Wednesday, February 12, 2014

Bad Boys

I'm a... criminal???
Members of the Pensacola community have pressed the City Council to reconsider a so-called“camping” ordinance passed last summer, particularly the sections of the law that criminalize keeping warm with a blanket, tent or other materials commonly used by the homeless for shelter. At the time of its passage, the ordinance was defended in the Council on the bases that “camping” in public was considered a threat to sanitation, public health, and safety, in addition to being a blight on Pensacola’s “aesthetic” quality.(1)


See, Lloyd, we're more than leaders. We're fine, upstanding
models of American citizenship. Cleave to that, baby boy. L'chaim.
What does "the law of unintended consequences" tell us? Careful what you wish for... For every action... You may get what you pay for, but you pay for everything you get....

Time worn sayings all, leading us down the same road. In the case of EM08, take a look around and notice, not just what's illegal, but what gets indicted, what gets prosecuted. In other words, what has a target on it?



It's easy enough to see that the evil empire dons are above the law, but when we criminalize the homeless, folks, we're nearing the bottom. Even for EM08.

What next, an ordinance against day dreaming?

=================


1.  ​Amid freezing temps, Florida town’s ‘camping’ law bars homeless from using blankets

RT, February 12, 2014
 http://rt.com/usa/florida-ban-blanket-homeless-611/

Wednesday, February 05, 2014

The Slide

Old media dinos sliding into the "new media
audience doesn't give a shit about you" tar pit.
In what world does a hard print magazine have over 12,000 employees plus all of the costs of producing a magazine, then sell that magazine for what, 3 or 4 bucks a week in the face of new media that's been inexorably crushing hard print for years?

How many mags do you have to sell just to pay your rent???

Lest we forget, Tina Brown, a semi-comatose publisher, only recently took "Newsweek" all digital. Problem is it was about a decade too late. 

But the "other real problem" is the old media itself, apart from its business model. 

In some ways, the old media dinosaurs are akin to the new media brats -- and those that buy into their horseshit -- in that they evidently don't know basic math. Un-parallel to the media brats, they fail to consider how their content is in at least some (major?) part generationally driven. That is, young kids don't read "The Atlantic", "The New Yorker" or "Time" let alone any of the other dino periodicals. Hell, they don't even read the icon of counter-culture when I was a kid, "Rolling Stone"!

The word is "relevance."

Simply, new media audiences don't give a crap about old media content. Isn't that obvious? On the other side, oldies who care about old media content aren't new media savvy. This latter digital divide is closing, but the crucial element is time; can old media fool, for instance, equities, and sucker them long enough in order to survive for a critical mass of oldies to catch up?

Does that sound like a good bet to you?

Meanwhile, a whole new crop of young/new media, from Voice of San Diego shaking off old journalism's business model (a very good thing), Priceonomics' smart, young take on things thought of from an incisive angle, to any number of smart takes on culture, politics and polemics (Jacobin, Edge, Medium...) that are not only pushing out new thought at an alarmingly good rate but greasing that silicon slide the old media dinos are losing their footing on.

History often focuses on the epochs - the Renaissance, the Third Reich, the Depression ... - but the transitional period/s to me are really interesting. And when you think about this time, given all of the stress points that EM08 is producing, this is obviously a key transitional time for old media.


Time Inc. Hit With Huge Layoffs


As feared, mass layoffs are starting at Time Inc., including editorial cuts at top titles like People andTime, where a voluntary buyout period could be followed by the much-sharper ax. CEO Laura Lang said in a memo to staff today that 6 percent of the company's 8,000 employees, or about 500, have to go in the struggle to be a "leaner, more nimble and more innately multi-platform" publisher. The company is already down some 4,000 people in the last five years.

-- 

​I'm a man without a corporation.
-
​Paddy Chayefsky

Tuesday, January 28, 2014

If You build It

"In the fall of 2008" as I'm usually saying these days to the point where, notice, I'm quoting myself, "if Barack had done one thing, just one, if he'd have tossed us one bone, I could maybe say, 'okay, I get how the system works. But he at least threw us a rope we can hang on to.'"

