Last month, when the Gotham Gal and I and our friends Brad and Amy combined to match $20k of donations to the ACLU and ended up raising $120k on a weekend that saw the ACLU raise over $25mm, we committed to do a match every month for all of 2017. Part of me wants to keep doing this as long as we have an administration hostile to the rights of minorities in the White House but we will see about that. We are going to keep doing this monthly match for the rest of 2017 and then we will see how we feel about it.
So, today we are launching a second match offer. Brad, Amy, Joanne, and I will match the first $20k of donations to the National Immigration Law Center, which “engages in lawsuits that defend the fundamental and constitutional rights of all Americans, including low-income immigrants and their families, often in coordination with other local and national civil rights organizations.” You can read about their work and their mission here. The NILC has been around for almost 40 years and has done some amazing work over that time and we need them more than ever right now.
Why did we pick the NILC over many other groups that need our support right now? Well first of all, we plan to do this every month with a different organization that is supporting the rights of minorities that are at risk under this administration. So we have a long list and this is just the first of many we will support with our monthly match.
But more importantly, we remain upset and anxious about the efforts of this administration to throttle immigration and the rights of immigrants, both those in the US and those coming to the US. We have had some early victories in the courts but we need to keep up the fight for as long as the administration continues to pursue these efforts and along with the ACLU, the NILC is an important leader in this fight.
Here is how the monthly match works:
- Go to our monthly match page and hit the donate button and give whatever you feel like giving (min is $10).
- After you complete the donation, TWEET your donation out on the post donation page. That will register it for our match.
- If you don’t use Twitter, you can forward your email receipt. The instructions will be on the post donation page. We would vastly prefer you tweet it out if you can.
Last month, we used Twitter for this and had to manually record every tweet including a receipt. That was fun but a pain to administer. This time we are using Crowdrise for the donations and the accounting but keeping Twitter for the virality that was so awesome and brought in so much money. We have customized Crowdrise to make it feel as much like the Twitter campaign we ran as we could. We think this will work better and we will be optimizing this as we continue these monthly matches for the rest of the year.
I hope all of you who agree that we must fight the efforts of this administration to throttle the rights of minorities will join our monthly match campaign this month, and every month this year, and support the NILC. Go here to do that.
In this Fox News interview, former Ohio Congressman and Presidential candidate, Dennis Kucinich, sounds the alarm that entrenched elements in the U.S. Intelligence community are working to undermine the Trump presidency and derail his attempts to normalize relations with Russia.
When you consider the economic and financial implications of peace, it makes complete sense that the military-industrial-banking complex would fight tooth and nail to stir up conflicts around the world, which is precisely what has been happening.
Whatever we might think of Trump as a man or as a President, the people must rally to support his efforts to cooperate with Russia in quelling the turmoil in Syria and the middle-east and move the world toward peace.
The news out of Uber last weekend was horrifying. A woman engineer was unable to get human resources to deal quickly and appropriately with a sexual harassment claim. I don’t know anything more than what I learned in her blog post. Uber is investigating and the full story will likely emerge in due course. I am not interested in piling on Uber right now. Plenty of people doing that.
But it does raise a great question which is how to get human resources right in a fast growing tech company. Growing from 50 to 500 to 5,000 to tens of thousands of employees is hard. Operating systems and processes that work in a 500 person company don’t work in a 5,000 company. The same is true of every growth spurt. Systems break down and stuff gets messed up.
A well designed and implemented human resources organization can help. A messed up human resources organization will hurt. As Uber has found out.
So what have I seen work and what do I recommend?
Here are some things you can do to increase the chances that your human resources organization will be a force for good in your company:
- Hire a human resources (HR) leader EARLY in the development of your company and “level up” your HR leader as needed as your company grows. The right HR leader in a company of 50 is not likely the right HR in a company of 5,000. Of course there are exceptions to this rule, but in general you will need more experience in the HR leadership function as your company grows.
- Have your HR leader report directly to the CEO. Do not tuck the HR leader underneath your COO, VP Ops, CFO, GC, or VP Admin. The CEO has a hard enough time figuring out what is going on in her company as it is. Putting someone between them and their cultural leader/thermostat is a bad idea. Plus the optics are terrible. Your management hierarchy says a lot about what you value and what you do not. Actions speak louder than words, always.
