How to be happy and successful: Find the intersection of the spheres

“There is no path to happiness.  Happiness is the path.”

      -Buddha

Because I often speak in person and in my book about using meditation as a tool for self awareness (“clear the mind to see clearly”), and intuition to find your path (“follow the clues to reach the treasure”), I’m often asked for advice on how to be both happy and financially successful.

 I’m also asked the same question, though in a different form, by entrepreneurs about their startups.  “How can my startup be both financially successful and feel like we’re doing something meaningful/unique/making a difference?”.

 It turns out that my answer to this question is the same for both individuals and for startups.

A Tale of Two Extremes

First let’s look at two extreme pieces of advice that I ‘ve often heard given (and followed):

Extreme Advice #1: “Do what you love and the money will follow.” 

This is great advice (and if I’m not mistaken, was the title of a bestseller long ago) in theory, up to a point. 

But what happens when you start to do what you love and the money doesn’t follow?  The reason there’s still a self-help industry is because it isn’t always so easy to make a living  doing just what you love.

I was reading a book by Dannion Brinkley recently (there’s a throwback to the nineties, when Dannion was a bestselling author, famous for having an NDE after being struck by lightning) and he said that one vision he brought back from the “other side” was a form of spiritual capitalism. In this vision, everyone would do work that they loved and earn enough income from it to make a decent living.    Again, a great vision, but one that doesn’t always play out in the real world the way we’d like. 

 This is also true for startups/entrepreneurs as well, though it can seem paradoxical.

 Some of the most successful startups did in fact start off doing something they believed in, and the monetization came around much later (think twitter, facebook, and Google).  But these are also extreme cases; unfortunately, more often than not (let’s say 9 out of 10 times), simply focusing on your vision without taking the time to fit it to the market is also a recipe why most startups go out of business.

 Too often I see entrepreneurs holding on to a vision of what they want their startup to be, but that vision isn’t producing results and isn’t generating enough cash to stay as an on-going concern, and they don’t admit it until it’s too late.

Extreme Advice #2: “Do what the market needs.  Find meaning elsewhere.”

In a way, this is great advice to be financially successful, but it leads to a whole different kind of frustration.  In the work world, many people have jobs that do not involve something they are passionate about and provides no meaning whatsoever – it’s simply a way to earn a paycheck.

For a startup, this means doing whatever a customer is willing to pay for. While this may lead to a successful company financially in the short term, as an entrepreneur you an feel like you’re “selling out” your vision and you’re not likely to make a big difference or feel passionate about what you’re doing. 

I’ve been in startups which started out as “fun” and “innovative” but ended up being slaves to the almighty dollar – every decision that was made had to do with “will it improve our financials or not?”.  That’s no fun either and you end up wanting to "quit" your own startup and go do something "fun" and "innovative" again!

The Middle Way: Find the Intersection of the Spheres

After reflecting on this question for most of my adult career, I have come to the conclusion that people are only happy and financially successful when they can find the intersection of three spheres. 

Sphere #1: What you love to do, what you want to do. 

Suppose you love writing. Or music.  Or acting, and you decide you want to pursue these things full time.  One thing to think about is that something that we “love” as a hobby may not be so “enjoyable” if it is the sole source of our income – it turns from a “hobby” to “work”. 

Still, it’s useful to create a list of the things we “want” or that we would be happy doing.  For a startup this is our “ideal vision” of what the world might look like with our product/service, without regards to the financial question.

As I mentioned before, focusing too much on sphere #1 often leads to unacceptable results in our careers and our startups but it’s a great starting point.

Sphere #2: What we are good at? 

Creating a list of what we are “objectively” good at is not as easy as it seems.  This is because we are often so concerned with sphere #1 and sphere #3 that we don’t stop to reflect on ourselves.  In fact, I often recommend asking someone else for this list, and we are more likely to get objective answers.

It’s important to be honest with ourselves here.  As an extreme case, suppose I want to be an NBA basketball player – but the truth is that I’m only 5’6 and not very athletic and objectively not that good at basketball.   In fact, I’m a much better computer programmer than I am basketball player. Or for that matter, an actor.  Orson Scott Card wanted to be a stage performer and “loved it”, but he realized he wasn’t that good at it. In fact, the was a much better writer than he was performer.

If you aren’t good at working with people, should you really pursue a goal of becoming the top salesperson (or multi-level marketer) in your region?  How many of us set goals that aren’t appropriate for either our skillset or our DNA (here I don’t mean our actual DNA, I mean our energetic patterns and what we are intuitively drawn to - Steve Jobs would call it "fate, destiny, karma"). I’m not trying to be negative here, I’m saying that each of us has unique talents and aptitudes.

In his bestselling book, Outliers, Malcolm Gladwell says that it takes about 10,000 hours to become an “expert” at something.  The thing he ignores though is that people aren’t interchangeable; we are drawn to different things and good at different things naturally.   I have a friend who has spent this many hours rock climbing. She’s an expert.  Would I be an expert too if I spent 10,000 hours rock-climbing?  Maybe, but most probably I wouldn’t make it to 10,000 hours because I’m not that interested in it, and not naturally drawn to it.  You might say it’s not in my karma.

This is equally true for startups. I’ve noticed that founding teams in different startups have different DNA (again i'm not talking about actual DNA here, i'm talking about aptitude and experience). As a result, certain business models are just easier for them to follow. Interestingly, they aren’t always the business models that they “choose to follow” because they aren’t being honest with themselves..

As an example, in one of my startups, we were very good at delivering developer tools that we sold for thousands of dollars and customized for many thousands more.  Why? Well, it turns out because we were developers ourselves and really understood this market.

At one point someone (I think it was me!) came up with the bright idea to build an end user tool and sell it for $49 or so.  We went ahead – and while we did an OK job, building end users products wasn’t really what we were good at – the product looked very “developer-y” and we couldn’t provide real end user support.  The point here is not that you shouldn’t experiment with different business models or products, it’s that you need a clear mind to see what you are good at and then play to your strengths.  

VC's will often tell you to "play to win".  But you can't "play to win" if you're playing to your weaknesses.

Sphere #3: What the market is willing to pay for..

This brings us to sphere #3.  If we are good at something, there’s a good chance that someone will pay us to do it, and more importantly – keep paying us to do it!

This may seem obvious, but many people set their sights on doing something that no one is willing to pay for, or they get paid for it once and despite the fact that they aren’t very good at it- they keep thinking that others will keep paying them for it.

The important point here is to define the “market” appropriately.  In your career, it might mean local job market – it might mean any company anywhere willing to hire someone full time – or it might be much more specific: “online e-commerce companies that are willing to pay consultants for”.

For a startup, the way you define of market is crucially important.  For example, if you are freemium model in video games, is your market that’s going to pay consumers or advertisers?  This is an important distinction.  You might find you have a free app that millions of people will download, but no one is willing to pay for it – that’s where the advertisers come in.

Usually, an entrepreneur can figure out what’s in sphere #3 by meeting with potential customers.  Very often, they won’t be ready to buy what you are selling, but if you listen closely, you might hear them say something like: “well, yes, that’s nice, but if you could do X, I’d be willing to pay for it right now.”

By listing items in all three spheres, you can start to look for the “intersection of the spheres”.   Seems obvious? In theory maybe, but in practice, it’s anything but, which is why I recommend you look to people that know you (or your startup) well and ask them what is in sphere #2 - what are you really good at?  If you can do this, you can find the sweet spot that can propel your career or your business to the next level, and make you (and/or your employees) happy in the process.

Like the mysterious "one thing" in the movie City Slickers, I can't tell you what lies in the intersection of the spheres.  

That's for you to find out.

Zen Entrepreneurship : Second Edition Now Available and a Bestseller!

