Book Review: Moneyball by Michael Lewis

Micheal Lewis continues to be one of my favorite non fiction authors. His book Moneyball is not new (2004) but I just got around to reading it. A film based on the book starring Brad Pitt got sidelined in mid last year and aparently the producer is looking for ways to cut the budget. Funny thing, because the book is all about how the Oakland A's general manager, Billy Beane, did more with less money than anyone else -- so maybe Columbia Pictures should call him!

There are too many great stories in the book to recount and the creativity and new thinking they applied to baseball can clearly be instructional for business. Here are my take aways:

• New Ideas Can Work: Baseball has been around for a long time and has tradition and momentum enough to stop even the most persistent innovator. If these guys could change the thinking in baseball, the sky is the limit for people that want to innovate in business.
• New Blood: Billy Beane brought in people from the outside. The less experience they had in Baseball the better.
• Measure Everything: Even if you don't know what you are going to do with the numbers. Question all of the existing numbers and figure out new ways to collect data on activities.
• Don't be Rational: Eventually the outsiders figured out how to reverse engineer runs. They tinkered and tinkered until they got a formula that they thought would work and then they applied it to the past to test it. They were able to suspend their own rational thinking long enough to try things that on the surface just did not make sense.
• Don't Let the Facts Turn Into Excuses: The A's knew they had no money, if you can call a $40 Million payroll no money, and they got over it and moved on to finding solutions. So at the same time they faced the facts (constrained budget), they were not willing to use the facts to lower their expectations of themselves.

Here are some other reviews:

Forbes 

NY Times 

Here is a link to the book on Amazon.

On Speaking: The Take Away

This is the second in a series of posts about public speaking. The first was: On Speaking: The Frame. In this post I will do what I can to shape The Take Away.

There is a conflict in any presentation between the need to be entertaining, and the need to make your point. Variety is entertaining, and repitition makes a point. The trick of course is to have enough variety to keep your audience awake, but not so much as to cloud up your take away. I find it helpful to imagine myself at the exit door of the venue asking everyone to tell me the one thing they took away from my presentaiton. The goal is for them all to have taken away the same message. So we do the tell, tell, tell.

• Tell them what you are going to tell them: Here you make your point all shiny and interesting but without all of the supporting arguments. With any luck it is also The Frame.
• Tell them: Take your main point and support it with as many other points as you think you can get away with. Stray far enough from the point to keep it interesting. Not so far that they forget what you are talking about.
• Tell them what you told them: Review, summarize, and remember to stick to your point. Hopefully you still have your audience, but even if they tuned out in the middle, you can still land the take away.

So forgive the overuse of a very tired addage -- but tell, tell, tell really works. Give it a try.

China in Your Backyard

Until I saw this article I thought low cost goods made from pirated designs with super cheap labor in China entered our markets through those shipping containers we see stacked everywhere.  Now it seems Chinese companies are invading with illegal immigrants and copying products locally and undercutting prices -- all without having to put a Made in China label on the products.  

Sound unbelievable? -- check out this story in the Financial Times. Sure it is just Italy now, but who is next?

There is a war going on and we don't even know it.

The Ultimate Walled Garden

I spent some time yesterday at Disneyland – the ultimate physical walled garden.  I can only marvel at Disney’s success in controlling every part of the experience.  From the music playing everywhere to the delicate balance of the wait times, to the happy and helpful staff, to the cleanliness, to the renewal found in the new additions, it is hard not to be impressed.

Of course none of this compares to the impressive marketing effort that brought me here for the fourth time since my girls were born – and manages to fill the park just about every day of the year.

Later this spring I am taking the girls to New York City – the ultimate open environment.  My mind is full of all of the potential contrasts – and I can hardly wait to hear what they think.

I was relieved that my girls elected to go to the beach today instead of back to Disneyland.  I have not deciphered their reasons for not going back, but here are mine for being relieved:

1. Coffee:  For some reason Nescafe has the exclusive for coffee in the park.  I do enjoy good coffee and being in an environment where it cannot be found at any price is downright disorienting.
2. Pricing:  The pay at the gate, wait in line, pricing construct is a highly complex business case to be sure.  Once in the gate we pay for rides with our time and the purveyors offer rides at a level that I suspect is just sufficient to prevent the customers from resorting to violence.  In the seven hours we were in the park we got in 9 rides (about 5 mins duration each), waited in line about half an hour each, and consumed one meal of unremarkable quality, and got a fair amount of exercise walking around.
3. Recommend it?  Strangely yes – as long as your kids are 10 or under.  Mine are 10 and 12, so I don’t think we will be back.

