Category: Growth

Hit Refresh, Book Notes

Hit Refresh, Book Notes

Over the holiday I wrapped up a number of books that had been piling up on my bedside table. Hit Refresh was one of those books and I am glad I read it. The main reason I enjoyed the book was the underlying sense of optimism and progress that Satya implies through his vision of the future workforce and broader society. I similarly enjoyed his open willingness to revisit core principles and identify which foundations (people, culture, products) to support to enable the next chapter at Microsoft.

Here are some quotes from the book that I highlighted…

On leadership & vision

“A leader must see the external opportunities and the internal capability and culture – and all of the connections among them – and respond to them before they become parts of the conventional wisdom”

“The view your adopt for yourself profoundly affects the way you lead your life” – Dr. Dweck, Mindset: The New Psychology of Success

“… compete hard, and then equally celebrate the opportunities we create for everyone. It’s not a zero sum game.”

On Trust

“Consistency is better than perfection”

“Consistency over time is trust” – Jeff Wiener

“The key to cultural change is individual empowerment”

“Learning to fly is not pretty, but flying is”

On Societal Change

Engelbart’s Law: “…Our ability to improve upon improvements is a uniquely human endeavor….”

“Economic improvement is centered around the intensity of the adoption, not just the presence or availability of the technology.”

Edward Conard: The Upside of Inequality…. inequality ultimately leads to faster growth and greater prosperity for everyone. Investors wait for good ideas that create their own demand for properly trained talent needed to commercialize ideas successfully. He sees two constraints to growth: an economy’s capacity and willingness to take risk and to find properly trained and motivated talent.

As machines replace labor in some tasks, firms will be incentivized to create new tasks in which humans have a competitive advantage. “Although automation tends to reduce employment and the share of labor in national income, the creation of more complex tasks has the opposite effects.” – Daron Acemoglu, MIT economist

“Business is humanity’s most resilient, iterative, and productive mechanism for creating change in the world.” – John Batelle

2017: Transition & Acceleration

2017: Transition & Acceleration

2017 was a year of change for me. I started out the year as Chief Revenue Officer at Choose Energy, culminating a 4.5 year role with the company that began as the first non-engineer in 2012. With the sale of Choose Energy in Q2 and my responsibility with the company melting away, I experienced a brief, but noticeable emotional lull. I had (re)started my dream job, working in venture capital at the intersection of technology and industry with the Invenergy Future Fund but I was missing the action of day to day operations. Working at Choose Energy with world-class employees and a truly unique entrepreneur was special, and the loss of that continuous engagement affected me. I hope to work with each of them again in some way during my career or personal efforts.

And just when there was a lull in my usual intensity, my new team at the Invenergy Future Fund of Michael, Amy, Juan and Carmeanna got me revved up for the truly unique opportunity we had ahead of us. We are now in the early stages of executing our plan to be a world-class venture firm focused on software companies in the energy & industrial verticals, and the machine is really starting to hum. I am increasingly confident in our unique value add as operators, industry connectors and EQ-aware professionals. The combination will take years to prove out but I like our foundation.

Part of our Fund’s momentum includes two new investments we made in the second half of the year. While the investments have not been formally announced, I can’t wait to share more about each of them. The management teams at both companies are elite, focused on driving industry improvements through products that are already operating in the broader industrial environment. The executives and the problems they are solving motivate me every day to find ways to be helpful to their existing operations and find more companies of equal excellence.

2017 also marked my first full year back in Chicago. Being closer to family is everything I hoped for, and more. The family connectivity, coupled with my amazing wife enables a balanced approach to personal and professional growth.

Overall, 2017 was a blessing both for the end of one personal chapter as well as the beginning and acceleration of another. I’m thankful for those around me and excited to work with my expanding team and network to enable and support continued success.

Three Industrial IoT Sales Traps to Avoid

Three Industrial IoT Sales Traps to Avoid

With the digitization of traditional industry, software solutions are increasing their focus on the energy and industrial verticals. At the Invenergy Future Fund we are seeing many pitches a week for companies seeking capital to grow their business. As part of our diligence, we like to sit in on a few sales calls – usually to prospective customers that we introduce. Through those calls, we have seen three common mistakes that start-ups make while pitching traditional industrial firms. We list them below to serve as a guide of pitfalls to avoid:   

1) Buzzword blockers: Many sales decks pitching the operations, maintenance and security divisions of traditional industries read the same… some newly formed version of technology (MACHINE LEARNING! ARTIFICIAL INTELLIGENCE!) could dramatically improve business results. The problem is that these buzzwords talk about your company’s solution, and not the customer’s problem. The customer does not necessarily care how the problem is solved, just that the results will improve. To paraphrase a statement I recently heard from an energy executive: “what makes this solution better than the 20 other AI software companies I have been pitched this year?” As a growing start-up you are better served cutting the jargon and delving straight to results and focusing on how you will get to a proof of concept within the customer’s desired timeframe. Remember, your technology is merely a tactic to serve the customer. The real product is the problem you are solving for the customer.