“I started meditating, a path of personal growth, because I thought it could help accelerate my career. By the time I was done, I would begin to view my career as a way of accelerating my personal growth. I realized I had it backwards.”

                        -from Zen Entrepreneurship, Rizwan Virk

The second, expanded edition of my book, Zen Entrepreneurship: Walking the Path of the Career Warrior – was launched on Amazon recently and I'm happy to announce it's become an international bestseller in four countries!

Buy it on Amazon.com now:  http://www.amazon.com/dp/0983056919/

Special Promotion - Get hundreds of dollars in free gifts: http://www.zenentrepreneur.com/book

Follow the book on Facebook: http://www.facebook.com/zenentrepreneur

What is this book about?

Zen Entrepreneurship reads like 3 books rolled into one:  a business tale, a spiritual adventure, and a handbook.

On one level, it’s the story of my very first startup, which I founded with my  good friend from MIT, Mitch Liu.  We didn’t really know what we were doing, but were very ambitious and to our surprise, the startup took off, and for a while it was one of the hottest startups on the East coast.  We had numerous articles written about us and Information Week called us one of 8 startups that CIOs of major corporations should watch. One this level, the book can be read as an interesting “startup tale”.

On another level, it’s a book about a path of spiritual growth.  Around this same time, I started meditating and working with a set of spiritual teachers and learning about “the hidden worlds”.  Back in those days, I didn’t care much about spiritual growth – or topics like dreams, finding my calling in life, karma, energetic patterns, synchronicity – I just wanted something that would help me mentally focus and have the mental stamina that a startup requires.  What I found was that the two were interrelated - more than I realized.  At this level, you can read it as a "tale of power" of a student being mentored - like The Way of the Peaceful Warrior, or the Teachings of don Juan. 

The third level, which is the most important in my opinion, is that this book is a handbook for bringing spiritual development and your work into one.  The Buddha once said: “Your work in life is to find your work and give your heart to it!”.  Rather than having your personal growth “over here”, while your work and your career is “over there”, the book describes the “Path of the Career Warrior”, which is a way to integrate the two paths into one.  In fact, the issues you are struggling with in your personal life and/or your meditation, are the same issues you will likely be dealing with in your career. If you have a startup, it’s even worse!

What have people said about the book?

“Tales of Power meets the Peaceful Warrior... in Silicon Valley! It's entertaining, humble, insightful and valuable - not just to entrepreneurs, but to anyone looking to manifest their dreams and make a difference in the world.”


           —Foster Gamble, Creator and Host, Thrive: What on Earth Will It Take

“You will come away with insight about yourself, guidance … and knowledge that you may not be able to acquire anywhere else save the mountaintops of the Himalayas.”


—Bookreview.com

 “Riz Virk brings the wisdom of ancient Eastern traditions into a purely Western setting. The result is an often hilarious but always insightful book that will change how you view career success and help you discover and walk your own unique path.”


—Marc Allen, author of Visionary Business, CEO and co-founder of New World Library

“Zen Entrepreneurship changed my life, it confirmed for me that 'clues' exist in the world around us and are powerful. I shared this book with every one of my clients from that point forward. Powerful. A must read... it reinforces that there is a bigger guide within us if we choose to listen”


—Lorin Beller, author of From Entrepreneur to Big Fish: 7 Principles of Wild Succes

What’s new in the second edition?

There’s at least 50 pages of new content based on feedback from readers in the years since I wrote the first edition  The new content transforms the book from a “fun story tor read” to a handbook, with summaries, principles, and exercises at the end of each chapter.

Many readers have told me they go back to the book every year to “refresh” on some of the business and spiritual principles described in the  story.  The second edition is  definitely the one to do this with – this edition is both a story and a manual for living the 14 principles of the Career Warrior.

Where can I get it?  What’s special on June 4^th!

If you buy the book June 4^th, you will receive a set of bonus gifts, worth hundreds of dollars from myself and other bestselling authors, spiritual and business coaches/advisors.  This includes a preview of my next book about synchronicity, Treasure Hunt,  an ebook from Betsy Chaisse, co creator of the wildly popular film, What the Bleep do we know?, Magical mystical images from visionary artist Ellen Mcdonough, and many, many more!

Special Promotion is here:  http://www.zenentrepreneur.com/book

Buy it here:   http://www.amazon.com/dp/0983056919/

Follow me on Facebook: http://www.facebook.com/zenentrepreneur

angel investing: top 5 reasons why indie films are like startups

When I tell people that I’ve been an angel investor for five years, they naturally assume I mean investing in tech startups. I do live in Silicon Valley after all, and it is true that since 2007, I have invested in a number of successful (and some not-very-successful) startups. 

But that same year, I also did my very first investment in an independent film, and I’ve learned a lot about that industry in the past five years. I think it’s a good time to reflect back.

Incredibly, the number one question I get asked by people who have no problem with the idea of investing in the latest unproven iPhone app or social gaming company is:  Aren’t independent films really, really risky??

You bet they are. But then again, so are tech startups.  

It’s rumored that 90% of startups and 90% of indie films don’t make any money for their investors.   I don’t know for certain, but my guess is that the failure rate of startups may actually be higher than independent films. 

The main difference is that when a startup fails (and they do, often, trust me – in the press we usually only hear about the successful ones), as an investor you usually end up with nothing less than the clichéd worthless stock certificates that you can use as wallpaper in your bathroom!

At least with a film, even if it’s not a financial success, you have a finished product that you can watch and recommend and enjoy.  And when a film is both an artistic and financial success, it can be rewarding in ways that most tech startups never approach.

In fact, I got involved in film investing for the same reason that I got involved in startup investing – as a way to help entrepreneurs who had an idea that they wanted to bring to the world.  Since then I’ve invested in and become an executive producer of quite a few indie films (see my imdb page for some of them) – starting with smaller budget films like Turqouise Rose and Raspberry Magic, and more recently higher visibility projects like the visually stunning and insightful documentary Thrive: What on Earth Will It Take? and the upcoming horror/fantasy flick Knights of Badassdom.

Unlike startups though, there isn’t really a good eco-system for angel investing in films, and young film-makers usually struggle to get their first film made. Similarly most angel investors are at a loss when navigating the treacherous waters of Hollywood.

That’s how I got involved in my first film, shot on the Navajo reservation in the Four Corners region of Arizona.  Travis Hamilton, a young film-maker fresh out of film school, had a vision for a film about a Navajo girl.  Not only did he not have a track record, but he was in a very un-commercial genre, and most seasoned investors weren’t going to give money to him, (you can read a little bit about this investment in an article in the wall street journal blog which mentioned my first investment, and a group called Film Angels that I’m a part of in Silicon Valley,  here ).

But like startups, when they go right, indie films can be quite lucrative (think My Big Fat Greek Wedding).   So in support of independent film-makers everywhere, and to encourage my fellow Silicon Valley angel investors (of which there are lots) to support film entrepreneurs (of which there are also lots), here are my top 5 reasons why investing in independent films is like investing in tech startups:

1.  It all begins with an entrepreneur and an idea, usually one that nobody will fund because “it’s too risky”.  OK, so not exactly.  In film it usually starts with a script or a book.  In many smaller budget indie films, the scriptwriter is often the director and main producer, meaning that they’re basically a one-man show.  Usually filmmakers who think of themselves as entrepreneurs and not “creative types” are more likely to get their project off the ground.
   
