The Signal

Until you are the decision maker, there are lots of people who will be in positions to choose the options that are available to you. Good ideas are not sufficient without financing and a container. Someone must have the money. Someone must own the money vehicle. Until that person is you, you will have to convince people. Skills and knowledge will need to be conspicuous. A clear offer. Although there are other paths, one of the tools for conspicuous skill is formal education. Arguably, you are not paying for the education/information (that is largely free now), you are paying for (1) exclusivity (for them to reject other candidates), (2) network (for them to accept other candidates who will become colleagues/friends), and (3) the signal to the person with money who gets to impact your fate. You are buying privilege. Beyond the knowledge, exam and study technique become essential. Establishing a habit of breaking down barriers. The process of absorbing information in a limited time, and then performing in an artificially constructed signal factory. 

"The Signal"

William Powell Firth  (1858)

 

Fighting over Scraps

The Corporate world is a game, best played as a game. I wasn’t good at it because I wasn’t willing to accept the veil of meritocracy. I took it too seriously and literally. I was too deep soaked in Righteous Indignation. It is more a club with increasing levels of loyalty when you prove yourself. Layer 1 is for cogs. Paid a salary and with a notice period. Your salary is the price it would cost to replace your skills and knowledge. Layer 2 is longer term incentives. Tying you in so breaking loyalty will cost you. Layer 3 is participation in profits (and losses). The club aims to reward you enough to stay, but not enough that you can afford to leave. Layer 4 is ownership. That private club isn’t open to everyone. Wealth creation gets institutionalised, so the first three layers are sufficient to create the value while closing the door to layer 4. Layer 4 is for immortality beyond individual contribution. Enough underconfident overachievers will do the work in the first three layers to make sure layer 4 is exclusive. Harsh reality? Layer 4 is available to those who start from scratch. The first three layers are attractive enough that people will fight over the scraps. Institutions change unwillingly. Pick your layer 4 and build new institutions.

Self Promotion

I hate interview processes and CV/Resume building. Partly because people who are good at interviews aren’t necessarily good at the job. Partly because hiring and firing is often just an opportunity to project prejudices and politics by dividing people into categories of good enough and not good enough. The interviewers and firers seldom hold themselves to the same standards as the person they are judging. The final decision seldom relies on anything other than gut feeling and hindsight justification. But such is life. Sometimes we just have to do things because that is how they are done. Writing a CV always felt nauseatingly self-promotional to me. A way I got around this was asking a few people I had worked closely, and well, with to write 100ish words (roughly the length of this post). Two or three authentic testimonials from people you have genuinely worked well with that demonstrate the skills and knowledge that are being looked for. My impression is that relationships and chance connections are the real catalyst for opportunity. Be part of the conversation and genuinely interested in other people. Do good work. Then change the way things are done.

Life is a Galton Board

Investing in Ecomaps

I am eagerly anticipating Brandon Stanton’s book “Humans”. A large part of our collective social capital is that we aren’t alone. Our lives are path dependent, and our perspectives limited, but that helps us see better as a team. Like blocking out the light so your image is clearer on your lockdown video chat. Not seeing, is a part of seeing. Most stories of financial security start with a source of income. Before that, you have to develop the appropriate skills and knowledge. Appropriate to the target job. Appropriate to your starting circumstances. Appropriate to your finances. To do that, you have to gather information. I had two gap years between school and university. Lots of conversations. There was no LinkedIn to see a world’s worth of career paths. I benefitted from the privilege of amazing teachers, introductions, and friends of friends. An “Ecomap” is a diagram used by social workers showing someone’s social and personal relationships. Books like Humans and tools like LinkedIn democratise the lessons freely available if you pause to gather information. If you invest in your Ecomap.

Personal Business

Business is very personal. In slicing up our time, a big chunk gets allocated to the answer to the question, 'what do you do?'. I have made some of my closest friends through work. Your colleagues and clients become a significant part of your life. There are those who try to establish Chinese walls between work and play. I think I tried that for an afternoon once. Those building teams know the importance of establish rapport. 

I once 'met' someone by having to resolve a mini-crisis over the phone where I wasn't able to give the answer the person wanted. Although we were on the same side, we had different roles, different motivations and different information. This person did not like me. It was not just business. Subsequent emails and interactions were very formal. We later met in a more relaxed setting and after a few drinks and the discovery of common interests, Trev retired a mini role as Voldemort. Subsequent interactions were pleasant and any issues were resolved by friends. We treat friends differently.

The same is true with clients. Over email, someone can seem rude and aggressive. The same person over a coffee can be charming. This is why those who are successful in business aren't necessarily the ones with the best academic qualifications. People skills matter a lot. As in friendships and relationships, a fantastic business person will be great at uncomfortable conversations. Someone who has earned the benefit of doubt from people who trust them can cut through layers of friction caused by distrust. Those who can find common interest and empathise with clients needs are priceless. We moan about business being about who you know. This can be a barrier to entry and a network can be inherited in the same way as wealth. But you can get to know people and the best way to do that is to show interest in them. These business skills are distinctly personal.

