Month: September 2013

Crowdsourcing the Race to the Bottom

postmates flowers

I just received this email from Postmates advertising flower delivery in San Francisco. Within the hour. For $19.95. Delivery and tip included. That’s pretty darn cheap.

Yesterday, Warren told me about another startup, BloomThat, that also delivers flowers. Ridiculously fast.

You should really be wearing a helmet, sir.
You should really be wearing a helmet, sir.

Why are they doing this? What problem are they trying to solve? Did your wife come home from work in the middle of the day and catch you in bed with the housekeeper, and now you need to send flowers, Ridiculously Fast, before she storms back to the office?

Exactly how big is this market, anyway?

As for the $19.95 flower delivery, they can’t possibly be turning a profit, or even breaking even. Operating at a loss to build hype is the same strategy employed by every failed business that ever patronized Groupon.

As of Monday, startups can publicly solicit funds from investors. You can gauge the quality of these crowdsourced startups for yourself on sites like AngelList. Yes, investors are actually putting money into these things.

You see, this is what half a decade of Zero Interest-Rate Policy does to the country. Thanks to Bernanke, we now have USB-powered sex-toy startups closing multimillion-dollar rounds.

crap2

These are all real listings on AngelList. BillMeLater for subprime credit? That’s a winner!

How to Make People Say Yes

Millikan

I spent a summer slinging phones for the Caltech Alumni Fund. I hated it, but it paid $10 an hour, which was way more than the $6.50 I got as a waitress.

My job was to disturb people in the middle of dinner to ask for money. The answers were usually polite but negatory. Sometimes a widow would answer the phone and say that the alumnus in question was deceased. According to my script, I was then supposed to ask, Would you like to make a donation in his honor?

7-caltechfundequation2_575

Sometimes I would skip that line. I didn’t actually care if the alumnus agreed to make a donation or not. The money didn’t go to me. In fact, I hoped that every number I dialed would go straight to an answering machine so that I could leave a quick message and cross another line off my list.

Whenever we secured a donation, we got to reach into the prize basket. The basket contained treasures like unsharpened pencils and plastic eggs containing silly putty. Needless to say, I sucked at my job.

These days, rejection carries a little more weight. Here’s how to avoid it, presented as a distillation of Robert Cialdini’s book, Influence: The Psychology of Persuasion.

Influence by Robert Cialdini

Reciprocity. Give them something first. They’ll feel like they owe you.

Consistency. People will continue doing what they were doing. If an alumnus had donated the previous year, we were supposed to mention it. I thought it might make the target think, But I already donated last year, you greedy bastards! Nope, they were likely to donate again.

Social Proof. They will do what their peers are doing.

Likeability. Obviously they only say yes if they like you. That’s why the Caltech Alumni Fund employed lovable undergrads to make phone calls.

Authority. People are convinced by authority figures. The Caltech Alumni Fund should have had David Baltimore make the stupid phone calls.

Scarcity. People will say yes if they think there is a limited window of opportunity.

So now that we know how to make people say Yes, we can practice by picking up chicks at a bar. Here’s how to do it:

Put on a police officer’s uniform (authority) and head over to the Rosewood. Carry a puppy (likeability – everyone loves puppies). Find a target female seated at the bar and buy her a drink (reciprocity). But don’t ask her if you can buy her a drink, cuz she’ll say No. Go to the bartender, and tell him you want to buy that girl a drink. Tip the bartender $20 to hand it to her and tell her that glass of Charles Shaw you bought is a 1956 Château Latour. Trust me, she won’t know the difference. When she looks to the person who bought her the drink, wave at her with the hand that’s wearing a wedding ring (scarcity and social proof).

With this technique, you’re pretty much guaranteed to get laid (consistency). If not, try Poca Bear.

For the record: I love Caltech and I will totally donate lots of money just as soon as I’m not poor.

Hire the Engineers without Pedigrees

Stanford_Graduation

One of the biggest challenges of a technology startup is finding star engineers. There are plenty of them in the Valley, but we have to compete with companies like Google and Apple who dangle six-figure starting salaries in front of their prospects. Not to mention other employee perks and benefits.