So what?  The connection between Disneyland and Steve Jobs is hard to miss.  Pixar is everywhere in the park these days and Steve Jobs is in fact the largest shareholder in Disney.  The Apple customer experience is the Disneyland walled garden of computing.  The iPad looks like it will be building another layer of bricks on the wall and the growing rift with Google and Amazon leads me to believe this trend will continue. 

I recently replaced all of the Macs in our house with PCs – mostly in response to Apple’s efforts to control every part of the experience. 

It will be interesting to see if the Apple marketing machine continues to keeps its park as full as Disneyland does.  

What to do with the Cash

We give China $20 Billion in cash every month (our trade surplus).  Other countries give China cash too.  This is a big problem for China -- because they are running out of places to put the money.  They put some in US Treasuries -- but we pay essentially zero interest, and they already have a trillion dollars of our debt.  They put a great deal into domestic projects, but there is a limit to that (inflation). They put another small mountain of cash into pre-purchasing natural resources like oil and copper from other countries, until those prices go up too much and everyone screams.  

Now they are building infrastructure projects in other countries as reported in the NY Times.

It should be a priority for us to figure out how to stop giving them all this cash.

TED: Food for your head

I love good speakers.  It almost does not matter what they are talking about.  Good speakers are a joy to watch in action.  The best video of good speakers can be found on the TED website.  The event just happened, so there is at least a year of new material up there for you to absorb.

If you need convincing, check out this post by Robert Scoble who just attended the event.

Don't just pick the talks that are on subjects you are already interested in.  I have never been to TED, but I do attend many events and I always come away with the benefit of something I did not intend to learn.  

So carve off 30 minutes and throw a dart a the TED web site and feed your brain.  

Google's as Your Banker

Google has some elements of greatness. It is an organization that thinks long term, makes rational decisions backed by data, is bold enough to go against the tide at times, and is actively trying to avoid doing evil. Google has its limits however and the recognition of those limits by the users (us) and Google (them) will be very important in the years to come.

Even though many of Google's services are offered free of charge, they are still services and they are in fact governed by terms of service which are actual written agreements.

In the negotiation of written agreements the issue of trust is central. Often the language in a written agreement is overly advantageous to one side. Anyone who has read a loan agreement knows what I am talking about. When making sure that a loan agreement accurately reflects the terms of the deal, the borrower must question both the language and its intent.  When doing just that we are often met with the response -- "We (the bank) would never exercise those rights, don't you trust us?". The best answer is: "I trust YOU, but I need to protect myself in the event this agreement comes under the control of someone other than YOU".

When we apply this thinking to our relationship with Google or Facebook or any other service provider, things get a little frightening. I do agree that Google is a great company, and that its goal to do no evil is sincere. What happens however when there is a leadership change at the company? What happens when the current leaders retire, or the company falters and they get pushed aside? The agreement Google has with its users would quickly be in the hands of different people and those people may have either a different definition of evil, or a general predilection to pursue it.

What if a new banker showed up at your house one day and said -- under the terms of our agreement I am taking all of your stuff?

Avatar Reflects Our Reality

I finally saw Avatar this weekend. I don't plan to get in the habbit of reviewing movies like I do books but it did bring up a few thoughts. First the 3D is pretty cool and when putting on the glasses I was kind of wishing I had not come to the 3D version, at the end however I was glad I did.

James Cameron takes the same old story that white people will kill indiscriminately in the pursuit of natural resources and makes what I think is the central arument of the movie: yes we did it 100 years ago and we will still be doing it in the year 2154.

This reflects the current pessimistic outlook on our ability to govern and projects it as a trend out 150 years. The recent NBC-WSJ poll shows that we are in the double digits for the first time ever on the number of people (11%) who responded "never" to the question: How much of the time do you trust the government to do what is right? An all time low of only 19% answered "Most of the Time" and 4% answered "Just about always" (not a record). Full poll results here:

I sure hope we find some leaders in our government that can actually do something -- and it would be even better if they did something right.

