Running With Slack vs. Running Overheated

Would you run a train network at 100% capacity all the time? No - I don't think you would. There's no slack. If one problem occurs then there's no room to manoeuvre. There'd be a crisis, a meltdown.

In fact - that's one of the problems with London Heathrow airport. It runs at 98% capacity. When bad weather hits, big delays ramp up quickly unless some scheduled flights are cancelled. 

So, it stands to reason that as managers we shouldn't try and run our people at 100%. If we do, a crisis will easily happen. We'll then be firefighting instead of growing. 

Or - maybe not. The counter view is this: if we are running at less than 100%, we are doing everything with time to spare. Some of that work is less important than the rest. If we say no to things, let's say no to the least important things. If you're saying yes to everything you're not prioritising. 

One way to navigate this dilemma is to make a distinction as follows...

Does all the work have to happen within a fixed time frame. Or not?

Predicable fixed tasks with defined time frames - these are best run with some slack capacity to allow for unforeseen circumstances.  

Transport and logistics would fit this model. Or fixed deadline civil engineering projects. 

Unpredictable tasks with non-defined time frames - these are best queued in order of priority. They can then be worked through at 100% capacity taking a new task from the top of the list as soon as another is completed. If there's a problem, simply pause until the problem is dealt with and then get back to the high priority work. 

Software development and creative work might fit better with this model. 

Of course, there's no right and wrong here. I'm just highlighting that there are benefits to running with slack and benefits of running with no slack. 

Ultimately it boils down to a simple question, "what would happen if we can't complete this by a certain time".

As a startup you're usually running at way above capacity simply because the answer to that question is the amount of cash you have left.  At some point however  you might need to design slack in your system to avoid a crisis.

MVP Feedback Tactics

In lean product development, there's the concept of a Minimum Viable Product, aka the MVP. 

(A MVP is intended to prove (or disprove) assumptions made in a business model. It's a product which aims to solve the core problem with as few features as possible.   Spending time building a product is expensive and in the earliest phases of a startup that expense hurts unless there are paying customers that follow quickly. So, you build a MVP).

But just how can you test out the product and get customer feedback?

What are the feedback loops? 

How can you be scrappy and learn fast with minimal investment?

Here's an excellent article giving a few great examples; "Minimum Viable Feature Analysis" by Alistair Croll (@acroll), co-author of Lean Analytics: Use Data to Build a Better Startup Faster.

In the article, Croll gives us suggested tactics such as

• Survey (just one question though)

• Phone a friend

• Headcams and stop motion cameras

• Watch someone use a competitors app

• Button to nowhere (my favourite)

• Sign Up Form 

• Prototype

• What would Bob do?

• False payment (sneaky, but very smart)

They're all great tactics, they all find ways to validate assumptions before investing too heavily in a finished product.

I've always been a fan of testing something to see if it works, then tweaking based on early feedback.  It's an evolutionary mindset that requires me to apply myself to a problem and learn from experience. This works not only in software development, it works in almost all areas of work.

I never truly understand a problem until I try to solve it.

Why Growth Companies Struggle With Hierarchy

The way a team works together effectively will change as the number of people in the team increases.

An organisation of 10 people acts very differently to an organisation of 200.

Getting from 10 to 200 can be a difficult journey to manage at the best of times, although in a venture-backed start-up the growth rate is often accelerated artificially such that the number of people joining the company builds the team size quicker than otherwise would be the case.  A company who relies on organic growth will not add people as quickly and the adaptation time is slower.

I've experienced this growth challenge several times.  It's not easy.  Here's why.

I like to use an anthropological analogy to illustrate the point.

A group of 4-10 people will act like a "hunting party".  Together they go out on a hunt with a prey in mind but they are very tactical, communicating in real time as the circumstances dictate.  There may be a leader and the leader emerges as being the person that all the others defer to and they are happy to be the leader.

A group of 10-40 people will act like "family huts".  Imagine that each family has a hut around a central fireplace.  Each family has a leader and these leaders and the elders will sit around the fire to share stories and make plans.  Life is relatively spontaneous.  Everybody knows everybody else, they communicate directly with each other as needed yet they spend more time with their own family than anyone else.

A group of 40-150 people will act as a "small village".  In the village everyone has specific roles and there are people in charge of various things.  Someone might be in charge of security, another in charge of energy, another in charge of the harvest.  Everyone knows everyone else to a degree but things start to get done effectively by using a light hierarchy.  Each function has a leader.  To get that function to operate effectively, you need to get the leader to instruct their team of specialists to do the job required.