Back then I had the idea to take $70 billion out of the TARP and tell the banks, Look, assholes, we're not gonna just hand over $770 billion to you numbnuts and not give the people whose money you're robbing nothing. So write down this $70 bil and stfu! You're STILL getting $700 BILLION so, one more time, STFU!"

Then, take that $70 bil and start a campaign where startups can apply for seed money. They go to the "restartamerica.org" site and can view tutorials, go through a bootcamp, see examples of what works, find mentors, find co-founders, network with others... 

That leads to putting together a pitch package: exec summary, slide deck, maybe wireframes or diagrams if applicable, maybe a short video. Then it gets vetted. If it passes muster, it gets seeded, let's say up to $70k. That's a lot of startups.

Most will fail. That's ok. Because even the failures will be better off; they'll have acquired very valuable skills in how to prepare a professional presentation, how to meet and greet, learn what investors are looking for... and with the advent of crowd funding, now they even have a second chance. Maybe that'd even be their first choice.

But the successes... there'd be a few... would be so motivating, so positive a message for us that we'd almost forget the evil empire because, well, who wants to focus on them when we got this great stuff over here going?

Hell, take that money and lay fiber in America  everywhere. Massive project, huge job creation, big stimulus for supplier entrepreneurs ... and at the end of the day, something to show for it: a state of the art network that will boost productivity (hopefully).

I believe entrepreneurship is one of the keys to unlocking the unprecedented set of problems that EM08 presents. And though all but the uber-rich have been hit with the EM08 wrecking ball and at least its shrapnel, young people today are up the creek. Have we ever put an entire generation at risk like this? This is suicide in the making, and the EU is foreboding in ts massive unemployment among its young people.

Enter Studio H, its founder, Emily Pillotin, and filmmaker Patrick Creadon's brilliant film on Studio H's foray into the unknown, which in this case is tiny Bertie County, NC. Yee haw, time for a hoedown.

Not quite. Studio H -- Emily and her partner Matthew Miller --  having been recruited by the superintendent to bring their design approach to the local high school. There are, of course, many letters between that a and z, but, as with all good stories, the troubles mount.

What sticks is watching these country kids come alive in new ways -- there's a great line by one of them when he's being introduced to the audience, and he says something like, "I'm an old fashioned boy" -- ways that city kids could never imagine, even in private schools. One of my big buzzwords these days is "craftsmanship," and I believe it's a dead philosophy, certainly in our dead ass educational system. Studio H teaches design from a holistic perspective, from the community perspective, in thinking and doing as one integrated process.

Olvera Street is where the City of LA "officially" got started, and is all touristy now. When Ma would take me there as a kid to eat, I remember wanting to stop and watch the glassblower dude. For me, the fascinating part was not watching the corny animals and baubles "come to life" but how he'd prepare the tubes, how he'd heat them, blow a bit, form them... the technique, the deftness... There is, for me, great pleasure in watching someone who's adept at something.

But the genius of If You Build It is not the voila! of watching these kids as design whizzes, it's in the how they become adept at design. And that speaks to "the 10,000 hour principle," but presents a problem for the artist; how do you convey the sweat magnitude of the principle? For Studio H, it's getting down to brass tacks; design begins with approach, consideration, thinking, then planning, and last but not least, doing. It's a ton of hard work.

One of the observations about East LA's lowriders is this; many, if not most, of the kids then were languishing in school. The schools in my hometown were some of the worst, with ultra-high dropout rates, recidivism and all of the attendant ills that go with a socio-economically-challenged area. But those kids who were into lowriding... they'd ply endless hours at dead-end gigs and plow that revenue into their craft, working tirelessly on their cars. And when you think about what goes into car restoration and customization, the myriad considerations and details... it really is remarkable.

I think that same spirit and practice is on display with the kids of If You Build It. Their "character arc" is also remarkable, as you watch kids who have no inkling of design principles and aesthetics blossom with the water of creativity.