Glad I Don't Use Gmail

Well I do have a gmail account but I have not gotten in the habit of using it.  I experiment with as many Google products as I can because I am a big fan of innovation and I am always thrilled when I find evidence of it.

Fred Wilson had a great post today on the virtues of Explicit vs Implicit communicating and specifically what happens when you combine email with a social network -- like Google did this week with Buzz.

Real people all have multiple social circles that overlap and interact in extremely complex ways. So far no one has figured out an elegant way to model the complexity of real relationships -- and I suspect it will be a long time before such a thing comes about. A social media system fails when the makers think it actually replicates real life. So the bigger and more self assured makers of systems get, Google would be the biggest and most self assured, the less likely they will be to create a system of value.

Now all the buzz is about how Buzz is sharing too much information with too many people with too little approval or awareness by the person sharing.  I have to say I am pretty glad I am not one of the unwitting sharers. 

Parallel Universes

Anyone in tech not watching Cranky Geeks is really missing out.  In the past few weeks, John Dvorak and Sebastian Rupley have become the new Smothers Brothers with the straight man - slow guy routine.   Of course they claim to be covering the tech news, and they do regularly have good guests, but it is much more entertainment than anything else.

Now I don't know if either of the geeks has any musical talent, and their humor is certainly not  as widely appreciated, but I find myself busting up every time John Dvorak asks who Om Giga is.  One could say the Cranky Geeks are a parallel universe of the Smothers Brothers show.

This brings up something I wonder about often.  Of the people that participate in the technology industry we seem to have a few parallel universes.  Three that I think about are the Channel, the Geeks, and the New Media.  People and companies often operate in more than one universe, but sometimes it surprises me how much distance there is between them.  

The Channel is concerned mostly with how technology products are sold to businesses and the discussion is usually around the channel partner programs of the main vendors and how the go to market propositions differ from vendor to vendor.  The leading commentators are Everything Channel and Channel Insider and the leading association would be CompTIA.

The Geeks are concerned mostly with the technology itself and the discussion often revolves around new product launches, technology standards, and how the makers of the products are getting along.  The commentators include PC Magazine, TechCrunch, Cnet and the leading association would be CEA.  The Cranky Geeks are probably in this group and maybe Robert Scoble and Leo Laporte.  I sometimes cannot decide where those guys actually fit.

The New Media are the bloggers and maybe some institutions like the New York Times.  The discussion in this group is mostly about how technology is changing the way we consume information and the impact on the newspapers, TV stations, movies, music, and ultimately our society. The commentators include Jeff Jarvis, Dave Winer, David Weinberger, and many others of course.  

As a follower of people and organizations in all three universes I am often struck by how the conversation in one universe can be disconnected from the others.  I will be writing more about this phenomenon and would be very interested in comments on your experiences. 

People You Like

People buy things from people they like.  I don't think this is changing.  In many cases (see previous post) we end up buying things without any people involved.  At those times, we are buying things from brands we like with processes we like.  Well, we probably don't like anything about it much, but we seem to be doing it anyway.

Whenever possible at the grocery store I use the self check out line.  The line is often shorter, but the real reason I do it is the experience with the real person has disappointed me so many times.  How many times has the check out person said "I can't wait to get out of here; my shift is almost over" when you ask how they are doing?  Yes indeed I would rather talk to a machine than someone like that.

When buying something more complex than groceries, say a business service for example, I would much prefer to have a competent and credible salesperson to help me make the best decision.  With the right person I get a much needed education, make a better choice, and probably even spend more money.  In addition, if something goes wrong I have someone to turn to for help.  I am still the buyer and it is still buyer beware, but with a salesperson I have someone with me to help.

Without a salesperson, I become the salesperson -- and that is a whole new level of buyer beware.

Yes we do need salespeople in our business ecosystem.

Everyone Wants to be in Sales

It seems like everyone wants to be in sales these days.  The twist is the new entrants want to be in sales -- without salespeople.  I spend good deal of time thinking about this because my company is an outsourced provider of sales and marketing services.

In the past decade many web based services have forever changed the way that customers interact with the makers of the products and services they buy.  And those interactions are being done more often than ever without the participation of a salesperson.

