

Intro to Tim Ferris Show Ep. 359

Incredibly useful things are often the product of doing something else:

  • WD-40 was first intended as a water-displacement compound to protect missiles from corrosion
  • Twitter started life as an internal messaging service at a podcasting company
  • CMOS censors – the camera on a chip that are used in most digital cameras today – was developed by NASA as they tried to shrink cameras for interplanetary travel (but they didn’t invent velcro)
  • Amazon Web Services (which probably runs a lot of the websites you use) grew out of Amazon’s own internal systems

There are thousands more – share yours and I’ll add them to the list.

This is personal

We’ve experienced this first hand at the literacy charity I work for. The levelled early-reading books that we developed for use within our own program turned out to be a scarce and valuable resource in Indonesia – so now we part-fund the program by supplying these to others… and our books have improved as a result.

The point

There are several points here.

  1. Serendipity plays a huge role in everything – some of these are intentional, but many are lucky mistakes…
  2. But serendipity happens to people who are doing things. Start now and start small. (We started selling our books after a chance meeting with someone from another organisation – but we did have the books).
  3. It seems to happen often to people who make a tool that meets their own need. This is partly because we make better dishes when we eat our own cooking. Tools are usually more easily repurposed by others (e.g. the development of clinical ultrasound) than products to be consumed.
  4. Tools to make tools (as in the case of shopify) have even more potential.
  5. Tools usually get better – more refined – when they find a market.

To do

  1. Business Model Generation (amazon link) is a great jumping-off point for thinking about this. Either start with these short clips, or this in-depth video.
  2. Look at your organisation (or yourself), and see where, in the process of doing what you do, you’ve made something (a tool, including documents and processes) that could be useful to other people.
  3. Ask how you could be generous with it – share it freely or for the price that makes it possible to share it again…
  4. Think about the wrapper – would people welcome training and support to use it well? How could sharing it improve it – would open source or creative commons licencing help?
  5. The next time you make a new tool or process, consider documenting how you did it, and the standards that you’re working towards. This will make your work better, and might result in something else that’s useful to others.

Strategy: from ideas to value propositions to business models

Ideas are easy. Ideas are free, they’re everywhere. The hard thing is turning ideas into value propositions that customers want, and business models that can scale.

How many projects do I need to invest in to create the next growth engine?

It turns out, you’d actually need to invest in 250 projects. You start with small bets first, and then gradually you filter out those ideas that don’t work, not based on a beautiful powerpoint presentation but based on evidence from the market. And gradually you’ll get to those that win. So the big lesson here is that you can’t pick the winners. You need to invest in “the losers”.

Where do I take this data from? … If you look at early stage venture investment, which is a great proxy, 65 percent of all ideas fail. 25 percent return a little bit of capital, so you invest 100 you may get 500 back. So where do the outliers come from? It’s from a small number … it’s basically four out of a thousand, or one out of 250 [that provide massive returns].

So if you want growth to happen, you need to create the playground, the boundaries, for these ideas to emerge. You need to allow people to experiment and have projects in parallel, so that you can win. That’s what strategy is about: creating the conditions for ideas to emerge. It’s not “hey this is a good idea, we make a big bet, and we execute.”

There are only a few companies in the world that have created these conditions, and it’s not a miracle or a coincidence that Amazon has grown so quickly, because when you have a leader who says “Amazon is the best place in the world to fail” and he admits that “invention and failure are inseperable twins,” you have a completely different culture for those ideas to emerge.

Alex OsterwalderGlobal Peter Drucker Forum 2018

GNU-GPL – a base of code

Richard Stallman famously wrote the GNU GPL, which is a license based on copy-left, not copyright. His position is the freedom to work with computers and work with software and work with software is hindered by copyright.

That in fact these are useful tools, and there are people who want to make useful tools and remix the useful tools of people who came before. Everything you use in the internet – that website that you visited that’s running on Apache, that email protocol, you’re able to do it because so many other entities were able to share these ideas.

So the way copy-left works is that if you use software that has a GPL license to make your software work better, it infects your software, and you also have to use the GPL license.

So if it works right, it will eat the world. So as the core of software in GNU gets bigger and deeper, it becomes more and more irresistible to use it. But as you use it the software you add to it also becomes part of that corpus.

And if enough people contribute to it, what we’ll end up with is an open, inspectable, improvable base of code that gives us a toolset for weaving together the culture we want to be part of.

Seth Godin Akimbo, November 21 2018 – Intellectual Property

An open, inspectable, improvable base of code.

For software.

For tools for making software.

How about for educational outcomes? For assessments?

For a set of tools and resources for running an organisation?

Show me the money

Love it or loathe it, you’ve got to know where the money’s going to come from, and where it all goes.

Get it right from the start – it’s essential to the health and credibility of your project or organisation.

It also works like an extra sense, helping you spot trends, opportunities and issues earlier than you might have otherwise.

Financial Intelligence, Revised Edition: A Manager’s Guide to Knowing What the Numbers Really Mean by Karen Berman and Joe Knight is a really great place to start.

Bootstrapping the non-profit organisation Rule 6: Scale is not a Reward (3)

This is the sixth-and-third post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

So what do finding the right size for your organisation and the Free Prize Inside approach to scale look like in practice?

Here are two examples from the charity I work for.

Scale and the right size

At the charity I work for, we produce graded reading books to support our literacy curriculum. These aren’t available elsewhere in Indonesia – especially not ones that can be tightly integrated with the curriculum – so we need to make them ourselves.