An old acquaintance once remarked his displeasure with the dating scene thus; "Any woman I meet from now on has to be into something." And he didn't mean "shopping". That, I think, is what's so great about watching the kids of If You Build It, that they really get into it. Currently, California is having a statewide debate on the so-called "Common Core," what students must know. But it begs the question: Will students get into it? And beyond, method, to borrow from McLuhan, is pedagogy.

If You Build It is not a panacea, nor is it "the solution." Our educational system is so broken here that saying that is beyond trite. But things that work are already known, and some I have written about here. Let me add design and the pedagogy, the admirable practice of Emily Pillotin and Studio H. If I had a young kid in school now, I'd kill to have her/him experience this program.

The farmers market: Student designed & built.


Studio H founder Emily Pillotin with students CJ Robertson & Stevie Mizelle


IYBI's director, Patrick Creadon




Sunday, January 26, 2014

All the Chips

This is wrong: It's the GANGSTER
that should have the tie & briefcase.
People at this point have no choice but to have some other values because I have really bad news for everyone:
THERE'S NO MONEY LEFT THEY TOOK IT ALL!
--Fran Lebowitz




Pics: Sunday Morning, 1/26/14














Saturday, January 18, 2014

Selllout

Sales fixes everything.
--Guy Kawasaki


Perkily, Marissa Mayer
Proving no American exception, Yahoo! didn't learn from history. When they announced Marissa Mayer's hiring, my reaction was the same as when they hired Terry Semel (from, aol-time-warner, the old media side, film, which made zero sense to me; an old media dude to run a new media company...?): why?

From the article below:

Mayer was on the product/engineering side of Google, but not in the advertising part of product/engineering.

Even "advertising" doesn't get it right. Advertising is not sales, it's mechanics, not sales (making money). Sales, and only sales, is sales. And yet, no one ever talks about going into sales, oddly opting instead for marketing because, given our valorization of money, that's where the cache is.

But marketing (mechanics) doesn't fix problems -- sales do (making money).

It's why I think ad traffic models have an inherent flaw; at pennies per click ("cpc" cost per click in industry speak) it relies on Godizilla amounts (economies of scale) of suckers (traffic) to "keep on clicking" -- that's why fb, twitter, et al ad nauseum, can cash in - for now. These "new economy" models have to be free to attract Godzilla traffic which they in turn sell to spammers. But is that sustainable for anyone outside of the billionaire boys club of facebook, instagram, and the rest of "the smoke and mirrors gang"?  

Maybe someone will figure out how this makes sense over, say, "build it, sell it", but until then I see these two core flaws as not just unsustainable, but ... weird. Why? Because despite the "irrational exuberance" of gamblers who're in the market with a new equities high yesterday, the smoke and mirrors gang lose money. And until that's addressed, how can anything else be considered more important? Am I missing something? Hey, despite Jeff Bezos claiming he can turn on the earnings spigot "anytime" most would be surprised to know that Amazon doesn't make money and for quite a while bled money like Niagra Falls.

But at least I can see the Amazon model's potential to succeed, because they sell like crazy.They're excellent at sales and customer service.

Then there's the weird insidiousness, the crassness, of "free". People are up in arms about the NDAA and NSA spying, but there's nary a whimper from the msm about your information being the target of spammers. It's as if there were an invasion scale; NSA prying? Hell yes we give a damn! Corporate retailers whose only goal is to weasel their way into your wallet? Eh, huh?

Anyway, back to the subject at hand. Two snis:

[de Castro] has no experience whatsoever running any kind of a real ad salesforce...

It looks like former AOL ad executive Ned Brody is going to take over for De Castro. We're hearing that he too was a "systems" guy at AOL. Mayer still needs to find a true sales person who understands the media business.

In the meantime, I'm not completely stupid. I'm working on a model that at least in part is derived from my contribution to the vomitus vernaculus --  "fread": free + advertising. Yeah, yeah, I know, sellout.


