Strategy

The Employees Of A Michigan Software Company Once Fired Their Co-Founder's Niece

Max Nisen — Tue, 18 Jun 2013 23:36:00 GMT

"Radical transparency" is a new buzzword in management and culture.

But Ann Arbor-based software company Menlo Innovations once took the concept to a new level when employees fired the niece of the company's COO and co-founder James Goebel from an admin position, despite the fact that she lived with his family.

In a feature on the company in New York Magazine, Matthew Shaer describes a place where there are no cubicles and no real bosses, and hiring, firing, and promotion decisions are made by the whole company. Employees' names and jobs are stuck on the wall, along with their pay grade.

Unlike corporate honchos who can be found in corner offices and c-suites across America, Goebel and Rick Sheridan, his co-founder and CEO, mainly think about overall strategy, represent the company at conferences, and deal with any accusations that an employee has done something illegal.

"On the days I spent at Menlo, I never once saw any worker pay Sheridan or Goebel any special deference. No one talked any differently in their presence." Shaer writes. "They were there as team shrinks and advisers, and yet they were also not there — the rest of the office thrummed on around them, regardless of what either of them did."

The transparent culture has worked well so far. The company has grown rapidly, and gets a flood of applications for every open position.

Other companies have also embraced the idea, moving towards flatter, more open office cultures, although they're not quite in the same league as Menlo.

New York-based SumAll, for example, shares its employees' salaries, and Boston's HubSpot publishes detailed financial information on its internal Wiki. Hubspot's employees are allowed — even encouraged — to call out the CEO there if they disagree.

The concept is not flawless. Things can move slowly in the absence of someone with final decision-making power, and there's some question about how scalable it is.

But that's not a reason to regard "radical transparency" as a fluffy experiment that isn't workable in the long term, or worth considering for any but a few startups.

First, an increasingly large portion of every company's workforce is going to hail from gen-y. Not all of the stereotypes about millennials are true, but data shows they're more likely to job hop.

Not many companies have figured out why that's the case, but often, it's because millennials don't feel like they're learning something, or don't feel any ownership of their jobs or decisions. And as a generation that's grown up on the internet, they expect more transparency.

Too many companies are still designed around the idea that you have to serve your time quietly before getting any decision-making power or agency. Cultures that offer autonomy and the potential to advance according to skill and effort are much more appealing to this generation.

Second is the massive tech talent crunch. People argue that the demand is overstated, and that companies want to open the way for immigration simply to push for lower salaries. But the reality on the ground is that companies can't find the tech talent they need, and have even resorted to offering $30,000 referral bonuses for developers.

Amenities are nice, but for companies that can't match Google or Facebook on that front, culture and transparency are the differentiators. A wealth of choice and opportunity can make a developer take a second look at a company that doesn't match on salary.

That's what helped analytics provider SumAll hire a top developer for a third of what he could have gotten elsewhere. The company's transparency, flat structure, and the fact that every employee contributes part of his ownership stake to a charitable non-profit mattered more than the money.

Some people get scared by autonomy and agency. They'll still likely find work where they can get told want to do every day. But those aren't the kind of employees that most companies want.

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Business Majors Are The Most Underemployed Graduates In America

Vivian Giang — Tue, 18 Jun 2013 23:12:00 GMT

English majors might traditionally get a bad rap for job prospects, but it's the business majors who are having a hard time finding work in their field of choice.

According to PayScale's "Underemployment In America" report released on Tuesday, graduates who studied business management and administration were 8.2 times more likely to be underemployed compared to their classmates.

This ratio of underemployment is almost twice as high as for English majors, who were 4.6 times more likely to be underemployed than their peers.

"Underemployment" rates measure the number of workers who are highly skilled, but in low-paying jobs and not utilizing their expertise and experience, or who are working part-time jobs but would prefer to be in a full-time position.

"The problem with business majors is that it's so common," Katie Bardaro, lead economist at PayScale, tells us. "There's so many of them and not enough jobs to go around."

Without an MBA, undergraduate business majors have it pretty tough, says PayScale's report, which identified the 10 most underemployed undergraduate majors based on an analysis of 40 million career profiles on its site.

Other majors with high levels of underemployment were criminal justice (6.9 times more likely to be underemployed), drama and theater arts majors (6.9 times), anthropology (5.8 times), liberal arts (5.6 times), history (5.5 times), and psychology (5 times), according to PayScale.

Of the different types of schools PayScale looked at, business schools also had the highest relative ratio of underemployment (1.17 times the national average), whereas engineering schools had the lowest (0.36 times the national average).

What does this mean for the bigger economy?

"Underemployment can have lasting effects on local economies," PayScale's report said. "As fewer people are able to find the jobs that match their qualifications or desired hours, less money cycles through the economy, and businesses continue to hold back on hiring. It is a compounding cycle that can mean real trouble for the metros on our list."