- Do not make your HR function a recruiting function. Of course HR needs to help the company hire. And it certainly needs to help transition out people who have to leave the organization. But HR orgs that function mostly as an I/O pipe are bad HR orgs.
- Do make your HR organization about culture and leadership first and foremost. I have heard many HR leaders called “our culture carrier.” That’s good. And HR orgs should be making sure everyone is getting feedback on their performance and development goals, including the CEO. Organizations that share feedback top to bottom with dignity and professionalism are great places to work and perform better.
- Always have a company handbook that lays out the rules of behavior in the workforce. You can’t do this too early. You set the tone early and it propagates. It is great if you can start with your values, clearly laid out for everyone, and then lay out the rules and what happens if they are not followed.
- Build a great employee onboarding process. I believe that the companies that take the time to properly onboard new employees are better places to work and perform better. Onboarding should be more than “here’s your laptop, here’s your desk, here’s your boss.” It should be at least a few weeks of getting ingrained in the values, culture, systems, processes, and rules. It should be learning about every part of the organization, the current operating plan, strategic priorities, management team, and more. Doing it right is hard but it pays off bigtime.
- One CEO that I have worked with for more than fifteen years once told me his HR leader was his most important senior executive. He said she was his “business partner.” That’s a great place to get to if you can get there. What is more important than your team, after all?
I hope those suggestions are helpful. They are based on what I’ve seen work and not work over the years.
In the Uber situation we also saw a failure in the “whistleblower process.” This is a particularly hard process to get right. First of all most teams, whatever kind of team, don’t really want “snitches.” It is human nature to try to come together and support each other. And blowing the whistle is the exact opposite of that. So here are some things you can do to get this right:
- Train your organization about the situations that are particularly tricky; sexual harassment, drug and alcohol issues, fraud, etc. Teach everyone how to recognize them and what to do about them. Make it clear that they are EXPECTED to report these issues to management and that failure to do so is complicit behavior.
- Have some sort of whistleblower hotline. Often times the company General Counsel will manage this hotline. Make sure everyone knows about it.
- Enable anonymous feedback throughout the organization and explain when it is appropriate and when it is not. Obviously anonymous feedback has great potential for abuse. But it is often the only way you are going to get the most important feedback that nobody will share otherwise.
- Talk about this stuff in your all hands, regularly. I am sure this is a big topic this week but it should not get talked about only when something bad happens somewhere. This is something that should be discussed at least a couple times a year. Companies that scale rapidly can double in size in less than a year. So you have to talk about this stuff frequently to make sure everyone understands it. And make sure to clearly cover it in the onboarding process.
If you don’t have this stuff worked out in your company, now is a great time to do that. Your employees are watching you.
If that business model wasn’t cutting edge enough for you, the Numerai team has now gone a step further and issued a crypto-token called Numeraire to incent these data scientists to work together to build the best models instead of just competing with each other.
When I read the Numerai blog post about Numeraire yesterday, I tweeted this out:
“The most valuable hedge fund in the 21st century will be the first to bring network effects to capital allocation” https://t.co/F5QHnPAtjH
— Fred Wilson (@fredwilson) February 21, 2017
This is all pretty out there stuff in a world, hedge funds, that has more or less done things a certain way for the last thirty years. I’m not saying hedge funds haven’t innovated, they certainly have, but I don’t think anyone has attempted to change the behavioral economics that underpin hedge funds in quite the same way that Numerai has. It is, if nothing else, a fascinating experiment that will tell us a lot about crypto-tokens, machine learning, and behavioral science.
I must admit that some of this is over my head. I’ve read the Numerai blog post as well as the Forbes and Wired posts several times now and I am not sure if I could explain all of this perfectly at a dinner party. But I am super excited that USV has invested in this audacious experiment and I look forward to seeing how it all pans out.
I came across this index from Bloomberg that tracks the health of the US startup ecosystem.
This index “incorporates both the money flowing into VC-backed startups, as well as the exits that are making money for investors. To smooth out some of the volatility, we calculated the average value for the last 12 weeks.”
I like that they are tracking both inflows (investments) and outflows (exits). What’s interesting is that over the past year, the exit chart is looking better than the investment chart:
If exits continue to outpace investments, that’s a very bullish thing for the startup sector, particularly for investors. But what is good for investors is ultimately good for founders because strong performance will lead to more capital flowing into the sector.