From Business Insider

Marissa Mayer just had her first major mistake as Yahoo CEO.
She was forced to oust Henrique De Castro, her hand-picked, and highly compensated COO after just 15 months on the job.
From the moment De Castro was hired, people warned that he was a big mistake for Yahoo.
Yet, Mayer plowed ahead, hiring De Castro, likely because when she started at Yahoo she had a blind spot for how the ad industry really works. After almost two years on the job, she now understands the industry better and is trying to correct her mistake.
When Mayer hired De Castro, one source told us, "[Henrique] is very smart, but he has a difficult personality; both his teams and his clients dislike him ... He has no experience whatsoever running any kind of a real ad salesforce, let alone a 1,000+ team selling experiential media into brand buyers."

This source wasn't an outlier. De Castro had plenty of enemies.
He has his own parody Twitter account that tweets some of the outlandish things he's said, such as, "To the CEO of major UK TV broadcaster: 'This deal is like sex with a Russian prostitute. Veeeerry tempting.... but no.'"

At Google, De Castro oversaw the successful creation of its display ad business, but Yahoo's ad business is different from Google's ad business. De Castro was running systems that served/targeted/optimized/ display ads for Google. That sort of advertising is radically different from a takeover display ad that runs on Yahoo's front page.
Mayer was on the product/engineering side of Google, but not in the advertising part of product/engineering. She didn't have to think about advertising. And since ad dollars flowed into Google, she probably thought she could just pluck any Google ad guy out of a lineup and plug him into Yahoo.
To people like Mayer who didn't pay attention to the ad business, an ad is an ad is an ad. But there are important, nuanced differences.
Despite many warnings that De Castro was bad fit for Yahoo, Mayer still poached him with a giant payday. Executive compensation firm Equilar estimates De Castro will collect $109 million from his time at Yahoo.
His time at Yahoo yielded little in the way of results, as far as we can tell. Yahoo's ad business remained stagnant, and De Castro was clashing with Mayer and her top executives.
Kara Swisher at Re/Code reported, "In recent months, according to numerous sources, he and Mayer had developed a tense relationship that many in meetings with the pair found it hard not to notice."
De Castro was a no-show at CES, the big tech industry trade show where Yahoo had a massive keynote with all sorts of executives. That was a warning sign that De Castro was not long for Yahoo.
Now, he's gone. In a note to employees, Mayer didn't try to soften the news. She said, "During my own reflection, I made the difficult decision that our COO, Henrique de Castro, should leave the company."
While this is a high-profile mistake for Mayer, there's some reason for optimism.
First, the stock is only down 2% this morning. By firing De Castro, Mayer telegraphed that the ad business is not doing well. And still, investors don't care, because Yahoo remains (for the most part) a tracking company for Chinese Internet giant Alibaba. In other words, Mayer has time to find her footing.
Second, she made her decision relatively quickly. De Castro was only at Yahoo for 15 months. She didn't let his tenure drag on just to save face. She cut him before it got too ugly.
Moving on from De Castro is good, but there's already murmurs in the ad industry that she still hasn't solved the problem.
It looks like former AOL ad executive Ned Brody is going to take over for De Castro. We're hearing that he too was a "systems" guy at AOL. Mayer still needs to find a true sales person who understands the media business.

-- 
Many are called
but it's not that so few are chosen
it's that so few choose.
-Ogami Deyegoroe

Thursday, December 19, 2013

Two Studs

Little Bear Park, the kiddie park where the
Rizzo gang told Vives & Gottlieb to meet them.
I've resisted following up on the City of Bell crimes til now, but the trial of assistant city manager Angela Spaccia -- guilty -- and the plea by slimeball Robert Rizzo of no contest to 69 counts has resurfaced this "huge little story." So, while the big EM08 dawgs (continue to) sip cognac on yachts and laugh at the little peeps, at least these medium gangsters are getting bracelets. 

