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Archive for the ‘Entrepreneurs’ category

HIC! – is innovative

November 2nd, 2009

Last week I had the great pleasure of talking with Matt Mullenweg, of Automattic Inc.

mullenmattMatt is one of those young entrepreneurs who creates his businesses out of his love for the “game” – in this case the “game” being the blogosphere and the open source tools supporting the growth of the growing online news industry. Mullenweg is the founding “developer” of WordPress Inc.  WordPress, while not the first  technology innovator in the blog space, is certainly well-designed and refreshing in the way that it has paid close attention to the needs of its customers and has built life-long believers. Mullenweg was a big part of that.  But, Mullenweg’s mother ship, Automattic (formed in 2005) is something innovative in my mind based on the new types of tools that it is producing and spinning out each year.  In its 4 years of start-up existence, Automattic has launched many products for online writers including:

  • Akismet – open source tool for monitoring spam, that helps
  • bbPress – forum/discussion software to enable stickyness on the blog
  • IntenseDebate  (acquired)- open source add-on that super-charges reader/commentor feedback
  • PollDaddy (acquired) – an innovative online surveys/poll add-on
  • Gravitar (acquired) – portable avitars you can create/use as your persona on multiple web services
  • VideoPress – slick video encoder/player that can be used on WordPress and other blogs

All of these companies complement WordPress ….and all these entities come under the umbrella of wordpressimageAutomattic — thus, I view Automattic as the “IdeaLab” of the blogging and Opensource world (“thou shall not use the world “incubator” in 2009 in vain”).  Funded initially by angels, True Ventures (SF-based), Polaris Ventures and the NY Times are the dominant investors in this company-of-companies.  The last round of $30M in 2008 gives the company a development and acquisition war-chest…and Seems like a GREAT FEEDER of INNOVATION for the NY Times.

Recently,  Automattic announced the acquisition of  “After the Deadline“. Available under Opensource license, AtD uses artificial intelligence and natural language processing technology to find writers/bloggers’ errors.  It then offers suggestions for replacing words or gramattical errors.  What’s unique is that the technology makes use of the neuro-net to “learn” from mistakes others’ have made and so it gets SMARTER over time and the more it is used.AtD is a spell-checker. This is a spell-checker that plugs into the braincells of the Internet in a very new way…and it hints at the future of shared knowledge for writers and/or other artists over open-source.A high-level overview of AtD can be found here.

Packed with a lot of bright young net-savvy writers, programmers, and creatives – I pick as a HIC (highly-innovative company) that will be rewarded in the future by the market for its unique approach to harnessing Open Source and the broader neuro-network of the web.

10 Ways Leaders Create Innovation

October 19th, 2009

Successful entrepreneurs are not only able to create a product or service that fits an unmet market need – but they also seem to have a knack for unleashing the creativity of their team. In my work with some 60+ companies as an angel, board member, venture capitalist or “mentor”, I’ve seen some very innovative companies – and most of them were innovative because the leader(s) or Founders put in some brain-power time to determine early-on what they could do to nurture creativity within the company.

Here are 10 ways that the most successful entrepreneurs created a truly innovative environment:

1) Foster an environment of experimentation and risk-taking – the great ones ensure that employees feel that they can experiment with risk – particularly in marketing, product development, and relationship management areas. I recall one company I was on the Board of that took the risk of trying out a new form of banner advertisement that incorporated e-commerce transactions right into the banner ad. Twenty-four months after launching, the company was purchased for $100M + and the entrepreneur who came up with the idea of e-com banner was handsomely rewarded.

2) Condition the team to a “Freedom to Fail” attitude – a cousin to the idea of risk taking is “freedom to fail” . Leaders who allow their team to sometimes try things, knowing that they might fail but also knowing that the team will learn something from attempting a new idea. This creates an environment where the team “fearlessly” approaches new markets and relationships without “sweating the small stuff.” (see Innovation Sparks, 9/24 and 10/2/09 entries for several great company examples)

3) Give control and responsibility to your “Creatives” – by creatives I include engineers, artists, editors – depends on the type of business. A great creative leader allows his creative team to have some control over the quality of their work and the output – rather than have to cater to the bureaucracy of an organization. One of the most famous examples of this was Steve Job’s Macintosh team. A more modern example are the scientific teams at Genentech.

4) Build a great physical environment –setting up an environment properly can ensure that employees have amenities to assist in their creative mindset. For example , IDEO’s campus includes a wide variety of playful rooms for client work, several well-stocked cafeterias (stocked with free food) and outdoor meetings spaces.  Google’s office complex (the “GooglePlex”) is run like a university campus and is so nurturing that an unconfirmed rumor has it that a recent summer intern spent the entire summer eat, slept, worked and recreated at Google ….and no one at the company realized that he used the GooglePlex as his home for 10 weeks.