   
2.      You have to pitch to “the big boys”, but usually it’s usually small money that gets a project off the ground. Just like entrepreneurs here in Silicon Valley, who pitch too early and too often to “the big boys”, the venture capital firms on Sand Hill Road, so filmmakers end up pitching to studios.  Like studios, VC firms will turn down most of the pitches they hear and invest in only a few per year.  Like entrepreneurs, filmmakers who have been turned down have to find angels to invest in their projects.  Many big budget films start off as options on literary properties.   A few years ago I met one of the guys who bought the movie rights to Batman in 1980, and it took almost a whole decade before it became a big budget production.   Of course, like entrepreneurs who take too much VC money and lose control of their company, this can happen if you go the standard Hollywood route.   In this case, the original Batman rights holders lost control of the project creatively and financially.   The alternative to studio money is to go the independent route, where filmmakers can keep more creative control and influence their productions.
   
   
3.      Later stage investments are less risky than earlier stage investments.  While most of us in Silicon Valley know about startup investments – seed round, series A, series B, late stage, etc., I didn’t really understand that the same is true for film.  The stages are a bit different – usually the development stage can begin even before the script has been written, then there’s pre-production, production, post-production, and then distribution – which involves p&a funds (print and advertising) for a theatrical release.  It turns out that just like investing in a late stage company is usually less risky than investing in two guys and a business plan, so the later stage investments tend to be less risk - i.e. think DST’s investment in Facebook after it was already successful.  In fact, there are entire funds dedicated to providing finishing funds for a film and p&a monies to films.
4.      It’s all about distribution.  While a few startups succeed because they have a great product, most succeed because of their distribution channels – getting a good product to the target market.  The same is true of indie films – the films which are successful financially are usually the ones who understand the distribution side of the business and have a core audience that they are able to reach.  Not all films gets theatrical distribution – this is a fact of the film industry, but film-makers who understand this are the ones who are prepared for it.  Most profits from most films actually come from DVD releases, not the box office numbers that the press focuses on.  Of course the more anticipated a film is, the easier it is to get the right distribution channels in place.
   
   
5.      Stars are helpful, but not necessary. In the startup world, VC’s love to invest in entrepreneurs who’ve “been there and done that”.  In films, it’s even more pronounced – even a smaller budget indie film can benefit from having a star  - think Bill Murray in Lost in Translation.  But television stars can be a great boon to an indie film too - in my upcoming film Knights of Badassdom, we are lucky enough to have Peter Dinklage, who won an emmy for Game of Thrones, along with Summer Glau, who made fan-boy fame in the Firefly and The Terminator: The Sarah Conner Chronicles and Ryan Kwanten, of True Blood fame.
   The most innovative filmmakers are able to get B or C-list stars to make brief appearances in their films, and that’s enough to get the film going.  But it’s also possible to have a breakout hit with no well known stars – think of Bend It Like Beckham, which launched the careers of Keira Kneightly and Parminder Nagra.   The same is true of startups – while it would be nice to invest in Mark Zuckerburg’s new company (if he ever leaves Facebook), it’s probably more profitable (and likely) to invest in the next Mark Zuckerburg who’s starting the next big thing.
   

Well that’s a very quick overview on what is a pretty complex topic. Of course there are also many reasons why film investing is DIFFERENT like startup investing, and maybe I’ll list those in another post.

In the meantime, if you are thinking about investing in a startup to support a tech entrepreneur, why not think about also investing in an indie film to support a film entrepreneur?

Zen and the Entrepreneur: The Startup Files

I just celebrated my birthday last weekend and as always, I found it a good time to reflect on the past year and the upcoming year. (Perhaps this is a good idea for all of us, since December 17 was also the day the war in Iraq was finally, finally over, and also the same day that Kim Jong Il, the leader of North Korea, keeled over).

A birthday seems to me like a more natural time to make resolutions for the next year, so that's what I did. One of mine was to write more. Which brings me here.

When I started this blog years ago, my plan was to write mostly about startups, along with some occasional tidbits about zen, meditation, science fiction, or anything else which popped into my head since the last entry, as long as I could somehow relate it back to the experience of starting and growing a company.

Like most things in life, it’s pretty easy to get dragged off track!

Two obvious examples: when I spent at year at Stanford Business School, this blog became about what life was like at the GSB (which led my classmates to have a running joke - whenever anyone said anything really funny or controversial, they’d to turn to me and blurt out: “Don’t put that in the blog!!”).

And, just last week, when I’d restarted the blog after a 1.5 year hiatus, I felt compelled to write about the Daily Show’s (wildly inaccurate) portrayal of my interview with them (See The Top 10 Things that the Daily Show with John Stewart Got Wrong About Tap Fish).

Of course, I'm sure there will be plenty of controversial and off-topic posts in the year to come (I promise!), but for now I want to shift the blog back to where I started. In this spirit, I thought I’d re-link to some of my favorite posts about… you guessed it… entrepreneurship (this is, after all, called the Zen Entrepreneur blog).

I’d like to dedicate these posts to those fearless individuals who, in the past year or in the upcoming year, despite the terrible economy, are willing to leave their well paying jobs, work long hard hours for little (if any) immediate reward, to take a risk and start a new company. In the process you will literally be creating something out of nothing, hopefully creating lots of jobs in the process.

I won't deny it can be stressful (if you've never had employees depending on you for their paychecks, month after month, or a mortgage of your own to pay without any paycheck coming in, or had investors and/or customers literally yelling at you ... well, welcome to the everyday world of a startup founder). But it can also be very rewarding on the days when things go right. And there are definitely some of those days too!

Here's to you:

• The Curious Case of Steve Jobs: Intuition and the Entrepreneur

  one-liner: “Don't let the noise of others' opinions drown out your own inner voice. ”

• Social Entrepreneur: From a Wacky Idea to the Nobel Prize

  one-liner : “Even the wackiest idea can make a huge difference. This happened when most of us had no idea what micro-loans were.”

• The Bootstrapper’s Dilemma

  One-liner: “When you got no cash, the real question is: To Focus or Not To Focus??"

• Build it Fast, But Make it Last

  0ne-liner: “Is your Agile really better than his Waterfall for a new software product? Is there really any good methodology for building software in a startup?”

• Poetry for Entrepreneurs: Love My Startup More Than You.

  one-liner: "Silly poem I wrote to the tune of an old jimmy when I was kicking around unemployed in Silicon Valley."

Here's to an interesting year ahead for all of you who are already on, or about to jump onto, your own entrepreneurial journey!

The Curious Case of Steve Jobs: Intuition and the Entrepreneur

“Don't let the noise of others' opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

- Steve Jobs, Stanford Commencement, 2005

Wow it’s been a long time since I’ve written an entry (the last once was written just before I sold my iPhone gaming company, Gameview Studios, to DeNA) in 2010. I’d like to re-start my blog with two topics that are dear and near to my heart: following your intuition and the death of Steve jobs.

Steve’s death on October 5, 2011 caused a literal outflowing of emotion, analysis and opining: hundreds, perhaps thousands of pages have been written in the last month alone since his death. And that’s not counting Walter Isaacson’s 600 plus page biography.

Some of these focused on his achievements at Apple and Pixar, some on his tumultuous personality, some on his “insanely great” products like the Mac and the iPhone, some on how he ran Apple after his comeback, some on the impact he’s had on (count them) at least five different industries, some comparing him to Walt Disney and Henry Ford combined.

So...what’s left to say?

For me one of the most inspiring (and overlooked) aspects of Jobs’ career and philosophy was his reliance on his own intuition even in the face of the “noise of others’ opinions”. I haven’t seen much written on it, so using his own words as much as possible, here goes:

Most writers about successful business persons like to try to reduce what they did to a set of pithy “principles” you can follow to be just “like Mike”. With Jobs, I think that’s pretty much impossible. It’s like asking for the “step-by-step formula” for how to “think different”! If it could be reduced to a formula…well you get the point.

Intuition vs. Analysis

Jobs attributed much of his success to his ability to follow his own “inner knowing”, even when analysts and the “experts” disagreed. He was quoted as saying he hated focus groups because consumers “don’t know what they want until we show it to them”. Instead, he insisted on having an “intuitive” feel for when a product was “just right” and when it felt “wrong”.