Here's a pretty good talk with Pulitzer Prize winning journalists Ruben Vives and Jeff Gottlieb. What I appreciated was how they detail that from deciphering contracts to interviewing to forensic accounting to making simple requests that can stretch for days if not weeks... this is long, painstaking work that only investigative journalism can do. They remind me of my television hero, Columbo; persistent, a focus on detail and a poker pro's nose for horseshit when they smell it.

More, their talk underscores why media is so crucial to freedom. Rather, a media that values sunlight, can figure out the dollars and has the balls to stand up to power.

Back on the ground, reporters Vives and Gottlieb deserve some kind of medal. An unlikely pair, Gottlieb is the grizzled vet, having bounced round honing his skills, while Vives shouldn't even be in his position if we listened to some. As a kid he was an undocumented immigrant (Guatemala). That he's here, standing with a Pulitzer in hand speaks well for our country.

These guys are studs, and really make me proud. Sometimes our country works pretty well.
(Doesn't Gottlieb have a passing resemblance to Bob Odenkirk? Don't know who Odenkirk is? Better call Saul....)

Thursday, December 12, 2013

This Broad

"Don't hate me because I don't danything
but somehow get you to pay me. Hee hee!"

Who was it -- Goebbels...? -- that said if you keep on repeating a lie enough the plebes will believe anything?



Marketers practice the blunt force mind-screwing they do and feel it's a science; one technique they call impressions.(1) I don't know what the current rate is, but as I recall back in the stone age it was in the teens before a sheeple converted. That's a marketing slime $5 word for when you finally break down and buy after the Nth time seeing that NIKE ad, despite it having Lebron even when you HATE Lebron.

When I bring up the subject of marketing to crazy liberal groups like Occupy, they look at me as if I'm Count Alucard standing at high noon in defiance. They conflate "marketing" with "spam" and the evil empire, and I get it, but would they do the same with "project management" or "operations" or "customer service"? Of course not. 

One of the examples I usually cite (as I did with the crazy Occupiers) is during my pitch about marketing being an integral part of change (AND stasis!). Back in the stone age, America had a problem: trash. Litter was everywhere on sidewalks, and roads, not just gutters and alleys. What cleaned it up? Marketing, the Keep America Beautiful campaign. It ran everywhere: magazines, billboards, radio, newspapers, and, perhaps most famously, the Clio winning tv spot with "Iron Eyes Cody" (not a native, but an actor) turning to the camera as it dollied in to a close up, a tear running down his cheek. It raised awareness and exerted social pressure on the bad habit.

The key was impressions, a consistent stream of them. The medium may be the message, but so is access and the resources to deliver them.

Leading us to the current Commissioner of the Bureau of Labor Statistics, Erica Groshen. Newly minted as of 2012, the BLS has been chest thumping about unemployment having dropped to 7%. That of course is a lie, there being any number of ways to slice and make mincemeat of their hubris. But oh, they know marketing, and they own the media, which has no hesitation about carpet-bombing this "good news" every chance they get.

And who is Erica Groshen? It reminds me of Marcello's line about his betrothed, Giulia, in Bertolucci's masterpiece, Il Conformista, here paraphrased; She's all theory and academy. As if that weren't bad enough, she's also ex-NY Fed Reserve; double whammy for us, two for one for the evil empire! And before her? Another academic/bureaucrat, Keith Hall.

During the prime bubble inflating years of EM08, yet another academic-- see a pattern here? -- was honcho: Kathleen Utgoff. She hurts in more ways than one; she's an LA gal from Cal State Northridge and UCLA, where econ was her poison. And boy did she ride that pony; by my estimate she retired early (Phd in '78) and ...
...chose not to continue for another 4-year term and completed her term as Commissioner in July 2006. Secretary of Labor Elaine Chao and others honored her for her service. Although she has not ruled out future opportunities to serve the Nation, she now spends her time with her family and does volunteer work in her community.(2)
These are people who have never run a business much less been an entrepreneur and know nothing about the real world because they've never had to sustain themselves in it. There's not an innovative, problem solving bone in their bodies.