Our desire to separate business and friendships also leads to another odd conclusion. In business, people consciously and carefully build relationships. They make sure they schedule interactions. They review how often they have seen people. They may keep a record of client meetings and ensure they meet them at least once a year and call them every three months or so. They may write to them even more regularly to make sure they are in mind. This ensures that when they are needed, the fact that they can help will be an instant mental trigger. All very considered. Then when it comes to family and friendships, it often just gets left up to chance. We want it to be 'natural' and unforced. Order feels false.

Unfortunately it is very natural for things that aren't regularly triggered to fade from the front of our minds. This doesn't mean they aren't important to us. We just aren't computers. We need to help ourselves out a little. Perhaps if business can benefit from being personal, being personal can benefit from being a little bit more business like.

Benevolent Dictator

America is the leader of both the democratic world and the corporate world, but the two worlds are very different. One of my favourite businesses is Google. I can safely say my life is better because of the company. It provides a product that you don't feel bitter paying for so there is no pricing problem. In fact, you don't explicitly pay for the most important product which is search. The advertisers pay to get your attention. They are also happy about it since there is a clear link between what they pay and what they get. An advertiser won't bat an eyelid spending $10,000 on a campaign they know tends to lead to $20,000 in sales. Advertising on TV is like shouting at a crowd where a handful of people might be clients. When search is involved, it is more like advertising to people who say they are looking for your product. The fact that Google did well to start means they are learning all the time from huge volumes of searches. Their searches are getting better. The business generates a steady flow of cash and they are investing in some exciting long term projects.

But they are not a democracy.

Google is a great example of a company with a benevolent dictator, well... a benevolent triumvirate with Larry Page at the helm (along with co-founder Sergey Brin and Chairman Eric Schmidt). Earlier this year they split the stock of Google to form new shares with no vote. The shares the majority of investors held already had limited voting power. The newly issued shares carried no voting power. This meant nothing to existing shareholders. You got a no-vote share for every voting share you had, but meant that going forward Google could issue new shares without diluting the control of Page, Brin and Schmidt. Short version - they run the show. They will always run the show.

Schmidt, Brin and Page

Source: Wikipedia

I am actually ok with that since Google are regularly voted one of the best companies to work for and I find Page an incredibly inspiring guy. It is however interesting when you think of what we think of as democracy as voting power. I think it is a good example of looking beyond the surface to see what is important. Google is not comparable to a dictatorship for several reasons. The public have alternative choices for search engines. Advertisers don't have to use Google. Shareholders can sell their shares. Still, Corporate Governance is really important. At the moment Page is doing a great job, but the ability to vote on shares protects investors should things start unravelling. So there is something to worry about.

An interesting bit for me though is the balance they have between this strong approach to protecting power and how staff are treated. They are quite unique. In other firms, particularly where there is a meritocratic system (rewarding top performers), staff can be simply a part of the stuff that gets fed into the machine. High fliers do well and those who are struggling move on. The idea is that underperforming staff would do well to find somewhere else where they would be doing better. It is no fun to not be doing a good job, so they should find a better fit. Everybody wins. The problem is what I was referring to the other day - there is not a level playing field.

At the shareholder level, it is actually very easy to sell a share and buy another one. You can also diversify your risk by holding a number of shares. At the client level, businesses use multiple channels to advertise and would consciously manage the risk of using just one supplier. As part of the public, we love Google, but there are other providers of most if not all of their products. For staff though, it really is not as easy to move. We spend so much time at work to build up social capital. Our colleagues become friends. We invest ourselves in the work so that we are 'emotional owners' of the company even if we don't hold actual shares. If we are loyal we don't want to invest the emotional energy in going to lots of interviews when we aren't even looking for a job. Then when someone actually decides to move, often it is only then that they start investing time in getting to know recruiters or joining LinkedIn. Networks only really work if you have been investing in them when you don't need them. The time to join LinkedIn is when you don't need help, but when you are in a position to offer help. That is not how most people think. The job market is actually an awful place. Putting a CV together and going to interviews is a little like be thrown into the dating game after a divorce. People don't know you. They don't respond to calls or get back to you because they have other priorities. The same recruiters who called before turn out to be useless when they are needed. I know incredibly smart, talented people who send out hundreds of applications devoting hours to carefully crafted, individualised cover letters, and then receive little to no response. Each job application has multiple people trying to get the job and so it becomes like the Bachelor or Bachelorette reality show, with the company having the pick. To be fair, finding the right person to hire is hard too, but business goes on - it is a much bigger deal to the individual.