2) Hubris hurts: Energy and industrial firms have been solving maintenance, throughput and security problems for decades. Yes, the technology environment is changing. But within these Fortune 500 companies there are seasoned executives who have developed impressive IT and software systems based on an accumulation of historical technologies that manage billions in assets. No new technology solution is going to completely rip & replace existing software. Start-ups that expect to dramatically replace existing software architectures and make generalizations about weakness of existing solutions simply have not done their homework. Respect the reasons that current solutions are in place by identifying existing strengths and demonstrating new, complementary capabilities. The professionals who made those architecture decisions were operating with then-existing resources and are likely still somewhere in the organization.

3) Deliberate (business) development: In-the-ground or under construction assets have detailed, expected lifetime performance metrics based on the technology and environment for when the asset was implemented. Given those strict performance expectations, a large company will only trial a new, unproven technology on a select number of assets whereby the test will not materially impact overall results. It takes time for the prospective company to identify those sites for your software and it takes time to encourage the internal P&L owner to take on the potential risk. Bake that “discovery period” and longer sales cycle into your revenue projections. The beauty to this structure is that if the software does work as expected, then the concrete data enables implementation across the rest of the asset fleet within a surprisingly abbreviated timeline. As a result, the longer sales cycles of the energy & industrial world can actually be a feature, not a bug of the purchasing decision.

We hope you find these insights helpful. If you are a software company targeting the Industrial IoT segment looking to scale your business, please reach out as we would love to share thoughts, make some introductions and help further optimize the industry.

Becoming dispensable

Becoming dispensable

On a recent RECODE/DECODE podcast where Kara Swisher interviews Frances Frei, the SVP of Leadership & Strategy at Uber. Frances is a renowned leadership coach with a special skill at turnarounds and an unparalleled optimism and belief in an individual’s redemption potential and trajectory.

In the podcast Kara and Frances cover Frances’ 3 key to modern leadership:

1) Making others better as a result of your presence. This is usually a “catch-all” line, but the impact needs to be internalized: are you as a leader actively focused on improving those around you?

2) Having strong performance outlast your presence. Replace yourselves as quickly as possible. Leadership is about a leader serving their team and creating a condition for them to thrive with a goal to become replaceable as soon as possible. Having this leadership goal implies the leader is confident there is another role for them in this organization or another one.

3) People feel your high standards and your devotion to them. Communicate this through asking questions and digging deep.

The one that stood out to me the most is item #2:. Younger professionals that rise to the executive ranks earlier than they expected tend to have a problem with becoming dispensable. A natural tendency is to retain information, become important to many stages of the company and not lose the opportunity to give input for what each group is doing.

I fell for this mind trap when Choose Energy was growing but I was lucky in that Kerry Cooper was my CEO giving me strong advice how to combat the problem. Similar to what Frances Frei says, Kerry’s coaching was persistent in that successful leadership was creating a structure that would thrive beyond my presence. It took me a while but ultimately through improved corporate communications, better delegating and transparent KPIs, we created a structure that was successful independent of our cumulative influence.

Saying thanks

Saying thanks

Over the course of 4-5 years with a start-up, I got a first-row seat into the ups and downs of scaling a company. One of my main takeaways was that you have to enjoy the journey. If you only seek the destination you won’t last the trip.

And to enjoy the trip you have to work with people who make the miles a bit more enjoyable. You don’t have to like them and hang out on the weekends, but you have to respect them. Respect their perspective, their experience, and their contribution. Respect enables trust and trust is a prerequisite for a healthy and long-standing relationship.

During my tenure I worked with some world-class professionals. In some cases our trust was more or less immediate (out of necessity!) and in others, it took a few crucible events to crystallize our bond. While there are too many names to write down, I do want to acknowledge the significant positive impact a few individuals had on me during the process:

Kevin Stevens & Jonathan Crowder: My “go-to” team from Dallas. No job was too complex or big for these men. They taught themselves operational finance, product management and the essential of programming. Whenever we were busy I knew they could pick up the slack. And when times were tough, they knew how to strategically engage and re-position the argument to identify channels for growth. Big things ahead for them as they take on the Texas market.

Kerry Cooper: Kerry brought institutional leadership when we needed it most. She brought excellence in hiring, in thinking about the customer, and in establishing operational procedures & OKRs. At the respective moments, most of those traditional managerial were relatively new to me. In addition to management lessons, I also learned from Kerry how to engage a mentor network, voice my opinion more effectively and to be willing to have an open and honest debate and feedback. I was lucky that her experience from Levi’s, Walmart, and ModCloth brought valuable lessons to my career.