5) Set up both intrinsic and extrinsic rewards for your employees – physical environment and other “perks” are extrinsic rewards (along with base pay and bonus/commission) that can, of course be an effective way of motivating creativity within the company. But truly innovative leaders also look for a variety of intrinsic rewards to give employees – such as public recognition, control over . At Netflix, for example, workers compete in an annual Waffle breakfast event – and take great pride in creating the winning recipe and eat-in each year…over 30 teams competed this past year.

6) Introduce stress into the team and key individuals – Impose deadlines, challenges and “stretch” opportunities for your creative teams. If the competition in the market doesn’t do it, it’s up to you to insert some stress into the system. Philosopher and entrepreneur, Renn Zaphiropoulos, believes that creativy cannot exist without some personal stress. See his video clip for more clarity on this concept…

7) Building a culture of communication, collaboration and “smart peers” – in my class at UC Berkeley, students love the Harvard Business Review article on “How Pixar Fosters Collective Creativity” by Pixar CEO, Ed Catmut. In the article,  Catmut describes the process by which teams at Pixar handle peer-driven problem-solving and creation of the next big hit movie.  The company creates internal and cross-company networks of peers who communicate directly over problems, work in a learning environment and and collaborate on solving complex production and creative issues.  I noticed a similar culture at The Active Network (San Diego), Facebook, Google, and many other young companies.

8) Set up internal processes for problem resolution and opportunity generation: although it may seem counter-intuitive that a “process” is needed to encourage the freedom to create – but in start-up companies the key to moving the business forward is being able to solve problems. Teams that have a process in working together to solve problems, can carry forward the momentum of the company. The best ideas come from intersections among departments, cultures, customer/business and more. “Intersectional innovation” borrows from one field and applies it in a new field (a great book on this is Frans Johansson’s The Medici Effect). One of the best-known processes for problem solving was developed by Sid Parnes at State University of Buffalo, NY – where the “Creative Problem Solving Institute” is located.

9) Envision yourself as a metaphor --– great leaders envision their role metaphorically as “shepherd”, “gardener”, or “producer”. S/he may not realize the metaphor until much later (although more experienced serial entrepreneurs may realize faster than others). The role they’ve playing in the success of the company was one of “herding” the sheep toward the right goals and projects, and “enabling/nurturing” the creative skills of the engineering/artistic team to create great products.

10) Learn to Balance and Embrace Opposites – Great managers are able to harness the power of opposites, such as success/failure, autonomy/control, or stress/fun. More on this in my next blog entry!

Freedom to Fail – Part 2

September 25th, 2009

In my last post, I talked about Vinod Khosla’s “freedom to fail” thinking.  But, how do entrepreneurs develop this? Is it acquired or are they born with it?

Freedom to Fail Learned?

One wonders: where does “freedom to fail” come from? Some of us seem to be born with a “spirit of exploration” (one that tends to drive our parents nuts in early years). Think of Ted Turner in his younger years (dropped out of Brown U) –probably exhibited a high “freedom to fail” component in many things he did – a certain irreverent personality. Picture Bill Gates dropping out of Harvard undergrad (failure to finish Harvard? so what!).  Or, modern day repeat, Mark Zuckerberg on an even faster race to financial freedom.  It doesn’t appear that they harbored a concern with failure.  I’m sure there were some healthy debates with college-paying parents, but ultimately the some of the greatest entrepreneurial examples of our times seem to exhibit a freedom to fail.

Yet, for others, environment definitely shapes our “Freedom to Fail”.  It comes with maturity.  Did parents use an encouraging touch? Were influential teacher allow students to make mistakes and learn from them. Did peers reinforce mistakes or mock them? Tim Brown, Found/CEO of IDEO talks about this “freedom to play” in his TED Talk from 2008 Serious Plan conference.

Pixar’s “Peer Culture”

Greg Brandeau, SVP of Pixar loves to talk about the culture of Pixar that the executive team has developed. The company strongly values collectigregbrandeauve creativity – the “peer” culture in which employees are encouraged to help one another out. Greg points out the “culture makes the team” – by that he means that keeping a culture where it’s safe for one express their opinions, make mistakes, learn from others (Pixar University has an incredible number of topics/courses for employees). Key to this is attracting VERY talented people – the rule of thumb is hire someone brighter and smarter than yourself. However, at Pixar “the Team builds the culture” – the company is run as a meritocracy (the better ideas float to the top) and innovation is all about the concept itself not whose idea it was in the first place. All of this basically creates an environment where an extremely bright set of people are not afraid to express their creativity.

Setting the Creative Culture

Patty McCord, the SVP of “Talent” and architect of Netflix’s unique culture, says that allowing people to fail at what they doPatty1_image is one of the most critical elements of the success of Netflix. At Netflix Inc., CTO (“Chief Talent Officer”) Patty McCord and founder, Reed Hastings, have taken this one step further, creating the “Freedom and Responsibility” culture. The company has deliberately built its culture in a way that allows employees the freedom to experiment, take on challenges and sometimes even fail. In essence, by giving employees the freedom to create and solve problems on their own accord, they fight off bureaucracy and control issues at the company grows.

