The Fish Stinks From the Head

That's an excellent Chinese saying that is much more elegant than what I used to say (*&^! flows downhill). I now use the Chinese adage when referring to CEOs and the effects, both positive and negative, they have on their organizations. Whatever he/she does will affect the culture, all employees, and ultimately, I believe, shareholder value. By the way, this applies to both start-ups and large companies.

A couple of examples come to mind. One friend of mine was at a company in which the investors wanted to terminate the CEO. Most CEOs (and execs of all types) "want to eat lunch in this town again" and therefore, leave quietly. Not so with this guy. He fought it and stayed. In case you're wondering, that means that the investors caved. Once that happened, it was clear that the CEO only cared about one thing: protecting his job. As a result, every executive in the organization adopted the same philosophy. Engineering didn't meet deadlines and blamed Product Management. Marketing blamed Engineering and Sales, and so on.

A much more positive example was told to me by a friend who was an investment banker at Smith Barney during the time when Jamie Dimon was Sandy Weill's second in-command. On Wall Street, employees get dinner and a free limo ride to wherever they live if they work past 8 pm. Jamie left his office at 7:45 to take the subway and saw an enormous pool of limos waiting for their charges. He walked up to the first limo, knocked on the window and asked, "who are you waiting for?" He walked up to the second limo, knocked on the window and asked, "who are you waiting for?" And so on. All of those who had reserved their limos in advance of the magical 8 pm time received memos about company policy (and probably a bit more). Jamie is a CEO who knows exactly what is going on in his organization, and it is no surprise to me that he has emerged as a hero on the Street post-financial crisis. He has always set the right example for his employees, and everyone benefits.

So, whether you are looking at investing in something/someone or considering going to work at a new company, carefully consider the "head." It will tell you much of what you need to know.

Andrea Goldsmith: Tenured EE Professor at Stanford and much more!

The San Jose Business Journal profiled my dear friend, Andrea Goldsmith, today. http://tinyurl.com/yzm39sa

Andrea is one of the very female EE professors at Stanford with tenure, and she's an inspiration to all who know her. She's an entrepreneur (founder and CTO of Sequoia-backed Quantenna), professor, terrific mother of two, author and fearless cook. Andrea will be honored as one of the 100 Women of Influence in two weeks.

After numerous disturbing posts in the blogosphere about the dearth of women in technology, it's great to have Andrea's accomplishments recognized.

A "Better Me"

I met with a great entrepreneur yesterday, Sterling Mace, Founder and CEO of BetterMe. You can check it out at www.betterme.com (it's in beta). BetterMe lets people give and receive anonymous feedback to people in any context (personal or professional). If you're so inclined, you can find out what people really think about your sales pitch, humor or fill in the blank. Think of it as 360 degree feedback from anyone with whom you have interacted. The feedback is anonymous of course and is broken out as "positive", "negative" (perhaps "constructive" in the future and "fyi". Enterprises could certainly benefit from using this. Have you ever been a lower level employee in a large organization and wondered what the heck senior management was thinking because it should have been obvious to anyone with a triple digit IQ that X or Y was utterly broken? That is a rhetorical question... It can be hard for senior management to reach down into an organization and learn the real story. Perhaps by using BetterMe, people across levels and across functions could learn from each other. In my view, the key will be to make sure HR has nothing to do with the purchase of such software - else, I don't think any employee would use it. My hypothesis is that the functions that have matrix reporting/responsibilities are ideal first customers, i.e., Product Management.

Consumer Internet Pitches

A good friend just sent me a great little company to evaluate. I love what they do - a new take on online dating. And no, this isn't Chat Roulette (thank God). They have really good traction and compelling numbers: time on site, users, growth, number of times users check in, paying customers, etc. What was missing is something that many, many Internet companies often miss. So, I thought I'd write a quick note about it. One of my partners calls this "useronomics." It's a very basic idea. What does a user cost to acquire? What is the lifetime value of that user? You may not have the answer to the second question for awhile, but it's something you should be tracking relentlessly. How do those "useronomics" stack up to comparable companies and situations? Know these numbers. Your investors will want them, and you should want to have them so that you know how good your business really is.