This is pretty much the opposite of what you will learn from business schools (even more progressive west coast ones like Stanford) about building products and companies. It’s even different from what most venture capitalists and startup gurus here in the valley will tell you - which is to analyze a market, make sure the analysis confirms that the market is “big enough”, then interview the people in that market to find out their needs. It’s kind of ironic that one of the biggest icons of Silicon Valley would disagree with the way business is being done here.

Tim Cook, who replaced Jobs as the CEO at Apple, talks about following his own intuition when he decided to join Apple after meeting with Jobs. “Engineers are taught to make a decision analytically but there are times when relying on gut or intuition are indispensable.”

Where did Jobs get this mindset from? A big part of his reliance on intuition vs. analysis came as a result of his own search for truth. When he was young, he dropped out of Reed College (again the opposite of what logic would tell you to do if you want to be a successful entrepreneur) and followed his own intuition down several notable paths.

The first path, his quest for enlightenment, led him first on a trip to India chasing some guru, and later transformed into his study of Zen meditation here in the Bay area. “The people in the Indian countryside don’t use their intellect like we do, “ said Jobs. “They use their intuition instead, and their intuition is far more developed than in the rest of the world.”

He concluded with: “Intuition is a very powerful thing.” (src: Isaacson's biography).

Continuing his search for enlightenment when he came back to the US in the 1970’s he experimented with Zen meditation (an interest he kept up for the rest of his life) and mind-altering drugs (which as far as I know, he did not keep up for the rest of his life). Now I can’t speak for LSD (since I’ve never taken it), but I can vouch that meditation can be indispensible for learning about different states of mind and teaching you how to follow your own intuition.

Steve Jobs said: “If you just sit and observe, you will see how restless your mind is. If you try to calm it, it only makes it worse, but over time, it does calm, and when it does, there’s room to hear more subtle things- that’s when your intuition starts to blossom and you start to see things more clearly and be in the present more. Your mind just slows down, and you see a tremendous expanse in the moment.”

According to his longtime friend, Daniel Kottke, who’d known him since his college days: “Steve is very much Zen. It was a deep influence. You see it in his whole approach of stark, minimalist aesthetics, intense focus.”

Zen influenced Steve Jobs in other ways too – including his appreciation of a minimalist ethic that rubbed off on his insistence that user interfaces and products be as simple as possible. When creating great products like the Macintosh and the original iPod, Jobs talked about having this intuitive knowing when something had met this ethic of simplicity and when it could be improved. Although he wasn't always right, he was right way more often than he was wrong.

Connecting the Dots: One thing leads to another

Of course, it’s not always easy to follow your intuition when it’s telling you something that’s different from what others tell you should “logically” be done. Jobs own life is a good example – ranging from his decision to drop out of Reed to what looked like a very poor investment decision to fund Pixar, a money-losing operation that he bought from George Lucas for $10 million in the eighties, and then continued to fund for years (to the tune of $50 million of his own personal money), until they came out with Toy Story in the nineties and became the landmark success story we know about today.

I think it only happens if you can have confidence in yourself and your own ability to find what’s right for you. Following your intuition often means follow your own path, even if you can’t see exactly where it’s taking you.

Jobs often gave an example from the time when he dropped out of college. He said that once he’d officially dropped out, he could take the classes that he “wanted to take” rather than the ones that “they were requiring him to take”, showing a streak of his habitual disrespect for authority.

He saw a flyers on campus for a calligraphy class, and decided to follow his intuition and take this class, where he learned about proportional fonts, serif vs. non-serif fonts. Jobs would say about this time: “It was beautiful, historical, artistically subtle in a way that science can't capture, and I found it fascinating. None of this had even a hope of any practical application in my life.”

Later, when it came time to design the Mac, he insisted that there be “fonts” of different types, rather than the usual stale green fonts that were popular at the time. Again in his own words:

“And we designed it all into the Mac. It was the first computer with beautiful typography. If I had never dropped in on that single course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts. And since Windows just copied the Mac, it's likely that no personal computer would have them. If I had never dropped out, I would have never dropped in on this calligraphy class, and personal computers might not have the wonderful typography that they do.”

This was perhaps the most important example of what Jobs referred to as “connecting the dots” – when something in your life unexpectedly connects to something at a far later date, but you are completely unaware of the influence it’ll have at the time.

I think that most successful entrepreneurs benefit from “connecting the dots” – bringing together seemingly unconnected experiences into a single whole that somehow is more than the sum of the parts. How do you know? You don’t – you have to have the courage though to follow your intuition.

I’ll end, as I began, with Steve Jobs in his own words from the now famous Stanford speech:

“Again, you can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

Mobile App Development: iPhone vs. Android: Books, Blackjack, and Tap Fish!

It’s been a while since I last posted. So what have I been up to?

Mobile, Mobile, Mobile

I've been doing mobile game development using our offshore team for both Apple and Google platforms (iPhone / iPod vs. Android) – and this entry is about what I’ve learned during that process.

Android vs. iPhone Gaming, Round 1: Quality and User Experience

In general, game developers have flocked to the iPhone/iPod in big numbers (there are 140K apps in the appstore and my guesis is that 70% of those are games), but not as many to the Android platform. Why not?

My own informal opinion is that to date, games on android have been less polished in all respects – the graphics and animation and gameplay. Historically, part of the reason for this was the horsepower of the phones themselves, though with Motorola’s Droid phone and Google's Nexus One, the physical hardware and OS has started to catch up to the iPhone. But it takes time to develop software, so it may be a while before a large number of android games “catch up" in quality and user experience to the iPhone.

We released two android games, Bay Blackjack, and Bay Connect 3-4-5, earlier this year (they’re live on the android market now - download them if you have an android phone!).

Our goal with these two games was to try to make android games that “looked” as good and played as well as iPhone games. Did we succeed? I think so. On the Motorola Droid phone, which I have in addition to my iPhone, these two games play as well as any iPhone versions.

So on Quality and User Experience, who wins? The iphone still provides a better game play environment, and with the upcoming iPad this gap may widen. However, as software developers eventually upgrade their android games, it’s possible in a year or more that the average android game will be as “good as” the average iPhone game.

Google vs. Apple, Round 2: Monetization and User Acquisition?

How about on the monetization and user acquisition front?

These are pretty important to developers; that's how we decide where to spend our time and money, which is what results in quality games in the end.

On android, these are still big issues: How do you advertise your apps, and how do you make money from your apps? Right now, it’s still just a paid/free application model – but the pre-requisite to making money (whether that money is from paid apps or advertising or virtual good sales) is to get LOTS of users.

Our Blackjack game has gotten more than 10K users in its first month. While that’s not bad, those are very small numbers when it comes to the iphone.

We released Tap Fish on the iphone in March. It has been a big success – one of the top games in March - within a week of launch, we were the #2 free app in the entire iTunes app store (that's right, #2 most downloaded out of 140,000 apps).

In contrast with android, though, you need something like 10K+ downloads per day to reach the top 25 list in the appstore.

Like other developers, since there is no built in monetization for our android games, we have been unwilling to spend a lot of money on distribution. For Tap Fish, we use Tapjoy (a company that I invested in) for both distribution and monetization, and use apple’s paid models to augment this revenue stream. Tapjoy is just releasing their SDK for android so this may spicen things up a bit.

Who wins Round 2? The iPhone eco-system for making money is much further along than android, by a long shot.

Round 3, Android Market vs. Apple iTunes App Store: Development and Deployment

You would think that this is easy win for apple – the iTunes app store has more than a hundred thousand apps already, with billions of downloads.

Not so fast, though. It turns out that development for Android is a lot easier than development for the iphone. With Android you usually write code in java, and there are millions of java developers who can be trained to write android apps pretty quickly.

