What I Learned in Business School » Uncategorized

GV Mobile available on Cydia

admin — Wed, 29 Jul 2009 21:37:01 +0000

After Apple removed all Google Voice apps from the App Store, GV Mobile has reemerged as an app for jailbroken iPhones on Cydia. To find it just search for “GV” in Cydia. It’s even gone from being $2.99 in iTunes to free on Cydia.

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Pay for performance?

admin — Sat, 02 May 2009 01:46:01 +0000

Believe it or not, there’s some interesting research coming out of business schools these days. This paper by Dan Ariely at Duke et al suggests that high performance-based incentives can stifle creativity and, yes, common sense.

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Home Depot’s Blueprint for Culture Change

MBA — Mon, 13 Apr 2009 22:17:59 +0000

If you’re looking for this HBS article in which CEO Robert Nardelli sets up Home Depot for disaster, Frances Frei has posted a copy of it in her online directory, even though it says “Do not copy or post” all over it. I would like to think that Frei, a well-known HBS professor, is posting articles to wage her own protest against the outrageous prices that Harvard Business Publishing charges for these things. However, that’s probably giving her too much credit. So sad, too bad.

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What to look for in term sheets

MBA — Fri, 10 Apr 2009 13:53:47 +0000

From a conversation with one of the top East Coast VCs, these are the things you must receive in a term sheet if you’re on the VC side:

Liquidation preference
A board seat
Right of first refusal for subsequent funding rounds.

The absence of any one of those terms should be a deal-breaker, but if you have those, you should be able to get close the deal.

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The next MBA requirement

MBA — Sun, 08 Mar 2009 03:23:31 +0000

Some time ago, business schools started making business ethics a required class. It goes by different names at different schools—perhaps, yours calls it Leadership and Responsibility, or Professional Responsibility, or Professional Ethics. Several schools instituted this requirement after the Enron and Worldcom scandals at the beginning of this decade. I’m not going to analyze the effectiveness of these additions, but I would like you, dear reader, to remember the current state of the economy and the MBAs who are partly responsible for getting it there. It’s a bit late for them to start applying the concepts they learned in that ethics class, don’t you think?

Given the results, I would like to suggest that schools replace the ethics requirement with something that might actually help MBAs: a writing requirement. In no academic environment have I ever met people who are worse writers than MBA students. And I’m not talking about the Russian finance wizard who just scored high enough on his TOEFL to get admitted. I’m talking about homegrown, American, English-speaking near-illiterates. How is possible to reach 27, 28, 29 and not know what makes a complete sentence? Or the difference between affect and effect? Or to think that bullet points somehow make an essay? You think that writing in bullet points displays your great skill at bottom-lining issues? No, it displays the fact that you don’t know how to write a single sentence in this language. And your use of the phrase “bottom-line” as a verb—well, you’re going to lose some points for that too. Where the hell did this whole he/she thing come from? Have you ever seen the Wall Street Journal publish a story that contained “he/she”? No, you haven’t. (Have you ever seen this/that in any reputable source? Have you ever seen it in the New York Post? Again, the answer is No.) The Journal is all you read, so I’m really not sure where you’re getting it from. If anyone knows the answer to this, please tell me. The gender wars and political correctness are over, people, and, anyway, we’ve more or less settled on “they” as an acceptable, genderless, single, personal pronoun if you must go that route. So, to you administrators who set curriculums, I give you the following in the format your students understand:

Replace corporate ethics requirement with writing requirement
Ethics classes have failed
Writing classes produce clear and immediate results
You like being able to show results
If it’s good enough for the ethically high-minded medical schools, it should be good enough for you

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Shipping bricks

MBA — Sat, 07 Mar 2009 17:53:24 +0000

One of my friends asked me to recommend an external hard drive today, and it reminded me of a case I read about the hard drive manufacturer MiniScribe. It appears in Jim Collins’ book, Managing the Small to Mid-Sized Company, as case 17 about a company called R3. Collins changed the names of the company and the people involved, but his veil is thin.

MiniScribe was founded in the late 1980 and went public a few years later. It grew rapidly and then crashed before being rescued by the San Francisco investment bank Hambrecht & Quist, which installed Q.T. Wiles as the company’s CEO. The company recovered briefly, but Wiles continued setting ambitious goals for earnings growth, which the company met with the help of some accounting fraud. The most outlandish fraud involved hiring overnight workers to prepare packages filled with bricks, which conveniently weighted about the same as MiniScribe’s hard drives. The day workers would arrive and find the new shipments prepared to go out and book the orders. After booking the sales and shipping the orders, MiniScribe would later recall the “hard drives” with serial numbers matching the brick shipments. The practice came to be known as “shipping bricks.” See this Wall Street Journal article for further reading on the scam.