Switch Vision

Tonight I had the pleasure of having dinner with Dave Chute, CEO of Switch Vision www.switchvision.com . Dave is an old friend of my husband's, and he's a very creative and smart entrepreneur. From an inventor's drawing on a napkin, Dave created a business plan and is building a great company.

As a technology investor, I don't see many businesses like Switch Vision, even though the Company is building its innovative sunglasses with a patented magnetic lens interchange system. The magnets make the lenses snap into the frames, enabling consumers to swap out lenses for various uses (think skiing, cycling, motorcycle riding or reading if you get a prescription lens through Switch Vision). The magnetic lenses "jump" into place in the frames. You choose your lenses based on your preferred activities and use cases. Of course you can choose colors and frames that work best for your face.

One of my favorite parts of what Dave has done is the packaging. The lenses come in plastic cases that are compact enough to fit in your pocket, and the glasses have a pouch that doubles as a lens cleaning material What a great idea and company! It's all so well thought out - from the go to market strategy to the consumer experience... If I could invest today, I would.

Failing Quickly

I recently met with an entrepreneur friend of mine who has been working on an idea for the past year or so. It's in the consumer internet space, and it has numerous challenges because it requires users to contribute content, needs scale to attract advertisers (it is an ad-based model) and needs mechanisms to generate awareness. That's sort of like what people used to say about George Bush. He has two problems: foreign and domestic.

I try to be gentle with my friends, but anyone who knows me a little would have picked up on the fact that the feedback I was offering (on request) wasn't positive. The sad thing is that this friend is a bit tone deaf. As an entrepreneur, that's probably a good thing at some level and a bad thing at another. It's a good thing because if he/she doesn't believe in the idea, he/she will be derailed and may not build a potentially great company. Moreover, there have been some great entrepreneurs who were never able to raise venture money for their endeavors. Tom Seibel is a great example.

It could be that I just "didn't get it." However, I was sad that my friend seemed so deliberately deaf to feedback. In the months that have passed since we last gotten together, not much had changed. Eric Ries, speaker extraordinaire on "The Lean Start-Up" www.startuplessonslearned.com is far more eloquent on this topic than I. He goes into terrific detail on how to think about developing a minimum value proposition (read: how to fail quickly). It is key for an entrepreneur to figure out if he/she has a great idea or if he/she is simply having a conversation with him/herself.

The thing that always surprises me about seeking feedback and not listening to it is this: the most valuable asset one possesses is one's time. The opportunity cost of not pursuing a different potentially great idea is huge. So, at the appropriate times in a new venture, measure success, come to terms with its success or failure and take appropriate action quickly. You will be happy you did.

The Internet of Things

The technorati have been talking about the "Internet of Things" for some time, but this week I seem to be reading about it in a few places. First, I received an invitation from the MIT/Stanford VLAB http://www.vlab.org/ to their panel on "The Internet of Things: Sensors Everywhere." Then I read McKinsey Quarterly's piece on the same topic: http://tinyurl.com/y9228ep

What is the Internet of Things? Sensors are being deployed for all kinds of reasons. RFID is meant to help manage the supply chain. Oil companies are deploying sensors for tank farm monitoring. Small cameras that are approximately the size of a pill can travel one's digestive tract and pinpoint abnormalities (I saw this in Japan almost five years ago - that is, I saw the camera at rest!). The Internet of Things is going to enable some amazing opportunities i.e., remote health care and some scary ones i.e., insurance companies could monitor how fast you drive daily vs. how many miles you drive per year.

This is an exciting area that will spawn exciting start-up companies. I invested in Apprion www.apprion.com a few years ago because I believed (and still do) that enabling the last part of the organization to become networked (the plant) was a great and potentially very profitable area for investment. The McKinsey article points to this new internet as what enabled Zipcar to lease cars optimally and do away with rental centers. It's an area worth understanding.