Apple, on the other hand, uses Objective C, which was a very progressive language when it came out in the 1990’s – Steve Jobs and his buddies at NeXT computer laid the foundations for it long ago. I remember seeing demos of this in 1992 when I was still at MIT.

Back then, Steve Jobs' development language was cool and hip and new. Today it’s pretty arcane – you still have to do lots of memory management, syntax is unlike most other languages, and what goes for visual programming (again it was cool in 1992) seems kind of ancient now. Ever heard of Visual Basic?

Plus, there are only about 20 developers in the whole world who have more than 1 year experience with Objective C (LOL – just kidding about that number – actually we probably have 20 developers in our Pakistan operation alone who now have very good iPhone experience). Still, good C programmers (which Objective C is kinda sorta based on) are hard to find and the number of C/C++ developers has been in decline since about 1997. Since most universities (including MIT) switched to using java almost 10 years ago, good java programmers are not hard to find (though of course, good programmers can be, no matter what language you're using).

Round 3, part-1 for development, the winner is... Android, by a long shot!

How about Deployment and testing?

Android apps are very easy to deploy – you just get apk file and put it onto your device. That’s it. After struggling with apple’s very confusing and dare I say it, BrainDead approach to distribution of apps during development (using things called provisioning profiles and entitlements that even MIT engineers have a really hard time figuring out).

And that’s just for deploying to development/test devices. Don’t get me started on deploying to the App store which requires that Apple go through a review process. I know people whose applications were delayed by a month waiting for apple to review their apps and addressing apple’s multiple rejections.

That said, Apple has come a long way since the bad old days of waiting weeks for your app to be approved. For example, we came out with a new version of our Book Bazaar app - which now includes support for searching for books at local libraries (thanks OCLC) as well as local bookstores. It only took us 1 day (less than 24 hours) to get this update through apple’s review process – thank you Apple!

New apps can take up to 7 days - still a pain, but they're often approved in less than that, so good work apple! Nevertheless, the fact that i'm saying Apple has improved means that Round 3 still squarely goes to: Android!

Of course, if you are a mobile developer and you have any significant amount of sales, the lion’s share of it probably comes from the iPhone, so Google’s advantage in development and deployment may not mean much in terms of the market. The rule of thumb, as always, is: follow the money.

What about other platforms?

We have done a little bit on other mobile platforms - blackberry, palm, nokia, but not much compared to the "big two" mobile platforms.

Last week I attended the GDC (Game Developers Conference) in San Francisco, where the two hottest platforms to develop for were... Facebook and the iPhone.

Of course, Facebook still has many more users today than the iPhone, but it's so ... 2007 (ok, i know i'm going to get into trouble for calling Facebook a "legacy" platform" LOL!!). But that's kind of like saying that AOL had more users than the Internet in 1995. Of course it did, but not for long. When you count the growth in the number of smartphones out there, facebook on mobile may end up being more used than facebook on PC's and Macs soon enough.

It's very rare when you see computing shifting to a completely new hardware platform - it only happens once every 10 or 20 (or maybe even only every 30) years. The last time such a major shift happened was the introduction of PC's and Macs in the eighties. Even the arrival of the Web in the nineties (which was BIG with a capital B) didn't prompt a wholesale shift in physical hardware - it just prompted people to buy more PC's and Macs.

And that's why i'm all about: Mobile, Mobile, Mobile!

Filming, Blogging, Novel-ing, and Ranjan has Died

Many of you have written me about not keeping my blog up to date since graduation from Stanford Business School back in June.

Thanks for your gentle nudges – I’m taking your advice and resuming my blog postings, starting with a very long one about what I’ve been up to since business school, and some very sad news I received today about an old friend and one of the biggest movers and shakers in the Indian software industry, Ranjan Das.

But first, what have I been up to?Read More Here...

Turquoise Makes the Wall Street Journal

As many of you know, I have a pretty strong interest in films and film-making (the two don’t always go together).

A few years ago I was an investor and Executive Producer of my first feature film, called Turquoise Rose, shot on the Navajo reservation in Arizona. For me, as usual, I stumbled into this role by helping an aspiring young, determined and talented film-maker, Travis Hamilton, create his first feature film.

Turquoise, shot on an ultra low budget (even by startup or indie movie standards) never made it onto the national circuit, so you probably didn’t see it. But, through the determination of the film-makers it was shown in limited theatrical release across the southwest.

It was a resounding success with its intended audience, Native Americans. It may have been the first feature film whose world premiere was on the Navajo reservation. Sometimes whole families would go to see it, multiple times. Of course, Hollywood rarely sees the merits of a little film like this, so we had to distribute it ourselves.

I also inadvertently found myself as one of very few investors in independent film who made a profit on my very first film investment. I know, Films are Risky Shmisky. So are startups.

So I’m now a member of a group of angel investors, called Film Angels, which invests in independent feature films and is located in the Bay Area. The idea is to use a Silicon Valley style of investing and bootstrapping to put out quality films at low budgets.

The Wall Street Journal wrote about Film Angels recently, and it turns out that Turquoise and my own investments were mentioned very prominently. Here’s a link:
http://blogs.wsj.com/venturecapital/2009/10/12/angel-group-likes-lights-camera-and-action-of-indie-films/

The full version of the article (on WSJ.com) which has to be accessed through Google News also mentions two upcoming films I’m involved with: Raspberry Magic, a small low-budget film about an Indian-American family (www.raspberrymagic.com) [look for it in 2010] and a big budget film series based on the Gap Series, a best-selling science fiction series from author Stephen Donaldson [look for it – well, I’m not really sure when yet].

Sid Searches for Enlightenment

One reason I haven’t blogged much this summer is that most of my writing energy has been directed to finishing a novel I’ve been working on - tentatively titled: “The Enlightenment of Sid: A Modern Quest For the Cure to Sickness, Old Age, and Death”.

It’s nominally about Spiritual Seeking, Buddhism, and Sufism, the mystical branch of Islam.

It follows the adventures of the main character, whose full name is Mohammad Siddhartha O’Leary (and who likes to be called, in fact insists on being called, simply Sid), whose parents were Pakistani and Irish, and who met at a Buddhist meditation seminar. Sid is going through a bit of a mid-life crisis, and finds himself compelled to go on a Quest.

The novel is inspired a bit by the famous novel Siddhartha, by Herman Hesse, about spiritual seeking, and a bit by the novel “The Lost Horizon” by James Hilton, which is about finding a Shangri La and was inspired by the Hunza region of Kashmir in Pakistan.

Sid takes place in the modern world and asks the question, is there really a literal answer to the questions that Buddha went to seek – i.e. is there a literal answer to the problems of Sickness, Old Age, and Death? If so, how would we find it today?

It also poses an important question: Do we need to turn to teachers to find our spiritual path – or is it something we can find on our own?

In the novel, Sid, while learning about the life of the Buddha and the Prophet Mohammad during his own search for enlightenment ends up in the mountains of Kashmir with a surprising dilemma.

There aren’t many books that are about both Buddhism and Islam – for good reason: at a simple glance the religions seem very far apart. But if you look closer, particularly in Pakistan, where tombs of Sufi saints are commonplace, you start to see similarities in mystical/experiential traditions.

Sufism, though not an organized sect of Islam, refers to many sects of Islamists which emphasize personal experience over simple ritual. Sufi sects were led by iconoclasts like Jalaladin Rumi (who is well known in the west for his poetry), Ibn El Arabi (who is not so well known in the west), and Lal Shabhaz Qalander (who is virtually unknown outside of Pakistan), among others.

Anyways, that’s what the novel is about. I felt compelled to start writing it last year when I took a walking tour in Ireland (what a beautiful country) and when I visited Pakistan during December of last year, the novel took an important turn. [Yes, both countries play a big role in the novel].

