Schooled

Back in my early twenties, during the go-go days of the first Internet bubble, I used to get invited to speak at business schools. Each time, I’d tell the class of students: you’re older than me, smarter, wiser, more experienced. You don’t need to listen to what I have to say. And each time, I’d watch them dutifully write in their notebooks: ‘don’t listen to what he says.’

Ever since, I’ve been deeply dubious of b-schools. Start with the case method of teaching, for example. By definition, the companies students study became cases by doing new, interesting, innovative things. In other words, they became cases precisely by doing things you couldn’t learn from prior case studies.

Or consider the problem of the professors, academics removed from the front lines of real business. If you’re an eminent historian, there’s no better way than academe to pursue recognition or greatness in your field. Whereas, in business, the really interesting folks are out starting Apple or running GM, while the professors are just writing about it. There’s no more prime example of ‘those who can’t do, teach.’

That’s why I was so taken by this Boston Globe story about Harvard Business School professor Brian Edelman and his interactions with local Woburn restaurant Sichuan Garden.

The issue began when Edelman looked at the menu on the Sichuan Garden’s website, and placed a takeout order. He ate the food, and found it delicious. And then he noticed that he’d been charged $4 more ($57.35 vs $53.35) than he expected. So he emailed the restaurant to let them know, and to ask about the discrepancy.

Ran Duan, son of the mom-and-pop founders (and apparently “America’s Most Imaginative Bartender” according to last month’s GQ, for the Baldwin Bar inside the restaurant) wrote back a gracious email, explaining that the menu on the site was outdated, apologizing for the confusion, and promising to update the site.

The professors response? Calling the old menu a ‘serious violation’ under Massachusetts state law, and, citing consumer protection statute MGL 93a, demanding triple damages: $12.

Things go downhill from there, with Duan’s sane, friendly and remarkably patient emails intertwined with Edelman’s ever more douchey / crazy-town ones, leading to Edelman’s eventually “referring the matter to applicable authorities.”

Nice work, Professor Edelman! Keeping the world safe from small businesses trying hard to politely serve their local communities, and wasting the time of already overstretched enforcement agencies! It’s a double win!

Still, it’s also an excellent reminder of why I never went to business school. As an early colleague said to me some 15 years back, it’s much better to own an MBA than to be one.

Now, Again

“There is surely nothing other than the single purpose of the present moment. A man’s whole life is a succession of moment after moment. If one fully understands the present moment, there will be nothing else to do, and nothing left to pursue.”
– Hagakure

Black Friday

Over their first two years, Jess’ company Dobbin  has built an unusually loyal customer base.  

In a lot of ways, the company is a response to ‘fast fashion’ brands like Zara and H&M, which get trend right, but don’t pay much attention to their quality of fabric, construction or fit.  Sure, it’s easy to copy an idea from a Prada dress; but unless you use the same fabric, the same factories, and the same extensive fit process, you end up with something that looks great on the rack, but not nearly so great when it’s actually worn.

Hence Dobbin, which, not surprisingly, uses the same fabrics and mills, the same factories here in NYC, and the same long and laborious fit process as the high-end brands you’ll find in Bergdorf Goodman.  Then, by cutting out the many layers of middlemen and mark-ups in the fashion world, they sell directly online at 1/4 or 1/3 the price.

They have free shipping both ways, so you can try it out without risk. And as their return customer rate is extremely high, it seems people really love what they buy. They’re running a 35% off Black Friday sale right now, so go buy something! 

Getting Personal

Here’s the thing about blogging: at times, it feels enough like writing in a journal that you can forget there are real people reading what you write.

Thus, in thinking about Northstar’s plans, I’ve described my former colleagues in ways that weren’t fair.  We may have different ideas about what makes for a successful CrossFit affiliate, but they certainly don’t deserve ridicule or rudeness on that account.  

So, while it may not mean much to them, my apologies.  The CrossFit community is small, the NYC market is large and underserved, and I’ll try to be a better neighbor going forward. 

Comedy before Competence

I was discussing the previously-cited Netflix Culture Deck with a few new colleagues, one of whom pointed out that the word ‘failure’ is conspicuously absent from the presentation.

That highlights a key difference between big companies and startups. In a large, publicly traded company, there’s a lot to lose. While not all new initiatives can be successes, it’s at least as important that few are damaging failures. Whereas, in a small company, chasing the upside of continually swinging for the fences is the only way to grow substantially. Focusing primarily on not screwing up keeps a startup from ever getting off the ground.

In that light, it’s interesting to consider Facebook, which attributed a lot of its early success to the internal motto, “move fast and break things.” A few months ago, it shifted the motto, to “move fast with stable infra.” By now, Facebook has more to lose than to gain by excess speed, but it never would have reached its current dominant position had it played conservatively from the start.