A group of 150 people+ is like a "town" and the default organisation is a strict hierarchy.  Large groups like this work through the power of the hierarchy.

(See also "Dunbar's Number, Cross 150 With Caution")

There is a reason why a hierarchy works better when there are more people.

Imagine you have 10 people.  10 people communicate directly with 10 people, verbally, via email, on the phone.  That's 10 x 10 potential lines of communication open at all times.  100 threads.  If there are 50 people and they do the same thing, it's 50 x 50 = 2500 threads. 5 times as many people creates 25 times as much noise.  We can't cope with so much noise.  To organise ourselves we naturally create groups and communicate with the group leader who then coordinates the activity of his or her group.  Less noise.

The type of person that operates effectively in a hunting party may not like town life.  In fact the reason they are a good hunter is because they are not townies.  People have preferred methods of organisation and communication, learnt behaviours and default reactions to situations.

A startup might hire some great people when they are small.  These great people might not like the environment they find themselves in a couple of years later when a new mode of organisation would be more effective.  They still act like it's a hunting party.  Those new hires who are used to living in a village or a town join the company expecting things to work like a village or a town because that's the size of the organisation - but they are confronted by hunters who act in a way that they need to adapt to.

The challenge for growth companies therefore is to adapt and change whilst maintaining effectiveness as well as acquiring and retaining talent.  Simply being aware of what is happening with the group dynamics helps, as does anticipating changes that might be needed as a result of a changing group size.  Communication structures work well if adopted by the majority, that's challenging if there are different expectations within the group.

There's no magic formula, this is human nature we're dealing with.  Awareness is a great first step.

London Office Space For Startups

Finding office space in London for startups is not easy.

For the early stage business, having a space to work together is often an essential but expensive necessity.  Finding that space in London where competition is fierce is always tough.

Having sourced and moved into 5 different offices myself over the last few years here's some tips on finding space.


1. How much SPACE do you need?

To calculate the amount of space you need, think about how many desks you need now and in the future (which is always going to be a guess). 

If you are going to rent by the desk, find somewhere that has enough desks for you now and where you have the option to take more in the future.

If you are going to rent your own office, I find the 50 to 100 sqft per person a useful yardstick...

How many people you have now x 100 = how much space you need in sqft. 
e.g. 10 people = 1,000 sqft. 
This includes meeting space, communal areas etc.  That ratio will be quite spacious. 

The maximum number you can fit in the space is the size / 50. 
e.g. 1,000 sqft will fit 20 people at a push - but it will be really cramped.

Optimal is a ratio of 1:75


2. What else do you NEED?

Think through your needs and wants.  The two are different and different for different types of businesses...

• short term contract, flexibility
• shared entrance or own entrance
• high speed internet connection
• access to shared meeting rooms
• own meeting rooms
• furniture supplied
• cleaning service
• telephony
• network trunking
• coffee machine
• kitchen space
• bike parking
• easy to get to for founding team
• close to public transport links
• cool image
• storage 
• security

Be really clear what's important and stack rank them.  You will not get everything you want.  Before you get excited about potential spaces, be really clear about what you will compromise on and what you won't, it helps decide between options later down the line.


3. What can YOU offer?

As a startup at first your filed accounts will be non-existent or meagre so a landlord will need to have security upfront.  If you have VC funding it makes it a little easier if you can show a bank balance.

The three main things you can offer are
contract length
- your budget limit
- your deposit available

Be really clear on what you have to offer and don't kid yourself

 
4. Make sure you understand ALL costs
The headline cost of a rent is the tip of the iceberg.  You need to not only consider the monthly rent and the rent deposit but you may have other costs as well such as;

• service charges
• business rates
• contents insurance
• fire safety equipment
• fit out costs
• moving costs
• security (optional)
• dilapidation costs (what you pay at the end to put the space back in the condition you found it)
• legal fees

Taking your own space might seem cheap at first compared to a by-the-desk rate but that's not always the case thanks to all these upfront costs. 

 
5. Start your SEARCH

Careful.  Many online listing services charge a 10% commission to the landlord.  Try go to the landlord direct. 

Areas with lots of building work often have cheaper rents.  (I wonder why).  It might be a trade-off you're willing to make.

End-of-lease subleases are quite handy.  Say a company had a 10 year lease and they move out on year 8 to a new place. They still need to pay their rent and it's better for them to rent it than not rent it.  You can actually get a sublease for less than the rent paid by the existing tenant.

There are co-working hubs that can be a good place to start (see list below).

Another tip is to contact VCs that you know and ask around if they have portfolio companies that have extra space to rent.  Often a growth company will take more space than it needs and rent desks out until they need the space.