Silicon Valley is a dog-and-pony show where pedigrees command a premium. In the last 3 years, 80% of the startups funded by the top five VC firms had team members from one of either Stanford, Harvard, or MIT.

But apart from investors, who cares?

McKinsey consultants began advocating the War for Talent in the late 90s dotcom boom. With no real metric for measuring talent, managers deferred to the US News rankings of the applicants’ alma maters. This standard has persisted into the present.

McKinsey also advised Enron to recruit the best and brightest. Remember Enron?

Emboldened by the mantra of A players, Enron created an undisciplined, narcissistic company that believed it was too talented to fail.

Enron succumbed to a culture of dishonesty because no A-player was willing to admit failure in a company that was too talented to fail.

Startup employees need to be ready to fail. And they need to be honest when something fails.

The highest-pedigree employees are particularly averse to failure. They probably haven’t had much practice at it. Nobody goes to Stanford for a PhD in Computer Science because they want to embrace risk.

Star engineers don’t even necessarily make the best employees. Intel hired me because I’m a stellar circuit designer, but I spent most of my workdays watching cartoons or hiding in the bathroom. No amount of pedigree can make up for a lack of motivation.

In a startup, anything less than committed passion is death. Will that Stanford PhD you hired remain loyal in your startup’s darkest hour – even with Google recruiters knocking on his door?

Last week, Seth Godin made a case for having a war for attitude, not talent. Motivation and honesty trump skills and talent any day. Cal Newport says that the ability to focus will be the superpower of the 21st century. These three things are all harder to find than an Ivy-League diploma.

You don’t need a degree from Harvard, Stanford, or MIT to be able to focus and yield a positive attitude.

There’s a good argument against purchasing pedigree dogs – they come from a limited gene pool and are often inbred. The same applies to hiring pedigree engineers – get all your employees from the same three universities and your company becomes inbred, narcissistic, and diseased.

google-campus-657x245

The Smartest Guys in the Room

Last decade, the smartest guys in the room were writing code to automate stock flipping. The decade before, they were placing bets on foreign currency.

Now, the smartest guys in the room are building mobile web apps and analyzing Big Data.

Smart people will always flock to money. Interesting things happen when you get too many smart people into one room.

Naps vs. Sleep: How to Optimize Sleep Stages for Memory Retention

i like sleeping ecard

I am awesome at taking naps. Just ask any of my former classmates or coworkers or the Jersey barriers on the I-5 and 210 freeways.

What happens when we fall asleep? This process happens in four stages:

0. Transition. Falling asleep in lecture. It is common to experience hypnic jerks.

1. Slow eye movement. People aroused from this stage often believe that they have been fully awake. This is where we experience a sensation of falling. Duration: 1-7 minutes.

2. No eye movement. Body temperature begins to decrease, the sleeper is easily awakened. Duration: 10-25 minutes.

3. Deep sleep. Passed out on my desk. The brain consolidates declarative memory (the ability to recall facts and knowledge). Dreaming can happen, but dreams are disconnected and less memorable than during REM sleep. This is where bed-wetting occurs.
Duration: 20-40 minutes for the first cycle, decreasing to 0 in later cycles.

4. Rapid eye movement (REM). This is the lightest stage of sleep. The brain consolidates spatial memory (the ability to recall information about location and surroundings) and procedural memory (cognitive ability and motor skills). Dreams are vivid, and heart rate is increased.
Duration: 1-5 minutes for the first cycle, increasing in subsequent cycles up to an hour at the end of the night.

After the REM stage, we either wake up or go back to stage 2. We then cycle from stage 2 to 4 until the end of the night, with stage 3 growing shorter and stage 4 longer each cycle.

sleep

Waking up from stage 2 or 4 makes us feel refreshed, but waking up from stage 3 leaves us groggy.

In summary:
To improve learned skills and figure out directions better, sleep the whole night. To improve rote memory, take lots of hour-long naps.

See Also:
Natural Patterns of Sleep (Harvard Div of Sleep Medicine)

I was inspired to write this post after reading a WSJ article of similar intent, but inaccurate information.