Jay Webster: Early on Jay gave me the flexibility to explore growth, taught me how to simplify strategy and most importantly how to execute.  Within my first few weeks I was stunned at how much accomplished rolling out to new markets and testing new partnerships. I also appreciate his lessons from many start-ups on how to better pitch VCs and how to engage a board room. Finally, I still marvel at how he could perfectly match interpersonal strength with candid feedback – truly an exceptional leader.

Ethan Wais: My first hire who was always the smartest guy in the room. He saw the future faster than most and worked on timelines faster than most. His insatiable appetite for knowledge and identifying alpha showed me the true ethos of the Bay Area and how the area truly does attract the best talent.

Simona Golebiowska, Leo vonP, Lindsay Hoffman: The can-do team that executed within every role the company needed – and those needs changed quickly! We moved quickly, tried everything and enjoyed the failures and successes. Each brought curiosity and can-do attitude to every growth and operations problem and I loved those days knowing that no mater what came up, this team could handle the attempt. Most individuals cannot match a start-ups fluid needs and this team (and others) handled every turn and speed.

Sai, Jake & Jeff & other eng team: The evolving engineering team had great leaders throughout (Paul Butler, Chris Hanson) and at the end Sai, Jeff & Jake brought all of our various projects and products together. If the first few years were about getting the infrastructure in place, the final 12 months were about increasing monetization. The team’s need in the final 12 months to understand the infrastructure while building applications and products to accentuate growth was stunning. One of my biggest regrets will be not knowing what else this engineering team could have done with another 12-24 months of runway.

Mike Rudolph & Erica Hennes: The marketing team that got it. Over budgets weren’t huge but Mike’s experience and Erica’s hustle seemed to accomplish every task. With Mike and Erica running the marketing group, we had immediate transparency, clear product requirements and a strong backbone to ensure the company was being truthful on expectations. Mike’s direct method of communication and ability to orchestrate multiple campaigns while still diving into the numbers and understand data analytics (with thanks to Michael Michonski!) was exceptional.

David Yi: Epic part time CFO. David taught me a lot about business economics, how to better understand the LTV / CAC trade-offs, how to manage capital raises and how to better manage both being acquired and getting acquired. Every start-up needs a David and we were lucky to have him.

Robin Swanson: The backbone of the Dallas office and a constant reminder to place the customer first. Robin was tireless in her work ensuring our day to day operations remained strong and was the big smile we all needed.

my lessons from bill campbell

my lessons from bill campbell

When I began working at Kleiner Perkins I made sure to introduce myself to many of the executive assistants in the office. I knew that I was going to intermittently look foolish and lost in the coming weeks and wanted to learn some of the daily routines and protocols to the extent possible. That openness helped me bridge into some great relationships with men and women I still speak to frequently. One of the early dividends of those relationships came when, working heads down at my desk, Kendall (now at FBN) in her boisterous way introduced me to “Coach”. I was young and hadn’t fully learned the recent history of the Valley quite yet and didn’t know who Bill Campbell was. Yeah, dumb I know.

I ended up speaking to Bill for a few minutes. We spoke about learning from the more established KPCB Partners around me and to do my best to spend time with the founders to expand my horizon into the operational side of the business. He never once mentioned his stature and who he had worked with. So, when the conversation ended and I did the obligatory Google search, my jaw dropped. A Silicon Valley legend, 100% down to earth, connecting, listening to young me. There was nothing of significant value I could have provided Bill in that moment – but he was simply curious about what the youngest looking guy in the building was doing. The curiosity – the curiosity to really meet me (albeit very briefly) made me feel special. I can only imagine how good of a coach he was to those who received hours of his time each month. His combination of grounded personality and curiosity was a real treat.

The one main lesson I took away from this is that if THE Bill Campbell is spending time, slowing down his day, to talk to a young me, then surely we can all take the time to better connect (truly listen and engage!) with those around us. (Oh, and the other lesson is to always befriend executive assistants 🙂 – thanks again, Kendall!)

using surprise as a means to ask better questions

using surprise as a means to ask better questions

If you have worked with me for more than a few days, you know my two favorite questions to ask when I am trying to better understand a situation are:

“What surprised you about [x]?”
“What will surprise me about [y]?”

I love these questions because if they are answered well, the conversation is engaging, insightful, and educational. If approached well, the questions allow the answering individual to display a combination of empathy and EQ, as well as capability to handle what can be a non-linear progression.

And, while these questions are great to ask others, sometimes they are even more effective when performing your own self-review. If something notable happens and it catches you by surprise (or does not catch you off guard) there is a reason why… and you should reflect to see what drove your handling of the situation. It will help you in spades as you continue to progress personally and professionally.

treat yourself to a zero dollar marketing budget

treat yourself to a zero dollar marketing budget

There are many lessons you learn early in a VC career. You learn how to identify product-market fit, size a market, evaluate a team, review the business model and determine scalability within the market position. The list could go on for days.