They produce NOTHING. Well, unless you count bureaucracy under the guise of policy-making.

Or paperwork. In the aftermath of the Pecora Hearings, the Glass-Steagall Act was an utterly ridiculous 37 pages or something. And yet, it protected us in terms of its goals for half a century. Meanwhile, the Dodd-Frank Act? Over 800 pages.

Is it really any wonder why we're so jacked?

Then that numbnut Phil Gramm decided to grow a hair up his ass and, with then Travelers honcho Sandy Weill's cash in pocket, began to methodically work his slimeball routine on congress. And it worked. See the Gramm-Leach-Bliley Act of 1999.(3) Weill, by the way, was so confident that Gramm-Leach-Bliley would pass, that he applied for and received -- evidently with our bureacrats' blessing -- a special dispensation to go ahead and merge with Citibank before Gramm-Leach-Bliley passed, and America crossed an historic line with the creation of its first Frankenbank: Citigroup.

Personally, having taken econ in school I can safely say that, as taught in the academy, it's a sure cure for insomnia, and has as much relevance to the real world as rocket science to workers eking out an existence in East LA.

As a friend pointedly put it recently when talking about bureaucrats, academics and theorists: If they didn't have their "jobs", these are people who wouldn't know what to do with themselves.

And lest you, dear reader, think I have some inborn sense of disdain for theorists, let me disabuse you of such; one of the most influential books in my life is Noel Burch's seminal Theory of Film Practice, and I have nothing but respect for Bill James.

And as if it wasn't a cruel jester ruling this sad universe, here's a bit of recent history: the one recent presidential advisor who has business experience? None other than Obama hand-picked slime ball, the former GE CEO Jeff Immelt, one of the worst CEOs ever. Maybe not Rick Wagoner bad, but horrible by any standard. Look up both of their track records if you don't believe me.

Immelt and Wagoner do share something else quite significant by the way: both have MBAs. From Harvard.

Then again, so does Groshen. Patterns, indeed.

---------------------------------
1. For those with a case of auto-masochism, it also quantifies and therefore justifies marketing and therefore marketers. Slap up flavor of the month singer/actor/athlete in a campaign on billboards, mags, site banners, commercials... and sit back and wait for the magic. If revenue goes up, well, there it is, and they're off to bonus land and the Clio awards. Next to bankers, pols and Hollywood execs, marketers have a bad case of full of shit. Interestingly enough, if the company posts negative during the campaign, well, it must be "the economy."

The corollary in sports are athletes and incentives. Star clauses have things like making the all star team will get you X amount over and above, or leading the league in scoring, etc. But I've often wondered why it doesn't work the other way if an athlete has a dog of a year.

Back to the point about brilliant marketers (and bankers, pols, etc.); that entertaining old curmudgeon of Hollywood, Sam Fuller, said something funny once and I paraphrase:

Know what they do to ferret out snipers? They send a lone soldier out into the open; when the enemy shoots at him, they can get a bead. They thought that one up at West Point.

2. http://www.bls.gov/bls/history/commissioners/utgoff.htm

3. Gramm's balls only grew once he'd decimated Glass-Steagall; he then turned his best evil eye toward derivatives, and cheer-lead the Commodities Futures Modernization Act a year later, in 2000, which kept derivatives dark. Thus, the fertile ground was perfectly primed for EM08.

And lest anyone still believe in the big game of "Democrats and Republicans" let me point out that each of these bedrock EM08 laws were of course shepherded by a Republican -- Gramm -- and signed into law by a Democrat: Clinton. Thus, history once again calls us from yesterday. 