I’d have been curious to read the deck Reed Hastings might have crafted in Netflix’s earliest days; by all accounts, they were a hard-charging, risk-taking culture. Because, in particular, I’d have been curious to see how they balanced accountability and encouragement. On the one hand, Netflix fosters a competitive culture, where people are held to high performance standards; on the other, for employees to take necessary risks, they have to feel safe getting things wrong.

In building Northstar, we’re trying to strike a similar balance. But, in my experience, the more serious early stage danger tends to be too much conservatism, not too little accountability. Which is why I’m posting a ‘Comedy before Competence’ sign on my office wall; I don’t mind if we get things wrong, so long as we try them out aggressively, and can laugh about it along the way.

Capital

I’m down in DC for the weekend with Jess and her business partner Catherine, working as their intern at a Dobbin holiday show.

In the past, we’d have left Gemelli behind for this kind of trip, but Penne is young enough – and terrible enough at walking on leash – that we didn’t want to dump them both on my brother (as he’s already regularly out walking Brooklyn, his cockapoo, he’s an excellent first line of doggy daycare defense), so they’re both in tow.

Traveling with two dogs has been an adventure. Penne, it turns out, gets carsick, and tossed her cookies within a few minutes of hitting the highway (and again, after a rest stop pitstop). Gem, who’s used to living in a building with just one other apartment on our floor, stayed up all night, growling at the door each time someone headed to or from one of the forty other rooms just down the hall.

That said, the Kimpton staff (dog-friendly across the entire chain) has been awesome, and both dogs were happy to nap together in the room last night when we hit the hotel’s newly re-cheffed restaurant Urbana, a current DC hotspot. And, as it’s been a few years since I was in Washington, it’s been fun to walk them through Dupont circle, or down K Street, enjoying the capital in its crisp, wintry best. I think we should all make it through the weekend in one piece.

Decked

Still on the theme of hiring: if you run a business, and haven’t read Netflix CEO Reed Hasting’s ‘culture deck’, go read it now. It’s a cogent philosophy for hiring great people, running a company and scaling up an ‘A player’ team.

A few gems:

“We’re a team, not a family. We’re like a pro sports team, not a kid’s recreational team. Netflix leaders hire, develop and cut smartly, so we have stars in every position.”

“The Keeper Test: Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix?”

“Netflix Vacation Policy and Tracking: there is no policy or tracking. There is also no clothing policy at Netflix, but no one comes to work naked. Lesson: you don’t need policies for everything.”

and a personal favorite:

“Adequate performance gets a generous severance package.”

Technical Hires

Back in the 1990’s, during the first internet bubble, there was a real divide in the startup world between the ‘tech people’ and the ‘business people’. Sure, you needed the tech people to actually build the products you were selling; but everyone knew that tech people couldn’t run companies. (The old joke: how can you tell the engineer you’re talking to is an extrovert? He’s looking at your shoes.) That’s why you needed to hire a recent b-school grad, with marketing experience and good hair, to lead the charge.

As early 2000’s stock market returns attest, that didn’t turn out to be a great long-term strategy. Which is why, in the tech world of today, there’s a bias towards founder-run startups. Using lean methodologies, the guys who actually understand what they’re doing build the companies, with little initial capital, retaining control, and growing based on traction with customers and real results. The tech team rules, and smaller-scale acquisitions are even valued by the number of engineers on staff.

In that light, the parallel growth of CrossFit makes a lot of sense, as the affiliate model similarly puts domain experts in the driver’s seat. Consider a Globo Gym, the soul-sister of the failed late–90’s big tech startup: an executive team, bolstered by a ‘coffee is for closers’ sales staff, run the show, while the trainers are treated roughly akin to the cows at a dairy farm – the core leveragable asset, sure, but certainly not a voice at the table. Then along comes CrossFit, with what’s essentially a lean startup approach to the gym business. With a few thousand dollars, an excellent coach can open a garage gym and build organically from those humble roots, keeping technical concerns (ie, good training) at the forefront and making more money (with more autonomy and control) than she did in the Globo world.

But here’s what’s interesting to me: in the tech world, companies like Facebook and Google have grown to huge sizes, while still keeping the technical talent at the forefront. A Google gig post-graduation is a big win for a computer science grad. Yet nothing similar exists in the fitness world. There’s no large-scale company that puts coaching first. There’s no opportunity at an Equinox that looks better than starting your own CrossFit Box.

In fact, even in the CrossFit world, there’s really no long-term career path aside from starting a box of your own. For some people, that’s a great choice. But many others don’t want to deal with running a company – they just want to coach. Much as more top computer science grads choose to take jobs at Apple, Google or Facebook than choose to go it alone and start their own company. So how come there’s no Apple job for the best CrossFit coaches in the world? How come there’s no place for them to get respect, autonomy and control, along with stability, great compensation and long-term career growth propsects?

I’m betting that, if such a place existed, it would quickly attract the very best coaches in the CrossFit world. And, because a gym is only as good as its coaches, that place would quickly clean up. Let’s see what happens.