Now that it’s “done”, when should you expect to be able to read it?

Well, if there’s one industry that recognizes small, quality projects even less than the traditional film industry, and is even slower, it would be the traditional publishing industry...so keep your fingers crossed - i'm sure it'll happen within this lifetime.

Ranjan Is Dead … Long Live Ranjan!

Speaking of religion and Death, I received some news that struck me very hard today. I guess Facebook is good for something other than making money for app developers, since several of my old college friends sent me messages on Facebook.

One of my closest friends from my years at MIT, Ranjan Das, passed away suddenly today in Mumbai, India. I won’t say much about his career in my blog, though he had a very successful one, as outline by this article: http://business.rediff.com/report/2009/oct/22/tech-sap-india-president-das-passes-away.htm

I don’t know the exact situation, other than it had to do with a heart attack. In fact, I haven’t seen Ranjan in quite a few years, and didn't even know that he'd moved back to India.

Nevertheless, I still found the news devastating.

Why?

Not only because Ranjan was such a talented, smart, witty guy ( think about this: in 1992, only two students from the entire country of India, which had a population of some 800 million at the time, were admitted to MIT, and Ranjan was one of them).

Not only because he was a great friend during my college years. During those years, Ranjan was the informal anchor for a rag-tag social group of misfits that included, at different times during our four years at MIT, a Sri Lankan, a White Guy from Jersey, One or more Bangladeshis, Indians, Pakistanis, a Nigerian, a German, a Nepali, and even one ABCD (that would be me as the resident American Born Confused Desi of the group, even though technically I wasn’t born in America and never considered myself confused!).

And it hit me hard not only because I felt guilty that I hadn’t seen my old friend in years. When I moved to the Bay Are a few years ago, I had always planned to get in touch with Ranjan and spend some social time together – rather than only talking about work and software and startups. There were still so many things to discuss and laugh about.

How many other close friends from those years haven’t I seen in ages? How easy it is as we get caught up in our own lives, our careers, that we don’t make time for those who have added something to our lives.

Not only because he was in the same age and to use a cliché (something Ranjan, a creative writer in those days, would never want me to do), it makes us face our own mortality. All of us, my old classmates and I, are approaching that mid-life age of forty. Hearing about Ranjan has really made me pause and think about things.

If death can strike like a lightening bolt so quickly, so unexpectedly, then shouldn’t we make sure we’re spending our lives doing the things we really enjoy, the things we would regret doing if it were to happen to us?

Mainly, though, I was devastated because, though I hadn’t seen him in years, I can still see him so clearly in my mind’s eye that it doesn't seem real. Even though he was nearly forty when he died, I can still still see him so clearly as he was 20 years ago, when we were twenty.

Whether we were having late night conversations about Xeno’s paradox (umm, it’s a physics thing), working on problem sets late at night for differential equations (Ranjan made up his nickname for me when he discovered that while I was pretty good at taking tests, I was never very good at completing problem sets on time. “Hey scholar!” he called me for the rest of our years at MIT, “you can copy my answers for the problem set,” while we called 783-BIRD or Domino’s to order late night food), or taking the bus to Wellesley to try to meet some girls (umm, don’t think we ever really did meet many girls from Wellesley though) or when we were carrying our little brown suitcases filled with home-made computers for our Computer Engineering Class at MIT (6.004) to computer lab in the middle of a snow-filled night in Boston.

The suitcases housed makeshift computers that we built up during the semester – they were called “Maybe” machines. To this day, I can still hear Ranjan singing his rendition of some old song, as we trudged through the snow, hoping our “Maybe” computers would work when we got the lab, “Come on Baby…. Don’t say Maybe…”

At that time, I didn’t realize that Ranjan was a trailblazer who was inspiring me in way inspiring me in many ways.

Amidst a sea of engineers, he was the rare creative, wrote short stories in both his native tongue and in English. When I visited him in the Bay Area a few years after college, he told me about a writing group he was in. A few years later, when I was writing more seriously, Ranjan inspired me to start my own writing group.

Among a wave of scientists who didn’t believe much in religion, he investigated them using logic and clarity of mind, and even got me interested in Buddhism well before I did any exploration of it on my own and (even though he wasn’t a Buddhist).

In a time when I was appreciating only Hollywood blockbusters, Ranjan taught me to appreciate off-beat indie films and quality filmmakers (Barton Fink and Fellini, anyone?).

Of course most of these memories are from long ago and they go on and on. This makes me realize the biggest shame of all, is that though I knew Ranjan quite well as a young man, I didn’t know him in his thirties, a successful business executive.

Even so, I can see him more clearly than ever, in whatever dimension of reality he’s moved on to, amused that all of his old friends have suddenly come out of the woodwork to appreciate him on the news of his death. He would be standing there, making up nicknames for all of us and for all of his recent colleagues, as he sings some rendition of some old song, changing he words to amuse himself, and to comfort his wife and family to not be sad, that he’s OK…he’s just moved on to the next thing…

Ranjan has died, but Ranjan lives on!

Stanford Business, Entry 7: New Study Groups, Philosophy, Desert Survial and Jack Welch

So, last week we officially ended our pre-term. This was an important milestone for us, as many of us in the Sloan program hadn't been to school for many years. Despite the fact that it wasn't officially graded, we learned a lot about how to work in Study Groups, about business school generally, and about Micro(MicroEcon, not MicroSoft, though the CEO of Microsoft did visit this week - will post more about that in my next post), Strategy, and Managerial Accounting specifically (see previous posts for specifics of what we learned in these classes).

I was personally excited about the end of the pre-term because it meant that we would shift to a more normal schedule: instead of starting class in the morning each day, some days would be off (well at least Wednesday would be our day off), and on most days class wouldn't start until 10 am! Yahooooo! (Wasn't that what customers of Wamu said in their commercials? Turns out Wamu went bankrupt this week - more on the financial crises and what our professors have to say about it later).
Read More...

Those of you following this blog will know that i like to follow "engineer's hours", which don't seem to work so well at a business school full of the best-and-brightest-early-risers. By "bright-and-early-risers" I mean those who don't follow engineer's hours - for me, I'm usually asleep at 8 am; Given that I probably didn't get to sleep until 2 am, that would mean i'm just finishing my sixth hour of sleep. For some business school students, 8am seems to be "mid-day", meaning they have been up for at least 3 hours.

Last Wednesday, on the last day of the pre-enrollment bootcamp, we had farewells from all of our three professors (actually one of them, our economics professor, is going to continue in the fall term - but as for the other two, that was it).



Someone in the class had the idea that we should give the profs a little gift as a token of our appreciation. This was a brilliant example of an idea starting at the grass roots level reaching fulfillment at a blistering pace. From an email that was sent out on Tuesday, by Wednesday someone in the class had bought three bottles of wine as appreciation for each of our professors: A Chilean wine, a French wine, and an Argentinian wine. Then we had our Chilean fellow, our French fellow, and our Argentinian fellow present the wines to each of the professors.

So what else has happened happened last week? Here are some highlights:

New Study Groups



As I mentioned before, our Study Group was just starting to hum by the third week of pre-enrollment. But then, suddenly, and without warning, just as classes ended on Wednesday, new Study Group assignments were sprung upon us!

At least that's how it felt - in actuality, we knew that this was coming. Despite our occasional hiccups, I realized that I was going to miss my initial study group. We'd gotten to know each other well. We had even become forgiving of each other's idiosyncrasies and learned (for the most part) how to channel these unique qualities into getting the best result for the group. (Err, except when we had to survive in the desert, which didn't go so well - see section on Half Moon Bay retreat below).