Monday, November 18, 2013

Barnum's Dictum: snapchat

This fish is a sucker.
If you want to get a close up look at how stupid America is, look no further than this, from snapchat's Wiki:

As of October 2012, Snapchat had not made any revenue.[7] Spiegel said in October 2012 that the Snapchat team was unwilling to be acquired.
As of February 2013, Snapchat confirmed a US$13.5 million Series A funding round led by Benchmark Capital, which valued the company between US$60 million and US$70 million. On June 24, 2013, the company's blog welcomed IVP as the lead investor from the Series B financing round, in which General Catalyst, Benchmark Capital, Lightspeed Venture Partners, and SV Angel also participated.[22][23]
A mid-July media report valued the company at US$860 million.[24]
On November 14, 2013, The Wall Street Journal reported that Snapchat declined a cash offer from Facebook of US$3 billion to acquire the company.[25]
According to Om Malik, on November 15, 2013, Google offered $4B for the company but Evan Spiegel declined.[26]
          --source: http://en.wikipedia.org/wiki/Snapchat

The key line, of course, is the first: As of October 2012, Snapchat had not made any revenue. NOT profits, but ANY cash flow.

Then you take a look at their team; go ahead, search them, unless this is the far future and they're long gone by now and buried somewhere on Alexa along with the first round Net bubble burst circa 2000. But to this point I only have this to say: There's a REAL reason why we don't allow anyone to be president that's under 35.

"Irrational exuberance" is one thing. Not learning is quite another. Together, we're talking suckerland part two.

A while ago I was writing on a related subject to a friend. I wound up like this:

here's the litmus test for all these whippersnapper start ups and entrepreneurs that think they're so clever and evidently everyone else thinks so smart, innovative, cutting edge...; make their services paid and watch what happens. ha! most people confuse equity market valuation [or in this case, investor exuberance] with real value. the truth is the former is speculation. the latter is vaguely proven, if that. 

Ta da.

Monday, July 15, 2013

Turn it Over



One of the greatest bands ever, in a breathtaking re-mix by Bill Laswell. If Emergency! is one of my desert island albums, and rated 10 out of 10, the old TIO was a 7. And that's for the inherent musical content.

At now over 40 years old, TIO has some dated, corny and well-known elements. But the burning fire of exploration at this band's essence creates a timeless feeling on its best moments. And there are many.

A bow to Laswell, who has almost created a new album. The butterfly has emerged, and she likes it loud.


Friday, March 01, 2013

As Usual, Blues & Sushi

Notice: They're not Japanese
Right now there's a lot of energy circling around the entrepreneurial wagons. In LA, the too So-Cal coined "Silicon Beach," is propelling more networking, seminars, angels, vcs, Meetups, advisors, mentors, consultants, incubators, and crowd this and that than comfort permits. If the word "bubble" makes you shift in your seat, read on.

This is about one facet of this phenomena, the so-called "Lean" approach to startups, popularized by Eric Ries. First off, I'll say that I couldn't agree more with lean principles, but second, not because of Ries, because I've known about lean for a while. Years ago I got interested in how companies ran, and along the way, as millions did, read Peters' &  Waterman's In Search of Excellence. But it was the PBS doc based upon the book, if memory serves, that opened my eyes. In it, I first learned of Toyota's and Honda's different approaches to running a company versus the typical American pyramid.

For those who dig just a bit, it's easy to find that it was Toyota, decades ago, that originated lean principles, not Ries, who in fairness mentions Toyota. And while the "experts" fawn over lean this and that in its processes, they neglect the most important factor: people. 

While implementing lean approaches in process, the most important thing Toyota did was to recognize that you can say "we're gong to be lean," but how, exactly, do you do that? 

Back in the day, Toyota issued a company-wide offer: make a suggestion that helps the company run more efficiently and guess what? You get paid. Honda, meanwhile, took a different approach; while one diagram displayed the aforementioned typical American pyramidal top-down -- and therefore information flow -- approach to management, Honda's diagram was all over the place, with lines criss-crossing in a bird's nest. Their reasoning was simple: open up comm lines so that ideas -- people -- begin increasing the probability for synergy.

And here's the crux of the matter: you can have lean principles, mvps, pivoting... but if you give it to a bunch of teenagers what's going to happen?

Of course, I exaggerate to make a point.