This chart is investments since 2007:
You can see that the VC sector ramped its investing activity significantly in 2010 & 2011 and has maintained it at roughly those levels (with some tailoff recently) since then.
This chart is exits since 2007:
You can see that exits did not start increasing until 2014, roughly three to four years after the significant pickup in investment pace. That makes sense because of the “gestation period” of startups is at least four years and in most cases longer.
I will be keeping my eye on this new index from time to time. And I will be most interested in the shape of the exit chart because it is the strongest predictor of the long term health of the startup ecosystem.
It has long been evident the Greek government, over the years, has been so overburdened with debt that much of it would eventually need to be forgiven. Now, even the mainstream media is touting that as the necessary solution to Greece’s predicament. In his recent article, published on the Bloomberg website, Princeton Prof. and former IMF deputy research director Ashoka Mody argues that the IMF is to blame for Greece’s debt situation and that it ought to pull out. He proposes that the IMF’s principal shareholders — the Europeans and Americans, must “honorably accept real losses.”
But he also points out that “the IMF’s Board, over the fierce opposition of several executive directors, the Europeans and Americans pushed through a bailout program that, contrary to the fund’s rules, did not impose losses on Greece’s private creditors. The decision was based on a spurious claim that “restructuring” private debt would trigger a global financial meltdown.”
So, here we have another case of private bank creditors being bailed-out. Yes, the Greek debt must be forgiven to allow the Greek economy to recover, but the burden now falls upon European and American citizens instead of on the banks’ owners, where it properly belongs.
AVC regular William Mougayar gave this presentation at the European Ethereum Developers Conference, Edcon, in Paris a few days ago. In his talk, William argues that Ethereum, unlike Bitcoin, is developing into a rich environment with many different services coming together to provide developers a wide platform to build on top of.
I am increasingly viewing Bitcoin and Ethereum as complimentary, not competitive, and see both of them as important public blockchains that will grow in significance in the coming years. But regardless of that, William’s take on Ethereum is correct and there is a lot of developer momentum and enthusiasm around it.
Edcon – State of Ethereum Ecosystem – Mougayar from The Business Blockchain
In my work to prepare for the Future of Labor conversation we had at NewCo Shift a few weeks ago, I talked to a number of experts who are studying job losses due to automation and thinking about what might be done about it. Two ideas that came up a number of times were the “robot tax” and the “basic income.”
The ideas are complementary and one might fund the other.
At its simplest, a “robot tax” is a tax on companies that choose to use automation to replace human jobs. There are obviously many variants of this idea and to my knowledge, no country or other taxing authority has implemented a robot tax yet.
A “basic income” is the idea that everyone receives enough money from the government to pay for their basic needs; housing, food, clothing so that as automation puts people out of work we don’t see millions of people being put out on the street.
What is interesting about these two ideas is that some of the biggest proponents of them are technology entrepreneurs and investors, the very people who are building and funding the automation technologies that have the potential to displace many jobs.
It is certainly true that we don’t know that automation will lead to a jobs crisis. Other technological revolutions like farming and factories produced as many new jobs as they wiped out and incomes increased from these changes. Automation could well do the same.
But smart people are wondering, both privately and publicly, if this time may be different. And so ideas like the robot tax and the basic income are getting traction and are being studied and promoted.
The latest proponent of a robot tax is Bill Gates who said this about it:
You ought to be willing to raise the tax level and even slow down the speed. That’s because the technology and business cases for replacing humans in a wide range of jobs are arriving simultaneously, and it’s important to be able to manage that displacement. You cross the threshold of job replacement of certain activities all sort of at once.
There is a lot of economic surplus that could come from automation. Let’s look at ride sharing. Today I pay something like $15 to go from my home to my office in the morning. Something like $10 of that ride is going to the driver. If the ride is automated, either the price goes to $5, saving me $10 a ride which then is surplus to me, or the profit that Uber is making goes up significantly, which is surplus to them. Some of both is likely to happen. This surplus could be taxed, either at the company level or the individual level, so that the cost of the ride doesn’t go down nearly as much and the driver can continue to compete with the robot or the driver can collect some basic income, funded by the robot tax, while they find a new line of work.
