Great by Choice: the surprising lessons of how tech startups succeed over the long term

Note: This is a pretty long article (~4000 words). You can skim it now but you might want to also bookmark it and fully review it when you have 15 mins or so.

Summary: Great by Choice describes the results of a deep investigation into how young companies can survive and thrive in chaotic, turbulent environments to achieve spectacular results. The book is of great value startups and entrepreneurs seeking to build enduringly great companies. In this blog post, I look at how his concepts of fanatical discipline, productive paranoia, and empirical creativity apply to building a startup that succeeds over the long-term [1].

Introduction

I just finished reading Jim Collins’ new book Great by Choice: Uncertainty Chaos and Luck—Why Some Thrive Despite Them All (GBC from here on out). GBC is the spiritual sequel to a highly-regarded & best-selling book published by Collins in 2001 called Good to Great: Why Some Companies Make the Leap… and Others Don’t. Both are great reads, but I find GBC particularly relevant to technology entrepreneurs (like myself). Why? Two reasons.

The level of research behind the book:

Unlike many business books, this is not just one successful guy waxing philosophical about how he made stuff happen [2]. Jim Collins and his coauthor Morten Hansen had entire teams of research analysts work for 9 (!!) years to complete the book.

They picked industries that were highly volatile and selected young/small companies that did extraordinarily well (beating their industry’s average stock growth by 10x or more for at least 15 years). They found comparison companies that were started off very similar to the “10x companies” but only had average performance, and dissected all the data they could gather on both companies to find the differences. For more, see Appendix A below.

The companies / industries studied:

  • Computing/Software: Microsoft vs Apple [3]
  • Integrated Circuits: Intel vs AMD
  • Biotechnology: Amgen vs Genentech
  • Medical Devices: Biomet vs Kirschner
  • Surgical Devices: Stryker vs USSC
  • Insurance: Progressive vs Safeco
  • Airlines: Southwest vs PSA

The companies are relevant and familiar to tech entrepreneurs like me and many of the folks on this blog. My focus in this post is to look at how the conclusions from the research could be applied to early stage startups that WANT to build enduring and spectacularly successful companies. I’m excited to see what we find.

MYTH-BUSTING: It’s not about more vision, creativity, risk-taking or luck

One of the great things about this study is that it’s not just studying winners but looking at the difference between winners and losers. GBC found that the 10x companies were NOT more creative, visionary, ambitious, lucky, hard working, risk-taking, innovative, etc. It’s not that those things weren’t important – I think they were/are. And GBC acknowledges this.

It’s just that both groups had lots of these things. Yet they had different outcomes. So we have to look at what DIFFERED between the 10x and comparison companies. Let’s start by looking at how innovation happens at 10xers. Continue reading…

Why Everyone is in Sales

This is a multi-part series on Sales, Marketing and Persuasion. To see the blog post that inspired this series, click here. To see a list of all the blog posts on this topic: How to Sell Market and Self Promote.

If you’re interested in creating passionate users, or keeping your job, or breathing life into a startup, or getting others to contribute to your open source project, or getting your significant other to agree to the vacation you want to go on… congratulations. You’re in marketing.

You are a marketer – Kathy Sierra

I want to talk about sales. Specifically, I sell you on the idea that sales doesn’t have to be sleazy and that in fact a great deal of your success in life relates to your ability to sell.

First let’s talk about what I mean by selling:

Selling [in this context] is about creating an offer that convinces other people to do something that benefits you and usually costs them their money, time, stuff, political capital, etc.

An obvious example of sales is when you list your old Macbook Pro on Craigslist, you get money by creating an offer (Give me money in exchange for this Macbook) that was worth it to the buyer.

However, sales is also when you make an offer to your manager to get transferred to a new project at work (“if you transfer me to this new project, I’ll make you look really good by delivering big”) because your manager had to expend political capital and time/energy coordinating the move. Your offer needs to motivate him to take action and expend his resources.

In this light, selling is everywhere. Selling is getting people to try your new web app, or tweet your blog post or have coffee with you or recommend your services to their friends.

This post is called “Why Everyone is in Sales” because when you think about it, pretty much everything you do requires the cooperation of other people. Unless you live entirely off the land on a remote island, you will encounter other people and will need their help. Having money helps, but many of the things you actually want are only indirectly gotten with money.

You will need to sell. So it might be helpful to get better at selling.

From the book You, Inc. by Harry and Christine Beckwith:

Living is selling.

Start from childhood and remember all the sales calls you made. You worked up a sales pitch to get your parents to take you to Disney World, raise your allowance, and extend your curfew. You pitched them on sleepovers, a nicer bike, perhaps your first car. For that matter, you sold them on the accident that “wasn’t really my fault” and on a report card that seemed to suggest some backsliding. And on and on.

Your childhood sales career prepared you for adulthood, when you tried to sell your college on admitting you, an employer on hiring you and the car dealer on dropping $500 from the sticker price.

The question is not, are you a salesperson? The question is, how might you become more effective?

Now I realize this makes sales sound pretty self-serving but that’s because I’ve only explained half of the equation. The right way to sell is to create an offer that’s compelling and addresses your buyers wants and needs. You’ve got to provide something of value that is greater than the cost that the other party has to pay.

Give people what they want, and they’ll give you what you want. That’s how you sell without the sleaze. More on this later. For now, the take-away point is:

Recognize that your life is filled with situations that require skill in sales. Developing that skill is important and a worthwhile endeavor that does not require you to turn into a jerk.