I figured that the new group might also be willing to work out some compromise so that we weren't meeting at the crack of dawn every single day. Anyways since we had a few days before class began (thursday was our retreat; friday was a free day, the weekend was free, and classes didn't start until monday). Well the weekend wasn't really free since as usual in Business School, we had both readings and problem sets for the first day of class.

As soon as the study group assignments were handed out, most of the students left to enjoy some sun and relaxation after what seemed like a very long pre-term. Just as I grabbed my bag to leave the room, I was informed that our study group was going to meet there and then!
Well, I figured, Business School is about efficiency, after all, so I put aside my toughts of r&r and went to the Study Group meeting, figuring that at least this meant we wouldn't have to meet on Monday. And at least one other member of my group, a Marine biologist with multiple degrees from Stanford already, had told me that she also was a night person, so the two of us might have some sway with the rest of the group members.

The group met for a while, but we accomplished only one cooncrete thing: Our first "official meeting" was going to be at 8:30 am on Monday morning before our first class. And we were all expected to have done our reading and homework before the meeting.

Sigh. My endless quest for a laid back study group goes on.

The old doubts started to creep back in; I looked out the little tiny window in our study group room, literally and metaphorically gazing "across the street", wondering if there wasn't a spot in an engineering class which began at 3 pm meeting only once a week with my name on it... Actually I had already decided to audit a computer science class (it would be a shame to spend this whole year and Stanford and not take advantage of the incredible engineering and comp sci departments). And it was scheduled to start at 4:15 pm on Tuesday ; not that I'm counting, but that would be more than seven hours later than our study group meetings. Ahh! Engineers hours.



Poets, Quants, and a Philosopher


In biz school (at least at Stanford), students are often grouped into poets (those with liberal arts education), and the quants (those with more financial, numerical, or engineering background). I should fit nicely into that second category, the quants, given my degree in computer science from MIT, but somehow I don't.

Poets had trouble with quantitative subjects and wanted to spend time talking about issues. That sort of fit me, as I definitely enjoyed the class discussions more than the actual material that was being covered . But I didn't have problem with quantitative subjects, other than being motivated to sit in class for hours on end. Quants could solve quantitative problems easily, but had problems with soft mushy wordy subjects. That kinda fit me too - except that I kind of enjoy soft, mushy, wordy subjects.

In fact, I don't have a problem with either kind of subject; I just have trouble getting motivated to get to class on time, day after day. I remember in elementary school one of the determinants of our grade was "attendance" - those who attended class automatically got a better grade than those who didn't. I didn't always find this fair, if we ended up learning the same things, but as an elementary student you're taught to respect the adults point of view. When I got to MIT, it was like having a straitjacket removed. I could go to class when I wanted; skip it when I wanted; as long as I passed the exams, I could pursue my extra-curricular activities with vim and vigor.

Believe it or not, Business School is a little bit like elementary school in this regard. In almost all of our classes, attendance is graded. If you don't attend, you're not participating - and you can lose up to 20% of your final grade on this.

Despite the lack of structure during my undergraduate days, when I'd first graduated with a bachelors, I had been a very motivated young man. I remember showing up for work at my very first startup, a company called DiVA (spun out of the MIT Media Lab), at 8:30 am wearing a suit hoping to make a good impression. No one was there. I couldn't even get into the office so I sat down outside the front door. In fact, around 10 am, people started to wander in, and were wondering why I was wearing a suit (was I a customer? was I interviewing for a job?).

In Business School, the exact opposite was happening. I would show up at 10 am, a few minutes late for class, wearing jeans and whatever shirt I could find as I scrambled from my dorm (which several of my b-school colleagues have pointed out is usually the same two shirts, again and again). In this case, everyone else had already been jogging, had discussed the homework, kissed their wives (or husbands) goodbye, dropped off the kids at school, eaten breakfast, and reviewed today's case study, all before I had even gotten out of bed!

Even harder (and more disturbing) than attending classes, I can't seem to stop my mind wandering to the philosophical underpinnings of what the heck we're really trying to accomplish in business school. Rather than try to figure out the marginal cost curve which yields maximum output for a given set of resources (a company, or even a country), I found myself questioning the assumption (made on the very first day of econ class) that a country is best off when they have made maximum utilization of their resources from an economic point of view. I have met many friends from other countries (who were not in business school) and it wasn't always clear to me that we were much better off. I remember talking to a woman from Cape Verde a few years ago, and she went on and on about how much happier people in her country were than we are here in the US. This is despite the fact that we have such a significantly higher "standard of living" than say Cape Verde.

In strategy class, rather than simply analyzing what made a company successful, I found myself wondering whether strategy can really be taught simply by talking about successful companies in the past (the case method, which was first pioneered by Harvard Business School and is now used pretty heavily by Stanford, though we also use textbooks heavily in our other classes). When we studied WIP (work in progress inventory accounts) in accounting, I couldn't help but start thinking about how the accounting system seems to have been built entirely for manufacturing firms, and how services firms, software firms, and Internet firms aren't really well represented by the current accounting system - shouldn't somebody be redesigning the system to reflect the new reality?


Another example: George Parker, a former Dean of the Sloan program at Stanford, and a well known finance dude, laid out for us the fundamental structure of the financial services sector, partly in response to the current financial crisis. As a result of his talk, it would be natural to start thinking about the mechanics of the interest rate, how banks and investment bank works and what interest rates should be charged. He divided the world into 1) people who save money (you, me, our friendly neighborhood corporations, and governments) and 2) people who need money (you, me, our friendly neighborhood corporations), and how this created the need for banks in the first place.

He pointed out that the average 3% margin of banks between what they paid for capital (what they pay us for depositing savings) and the inherent mismatch of needs between the providers of capital (we want to be able to pull out our money short term, with no risk) and the recipients of capital (who want to borrow money for as long as 30 years, and have inherent risk in the projects they invest in), he told us that some shakiness was inevitable.

Rather than thinking about the equity/debt ratios and what interest rates were sustainable to maximize profits, I found myself wondering about the stability of the whole financial services sector altogether, in the very long term. Was it really sustainable to have two parties with such different interests mediated by a bank who owes us our money back every time we ask for it, but never actually has all that money available? Was the financial system, based the idea of cost of capital (represented as i or r in our finance equations) really sustainable, in the long run, or were "runs on the bank" unavoidable, even inevitable? WaMu's recent crash (the biggest bank failure in history) underscores this.

There are other financial systems that don't rely on interest as the key motivator (the Islamic financial system, for example, does not allow charge for money). Is it possible to have an economic or financial system where interest (the cost of capital) is not the sole, end all, be all. But it's not clear to me that the Islamics system is inherently any more stable either - since they just change the word profit for "interest" and charge about the same as the "prevailing current interest" rate, just calling it something else.

But business school students aren't supposed to be philosophers! We're supposed to be here to get skills and perspective that helps us to get ahead in our careers, and make more money, not question the fundamental nature of the subjects we're studying. So on to career advancement and skills training!


Incompetent Jerks and Lovable Fools in the Desert


On Thursday we had a field trip to Half Moon Bay for a "team-building" retreat. The bus was going to leave from Littlefield arch at 8:30 am. Sharp. By the time I got there, I learned that some of my classmates (who'd gotten to know me well) were already taking bets to see how late I'd be and if I'd miss the bus and have to drive to Half Moon Bay on my own. Oops! Sorry to disappoint, guys, but on that day, I made it on time (there were even a few students who showed up after me).

So what does one do on a "team-building" retreat from arguably the top business school in the country?

The presenter started out by talking about interpersonal skills and how important they were. She brought up the classic consultant (and MBA) tool, the two by two matrix - divided into quadrants. Along the horizontal axis was "interpersonal skills" and along the vertical axis was interpersonal skills. The people in the top right quadrant (Lovable, Competent Heros, or some moniker like that) were people everyone wanted to work with. The bottom left quadrant (Incompetent Jerks), were people that no one wanted to work with because they didn't know what they were doing and they were hard to work with.