At least that is the idea.
I would not characterize myself as a proponent of a robot tax or a basic income. But I find these ideas interesting and worth studying, debating, discussing, and testing at a small scale to understand their impacts. We should absolutely be doing that.
I posted the discussion my partner Andy and I did at the Upfront Summit last week.
There were other great conversations at the Upfront Summit.
This discussion with Mark Cuban was great. I totally agree with Mark that we need more tech companies to go public and have been saying that publicly for several years.
I backed this journalism project a few days ago and I thought I would highlight it to all of you here today.
Off Assignment is a publication that allows writers to go off assignment and tell the stories they really want to tell.
Here’s a video that explains it in more detail:
“We now have five investments there, placing Toronto third as a location in the USV portfolio after New York and San Francisco.” https://t.co/IinjtETAIj
— Fred Wilson (@fredwilson) February 15, 2017
Toronto is a great place for startups. In addition to five investments of ours that are HQ’d there, I know of at least one other USV portfolio company that has much of their engineering team in Toronto. The talent, mindset, and quality of the people in the Toronto/Waterloo tech/startup community is really top notch and we love investing there.
Top Hat is an interesting investment. It’s a bet that interactive learning tools for college classes can be a platform to re-imagine how the college textbook market should work. Here’s is Albert’s post in full about all of that.Top Hat
Even back when I was in graduate school, I found the price of textbooks to be high and their quality to vary widely. Now that I have children taking college courses, I was shocked to find textbooks that cost over $200 and are still large physical objects that have to be lugged around! The high prices and lack of innovation are the result of a market structure which has become highly concentrated among just a few textbook publishers. That’s why I am excited to announce that USV has led a new round of financing for Toronto-based Top Hat, which last year launched a content marketplace for higher education.
I first met Mike, the founder & CEO of Top Hat, shortly after he had started the company. He told me about his exciting vision for bringing innovation to the higher education market. But then he said he was getting going by replacing Clickers. For starters I didn’t know what those were as they had come after my time in college. Once I figured out what a Clicker was, I admittedly thought going after those was, well, boring. But Mike was right and I was wrong. Starting with classroom engagement turned out to be the perfect basis for establishing a large footprint in higher education. We stayed in touch as Top Hat grew and then last year the team successfully used their user base to launch a content marketplace.
While it is still early there are many positive signs about the potential for the content marketplace that remind us of other successful marketplaces we have invested in over the years such as Etsy and Science Exchange. In addition to individual professors adding content by themselves there are also new behaviors emerging and we are particularly excited about collaboratively developed content. Much work remains to be done but the company is now well funded to execute on that.
Our investment comes from the USV Opportunity Fund, which we set up in part for this type of situation where we have developed a relationship with an entrepreneur over time. Also worth noting is that Toronto continues to impress us with its quality and diversity of companies. We now have five investments there, placing Toronto third as a location in the USV portfolio after New York and San Francisco.
Yesterday, on Valentine’s Day, Etsy invited press to its headquarters in Brooklyn and took the covers off a bunch of things they have been working on for most of last year and will launch shortly. For those that don’t know, USV was one of the first investors in Etsy and I have been on the Board of Etsy for over a decade now.
Here are the details of what they talked about and showed yesterday:
Etsy Studio – This is a brand new marketplace, built from the ground up, to allow makers of craft supplies, large and small, to reach crafters all around the world. Etsy Studio will compete with retail stores like Michaels and others but with ~200x the inventory. A typical retail craft store will carry 30,000 to 40,000 SKUs. Etsy Studio will carry 8mm SKUs at launch.
Etsy also plans to bring the “joy of crafting” to Etsy Studio with its signature design and ease of use, but also with content and projects that connect what you want to make with the supplies you need to make it.
Etsy Studio will launch in April.
Etsy Shop Manager – Over the years Etsy has offered sellers the opportunity to use Etsy tools in a variety of places. They can use them on Etsy.com, they can use them in a craft fair with Etsy’s mobile apps and card reader, they can sell on their own website powered by Pattern, and soon, they can sell on Etsy Studio. And sellers can use Etsy’s advertising services, payment services, and shipping services on most of these sales channels. If you follow this trend, it is clear that Etsy wants to help sellers sell wherever they want to sell. Etsy Shop Manager is an entirely new interface for sellers to manage their business. It puts all of the Etsy seller tools in one place and helps sellers decide which tools and which sales channels to use to grow their business.