6. NEGOTIATE and close

When negotiating consider what you can negotiate with other than the rental rate.  Look to reduce the overall cost of the deal.

These are the main elements of a deal;

• monthly rent
• lease length and break clauses
• service fee
• rent free period
• rent deposit

And finally...





A list of co-working rent by the desk spaces in London...

Techspace London
Headspace 
Club Workspace
Techhub
Google Campus
Rainmaking Loft

(Feel free to contact me if you have others to add and I will add them).

2000 to 2014 - ifyouski.com Stands the Test of Time

It's the ski season and if you are looking for a ski holiday you could do worse than check out www.ifyouski.com.  In fact, to be clear - I love this website!

It's so good to see her keep going, year after year.  Ifyouski.com was my first internet job.  I joined in August 2000 (shortly after they raised some money from VCs) and now, 13 seasons later, she's still shining.

Ifyouski nearly didn't survive.  It had c.£3m of investment and at one point we had about 50 staff. It imploded and was saved/bought by Online Travel Corporation in 2001 for a bargain (it's since been sold again a couple of times).  A handful of us kept our jobs.  I was one of them, together with Robin Wallace, Max De Grunwald, Rob Van Selm, Tim Barke, Susanne Hedges, Andy Hiseman, Tom Corcoran and Alan Whiteley.  Great team.

Ifyouski.com was a very useful website.  It still is.  It's a well structured fusion of holiday search with great decision support content (resort information, snow reports etc.)  So what happened to the £3m? Where did that go?

I was working in a Ski Tour Operator in 2000 and it was the height of the dot com boom.  I was excited by the chance to join an internet start up and whilst I didn't know much about startups or the internet, I knew a lot about selling and organising ski holidays.  I saw an ad, thought "Yup - that'd suit me" and I joined in a role which would these days be called Product Manager.  Back then such job titles didn't exist.

7 years earlier (1993) ex-Olympian skier, Michael Liebreich published a book on ski technique called The Complete Skier. A few years later he took it online as complete-skier.com.  It had ski technique content, resort information, snow reports, ski news.  It was just stacked full of great ski related content.  On top of this a ski chalet holiday search was added as a way of generating some revenue.

As it turns out, a ski chalet holiday search in 1999 was a very useful tool indeed.  It still is.  The British ski chalet business is fragmented with many small independent operators.  In those days, if you were looking for a chalet (say) for 8 people in a specific resort for a specific date from a specific airport you'd have to phone many different operators having read the ads in the Sunday Times travel supplement.  To have a website where all of the main operators were listed was fantastic because you could search across many operators at the same time.  When you'd found your ideal holiday you could phone the booking office (our travel agent partner) or make an email enquiry.  The travel agent made a commission on the booking which they shared with us.

Nice business model.  Going strong today.

What happened in 2000 was the company looked to build on it's early success in ski by raising money to launch new sites leveraging the same technology platform.  Instead of just ski, the plan was to open up into adventure travel (ifyouexplore), golf (ifyougolf) and scuba diving (ifyoudive).  And as well as doing this in the UK, we intended to launch in 3 other countries.  Instead of 1 market in 1 country we went head first into 4 markets in 4 countries.  Instead of nuturing 1 business model that worked, we developed 1 that worked and attempted to launch another 15 that we didn't know whether they would work or not. 

This was an expensive bet to make.  Expensive as we had about 50 people (although about 20 of them were interns).  In 2000, tech development was costly (we used an agency) and almost everything was proprietary.  We had to buy our own servers, write code from scratch (very few open source libraies existed) and create our own content.  We didn't know about lean startup methodology.

As it turns out the international businesses and the non-ski businesses didn't deliver a revenue stream fast enough.   Some parts of the ski business model simply did not transfer across borders or sectors.

The cash burn was crazy. Back in the dot com boom maybe this didn't seem so crazy.  However, unable to deliver the revenues, we were not able to raise further funding and the business was sold. 

All that remains now is the one business model that worked; selling ski holidays in the UK via a travel agent using online search.

The lesson I took away from that experience was that any new business model that a company attempts needs to be validated before putting too much investment into it.  Validation of the business model requires really understanding the customer segment(s), the distribution channels, the customer relationship methods, the proposition, the key activities and resources, who the key partners are, the cost base and the revenue model.

An excellent way to map this out is using a business model canvas.  A business model canvas allows you to capture on one page all of the above points.  You can highlight the parts of the canvas that you understand (the "knowns") and the parts you yet need to prove (the "known unknowns").  You can think about the assumptions you are making and then think about how you can go about testing those assumptions.  You then systematically run those tests and tweak the model based on the feedback. Once you really have proven all elements of the canvas to a reasonable degree of certainty, you're in a position to start investing money in developing this business model.  