Democracy for me isn't about a vote. It is about being in a position to find happiness. That is the philosophical basis of the American project and why I think the US leads the way. Leading the way doesn't mean we have solved everything. We need to nibble away at the things that cause friction. I am actually happy that Google is doing a good job. Happy enough that it is my largest investment. I am less happy about the balance of power between people at work, and the workplace. Unless they are benevolent like Google and invest in being the best place to work, it becomes up to those in the workplace to think of ways to empower themselves.

The real labour revolutionaries shouldn't be fighting for job security for individuals. They should be fighting to improve how easy it is to switch between companies, and they should be thinking of ways to educate people to manage the risk of having one company being overly important to their happiness. They should be empowering people to think of themselves as businesses. To invest in their skills and their ability to learn. Then I would don my red beret Mr Julius.

Julius Malema

Playing Field

We like to talk about companies as if they are people, and it feels good to start having emotional attachment to them. Like sports teams when growing up, it feels good to worry less about yourself and more about the team. Anything that makes us able to have a broader definition of ourselves seems to makes us feel happier.

One issue with this is that there is a disproportionate imbalance in power between the company and the employee. There are very few cases where a single individual hire or loss will change the direction of the company. Tough to swallow, but everyone is replaceable and life goes on almost unaffected for the firm. For every job, there are multiple applications and saying No to a CV is relatively easy. At the other end when someone leaves, it is a much bigger impact on their lives than on the companies.

I was recently thinking about a response I had heard to the 'Enron lesson'. When Enron collapsed, it took many people's pensions with them. Many employees saw it as a sign of loyalty to invest their pension in the companies stock. They bet their entire financial future on the place where they spent all their time. On the business they had 'married'. They lost everything.

The lesson that many took is to separate where you invest from the business you are in. I think that is partly right. The broader lesson though is never let any one bet bring you down - keep a margin of safety. I do think that there is still value though in every employee being an owner of the business. I also think that it is helpful for every employee to be a client of the business. Specialisation may mean that you are working for a company that doesn't produce anything you need - I guess that is an exception but it must require something else then to make the work meaningful.

1. Don't work for a company if you wouldn't buy their shares.
2. Don't work for a company if you wouldn't buy their product.

This is one way of levelling the playing field between labour and capital, between employee and employer. If you own shares, even just a months salary, you start to have an interest in both sides. You aren't just a cog. If you or people you care about don't use the product, then it must be hard to find meaning. Now this can all come across as a rather privileged view since most people simply take the job they can get. I accept that. The thing is we spend so much time at work, it has to be something that is a source of happiness. If you do your job because you have to and not because you want to, I think that is a form of poverty.

Another lesson that could be learnt from Enron, but would be harder, is to rethink the whole way we approach the employee/employer relationship. The world is dynamic. Professions become redundant. Products become redundant. Companies grow and the team you joined is not the team you are in. Acknowledging this may mean a company you work for becomes more like a business you invest in. You don't choose one business. You invest in a few. Your career becomes a portfolio rather than a bet. Imagine a world where you worked on projects or problems together. Your network broadened and you worked with different people from different areas depending on what needed doing. You weren't defined by your employer.

This isn't new at all. It is what consultants or contract workers do, but perhaps technology is changing enough to allow markets to find and market your specific skills. Perhaps it will get to the point where it is very unusual to get an employees undivided attention, and so that commands a premium. It is odd that the lesson learned from Enron and alike isn't that working for a single firm is perhaps a very risky strategy. I think TaskRabbit is doing some exciting work. It allows you to outsource errands and provides a market-place for both users and those who are doing the work. It would be interesting if this concept could be extended beyond just errands to bigger projects.

Then, like a company with several CVs coming across the desk, you may have several projects coming across your desk. That would be a more level playing field.

Friendship or Stalking?

I sometimes think that peoples aversion to Facebook, Blogging and other forms of social networking is similar to how people held out against adopting cellphones.

Most of the concerns sited are along the lines of an invasion of privacy. To an extent that is true. In the same way as someone pre-social networking who didn't have any friends also might have said having any friends at all invades privacy. So, taken to an extreme, a hermit would have complete privacy.

But, I do see the concern that with physical friendships you are able to `manage' them more easily. You only really maintain friendships with a handful of people, and the others you catch up with occasionally. Family doesn't even necessarily fit into the category of people you regularly keep up with.

For some people that is desirable. They can't see why on earth they would possibly want to know more about what is going on in their friends lives than they currently do. And they think it is a bit stalkerish.

This may be true.

However, there is something great about seeing a friend you haven't seen in ages and they have been reading your blog, and seeing your photos on Facebook.

Immediately, they bring up something that you have a mutual interest in (which you might not have known you shared) and conversation flows. Not that it wouldn't have flowed without it, but I think it is easier to find common ground faster.

The price is that maybe it is harder to lose contact with people you want to lose contact with. Harder to redefine yourself and your circle of friends? Harder to compartmentalize your interactions with people?

I don't deny that the pre-networking era had its benefits. But like cell phones, I suspect everyone will be `on' in a few years time.

And, on the balance... I think we will be better off because of it.