Saturday, January 28, 2012

Never Hackathon Alone

I gave a brief talk today at the kickoff of DevFest 2012 at Columbia, and everyone was excited and still trying to figure out how to split off into teams.  And I overheard a couple of conversations where people were trying to decide whether to join up with a group, where they might be able to tackle a more ambitious project, or to work on their own, where they'd have more control, ownership, and credit for the finished project.  That's an interesting discussion to have, but it's not remotely the relevant tradeoff here.  You always want to work with a team, preferably with people you don't even know that well, because you will expand your technical network.

Technical people don't like "networking", which feels a lot like pretending to be nice to people so you can ask them for favors later.  We don't like pretending to be nice, we think personal favors interfere with meritocracy, and we like to think that we won't be in a position to need any favors.  And I think all of that is valid.  The great thing about working on a hackathon team with new people is you don't have to be fake-nice, you just have to work together.  You can appreciate each other for your skills and what you've made, not how good either of you is at polite conversation.  That's a much higher signal than networking-event chatter.  On the value of networking generally, it's short sighted to think of it as only for asking for favors.  One of the most powerful things you can do with an extensive technical network is recruit them.  In fact, the more successful you are, the more value you will get from knowing lots of talented engineers.  A job-seeker can only get one job at a friend's company, but if your job (or better, the company you founded) is doing great, you can get as many excellent co-workers (or co-founders) as you know.  Always work in a team.

Saturday, December 10, 2011

In Public Markets, Not Everybody Wins a Trophy

This TechCrunch piece on a $155 million round by a Swedish payments processing company notes that the funding is part of an increasingly prominent trend: companies that would have gone public a decade ago are staying private for as long as they can. Facebook and Twitter are the headliners of the trend, which also includes my own Palantir Technologies. In the linked article, Michael Moritz of Sequoia voices the new conventional wisdom, that it's better to stay private because it gives company leaders more freedom to run the business:
"I think overall it is better for businesses to stay private because you have more latitude," says Moritz, "more freedom. The inevitable mistakes made during the hurly burly of developing a business are not penalized by people who do not understand it."
The implication being that Sequoia is different, and it understands that hurly burly in the way that ordinary investors do not. So Moritz is talking his book a bit, which is fine.

But is it really true that private companies are freer? Google and Apple are publicly traded companies that seem to behave however they please. Most obviously, both of them are sitting atop giant piles of retained earnings rather than distributing them as dividends. The Business Judgment Rule gives enormous latitude to managers of public companies who choose to use it. In fact, in many cases the diffuse control of a large public shareholder base may be less of a check on managers than control concentrated in the hands of a single powerful investment group. Sequoia wants board seats when they invest in your company, where public shareholders almost always vote for the company's preferred board candidates.

Since the formal levers of control of public corporation managers by shareholders are so attenuated, the only thing that can be driving them to feel less free is informal or social pressure. On the one hand, the mechanisms of that pressure are pretty clear: if you're reporting quarterly numbers, everyone can see the extent to which large, long-term strategic moves haven't paid off yet, where private company leaders can make big moves wihtou getting lots of feedback on why they're a bad idea. You could make a case that outside parties will consistently undervalue the discounted present value of large strategic moves, since they don't have access to the information that managers do, and that could bias them towards over-criticizing risky plays. But on the other hand, what the hell, public compnay CEOs? Your company is less innovative because people might disagree with you? People like to talk about how in my generation, everyone won a trophy at the end of the year, and now Millenials can't tolerate failure or even the prospect of failure. We're entitled, subservient people-pleasers. Well those values came from somewhere. Maybe everyone could do with a little more appetite for criticism.