There are a bunch of other things Etsy has been building to make all of this work like structured data and search, a new and better way to manage inventory, and the ability to check out with as many items in your basket as you want.
Since I started working with Etsy over ten years ago, they have been committed to a single idea – that there is an emerging economy of creative entrepreneurs who power a personal form of commerce that is better for everyone. Here are some stats that show the power of that idea:
- Today, there are active Etsy sellers in 99% of the counties in the US and almost every country in the world.
- Half of Etsy sellers start their shops to meet a financial need.
- 87% of Etsy’s creative entrepreneurs are female.
- Etsy’s 1.7 million sellers are able to create jobs and incomes for themselves and build value in their communities by connecting with 27 million buyers all through the Etsy platform.
Companies like Etsy don’t come around that often, but when they do, I am drawn to them. They are mission driven and they make things happen that need to happen. It’s very fulfilling to work with companies like this.
My two favorite holidays are Thanksgiving when we are thankful for family and food and Valentine’s Day when we celebrate love and the people we love.
Love is a powerful thing, maybe the most powerful thing. And I am blessed to have a lot of it in my life.
So I hope everyone in AVC land takes time today to be with your loved ones and celebrate the love in your life.
Happy Valentine’s Day
Chance talked about the importance of artists staying independent and his shoutout to SoundCloud was a well deserved acknowledgement of the power of platforms like SoundCloud in helping artists get discovered independently of the traditional music system and staying there.
Here’s the Best Rap Album of 2016, in case you missed it.
And if you didn’t know, SoundCloud is a USV portfolio company.
Strategy is hard and becomes increasingly important as companies grow and scale.
One thing I advise teams to focus on when they go through a strategy exercise is to identify the things they won’t do.
One way to do this is to make a list of all the things people inside (and outside) the company are encouraging the company to work on.
Then break that list into two lists – the things you will do and the things you won’t do. This should be a group exercise, iterative, and ideally done on a whiteboard or some other similar tool.
The timeline for this list of projects doesn’t matter a lot. It could be for the next year or it could be for the next three to five years.
This exercise identifies the things that are most important versus the things you would like to do but can’t get to right now.
And this process helps solidify the strategy.
I think a company, at least a company that is smaller than 1000 people, should not try to do more than three big things a year. These big things can include a number of smaller things in them. So you might have a list of ten things you want to do this year. If you can organize those ten things into three big focus areas, then that works. If there are literally ten big things you want to do this year, I think that is way too many.
The most successful companies I work with have a clear sense of Mission/Vision>Strategy>Priorities that guides the company quarter to quarter, year to year, and aligns everyone on the team around where the focus is and why.
Saying no to things that are off mission, off strategy, or are not a priority right now is critical to getting this right.
I say this as an investor who has seen his ideas end up on the no list way more often than the yes list. I understand why that is and accept it. I would rather work with a company that knows where it is going and why than one that blindly listens to its investors.
Following last summer’s exciting and successful workshop in Greece, Thomas Greco will again this summer be conducting a workshop in Monetary and Financial Innovation for the New Economy at the Alexandros campus of the Kalikalos Holistic Summer School on the beautiful Pelion peninsula in Greece.
[Edit:During the 2017 workshop Tom will again have the assistance of Matthew Slater and the benefit of a guest appearance by Prof. Jem Bendell of Cumbria University (UK).]
In this week-long workshop we will examine the problems and deficiencies of both conventional money and local currencies and exchange systems, and delve into the principles and practices of innovative exchange and finance.
Over the past three decades, a great many complementary currencies and exchange schemes have sprung up, gained some degree of acceptance and notoriety, then faded away. This workshop will focus in on the reasons why none of them has become a significant factor in their community economies, and uncover the principles of design and implementation that need to be applied to make exchange alternatives more effective, robust, and scalable. It will also cover new ways of providing entrepreneurs with the resources needed to bring their ideas to fruition and achieve success in the marketplace.