The two tricky quadrants were the upper left - "Competent Jerk" is someone who is very good at what they do, but has bad interpersonal skills, and "Lovable Fools", those people who have good interpersonal skills and get along with everyone, but aren't very good at what they do. She asked us how many of us would like to work for one or the other. Quite a few raised their hands under working for "Competent Jerks", with some people giving an explanation that at least that way they'd learn something, even if thier boss was a jerk. In fact, she continued, when people are asked this question in a survey, a large percentage answer "Competent Jerks". But when people are observed actually choosing people to work for, they almost always favor working for "Lovable Fools" rather than "Competent Jerks". This was interesting.

We spent the morning talking about interpersonal skills and qualities that different people in the class had. This consisted of an exercise where we each had a number of cards - each colored differently and each with a "personal quality" on them - for example "does well under pressure", "is a diligent worker", "speaks his mind", "gets things done methodically", "is a visionary", etc., and we had to hand out the cards to people in our class if we thought the card didn't describe us, but described someone else. I won't get into specifics but I think we were all surprised how well (or not so well) our classmates knew us.

Half-moon bay is a nice little beach on the other side of the hills that define the western edge of Silicon Valley. During lunch a few of us went on a walk along the beach while our Marine biologist gave us a tour of the little aquatic life that lives near the seashore. "I may not know much about balance sheets," she quipped after pointing out the different kinds of snails and barnacles that lived there, "but I do know alot about fish!". Somehow I don't think that's going to help her through businesss school, but it sure was a lot of fun! (except for the time when I tired to touch a sea enenemy, something I didn't even know existed 24 hours earlier, and it squirted me; hopefully it was just water it sprayed on me!).

In the afternoon, we divided into our old study groups and had to face the highlight of our trip to Half Moon Bay, a group test: The Desert Survival scenario. We were all on a plane (let's suppose). Let's also suppose that we crash-landed int he Sonoran desert (that's south of Arizona near the Mexico border). Let's further suppose that the pilot and copilot were killed in the crash, but miraculously, we are all OK. Let's one-more-time suppose that we have a series of items - including a parachute, a swiss knife, a topcoast, a mirror, a quart of water each, salt tablets, and on and on - and it is the goal of the group to come up with rankings of items by importance. I found myself thinking that this scenario was written well before the iphone was out; I would just do a GPS lookup of where we were and call someone to pick us up.

iPhone-less, the sole determinant of our survival would be our rankings of the importance of each item. We were revealed at the end to the the rankings of a "survival expert", our team would either survive or die in the desert, depending on how close our rankings were to his rankings.

Needless to say, most teams died on the desert! Ours was particularly bad, and my own score was more than particularly bad (though there might have been one person in our whole class who scored worse than I did!).

The trick happened to be the two most important items - I somehow ended up ranking them both last. Our group mostly agreed on our rankings, though we had a few disagreemetns. One member of our group insisted that the most important item (i won't tell you which one it is, since you might want to go thru this exercise yourself) was among the most important, we (myself included) didn't listen to him! Oops!

This situation, one person who is in a minority, disagreeing passionately with the group, who is too far gone to listen, seems to come up again and again.


I thought we'd learned our lesson about this. But this week, in our first OB (organizational behavior) class, it happened again, in our new Study Groups. All the members of my study group agreed on one position, except one of us - in this case it was me -- passionately disagreed with the group.

In both situations, the desert scenario (where I was with the group) and the OB scenario (I'll describe the actual scenario in my next blog entry), where I was the dissenter, it turned out that the dissenter ended up being the person who was "most right" and the group ended up being "most wrong". This was an interesting result- in both cases, neither of us had the data or votes to back it up, we were operating on what is one of my favorite topics, intuition.

One of our team members, John, said that in his real life job (in the construction industry), when one of his team members disagrees very passionately about something, he usually takes the time to really hear that person out and understand why they feel so strongly. But neither he nor I nor the rest of our group did that in the desert scenario, beacuse we thought we were pressed for time and had agreement from the other group members. Maybe the wisdom of crowds isn't as great as it's cracked up to be!



Jack

In the movie industry, whenever someone says "Jack" in a knowing way, they all know who's being talked about: Jack Nicholson, the famouse movie star who has won multiple best actor Oscars, and who has a personality that is recognizable wherever he goes.

In businesss school, when someone says "Jack" in a knowing way, they are also talking about an easily recognizable celebrity - in this case, Jack Welch, who was CEO of General Electric for many years, and considered by some to be among the greatest of American CEO's. Though John Q. Citizen might not recognize Welch, John Q. BusinessSchoolStudent certinaly does. Even though Welch retired a few years ago from the CEO slot at GE, he is a recognizable figure in the business section of the bookstore and on financial news programs on TV.

We studied a case in Strategy class on General Electric, and reviewd what happend during multiple CEO's ending up on Jack Welch, who many consider one of the most visionary CEO's of his time. One of the elements of his vision for GE was that they be #1 or #2 in every industry they were in - and that sometimes meant selling businesses which were profitable but couldn't get there, or buying into other businesses which were already there. This vision also originally led to a process of "de-staffing" early on during GE's days.

The class seemed very energized by this discussion about GE and about Welch in particular. After the discussion, the professor showed us a clip of Jack speaking at some conference. The professor said it was the most "geniuine" clip he'd seen, even though it's fairly old. Jack talked very passionately about how many people in corporations have trouble coming to grips with a six letter word: Reality. He spoke exuberantly about how corporate staffs (in big companies) don't make anything, don't sell anything,a nd they should be there primarily to support the field and how often they don't, and how companies need to be restructured for that.

Like the rest of the class, I found this talk inspiring, up to a point. Then later, as I was wandering around campus, the philosopher in me came out,and I began to wonder what I really thought about Jack Welch, his philosophy, and the culture of adoration that's gone up around him. Something was nagging at me and I couldn't quite articulate it until later.

Note: if you read on, you might be exposed to heretical views on being acorporate CEO and might, like I am in danger of, be excommunicated from the religion of American Business School Students.

So let me start by saying that I agree that Welch was a wildly successful CEO who brought in profits. And even an effective leader. But I guess i get a little unsettled when they talk about Welch being a visionary for American business.

It strikes me that "Being #1 or #2 in every industry you're in" isn't much of a vision. It's more of a performance measure. It's kind of like going to college and saying my vision of college is to get an A or B in every class I take. And if I can't get an A or B, then I'm going to drop the class. And I'm only going to take classes where I can get an A or a B. Sorry guys, but that's not a vision - that's a grade point average.

It also struck me that Jack was a great operator but not much of a visionary about the business units themselves, which seemd to have no rhyme or reason why they were part of GE except Welch's three circles (which didn't strike me as showing any kind of real understanding of the new or old technology or markets that GE was in), just how each was performing.

OK, granted I'm operating on limited information, of course. And no doubt, Jack is a "great" guy who knows how to squeeze every penny of performance out of the people that work for him; I just disagree that he's much of a visionary [of course when the Business Inquisition gets to me, I may change my mind on all these philosophical topics, and get back to making profits, yeah!].

Speaking of a vision of a grade point average, I have a vision too: that i'm not going to get A's or B's in my classes unless I stop spending all my time writing and get back to studying!

Stay tuned for more on the first week of the official term, the arrival of the MBA's and the undergrads onto the Stanford campus, and the house that Software Built. Coming Soon to a blog near you!

SPECIAL DISCLAIMER: the opinions and experiences recounted in these blog entries about my year at Stanford Business School for the Sloan Program are my own personal observations and ranting. This blog is not endorsed by either the Stanford GSB or by any of my fellow Fellows.