The catch is, that there’s an economy of scale to printing books. The cost-per-book of printing small runs of books costs more than three times as much as if you bulk print a thousand copies. In fact, a bulk-printed colour copy of a book costs less to print than a black and white photocopied version.

If we want to bring price down and quality up, we clearly need to print in bulk. The catch is, this takes a significant investment, and the only way to make it worth it is if we have thousands of teachers using our books – at which point they pay for themselves.

So a few years ago it became clear that if we wanted to serve more groups at a lower cost (which is a key factor in more groups being able to afford our program in the first place), we need to be big enough to make bulk-printing and storing thousands of reading books a realistic proposition.

Scale and the free prize

The best example of this that I’ve come across is how Amazon moved into web services and cloud computing with Amazon Web Services. In short, they built a huge amount of electronic infrastructure for their own use, then realise that they could share it with others.

Amazon gained a new revenue stream, and companies could run their online infrastructure on Amazon’s servers for a fraction of the cost of making their own. This created huge value for everyone (prizes all round!) – Amazon got richer, and a whole generation of companies (netflix, godaddy, airtable, hubspot, airbnb, coinbase,wetransfer, dropbox*) was able to offer services as if they were already big companies, and grow with their customer base, rather than needing a huge capital investment up front.

And look what it’s done for them:

(source: geekwire) – supposed to be an embed

*This is not to say that AWS is the most efficient way to do this – apparently dropbox is saving a fortune by migrating off AWS. But AWS allowed them to test and validate their business model before they spent huge amounts on hardware.

Scale, the free prize and the non-profit (1)

The free prize here came when at the same time as we were working out the above, we used the Business Model Canvas to study our (charitable) business model. It became clear that the books were an asset not just to us and our users, but to many other groups doing education work across Indonesia. They wanted books. We sorely needed an income stream.

By selling our books, our partners gained a useful resource to add value to their work, and we gained extra income for little additional effort. Prizes all round!


Scale, the free prize and the non-profit (2)

The other example of this is a work in process – we’re looking at sharing our curriculum and training materials online under a creative commons (open source) license.

This supports our core activity – equipping teachers to teach reading effectively – by allowing our users to review training sessions and check their technique. It might also come in handy for training future partners.

But it will also be a resource for anyone working in the same field as us – something that helps others that we can make available at no cost to ourselves. Free prize!

And of course, the free resources also help potential clients to hear about what we do, and perhaps makes them more likely to use or recommend our other services too.

Bootstrapping the non-profit organisation Rule 6: Scale is not a Reward (2)

This is the sixth-and-half post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Scale and the Free Prize Inside

We left Rule 6 a little watered down: “Scale carefully and find the size that works for your organisation”.

There’s a type of scaling, though, that is a reward: when scaling in a particular way means that you make a free prize for someone (see also here).

There might be a scale at which you are able to give something to your customers (or to people who are not yet your customers – maybe even people who never will be your customers) at no real cost to you. Is there something you own that you can sell cheaply and easily – or give away – that adds tremendous value to them? Could you:

  • Share a resource or planning tool?
  • Grow big enough that you can offer a useful physical space to the community?
  • Thicken the network by connecting different groups of your users so that they can create value for each other – or for someone else entirely? How big does your network need to be to be useful?

If you’re working more in service of a vision (that is, in service of people) than profit, there is more than likely an asset of some kind that you already own that you can share with others.

You might also create a free-prize for your organisation by selling the asset in some way. This isn’t free, but if it allows you to serve more people in a way that creates value for everyone and pays for itself then it’s prizes all round. 

Or you might charge a litlte more, covering some of your overheads at no cost to yourself (prize for you) and allow you to serve more effectively and sustainably elsewhere (prize for the community).

The Business Model Canvas is a great tool for identifying assets that you could turn into prizes…

Business Model Canvas

This is one of the most useful tools I’ve come across for understanding how your business works (or might works).

It designed for lean-startup style customer discovery and validation, but I found it a fantastic lens for actually seeing different parts of our organisation for the first time, as well as how they fit together to make a whole.

I’ll do a series on this before long. For now, here’s a set of links to a video series from Strategyzer to give you the main ideas (youtube playlist here):

Check at Alex Osterwalder‘s excellent book Business Model Generation for a lot more detail.

Bootstrapping the non-profit organisation Rule 5: Own your Assets

This is the fifth post in a series applying Seth Godin’s rules of bootstrapping (see also here) to building a non-profit organisation.

Build and own an asset that’s difficult for other people to reproduce

.

This is an interesting one in the non-profit world, because an attitude of generosity – of wanting to see problems solved more than we want to build empires – suggests that we should welcome others working in our ‘market’ as allies rather than competitors.

But there’s an important point about attitude here – we should always be building assets, and the most valuable ones we can build will always be those that are difficult for others to reproduce.

These assets might be products – in our case, curriculum and reading books. They might be services – delivering teacher training.
They might be processes – the ways that the pieces of what you do fit together to create value.
They might be things like reputation, trust, and relationships.

Investing in building any of these assets – from building a physical product to making a spec or howto for a process, to training your team – is always worth the time – a gift to your future self.

Here’s a thought experiment that links back to this post from a few weeks ago. Imagine that each central piece of your (charitable) business model was widely available at low cost (what if you open sourced it?). In the absence of each piece, what about your organisation means that people would still want to work with you? How would your clients answer this? How about your donors?