This course is designed especially for social entrepreneurs, government officials, enthusiastic agents of change, and serious students who are ready to co-create a new sustainable and convivial economy from the bottom up. In this highly participatory workshop, we will use a combination of presentations, discussion groups (some on the beach), videos, and simulation games, to dive deeply into the process of exploring and developing innovative methods of finance, exchange, and value measurement. Participants will have the opportunity to showcase their projects and ideas and receive feedback from the group.
Here is an opportunity to work with one of the world’s leading experts in innovative economics, finance, and exchange, and to collaborate with like-minded peers to create a new economy that works for everyone, while enjoying a delightful summer holiday on the magical Pelion peninsula. Come join us in a process of inquiry, discovery, sharing and collaboration.
The workshop will run from 16 to 23 June, 2017. Space is limited so register early at http://www.kalikalos.com/community/x/exchange-finance-new-economy-thomas-greco/.
# # #
All the perplexities, confusions and distresses in America arise not from defects in the Constitution or Confederation, not from want of honor or virtue, as much as from downright ignorance of the nature of coin, credit and circulation. –John Adams, second president of the United States.
Just as the political monetary system trends power toward the state, so the system based on true money will release the natural forces that trend society toward private initiative, enterprise and democracy. Pending this fundamental reversal, all resistance to statism is futile. As long as the only available monetary system is political, exchange, that process by which the social order functions, will never accomplish its natural purpose, the development of prosperity and freedom.– E.C. Riegel, Flight From Inflation
A couple weeks ago my partner Andy and I talked about generational change in a VC firm in a conversation moderated by our longtime investor Lindel Eakman. I blogged a bit about generational change prior to that conversation.
Here is the video of that conversation:
This was a fun twitter exchange yesterday:
@fredwilson agree, but how do they better monetize that influence and impact?
— Scott M (@SouthofAmerica) February 9, 2017
I can’t help but think that competing with Facebook and Google in the online advertising market is an uphill battle for Twitter. They have done a great job at building a $2bn annual advertising business that pays the bills and generates positive cash flow. I know the people who have built this ad business and they are world class.
But given that Twitter’s strength is influence and impact, not page views and clicks, is there a business model that compliments the ad business that Twitter should be leaning into?
As always on fun fridays, the action will be in the comments. So let’s get this discussion going.
I picked up a bad head cold in SF this week. It’s rainy and cold there and that got the best of me. So I’m running a post from the archives and medicating myself instead of writing today.Retaining Your Employees
I hate to see employees leave our portfolio companies for many reasons, among them the loss of continuity and camaraderie and the knowledge of how hard everyone will have to work to replace them. Many people see churn of employees in and out of companies as a given and build a recruiting machine to deal with this reality. While building a recruiting machine is necessary in any case, I prefer to see our portfolio companies focus on building retention into their mission and culture and reducing churn as much as humanly possible.
There isn’t one secret method to retain employees but there are a few things that make a big difference.
1) Communication – the single greatest contributor to low morale is lack of communication. Employees need to know where the company is headed, what they can do to help get there, and why. You cannot overcommunicate with your team. Best practices include frequent one on ones between the managers and their team members, regular (weekly?) all hands meetings, quick standup meetings on a regular basis for the teams to communicate with each other, and a CEO who is out and about and available and not stuck in his/her office.
2) Getting the hiring process right – a lot of churn results from bad hiring. The employee is asked to leave because they are not up to the job. Or the employee leaves on their own because they don’t enjoy the job. Either way, this was a screwup on the company’s part. They got the hiring process wrong. The last MBA Mondays post(two weeks ago) was about best hiring practices. Focus on getting those right and you will make less hiring mistakes and experience less churn.
3) Culture and Fit – Employees leave because they don’t feel like they fit in. Maybe they don’t. Or maybe they just don’t know that they do fit in. Another post in this series on People was about Culture and Fit. You must spend time working on culture, hiring for it, and creating an environment that people are happy working in. This is important stuff.
4) Promote from within. Create a career path for your most talented people. The best people are driven. They want to do more, develop, and earn more. If you are always hiring management from outside of the company, people will get the message that they need to leave to move up. Don’t make that mistake. Hire from within whenever possible. Take that chance on the talented person who you think is great but maybe not yet ready. Work with them to get them ready and then give them the opportunity and then help them succeed in the position. Go outside only when you truly cannot fill the position from within.
