Stanford GSB Sloan Study Notes, Week 10 (40), Spring quarter
Our last two days of five classes were almost all about presentations with a few wise final words from each professor. Pictured above is the last of my last moments, with Professor Charles Holloway, co-founder of Stanford’s Center for Entrepreneurial Studies, and a driving force behind many startup-focused academic initiatives in this school over the decades. My last class co-incidentally was the very last Formation of New Ventures Chuck taught for 16 years together with John Morgridge of Cisco fame.
I am sad this is over, not counting one remaining exam. And glad I made it here in time to be part of so many defining classes like this over the past year. I guess it is up to us now to walk out of this campus in the footsteps of many whom these teachers have personally sent off to change the world over the years.
John’s closing words included “don’t try to do it all by 35”. Relieved to know, having crossed that milestone at Stanford.
Covered in this issue:
- very brief summary remarks from professors concluding their quarter
- Last Lecture by JetBlue Chairman Joel Peterson
MKTG 365: Marketing Analytics (Narayanan)
- Behavioural data is usually more valuable than demographics. Yet, often companies investments into gathering the data are the opposite.
- Price discrimination is usually discussed only as negative (getting more cash out of unsuspecting customers). In many industries (pharma, etc) the struggle actually is how to charge less.
- Aggregation of data destroys variation, always better to pool data.
- Multinomial logistic regressions extend regular logic’s by introducing several binary variables: “what is the probability of a purchase for product 1, 2 or 3”
STRAMGT 351: Building and Managing Professional Sales Orgs (Lattin/Levine)
- A sales management pattern that scales: give every rep an equal opportunity, get them trained and up to speed, let them fly — but remove ongoing handholding after 6-9 months and deal decisively with those who can not get to quota or above after that on their own.
- Disaugmentation – Doug Engelbart’s idea for simulations that create obstacles and allow users to innovate getting around them (as opposed to trying to simulate ideal worlds for training)
- Direct access to market is harder than you think (in startups there is no brand, new product, etc). But channels are less capable than you think.
- Sales economics is about understanding unit economics of your business (lifetime value, acquisition costs, funnels)
- M&A can often turn into a collision of garbage trucks.
- Compensation should not become a crutch holding up otherwise poor management.
STRAMGT353: Formation of New Ventures (Holloway/Morgridge/Chess)
- Jumping into entrepreneurship, consider the good old “5 W-s” framework of journalism:
- It will be easier if you get a basis, foundation – maybe from an early growth co created by people you look up to. Obtain skills, network.
- It is a bell curve: founding easier right out of school and then later in career.
- Not everything fits best in the Valley. Biofuels, medical devices, international ventures, etc have their own hubs which provide unfair advantage over those who are not present.
- What is your role? Ideation? Getting to product-market fit? Scaling organisations? Those who can do all well are much rarer than you think.
- What is your passion? Product? Industry? Building a company? Authenticity is important, but not everything – you can learn and surround yourself with gurus for anything if you have the passion.
- Is this once-in-a-5-10-years opportunity?
- Building great companies solo is an exception.
- Real test: how will your co-founders / early employees behave in tough times. Idea: go through a 3rd world country with a together to try an environment where everything will always go slightly wrong.
- Can you trust that person’s judgement when you’re not around?
- Characteristics that eventually matter: determination, relentless, persistence, letting nothing fall through cracks
- What makes you tick: Make money, build a great company, change the world? Create jobs? Be your own boss?
- (and then: How?)
- In a startup there is no more reputation than the founder’s personal integrity, from every first small step and keeping every small promise from the start.
- “Urgent” is not “important”
- Most businesses evolve through these stages by their modus operandi and center of attention: centralized/founders -> decentralized/founders -> centralised/professionals -> decentralized/professionals.
- Midpoint check: “am I needed in this meeting beyond calling it?”
John Morgridge: Rules for the Road (aka The Baker’s Dozen):
- Don’t try to do it all by 35
- Enjoy each stage (not only rush to next one)
- Listen, but don’t always be actively looking (opportunity is random)
- Wait 24 hours (to become rational)
- Don’t put negatives in writing (includes e-mail, Facebook, media), seek out the person and talk
- Don’t carry baggage (learn to forgive yourself and others)
- Invest in friendships and good marriage
- It is OK just to be a member, not founder – to start
- The art of small check giving (amounts don’t matter behind a good deed)
- Set annual mental and physical challenges (more important when getting older)
- Ask questions, be curious
- More important to do the right thing, rather than doing every thing right
- Make sure what you want to be is what you’re building towards
Last Lecture: Joel Peterson
- Joel is a Management Professor and founder/Chariman of JetBlue
- The “Last Lecture” is a tradition at many universities, in which a professor is asked to prepare a lecture guided by the question: “If it were your last chance to give a lecture to students, what would you say?”
- __Solving for “peace” (as opposed to just happiness or joy): find a person to be, someone to love, work to do.
- Currencies to trade: Time, Money & MINDSHARE (what do you think about)
- What do you read and memorize? People don’t memorize enough, many things are still worth it even if everything is searchable.
- What evokes (negative) emotions?
- Waking up at 4am is my unfair advantage. You feel like you own the world and get so much done because none else is up to catch you.
- GSB alumni pitfalls I’ve seen over the years:
- impatience, jumping from adjacencies to adjacencies, loosing the plot line. Moving away from something is very different from moving to something, and is almost always a mistake.
- underestimating that people are smart. don’t trick, don’t use techniques on people, don’t manipulate.
- When you find a mentor, embrace it. Take the job, it is a gift, be a humble learner. There is a lot of talk about mentorship, it is surprising how few people are lucky to have someone admirable to invest in taking them under their wing.
- Raising 7 kids: defined 6 values of the kind of old and wise people you would like them to become and operationalised that: what are the activities you want to do with them that lead to that person (book, movies, music, financial training, summer camps, trips, languages…). Set metrics and tracked progress.
- Failure of character is brutal. Failure of effort, not trying hard enough is hard for people to forget. All other failures, like failure of results you can embrace and move on.
For all posts on the Stanford GSB Sloan life – see the table of contents here.