I was lucky enough to work with some really great people at ifyouski.com.  Many remain true friends.  We had a real adventure and managed to leave a legacy which still keeps going today. 

The good news is for entrepreneurs today, lean start-up methods have made it easier to validate business models sooner.  More tools and platforms exist to support new initiatives and there's a growing workforce of talented designers, developers and marketing folks to call on. 

The Death Of A Startup

This week I met an entrepreneur who was at a critical point in her journey.  I use the word critical on purpose.  Her company was about to live or die.  Either she will raise more cash (or be acquired) in the next few weeks or she will pack it all in after 3 years of toil with nothing to show for her effort except some wisdom and battle scars.

She's got a great product, the future could be very bright. She's an amazing positive force despite the obvious stress. Circumstances have simply dealt her a bad hand in the last few months and she now needs a little light from lady luck. I will cheer loud and proud if she makes it.

Recently CB Insights published a report entitled "Startup death trends".  The headline; "Companies typically die around ~20 months after their last financing round and after having raised $1.3 million". The median time is 16.5 months.  

That makes sense.  Most investors will put enough money to buy a company enough runway for a year to two years.  Enough time to make a step change but not too much to over-invest.  After 16 months you're either ruling the world with profits to live on (unlikely) or needing more money (more likely).  If you have good indicators that your business model can and will deliver profitability, you have more chance of getting additional funding.  If you don't, death looms.

The article is well worth reading if you are thinking of starting a business, investing in or joining a startup.

Startups are massively risky.  When I interview someone to join a startup I make it clear... this company is a not yet profitable.  We've got a great opportunity (share the vision) but if we don't make, none of will have a job.  If you want job security, you won't find it here.

As a follow-up, CB INsights also published "51 Startup Failure Post-Mortems".

A quote stands out for me in particular...

Andy Young from GroupSpaces wrote, "…we most definitely committed the all-too-common sin of premature scaling. Driven by the desire to hit significant numbers to prove the road for future fundraising and encouraged by our great initial traction in the student market, we embarked on significant work developing paid marketing channels and distribution channels that we could use to demonstrate scalable customer acquisition. This all fell flat due to our lack of product/market fit in the new markets, distracted significantly from product work to fix the fit (double fail) and cost a whole bunch of our runway."

This I personally believe is the biggest risk to any tech startup. A startup is a quest to find and prove a viable business model.  Unless it's profitable, it's not viable.  An entrepreneur therefore has to really think hard about whether adding more cost to their business is going to help them uncover that business model sooner rather than later.  The aim should be to get to the viable business model with as little cash as possible.

Once a business model is validated, capital invested is then invested as growth capital.  That's a whole different challenge in itself.  However, taking lots of capital before the business model is validated and then spending hard basically adds more risk, not less.

The earlier you can prove the business model the better.  In simple terms that means having something that customers are willing to pay for and to be able to acquire customers in an efficient way.

What Start-Ups Can Learn From Archimedes

As it turns out, Archimedes can teach us a lot.  He was Smart with a capital S. 

“Give me a place to stand on, and I will move the Earth” Archimedes

Or – in other words, “Give me a lever long enough and a fulcrum on which to place it, and I shall move the world."

 

“A lever (/ˈlɛvər/ or UK /ˈliːvər/) is a machine consisting of a beam or rigid rod pivoted at a fixed hinge, or fulcrum. It is one of the six simple machines identified by Renaissance scientists. The word comes from the French lever, "to raise", cf. a levant. A lever amplifies an input force to provide a greater output force, which is said to provide leverage. The ratio of the output force to the input force is the ideal mechanical advantage of the lever”. - Wikipedia

How does this relate to start-ups?  Start-ups are small Davids who are out to conquer giant Goliaths.  In the bible, David defeated Goliath with a lever.  A catapult with a stone is a weapon which turns a near useless stone into a giant killing weapon.

In the business world, there are plenty of levers to use.  Identifying them and using them to your advantage is an essential part of building a small business that can take on Giants.

An example. Microsoft came to dominate PC operating systems through a smart distribution deal with IBM.  IBM at the time were a massive PC manufacturer, Microsoft were tiny.  Bill Gates managed to get his DOS operating system into all IBM machines yet retain the rights to use them elsewhere.  By leveraging the massive scale of IBM, MS DOS became the main PC operating system of its time.