“I Miss Being World-Class” [quote]

I don’t miss Counter-Strike. I miss being the best at something. I miss being world-class. I miss being exceptional.

Jon “juan” Mumm, retired Counter-Strike: Source legend most known as the stratcaller

I was never a world class gymnast but I understand what he’s talking about. You never look at the world in the same way after coming down from the top (in my case, a national championship).

Going the Distance – Back-to-Back 10ks in Stanford and Eugene

If you’ve been reading this blog for a while, you know I pretty much don’t do things halfway. So it won’t surprise you to know that despite having never completed a 10k distance race before I found myself entered to compete in two of them, one weekend after another. Here’s how that went.

Stanford Habitat for Humanity Home Run – 11/12 

Great race. As an alumni, I was excited for an opportunity to see the campus again and I was not disappointed: the organizers put together a scenic windy tour around Stanford. I raced in a new pair of shoes (yes, another pair!): the Vibram Five Finger Bikila’s (named after Abebe Bikila, an Ethiopian who won 1960 Olympic marathon barefoot). [1]

I LOVE my Bikilas.

They weigh about the same as my other shoes (~7 oz) and have the same shape, fit and road grip as my VFF KSO’s, but more of the New Balance Minimus MT20′s “cushioning”. I think the MT20 are better for trails and the KSO’s are more flexible / truly barefoot-feeling but the Bikilas seem to exist to help you run fast. This praise comes with a warning: they really encourage you to run with a forefoot strike, (more than the KSO’s because of the 4mm Vibram outsole) not and even as a guy who runs exclusively in minimal footwear, my calves get a serious workout every time I run with the Bikilas.

My goal for the Home Run 10k was to run a smooth race and not push myself too hard. I aimed for a 9:20 pace and was able to stay roughly on target. I definitely spent most of the run chasing middle aged runners which didn’t do particularly much for my self-esteem [2]

I ended the race on a strong kick as usual and had a great time. Below is a screenshot of my race as tracked by Runkeeper. I was happy with how it went and of course, the money went to a great cause as Habitat for Humanity was studied in Forces for Good as a high impact nonprofits.

My official time was 54:57, putting me in 116th place out of 223. See official race results here.

EWEB Run to Stay Warm – 11/20

The second weekend I took a trip up to Eugene Oregon to compete in EWEB Run to Stay Warm, their gas/electric provider’s charity race which helps householders in tough financial conditions keep the heat on during the cold Oregonian winter.

Why did I pick this race? It was featured in Runner’s World’s run of the month! And also, it gave me a chance to rideshare up and down via Ridejoy!

I was Couchsurfing in Eugene and was fortunate enough to have my host, Jesse, drive me to the center and he ended up bandit running the race (that’s Jesse in green in the picture).

First off, it’s freaking cold in Oregon. I know all the race organizers get a laugh out of the fact that not only are we helping keep the heat on through the race, but we personally are staying warm in the 37 F weather through running.

I don’t think I prepared adequately for the race and struggled quite a bit in the middle. Here’s what I learned:

  • Dress appropriately
    I knew it was going to be cold so brought a jacket and a long sleeve Under Armor shirt. Sounds reasonable except that the jacket wasn’t meant for running and the compression from the Under Armor shirt made it hard to breathe [3] I spent half the race with a bunch of crap tied around my waist, which wasn’t great. Next time I do a race in this climate I’d make sure to either have a running-specific jacket, or at least arm warmers and perhaps longer shorts or tights that fit not *too* tight.
  • Don’t drink too much coffee right before running
    I drank a big cup of coffee less than an hour before the race — it was really cold (see above) and drinking a hot beverage made me feel better in the moment. However, later in the race my stomach was not doing so great and I think it was in part because of the java.
  • Get more rest before the race
    The week leading up to the race there was a lot going on at work, so I don’t think I rested adequately, which is unfortunately a tradeoff you have to make when running a startup.

I was able to pull it together toward the end of the race and finish strong but it was definitely not easy. I am sort of amazed I finished slightly faster than the Stanford race. I definitely worked a lot harder…

Check out the differences in the splits (from Runkeeper)

Eugene Run to Stay Warm Stanford Home Run

Official finishing time was 53:57, placing 86 out of 272 runners. Official results here. Runkeeper link here.


Now that these two races are over, I’m taking a little time to rest, recharge and prepare for my next race. I’m jumping into a half marathon distance, which I’ve been told is a bit of a leap up from the 10k. We’ll see what happens! As always, I’ll keep you updated on how things go. Shoot me questions or comments down below!

FOOTNOTES


[1] I’ll be honest, I’ve coveted the Vibram Bikilas since hearing that Vibram was building a version of the shoe specifically for runners, but since I already owned KSO’s and then getting  the New Balance Minimus Trails, I didn’t feel it made sense to get another pair. But I’ve kept hearing good things from my running friends and when I got linked to a special 30% off deal, I took the plunge. [2] I’m mostly kidding – it doesn’t necessarily feel great to get passed by someone 20+ years older than you, but after reading the book Run Faster from the 5k to the Marathon, I’m heartened by the author/running coach’s rule that most runners don’t hit their peak until 30 and no matter what age you are, if you haven’t been much of a runner, it’ll take about 7 years of serious training for you to reach your lifetime best. So I confident to know there’s so much progress I can look forward to making. [3] I don’t know why but after getting this shirt as a gift, I always want to try to wear it for running, despite the fact that it’s a little too small and exerts force against my chest cavity opening and closing – making breathing just that much harder. I definitely learned my lesson this time.