You can see Patty’s Freedom and Responsibility Culture posted in PPT format. Patty is joining me on October 7th at UC Berkeley for my class on Innovation, Creativity & The Entrepreneur and the unveiling of a virtual case study on Netflix that we filmed at Netflix.

Freedom to Fail – Part 1

September 23rd, 2009

This past month, I was struck by something that Vinod Khosla brought up at the Haas School while accepting a “Lifetime Achievement” award, and have been turning it over in my mind many times… Khosla is responsible for major successes at Daisy Systems, Sun Microsystems, huge portfolio wins at Kleiner Perkins (KPCB) over the years, and is now responsible for at $1+ billion new fund at Khosla Ventures. What would you guess contributed most to his success: an eye for technology? Luck? Choosing the right teams?

Khosla’s secret to success

When asked what most contributed to his success over the years, Vinod boils it down to this: the Freedom to Fail. According to Khosla and many others, if we feel that we have the freedom & ability to push ourselves to the limit, create new ideas, and start companies we believe in – we are more likely to succeed. An entrepreneur who allows FUD (Fear, Uncertainty, Doubt) to creep in about his/her abilities and leadership, and fears failure is more likely to fail. More on this in a video of Vinod from SDForum awards 2 months prior.

Lessons from Early Yahoo

As part of the original Yahoo team, I observed this first-hand. There as a general feeling among the team that “hey, if this doesn’t quite go the way we imagined, we’ll fix it and try something else.”  If the worldwide web (or Yahoo)  didn’t quite take off, some of us would  just go back to their happy lives as grad students at Stanford and continue on.   Of course that didnt’ happen.  And, it was later on, after the company tasted big success that fear of failure crept in.

So, I have been wondering: what’s the link between “freedom to fail” and creativity in a start-up?  Do most successful entrepreneurial environments include this element? Is Freedom to fail learned or are some of us born with a certain “chutspah” that keeps us from thinking about failure? Can an entrepreneur deliberately set up a “Freedom to Fail” culture?  (More next post –>)

Where is "Creativity" found?

September 4th, 2009

One of my chief purposes in creating a course on Creativity & Entrepreneurship for UC Berkeley engineers and MBAs was to prove a point:  creative genius and innovation can be found in many aspects of the start-up or intrapreneurial venture.  It’s not just new products or services, but in my experience, you can find highly creative approaches in leadership, business model, marketing, manufacturing, sales/channel approach, financing and fund-raising.

After 12 years in the venture capital business I like to say “show me a strong Entrepreneur, and I’ll show you a highly creative thinker.”  It’s not only the nature of an entrepreneur to get creative & think differently – but it’s pretty much a REQUIREMENT – the sheer number of challenges one has to face to get a venture from concept to exit is mind-boggling these days and new challenges crop up at every turn in the process.

But where do creative concepts and approaches typically come from?

The ultimate student of management, Peter Drucker, identifies 7 sources of innovatoin in his book Innovation & Entrepreneurship, which was nicely condensed into an HBR article called “The Discipline of Innovation” (HBR 3480).  He says new ideas are found from:

(1) unexpected occurencesdrucker1
(2) incongruities
(3) process needs
(4) industry & market changes
(5) demographic changes
(6) changes in perception
(7) new knowledge

I love #1 an #2, because they are also the reason a GOOD JOKE works – the “unexpected” or “incongruent” punchline leads to a creative new outcome – which leads us to (hopefully) laugh.  In his book The Medici Effect, Frans Johanssson likes to call the place where creative thoughts occur “The Intersection.”  The intersection is the spot in your mind, or reality, where thoughts from 2 or more fields or disciplines intersect, creating a new concept or idea.

Seth Godin, founder of Squidoo and author of  numerous web and marketing books actually takes the argument in almost the OPPOSITE DIRECTION.  In a January 2009 blog post writes “For me, creativity is the stuff you do at the edges. But the edges are different for everyone, and the edges change over time.”   The edge, as in “leading edge”, means being on the fringe of a movement and demonstrating a new approach that leads the pack, which others have not yet thought of. Depending upon your own experience, the edge might look creative or it might look mundane.  Creativity is in the eye of the beholder.

Perhaps The Edge and The Intersection are quite related.

When my friend, Scott Adams (the quintiscential entrepreneur) conceptualizes a Dilbert cartoon strip over his morning coffee, his mind has the ability to pull incongruent thoughts together in unexpected ways.  Scott, who certainly seems to think at “The Edge” with his sarcastic observations of life,  creates the Dilbert cartoon strip somewhere along the  “The Intersection” of restrictive business rules and every-day life principles.


Hats off to all those creators and entrepreneurs – living on The Edge, driving in The Intersection, and (hopefully) enjoying The Ride.