These days, a small online trader can leverage the marketplaces of eBay and Amazon to gain access to consumers.  A gaming company can leverage the user base of Facebook, a SaaS business can give away free products in app stores to acquire customers that they can up sell to paying subscribers.  A travel insurance provider can partner with an online travel agent to gain access to relevant consumers.  
 

Thinking of the world in terms of how to leverage the strengths of others to your advantage is a very useful perspective when you have very little in the way of money or resources.   

Got any other examples?  Please do share your thoughts…

Whose Job Is It Anyway?

One of my favourite maxims is "vision without execution is hallucination".  Not sure who coined the phrase but I like it.  It's all very well saying "let's do something" and it's something else to actually get it done, especially if it involves people.

It's helpful to have some "getting stuff done" tools in your toolkit and one tool that I've found helpful in the past is "RACI".

To get from an idea to reality, we need to know who is going to do the work.  This is where RACI comes in.

RACI stands for "Responsible, Accountable, Consulted and Informed".  It's a usually framework to understand the roles of all the actors in a system required to get a task done.

Responsible
The responsible person is the doer.  (Or doers, i.e. those that actually do the work and deliver to the agreed standards, time frames or expectations).

Accountable
The buck stops here.  This person is answerable for the correct and thorough completion of the task.  It can only be be one person.  The accountable person may well delegate their tasks to a responsible person but they cannot delegate their accountability.

Consulted
Their opinion is sought, these are experts whose skills or knowledge can influence the success of the task.  It's a two way communication flow between the Responsible and Consulted parties. It can be more than one person.

Informed
(Or - told). Those who need to know what's going on.  Not necessarily during task, more likely on completion.  It's a one way communication and it's usually many people.

In any project, you write down all of the tasks down as the rows in your matrix.  In the columns, write either names or job titles.  In the grid, type R, A, C or I in each cell. 



If you do this with all of the people involved you can then get consensus on who does what.

It provides a good grounding for the next part of organising - what interactions (e.g. meetings) and documents are required during the project to make sure everyone gets what they need from the others involved.

When Is Too Much Cheese Fondue Too Much?

Is there a limit to how much cheese fondue we can handle?

Yes, and it's about 50 servings.

Huh?

Maybe I'm not making sense so I'd better explain myself.

Back in 1990 a young David Norris left university in the midst if a recession with limited career options. (Theology as a degree isn't exactly vocational unless you want to be a priest - and as an atheist I wasn't sure I could be convincing at interview). So, at the relatively young age of 21 I decided I still had time on my side and could do worse than follow my passion.

With student debt to forget, I took the train to Dover in early December, the ferry to Calais and a train to Paris. I muscled through the metro system in rush hour to get a night train south. I woke up in Bourg St Maurice in the French Alps with about £100 to my name and I took a bus to Val D'Isere with my backpack, ski boots, skis and a burning desire to find a way to stay there and ski for 5 months. Nothing else mattered.

I had the advantage of speaking some French. So I knocked on doors for 3 weeks asking for work. I found a place to stay during thus time, sharing an apartment for 3 with 10 other ski bum hopefuls. (Yes, it was smelly, messy and wild). I made friends and it was through a friend that I heard about a job in a restaurant kitchen. Lesson 1: networks bring opportunities.

As my credit card was maxing out I managed to persuade this restaurant to take me on. I was to be a "plongeur". And this is where the cheese fondue comes in. A plongeur is a kitchen assistant and wash up. They didn't know it when they hired me and I didn't know it either but they had just hired the best damn plongeur in history.

I was super motivated. I was getting to ski every single day. I would wake early, be on the first lift and ski to 3 or 4. Then, shower, change, snooze and get to work for 6. Because I wanted to be out early skiing the next day I wanted to fully optimise everything possible and be ready to leave work as soon as possible. The earliest was midnight. On a busy night it might even be 2am.

Yes - that really is me

Cheese fondue is served in a ceramic pot. It's mainly melted cheese with some wine and a few other secret ingredients. Dunk dried bread into the cheese. A local speciality. Indeed our restaurant was a local speciality restaurant. We served meat fondue, cheese fondue, raclette, steak tartare (raw minced beef steak) and other high protein feasts.

There were two chefs and myself in the kitchen, a waitress, the owner and his wife. On a busy night we would turn 100+ covers. The French chefs and I kept ourselves fired up with plenty of Dead Kennedys punk classics. They knew all the words.

I was paid about £150 a month. Accommodation included. I paid £60 a month for my season-workers lift pass, then I had some pocket money for ski servicing, beers and food. Slave labour. Loved it.