Travel:  Web services like Priceline, Expedia, Hotels, and Kayak have been cutting the travel agent out of the travel business for over a decade now.  Some of these services have real people in call centers somewhere, but I rarely talk with them and I suspect you don't either.  

Specialty: You can buy just about anything from Amazon, eBay, iTunes, and Craig's List without ever encountering a salesperson.

Advertising: Google is working hard to position itself as the salesperson for everything, but for now they are mostly disrupting the sale of advertising.  Google leads the market for advertising on the web through its AdWords and AdSense programs in a largely self service model.

Homes:  Zillow has not completely blown up the realtors yet, but it may not be long.  

Cars:  The great recession has caused the car manufacturers to dramatically reduce the number of car dealerships.  And car dealerships were mostly full of salespeople.  Car buying may be the next thing we do without the aid of salespeople.

Everything Else:  Last week a the latest digital personal assistant, Siri, was launched.  Yes I know, the Newton never panned out for Apple, and the world (and a box in my garage) is filled with failed PDAs, but if this one gets over the top, it aims to be the salesperson of everything from taxis to concert tickets.  All of this done without any actual salespeople.

All of the human salespeople better do something! 

The New Reply All

Today Google launched Buzz -- its new addition to Gmail that is predicted to be killing everything in its path from Twitter to SharePoint.  That is right, just read these articles and you will see that the Google steamroller is destined to crush at least a dozen companies with the announcement alone!

Mashable

PC Mag

ZD Net

I went to try it today and did not see it in my gmail account -- maybe I will get it tomorrow.  Either way, from what I have read and seen on the video it could in fact be pretty cool.  It would be nice to wrap some of these things that we do in different places into one place.  

On the other hand, anyone who has ever accidentally hit the Reply All button will want to be very careful.  I gather Buzz will enable you to broadcast messages to just a few people, or your entire network, or maybe even anyone.  That is going to be some sinking feeling when you realize you accidentally hit that button.

Stay tuned for more Buzz on Buzz tomorrow.

Social Media Measures You

Our social media tools measure many things and I like things measured. So I suppose I should not be surprised that I find myself drawn into the social media vortex.  In the technology marketing industry, measures matter, and that probably explains why we all find ourselves talking about social media often.  

The ultimate measurement in our business is the top line.  Our job is to generate revenue for our clients and revenue is quite measurable.  Accordingly, we spend our time working to correlate activities to revenues with the goal of understanding which activities to expand and which to kill off.  As potential revenue makes its way through the sales pipeline from campaign to lead to opportunity to deal to actual revenue we measure every step.

Within each step there are intermediate things to measure.  The size of the market, the number of potential opportunities, the qualification of potential opportunities, the number of attempted contacts, successful contacts, conversion rates, close rates, cycle times...an endless stream of things to measure and we have not even added in the cost of each and the resulting ROI.   

So why are we so attracted to the prospect of measuring more things?  Why do we want to add followers, friends, links, hits and other social media measures to the mix?

Maybe it is the same reason I like to mow my lawn.  For me, mowing the lawn is an individual pursuit.  I do it by myself.  I know when it needs to be done, I know when it is done, and I can see the result of my effort.  So far, social media is a decidedly individual exercise and with the exception of a few companies that have implemented collective social media campaigns, the measurements are mostly measurements of us as individuals.  

So I think we like social media because it measures us as individuals.  The rest of our work is collective and the results are team results.  Our efforts are hampered by a multitude of dependencies and corporate constraints.  Our social media activities are refreshingly unencumbered by comparison and we can apply our creativity directly and see the results directly.

The DVR Killed the Superbowl (for me anyway)

I admit that I am not a big pro football fan.  Either way, I have always enjoyed big sporting events and the drama leading up to them.  The Masters, the US Open (Tennis or Golf), and the Rose Bowl were always on my TV watching calendar.  

A few years back I started using a DVR and did so for the sporting events too.  At least half the time I knew the outcome before watching the game -- how can one avoid knowing who won the superbowl withing 5 minutes of the end of the game?

Part of my interest was certainly the big personalities involved, and the way the story unfolded.  Another part comes from the fear of missing the best game ever.  Believe it or not, there was a time not long ago when if you missed the game that went into overtime -- you really did miss it.  You got to read about it in the paper but the chance to experience it yourself was lost.