And yet, one of the items that I only slightly recognized in my ongoing venture experience – but ABSOLUTELY recognize in my operations experience is the importance of establishing a very lean (or non-existent) marketing budget for the early stages of a company. There are two main reasons why:

1) Organic / “free” customers that are naturally drawn to your product for the service you offer are VERY different customers than customers acquired through paid channels. The cohort analysis on an organic customer will (almost) always show significantly improved economics versus a paid customer. Solving for your core user base and improving the product-market fit by not being distracted by more secondary, paid channel customers is key. Quite simply, paid customers could hide the real solution you want to solve for with your early adopters. Optimize for those early customers before expanding.

2) Venture capital firms expect a 30-50% annual return on their capital. It is pretty dam hard to get a 30-50% return on marketing dollars. There are many high flying adtech firms out there promising returns of +1-2% more than usual channels – and those companies are still questionable in their success. And even more scary is that if there is an easy way to get a 50% return on marketing dollars, the returns will quickly be competed away by competitors. Just look at the food delivery market. Competition will drive down returns to marginal cost. Combine that with sunk cost bias and you can see why VCs and high flying unicorns are raising hundreds of millions of dollars for what can quickly become a commodity product.

Jim Goetz at Sequoia Capital made a great comment in a recent HBR article that I believe demonstrates the danger of excess capital, usually spent in marketing.

“In our portfolio there is a correlation between cash required and long-term market cap—but it’s negative. The more you raise, the less value you create. Google, Cisco, and Oracle were incredibly efficient with their cash, as were ServiceNow and Palo Alto Networks. Those companies all had market caps north of $10 billion within a couple of years of going public. One curse of raising lots of cash is you lose that discipline. We discourage our teams from raising too much capital.”

Yes, you are reading that right. More cash = less success.

In summary, when you raise money as a young company, focus on nothing but customer-driven product development. Focus on listening to your early customers to create an amazing product that will serve them so well that the customer not only WON’T go anywhere else, but actually CAN’T go anywhere else to meet their needs. Save that money to hire better engineers and do more customer inquiries. In fact, I challenge you: give yourself a $0 marketing budget for the first 12 months and see how scrappy you can become. You will thank yourself later – because when you are ready to let yourself enter the paid customer acquisition channels, your barrier to entry and competitive advantage will be significant.

deliberate diversity

deliberate diversity

When I lived in London growing up I was immersed between locals, a host of ex-pats, and many African and Asian students that flocked to UK schooling to advance their education. The diversity of backgrounds was significant and it was arguably one of the most transformative and curious four years of my life. In any given week I would learn an Ethiopian tradition, how the local British kids has different curriculum expectations and then how many ex-pats from all over the US viewed different ongoing social events.

I loved the difference every day brought and yet I took it all for granted. You do not realize when you are growing up just how easy it is to fall into a comfortable cultural norm, to shut yourself off from new perspectives and only surround yourself with individuals of similar belief to your own. For many individuals, the most diverse years of their life occur during college, when they are forced together with thousands of other students. How disappointing us that?! How disappointing is it to know that for most people they are not going to learn (and therefore respect) more about other cultures or lifestyles beyond the age of 20.

Much has been written about the lack of diversity in Silicon Valley — mainly on gender and race. Companies that take deliberate action early on to remove the anchor, or expected “normal” will win. Engagement will be higher. Empathy to the customer and the ecosystem will be more noticeable. Long term value will be a mere output. Companies like Slack are the pillar of this movement. I am so confident that their diversity approach will make them a generational winner both as a communication tool and as a social demonstration for the outsized returns generated from the curiosity and empathy of inclusion.

People and companies have to take deliberate actions to expose themselves to new perspectives. There are many reasons why my experience in the UK was so transformative, but the single most important is this fact:

There was no single ethnicity at the school that was “normal” and there was no single background that was consistent.

Imagine that. When there isn’t a default opinion or set of biases that we know to fall back upon, everyone is more open. Everyone is more curious. And the result? The cumulative environment is greater than the sum of its parts. Forget valuations being a sole benchmark for a unicorn, let’s talk billion dollar social & capital return and that is where the true, rare unicorns exist. And I bet we are going to find out that social influence married to a great business model is going to equate to an outsized hundred billion dollar + company with world-impacting change. If this is not the most motivating idea to you, the idea that Silicon Valley may be able to intertwine social acceptance into business models, then you are in the wrong century. When companies like Slack and others prove successful, other companies around the world will slowly adopt the social-influence mantra, and then, Silicon Valley may have just disrupted the workplace.