My main job, apart from washing up was to prepare the desserts. I was an expert at classic ice cream creations such as Banana Split, Peche Melba and Cafe Liegois. The cheese fondues would be stacking up as I prepared the desserts because of course, it's when the main course is brought in that the desserts are then ordered. It's a double whammy because not only have you got more washing up to do you have less time to do it because you're having to prep desserts. Actually, it was really a triple whammy because on a busy night I had to also keep the flow of the crockery and pots back into service. Doing that meant less time for desserts and even less time for washing up.

At 50 fondues a night the system (me) would go into meltdown. Even though I had perfected cleaning fondue pots with a scraper, I was struggling to get the pots back to the kitchen in time and do the desserts. By midnight I had the entire restaurant stock of pots, pans and crockery stacked up in a pile. It would be a long night.

Try washing up 50 of these

I learnt a lot those 5 months that I have found useful at work ever since.  The main lesson learned though is to watch out for triple whammies. As people add more tasks or projects to the mix they sometimes forget that gives them less time to do the same jobs they already have. Also, if volumes of transactions multiply at the same time they'll have even less time to do the second job and even less time to do the first job. Meltdown is always on the horizon.

So, in a growth company, my advice would be always to think about the proposed operational solution not only in the present, but in the future as well - and in a future where you are doing twice as much business.

Triple whammies happen all the time and when they do the only solution is to dig yourself out of a hole and fix the mess. By then you've probably caused some damage and you may have lost staff, customers or suppliers. That sucks.

You need to know how many cheese fondues is too many.

Why COOs love roundabouts

Approaching a roundabout one early morning last week, I was riding to work on my bike, crossing through Richmond Park. It was relatively quiet with a few cars and bikes and the deer were happily munching on grass in the fresh morning air.

I sailed through the roundabout without slowing down. Almost at the same time but not quite, another bike came through from another direction. And a few moments after that a car flew through. None of us slowed down, we didn't need to. It was all fluid, smooth and unintentionally synchronised.

At that time there was no need for a roundabout. We could have all managed without one. Later in the day however, with more traffic, a roundabout would become very beneficial. Someone had wisely built one.

A roundabout is both a physical technology and a social technology. Physical because it requires certain techniques and materials to build, social because it requires rules and behaviours to have benefit. We developed roundabouts to solve a volume and interaction problem.

Growing companies have the same challenges as the road traffic network. As volume and traffic builds, more processes and organisational structure (social technologies) are needed. Plus, more servers and work space are needed (physical technologies).

The CEO sets the direction. He/she says, "this the horizon we're headed towards and here's why". It's a "what" and a "why" focus. The COO however takes responsibility for how we reach that horizon, getting the right team together at the right time, building enough (but not too much process), find the best way to make the team perform together. It's a "who, when, how much" focus.

As a COO therefore I need to figure out if give way signs, roundabouts or traffic lights are needed. I need to build junctions and roads and I need to do so with a sharp eye on making sure the costs and revenues are supporting that investment.

With a tech start up, the COO role is particularly relevant. How many people to hire, in what order, how many servers to pay for, building systems for organisational effectiveness...these things are always important in any business, but in a tech start up the impact is amplified many times over. Some companies grow at 10 to 20 percent a year in revenue, people and infrastructure. For start ups, add a zero to any number. 10 times as fast. Traffic can hit your junctions pretty quickly and you need to know whether to put in place a give way sign, stop sign, roundabout, traffic lights or flyover.

That challenge of building a team and product to make possible a vision is one I love. I guess that's why I'm a COO. I love roundabouts.

Why in the Future We Will Own Less

Ownership.  It's over-rated.

I grabbed some mountaineering gear from my cupboard and packed my bags to head to the Alps for the weekend for some ski touring.

I wondered, how many ice axes are there in the world sitting in cupboards and how many are actually being used right now? Maybe 99% are in storage, the rest are in use. Same goes for cake mixing machines, suitcases and tennis racquets. To a lesser extent, cars and computers.

As human population explodes across the planet, as natural resources dwindle, as consumption and desire for goods and services increase because of increased wealth; we will need to adapt. I am an optimist. I see humanity as a self organising complex adaptive system. We make mistakes, we figure it out. Before we destroy our planet? I believe so, yes.

So what will the next 50 years bring?

I think it's pretty obvious and it's already starting to happen; we will increasingly (but not completely) discard "ownership" of property and instead share and exchange more than we've ever done before. Where the costs of ownership are too much to bear for a single individual, that's exactly what we do. For example, we'll buy an airline ticket, not an entire airplane. Unless you are super duper rich, but even there you can use Netjets and share a private jet.