We are clearly not in that time anymore.  Knowing that I can go back and see the best game ever -- any time I want -- has left me with just about no interest in watching the game.  I am not exactly sure how that happened.

I find myself reading much more now that the DVR killed the Superbowl.

America's Cup is Not the Top of the Sport

Throughout my life I have been enthralled with sailboat racing.  At times I have been consumed by it.  Lately not so much due to other interests.  

I will be watching the Americas Cup on Monday, but for all of you that do not follow the sport, please do not judge us by this spectacle.   Some of our sport's greats have been drawn into the fray -- I suspect because of the big money.  Russel Coutts, John Kostecki, and other true greats are competing.  But if you want to see who is who in sailing -- check the list of gold medal winners in the Olympics.  

The Americas Cup is a circus act.  Too weird to look away -- but not a representation of the sport of sailboat racing.

Capacity of a Salesperson

How many salespeople does a country need in order to achieve its GDP growth? Can salespeople increase GPD (pull us out of a recession)? If we only had enough salespeople, we could put the whole country back to work. Clearly the world is not this simple, but hidden in a ridiculous argument like this may be a few interesting things to think about.

Every industry has its key metrics and just about every industry has salespeople.  From what I can tell the mid point in salesperson production is about $1 Million in revenue and $100,000 in compensation.  A Starbucks Barista would generate much less and get paid much less, and a bond salesperson on Wall Street -- well much more on the pay part anyway!

So I know this number is weak, but let's just go with it for this discussion.  One salesperson = $1M in Revenue.

The other day I analyzed 8 tech companies including Apple, Google, Microsoft, IBM....  Together those companies generate $400 Billion in revenues.  Using our little formula above, they collectively would need to have 400,000 salespeople to generate this amount of business.  Even though they collectively employ 900,000 people, clearly half of their employees are not in sales.

So where do all of those other sales come from?  Some from automation (Google's service apparently sells itself), but most comes from channel partners.  Partners ranging from the distributors, to the retailers, to the four person computer consulting company in Everytown, USA.

Despite what has been happening on the NYSE the last few days, the economy is showing signs of life.  Our President is looking for ways to get more jobs into the recovery.  Many economists are pointing towards small business as the place where the hiring is going to happen.  Well the President should be proud because this is exactly what we are seeing happen right now.  

The large technology companies are ramping their channel partner programs up in a big way.  This is presenting many opportunities for growth in their channel partners, and those channel partners are hiring.  And for every 100,000 new salespeople we will grow a whole IBM ($100B) worth of new GDP. 

On Speaking: The Frame

I was asked recently to coach some young leaders on public speaking. I am looking forward to the exercise. I love to speak, and talking about speaking is about as fun as things can get. It should be a good opportunity to capture some thoughts on public speaking -- and I will do my best to post them here.

The Frame

The curse of knowing a subject well leads many public speakers to neglect to frame the subject. We all want to jump right in and get to the main point and supporting evidence, but those points will be lost without a good framing statement. A good framing statement should be one tight sentence that orients the audience. It should be strong enough to bring even the most distracted listener into your universe. It does not have to make your argument or seal the deal. After hearing the framing statement your listener knows what you are going to talk about. This is the first Tell in the Tell, Tell, Tell speaking structure.

Here are some examples of framing statements for some common speeches:

• On a book you wrote: I did not know that I was changing my life when I wrote the first page of my book fourteen years ago.
• On a trip you took: Mount McKinley is obscured by clouds 345 days of the year.
• On a company you started: Like many entrepreneurs, I started my company because I wanted to be the first customer.
• On a cause you support: Of 100 students entering high school in the Seattle Public School system, only 2 of graduate from college.

No matter how well oriented your audience was when they decided to attend your talk, at least half of them will have forgotten their own reason by the time you start to talk. So take a second to give them a good framing sentence. You just want them to think 'oh right, this is the guy that started that company'; or 'OK, we are talking about education'.

There are as many flavors of this as there are speakers, and you want your framing statement to fit your style and your situation. If you are leading a meeting you could say "This meeting is about..." If you are giving a sales presentation you could say "We are here today to present our solution to your..." If you were introduced at the podium you may need to pull people back from momentum established in the content of your bio by saying "Even though my day job is as a lawyer, I am here to speak to you today about..."