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KG goes down

MBA — Fri, 27 Feb 2009 04:49:53 +0000

So, Kevin Garnett is out injured for the next three weeks, and what do the Celtics do? They sign Stephon Marbury. To go from the most valuable player in the NBA in terms of win shares to a player who probably has a negative win share value, who cost his previous team on and off the court, just seems absurd to me. I’m not a Celtics fan, and, in fact, I don’t like them much at all, but what the hell are they thinking here?

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Now is the time for roll-ups

MBA — Thu, 26 Feb 2009 22:47:39 +0000

The traditional signs of a roll-up opportunity are found in industries with high fragmentation, similar products, weak management, good profitability, high fixed costs, and the chance of realizing economies of scale through centralized efficiencies. However, favorable industry characteristics are just one factor that should go into the decision to pursue a roll-up strategy. The other factor concerns the larger economic climate. The best time for a roll-up is when you have the following:

Low interest rates
Low transaction volumes in the M&A market
Low equity values
A preference in the equity markets for reliable earnings over high earnings with more risk

The last time we had such conditions for a sustained period of time was in the early 1990s. So, unless you want to wait another 20 years, I suggest that now is the time to get rolling. Perhaps, we’ll see a return of poof IPOs, even without Lehman Brothers underwriting them.

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On entrepreneurship

MBA — Thu, 26 Feb 2009 18:11:47 +0000

Last night I sat around a conference table with a group of graduate students to hear one of the world’s top entrepreneurs answer questions. I hate to reduce anything to a series of key points, morals, take-aways, or bullets because it just discounts so much, so much personality and character, but I’m going to do it, anyway. So. Here:

The biggest risk you can take is to not ever take any risks at all. And you know you’re risk averse, I know you’re risk averse.
If you care about someone or someone cares about you, but you neglect them for your work, they’ll eventually walk away.
Read a lot and read widely to spot trends in different industries. Then position yourself to benefit from them. It’s too late to catch the iPhone tide, so look for something new.
Don’t be inhibited by not being an expert in something. Expertise is temporary. If you’re learning or creating something brand new, you can become an expert in a very short amount of time.
Moreover, it’s often the non-experts who aren’t confined by existing industry traits.
Be arrogant enough to challenge the status quo and persistent when people tell you that you don’t know anything or that you’re wrong.
At the same time, be flexible and constantly test and revise. You’ll probably rewrite your business plan 20 times based on your experience.
To get meetings with people you probably don’t deserve to meet with based on your lack of credentials or experience: Lie.
Sometimes risks can be taken in making use of very old technology thought to be dead.
Sometimes you fail, and sometimes you don’t. This guy chose to pass on investing in Google in 1998. So it goes.
Unless you want to be a lawyer or a doctor, you can learn what you need to learn without going to school. (As an update, Fred Wilson just posted on this same topic, perhaps inspired by the same entrepreneur.)

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McKinsey and the problem of relationships

MBA — Wed, 25 Feb 2009 00:58:02 +0000

McKinsey receives praise for many different practices, but none have been mentioned as frequently, by professors and students during my first year of business school, as the way in which it handles its clients. I’m not talking about how it chooses its clients, but how it maintains relationships with them. If you’re a McKinsey client and you want a point of contact at the firm, forget it. Your point of contact is the Firm (capitalization McKinsey’s), not the partner who brought in your business, not your engagement manager. Now, the first problem here is that McKinsey refers to itself pretentiously, arrogantly, and moronically as the Firm in its communications, but I digress.

Back to the point, you may think, Well, that’s interesting. But everyone who mentions this aspect of its business universally praises the practice because it prevents consultants from leaving McKinsey and taking clients with them. This issue exists in several businesses: the lawyer who leaves the large firm to start her own boutique, the editor who brings her writers with her to a new publishing house, the agent who takes his star client out of his firm.

And so that McKinsey considers this a problem it has solved seems to me a bit troubling. After all, aren’t people and relationships the core of all business? In every company I’ve worked for, it’s been people I’ve worked with—co-workers, clients, writers—who made the experiences worth my while. Perhaps, instead of eliminating personal relationships with clients, you should value them and the people who create and maintain them accordingly. Then you would reduce the risk of losing your clients, but—oh! wait!—that wouldn’t maximize profitability, would it? Take your eyes off the margins and you lose, boys.

I don’t have a problem with the whole notion of making personal sacrifice for the good of the company, team, country, et cetera, but there’s something utterly dehumanizing about removing the importance of personal relationships and individual value from doing business. Is this any shock, though, in a society that prizes conformity and a firm that has a strong up or out policy and hires the smartest, most insecure graduates for a relatively low hourly fee of around $14? Perhaps, it’s good for business and I’m proving myself an idiot, and maybe it’s good for business but it’s not good and my choosing good over good for business (or even recognizing the distinction) is what makes me an idiot. And while I might not be able to take my clients with me when I leave my next company, at least I’ll be able to take my idiocy.

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