The cost of ownership of everything will go up. We've already optimised the cost of production So there's a limit to how cheap things will become. Primark, Lidl, Walmart - these guys run it pretty lean already. So, it's inevitable. Owning things just won't make sense.

I'm not saying that we will not own stuff. Of course we will. You wouldn't want to wear my shoes and you wouldn't want to wear mine. We'll still own shoes. Maybe not as many pairs.

What we will start to do is to figure out how to share more. There's already a few examples out there doing very nicely. Why own CDs when you can stream music from Spotify on a subscription? Why own your own car when you can use a pay as you go one with Streetcar? Why own a holiday home when you can rent an apartment from HouseTrip?

There are 5 distinct types of consumption that I can identify

1. The producer-owner-purchase-model.
Here, someone produces a product (say a car) which someone purchases for cash. Very common across the world and a great way to see the benefits of division of labour and trade as a foundation for the creation of wealth. Sustainability: very difficult because a lot if products are not used, discarded or left in cupboards.

2. The distributor-rental model
Many people can use the product on a subscription or one time rental basis. Much more efficient.

3. The secondary-reseller-market model
You don't need it anymore? Sell it on to someone else. At least this way the product is used by more than one person.

4. The charity model
Give it away when you don't need it anymore. Take it to the charity shop, then they will give it to someone who needs it or, they'll sell it to someone to make money.

Then there's recycling of course. And maybe communism. There is however fifth way, and I'm convinced that due to evolutionary necessity we'll see more of it very soon.

5. The fifth way
We will create marketplaces to trade goods and services that don't use cash as currency. Instead of going shopping, you will connect with your community and offer and receive favours. You will lend out the things you own but rarely use and you will borrow the things you rarely use but don't own. The taxman will hate this if course.

This is not communism with joint ownership. This is peer to peer trading at a hyper local level. You will accumulate points of some type as you lend and you will burn points as use consume.

These marketplaces are already possible with the advent of PCs and mobile phones. As connectivity becomes better, we'll start to see goods themselves connected to the net with their own unique IP address and history. Objects will connect in the same way that people connect and people will connect with objects and objects will connect with people.

We will see highly targeted and relevant sharing, bartering and exchange websites and services.

Over the next 50 years we will transition through necessity and through efficiency to only own what we need to own. The rest we will rent or borrow.

It's the only way.

Teams, Hierarchy, Process and Start-Ups

How to think about structuring a start-up team.

One of the marvels of humanity is how when we work together we can progress so much more than when we work alone.  We all have different experience, skills and talent to offer, and businesses are just one example of people working together to achieve more than they could alone.

The challenge facing fast growth companies and start-ups is that they are in a constant state of change.  Actually, all businesses need to be in a constant state of change if they are to survive at all.  The environment around them changes and to provide value in that environment they need to refine and adapt.  The fact remains however that some businesses move faster than others, and start-ups tend move really fast.

And here's the thing, the bigger your team gets, the more structure you need to make the most of your resources.  By structure I don't just mean hierarchy, I also mean more clearly defined processes. Most people recognise that small companies need less structure and larger companies need more.

Things aren't that simple though.  It's not just size that matters. There are I think four major considerations at play when building an appropriate structure for the business (for that moment in time).

These four are "chunking", "scheduling", "size" and "risk".

1. "Chunking"

By chunking I mean; how easy is it to separate different tasks between different people?   It could be that (in say - a recruitment consultancy) one team looks after London, the other team look after New York.  Or - (in say - a law practice) one legal team looks after client A and another legal team looks after client B.  Where it's easy to do this, we often do because division of labour brings speed, expertise and efficiency.  As long as there are not too many dependencies between these teams, you can still run a fairly flat organisation with limited processes.

2. "Scheduling"

In some instances, many different tasks are required AND they need to be done in a certain order.  This is where it gets more difficult to manage with little hierarchy. Consider a major engineering project such as building a new bridge.  Many different teams are involved in a build process that has to happen in a certain order.  In such businesses, more hierarchy is required to get the job done, create the processes to pass the project along from a multitude of task owners.  It's not just that this is a lot of people, there are lots of complexities with dependencies that require order.

3. "Size"

Size is more obvious and is where we started out - the more people involved, the more hierarchies and process are needed.  Just because two businesses have the same number of people though, it doesn't mean they should have the same depth of hierarchy or body of process.  A recruitment consultancy with 10,000 staff will not need as much hierarchy and process as an oil exploration company with 10,000 staff.  In the first instance the recruitment consultants can work in small teams to independently mange their customers, develop business and attract candidates.  Maybe there's a central payroll system, CRM software or a local marketing team, but it can be quite a flat hierarchy.  The oil company will have far more specialists all needing to interact and more hierarchy depth is required.