Using jokes as to frame your subject is tricky. It can be great because loosening up your audience with a joke is great fun. However if you go that route, you have to realize that you will both have to be funny and do it in the context of your subject. A funny joke that propels your audience in the wrong direction is probably not going to get you where you want to go.

Using a rhetorical question is also complicated. If you do, make sure to answer it right away -- say in the next sentence. Unresolved items like that can chew up the brain power of your audience and distract them within the presentation.

Step one of your speech should always be to get your audience into the frame with a good framing statement.

Microsoft = Platform

My first job out of college was as a Computer System Analysis for Boeing Aerospace in 1987. Our group of about 16 people had two responsibilities: get office users in the company to start using all of the computers the company had bought, and establish standards for desktop computing. For those of you who are interested, back then we did email on the HP 3000, used Netware for PC networking, did word processing with Word Star, databases on Rbase, and Lotus123 for spreadsheets. And all of the PCs ran on MS Dos.

I remember getting a call one day from a friend at Microsoft who was working on the MS Word team (Dos only back then) asking about how we made decisions and the dynamics of the relationships inside the company and how influence impacted purchasing decisions.

Microsoft already knew that its success depended on its partners (Novell, WordStar, Rbase, Lotus...) who made apps that ran on their MS DOS platform. Microsoft was just starting to think about another layer to their partner program; internal or external consultants that had an influence on setting standards and purchasing decisions. Back then everyone bought software from Egghead Software -- in today's lexicon, Egghead Software was the Microsoft App Store. It sold all of the applications available to run on the Microsoft Platform. Microsoft has evolved considerably since the late 80s and now has as many partners in the consulting side as it has in the application development side.

Steve Jobs made a big deal last week about the iPhone/iTouch/iPad Platform, the 140,000 applications, and the 3 billion downloads. In technology we love new things and really don't like old things much. So the whole platform idea has been recast as new by Apple. Microsoft has so many applications built on its many platforms that no one can even count them all.

Apple may have a large and growing number of people writing applications for its platform, but in an effort to completely control its environment has actively discouraged hardware partners - even bringing out its own chip this time - and has no interest in building a consulting partner base.

All of this reminds me a little of a company everyone thought was on the way out 20 years ago -- but now generates $100B in revenue with 400,000 employees (IBM).

It would be crazy to count Microsoft out of the platform game.

Book Review: Free by Chris Anderson

There are so many great books on my reading list that moving Chris Anderson's "Free" to the top was not something I was all that excited about. In the tech marketing business it is hard to go a week without someone referencing his book however, so to the top it went. I really liked "The Long Tail" and therefore had no justifiable reason to read it begrudgingly. Turns out it is quite good.

I do not ordinarily read with a pen or pencil in my hand. I used to underline things but found I never went back and used the markings so why bother. About 30 pages into Free I found I had 10 pages dog eared and got out my pencil. Just about every page in the book now has a note on it. The book is very well researched, easy to read, and full of great quotes I will want to find easily. The exercise of reading Free also added half a dozen other books to my reading list.

No small part of my reluctance to read the thing was based in the thought that I already knew what he was going to say. Free drives traffic, traffic is value, value converts to dollars some other way...example, example, example, done. While the book does follow this framework, it is much more interesting than that. I had heard many other arguments that the new currencies of attention and reputation were more valuable than dollars, but this book makes the idea pop and then locks it in with solid facts and a convincing cast of supporters.

The author tackles the critics head on and even devotes a chapter to a list of many arguments against the idea of Free and then crisply refutes them one by one. Now there is a limit of course. I am pretty sure I know what would happen should I call up the IRS and suggest that living in this country should be free.

Clearly everything cannot be free, but Chris Anderson does a good job of articulating why some businesses are better off adopting the model.

The two current high profile tests of this idea: Rupert Murdoch against Google, and the New York Times 2011 pay wall decision, happened after the publishing date; and both the NY Times and the WSJ are cited numerous times. These new developments do not take away from the book, and somehow even make the reading seem even more relevant.

Here are some other very good reviews. All of them come in on the too good to be true side. I will post a rebuttal at some later date because I am in the middle of a couple of other contra argument books and I want to give both sides equal time before I conclude anything dramatic.

The New Yorker

NY Times Book Review

Washington Post

Here is a link to the book on Amazon.