Go back to the example of Toyota soliciting ideas from its crew, high and low. Management thinks they know about the assembly line, but the workers are doing the assembly line. Doing doesn't necessarily confer knowledge, much less insight, but how can it hurt to open up the comm lines to those on the front lines rather than constantly having a one-dimensional view from a bird's eye on high?

This simple thing -- grounded in people -- was the crux of Toyota's lean principles, not process re-imagining per se.

By handing over things such as lean principles and Business Model Generation (Osterwalder & Pigneur, another good read) to (mostly) young people in skinny jeans, I believe that's a good thing. But without the experience or training and skills that enable one to think so that you can pivot in a logical way (or ways), based upon a thorough knowledge of one's business model, I believe there's a false bravado and sense of confidence being bred. The joke goes that youth is wasted on the young, but we don't laugh when we say that a president can't be under the age of 35. Our government may be screwed up in ways we can't imagine, but do you think that's an arbitrary, non-sensical mandate?

Think about one of my favorite things, basketball. The sport is rife with stories of young,  high flying athleticism and enormous amounts of skills. But it's also true that no less than Michael Jordan himself points to the mental aspect of sports as being the toughest challenge. During a revealing interview, the living legend had this to say about his storied comeback to basketball after his brief baseball detour:

Q: When you came back, there was a new breed of players that had not tested themselves against you.
Jordan: Well, it was a challenge. One of the reasons I left was because I didn't have as many challenges as I [had] previously. Now I had all the challenges in the world. People were presenting different challenges to me and that's something that I was really thriving [on]. Young kids were talking trash to me. Some of them were physically, athletically a lot better than I was. But I think another championship -- to do what hadn't been done as far as I could remember. What separated me from them was I knew more. I knew how to win. I knew what it took. So that was a challenge to prove and see if you could teach these kids what it takes about winning. Not just physical skill but how to apply that in similar situations. The same thing that Magic Johnson and Larry Bird did to me in the 80's basically. It was my responsibility to teach these young whippersnappers how to do that, and in the midst of all that, it was a challenge to come back and win.
--NBA at 50 Interview: Michael Jordan, Part 2
What separated me from them was I knew more.

In essence, I think another bubble has been built, albeit anything that gives entrepreneurship  a leg up on the typical American favoritism toward huge conglomerates can't be all bad. What this bubble boils down to is that by emphasizing process without the skills to think logically through one's business model in all of its contingencies, that false sense of confidence builds. It's a step up from where we were, and in fairness, people such as Ries , Steve Blank and Osterwalder are steps in the right direction, but I'm pointing to something much more fundamental.

One of the things former Apple evangelist Guy Kawasaki says to startups is to hire better than yourself. What he points to is that startups are a far more complex landscape than a game of poker, and that people and thinking are the crux of the matter. There must be a sober way of mapping out one's business model in all of its permutations, not just acquiring a few skills, such as developing an mvp. To circle back to basketball, it's like having a hotshot shooter who can't handle the most fundamental aspects of the game such as dribbling ball. Running a business is an ultra complicated affair, and if you're not sound fundamentally, no amount of mvp or testing would cause me to place a bet on you -- which is what an investment in a startup is -- a bet.

Look at the movie studios, one of the oldest institutions to employ the mvp principle in the form of pre-release screenings and focus groups to garner early feedback. Most movies languish and fall far short of expectations, prompting William Goldman's famous dictum about Hollywood: no one knows anything. This is because of one thing: the studios not incorporating a ground up approach at the very beginning of the development process. By ignoring fundamentals, they automatically incorporate more risk into their formula.

Last, I find it amusing, but not surprising, that lean principles are having a hey day now. Ries has fashioned a career from it. But just as the blues only found its rightful place in American minds when foreigners such as Peter Green, John Mayall and Eric Clapton championed the art form, so too are these Japanese principles now wending their way into American startup circles. Just like sushi, Japanese finger food, now made an entire meal due to white people saying "this is good."

Go figure.