4. "Risk"

Compare NASA to a theatre ticketing company.  In one case if a process fails, someone dies. In another case, the guest might not get a ticket.  In situations of high risk, it's likely that more controls are in place to manage resources tightly.

What about start-ups?

I find the four considerations above a useful starting point when thinking about structures that are needed for a start-up.

Some learnings;
- Understand that as you grow you'll need process, but only just enough to make it work.  Too much will suffocate productivity
- Build a foundational structure based on your thoughts around risk and scheduling considerations. Figure out how much scheduling is required to make things work.  Reduce dependencies where you can.
- Chunk work if you need to, but understand the different between "could chunk" and "should chunk"
- Accept that different parts of the organisation may require different levels of hierarchy and process.  Many people assume a company requires a standardised set of levels of management, this is a mistake.  Tech may need a totally different level of depth and structure to (say) sales
- when hiring people, try to understand what types of environment and culture they thrive in.  Hire not only for your current structure but try to anticipate what you'll need as you grow

Building an organisation framework requires understanding your current state, anticipating your future state and being able to find a balance between the two.  As both are always changing, you're never done.

Burning Down The House

"I was in the house when the house burned down".

So sang Warren Zevon on his Album "Life'll kill Ya" in 2000.

Now I've never lived through a world war, but I've had my share of family losses and lived at more than 20 addresses. At work I've lived through two recessions, the dot com bubble burst, and 9/11 (when working in travel).  I've been in 5 companies that have been acquired and three that have had to lay off staff.  I've been through several VC funding rounds.  As an Ops Manager in travel and eCommerce I've had to fire staff, lay off staff and deal with; the death of my customers, vehicle crashes, flight delays, server outages, terrorism threats and avalanches.

So, when I heard Zevon's lyrics, it kind of made me feel - well - old.

Also - I realised that all that experience at the sharp end does make for better intuition and decision making.  Looking back at the younger me coming out of university in the early nineties - I hardly recognise him  - but it's still the same old me.

The thing is - when you're young, you have no way of knowing that something won't work, so you go for it anyway.  Business rewards risk that succeeds - and some of our best entrepreneurs and innovators are young, ballsy and blissfully ignorant of burning houses.  Passionate, energetic - and full of belief.

Increasingly I'm seeing that pairing up experienced hands with youthful vision and energy surely must be the best ingredients for start-up success.  I guess that's why Silicon Valley is a magnet for start ups; experienced VCs mentoring and funding youthful creativity.

If I ever go into business on my own, I'll be Butch Cassidy to a mother-f crazy Sundance Kid.

Community 101, Drive Usage, Then Monetise

STOP PRESS!!!

Since I wrote this blog, my frustration and objections are now resolved, you CAN now hear what I really thought about location based services on video...


ORIGINAL POST....

Location based services. Buzz words. You hear them a lot right now. But what do they mean?

Simply put then, if I know where you are, can I offer you something that uses that knowledge in real-time?

If your mobile phone tells me your location co-ordinates...
- if I am Google I can show you a map of where you are and what is nearby
- if I am a restaurant booking app on your iPhone (e.g. bookatable) I can show you restaurants nearby
- if I am Foursquare I can present local restaurants and bars that you can "check-in" to and see who else of your friends are there

Three very simple examples then. But what of the future?

What are the implications for consumers and for marketeers?

At a recent plustechnology event run by London lawyers, Olswang, I committed my comments on this topic to video.

A company called Knowledge Peers were videoing peoples thoughts. Today I received an email with a link to a short video on my observations that targeted marketing can be welcomed by consumers rather than seen as obtrusive, and that location-based technologies help with accurate targeting.

Can I share it? No!

I really don't get it. I mean, I REALLY don't get it. What the? Uh?

Knowledge Peers is a members only site. I tried to send a share this link to a friend, they first had to sign in to Knowledge Peers. Fail. They STILL couldn't view the video. Doh - that sign up was for standard membership. Apparently I have full membership and that's why I can view it. Double Fail.

Look, if you want to build a community site, it needs to be viral, self-sustaining. You need to drive USAGE first, then monetise when you actually HAVE a community.

It's all upside down. I should be able to embed the video in this blog post, email it to friends. If they get value from the content, maybe they will sign up and subscribe.

The content on Knowledge Peers is pretty good. I mean, it's like a YouTube for business. But walling it in is route to oblivion.

So much for trying to share my thoughts on location based services with you. Sorry!