5) Assess yourself, your team, and your company. We have discussed various feedback approaches here before. There is a lot of discomfort with annual 360 feedback processes out there. There is a growing movement toward continuous feedback systems. Whatever the process you use, you must give your team the ability to deliver feedback in a safe way and get feedback that they can internalize and act upon. You must tie feedback to development goals. Feedback alone will not be enough. Build a culture where people are allowed to make mistakes, get feedback, and grow from them. I have seen this approach work many times. It helps build companies where churn rates are extremely low.
6) Pay your team well. The startup world is full of companies where the cash compensation levels are lower than market. This results from the view that the big equity grants people get when they join more than makes up for it. There are a few problems with this point of view. First, the big option grants are usually limited to the first five or ten employees and the big management positions. And second, people can’t use options to pay their rent/mortgage, send their kids to school, and go on a summer vacation with the family. Figure out what “market salaries” are for all the positions in your company and always be sure you are paying “market” or ideally above market for your employees. And review your team’s compensation regularly and give out raises regularly. This stuff matters a lot. Most everyone is financially motivated at some level and if you don’t show an interest in your team’s compensation, they won’t share an interest in yours (which is tied to the success of your company).
I believe these six things (communicate, hire well, culture matters, career paths, assessment, and compensation) are the key to retention. You must focus on all of them. Just doing one of them well will not help. Measure your employee churn and see if you can improve it over time. A healthy company doesn’t churn more than five or ten percent of their employees every year. And you need to be healthy to succeed over the long run.
As I mentioned yesterday, I am moderating a panel this morning at NewCo Shift Forum on The Future Of Labor.
As I think about, there are three big megatrends impacting the future of labor/work.
The first has largely played itself out over the past thirty years and that is globalization and outsourcing. I believe we have seen most of the impact of that trend in the US as wages and the standard of living has risen dramatically around the world and has stagnated here in the US for the working class. We are not yet in balance with the rest of the developed/developing world, but we are getting close enough that it is a much harder decision now to move a job somewhere else.
The next two big megatrends are starting to happen and they will shape the next fifty years. They are the move to an on demand model for work and the automation of work.
And so, the two people that are joining me on stage this morning are people who can help us think about where all of this might be going.
Stephen DeWitt is the CEO of USV portfolio company Work Market. I wrote a bit about Work Market here a few months ago. Work Market’s software allows employers of all shapes and sizes to arrange the people they work with into labor clouds. These labor clouds include freelancers, contractors, and full time employees. When they need something done, they issue the work order to the labor cloud and someone picks up the work order and gets it done. If you think about many of the operational things companies do (provide customer service, install something, attend a marketing event, make a house call, etc), these labor clouds allow an employer to get the work done without thinking about the kind of relationship they have with the worker. This is the “on demand” model for work and I think we will see this model explode in the coming decades.
Maya Rockeymoore is the CEO of Global Policy Solutions, a think tank and advocacy organization that focuses on the needs of workers and their communities. She is an expert on the US Social Security System and has written extensively on it and other issues.
I talked to Maya last week in anticipation of this panel discussion and I wanted to get her take on what happens to all of the jobs we could lose to automation over the next few decades. She explained to that we may want to look at the safety net that we built with social security as a model. We will get into that in more detail this morning as that is an interesting idea to me.
I don’t think all the work opportunities will be gone in fifty years. But I do think the nature of work is changing quite dramatically in front of our very eyes. Some jobs will clearly be automated out of existence. We are already seeing that. And other jobs will go from being full time employment to on demand employment and that will require big adjustments from everyone, including policymakers.
I thought it was interesting in Henry Blodget’s talk at DLD, which I blogged this past weekend, that we have gained 30 hours a month in productivity over the past fifty years and that 28 hours of those gains have gone towards watching TV. We are going to gain even more hours in productivity over the next fifty years. And what we do with those hours will say a lot about who we are as people, what we value, and where we are headed as a society. It is very possible that jobs and work will matter less and other things will matter more, a concept my partner Albert has been considering in his book World After Capital.
We should be talking about these issues as a society instead of pretending that we are going to bring back all of the jobs lost to globalization and outsourcing over the past fifty years. Those jobs are more likely to be gone completely via automation than coming back to the US. So that’s what I plan to do with this panel today. It should be interesting.