In short, education can help you better your skills and develop valuable relationships with others, but it's up to individuals to think like innovators and disruptors and identify trends that will set them apart in our rapidly evolving global workforce.

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Why Even Hugely Successful Sites Have So Much Trouble Making Money

Nir Eyal — Tue, 18 Jun 2013 22:46:00 GMT

Ethan Stock lived the Silicon Valley dream. He had recently sold his company to eBay and emanated the tanned skin and relaxed composure you’d expect of someone who just cashed a big corporate check. But as we sat across from one another in a Palo Alto coffee shop, I was surprised by what he said next. “Mediocrity is worse than failure, you know?” For seven years before the acquisition, Stock served as the founding CEO of Zvents, an online guide for local events. Though he was successful by anyone’s standards, I could tell he was a guy who, like me, had learned some hard lessons.

“Zvents grew incredibly well,” Stock told me. “We were the largest events site of its kind, providing local listing in hundreds of markets and attracting over 14 million monthly unique visitors.” Zvents had done what so many tech companies dream of doing, they cracked the network effect and built a business that increased in value with each new user. The more event organizers posted to the site, the more useful the site became to people looking for things to do. Both parties loved the site and Stock’s company was in the middle, connecting visitors to events they otherwise wouldn’t find.

“But I learned the network effect isn’t everything. In fact, it became a liability.” Stock’s words confused me. How could being in such an enviable position of creating a valuable marketplace be a bad thing? “Getting paid was a bitch,” Stock said, and he began to unravel how certain marketplace businesses like Zvents can succeed themselves to death.

THE EXPECTATION OF COMPLETENESS

Marketplace businesses exist to connect two or more parties, typically the buyers and the sellers. Investors love these businesses because they tend to grow quickly and spawn winner-take-all companies. A long line of successful Silicon Valley startups have found success providing a place for people to connect and transact. Examples of these kinds of companies include industry titans like eBay and LinkedIn but also include some of today’s web darlings like Uber and AirBnB. “Marketplace businesses are great,” Stock told me. “But there is a fatal flaw in some businesses that can hogtie their ability to make money — the expectation of completeness.”

Stock explained how Zvents had planned to charge event organizers to list on their site. “Once we reached critical mass and it was clear we were becoming the market leader, we expected event organisers would start paying.” Unfortunately, reality fell short of expectations.

Like many marketplace businesses, Zvents was catering to users who expected to find a comprehensive listing of all local happenings. To keep users coming back, Zvents had to ensure it was displaying everyone’s events — an incomplete list would send visitors looking elsewhere.

“When we asked event organisers to pay up, they said ‘what for?’,” Stock said. But threatening to remove a listing was not possible, Zvents needed them all to keep site visitors happy.

So Stock’s team offered event organizers better ways to reach users like sponsored placements, which displayed the listing more prominently on the site. But the attempt to finally get paid largely fell flat. “We certainly created value for them.” Stock said. “We were sending people to their events. We just couldn’t capture very much of that value. I guess it’s the old saying, ‘why buy the cow, when you can get the milk for free?’”

JUST LIKE GOOGLE

“Google is similiar if you think about it.” Stock told me. The comment surprised me given the tremendous success of the search giant juxtaposed with the Zvents story. “They also create much more value than they capture.”

He was right. When searching on Google, users also have an expectation of completeness. They come to the site to find all relevant results, every time. If Google decided to only display listings from paying advertisers, we’d all switch to Bing.

When considering the collective value of all the clicks on un-sponsored links, the company does give away the vast majority of the value it creates. Indeed, Google appears to be “giving away the milk for free.” The difference is that Google’s market is not limited to local happenings as was the case for Zvents. Google’s market is much, much bigger. In fact, it’s everything.

By organizing “the world’s information,” Google skims a proportionally tiny amount of value from a tremendously huge marketplace. The absolute number of people who buy a sponsored placement is large enough to keep the company humming, even though it only monetizes a tiny proportion of the value created.

IMPLICATIONS

The Zvents story should give pause to marketplace businesses going after niches. The expectation of completeness, and the resulting inability to monetize, may help explain the challenges faced by companies like Foursquare, RedBeacon, and many industry-specific job listing sites.

One way around the problem of completeness is to facilitate the transaction itself. Companies like oDesk, etsy and Uber, ensure they are in the middle of the money by processing the flow of cash. It’s much easier to justify taking a cut when you hold the gold, particularly when doing so adds convenience and security to the transaction.

Without the ability to collect a share of each transaction, marketplaces serving users who expect completeness face a difficult challenge. Two options remain: either cater to a very large market, a la Google, or monetize a large share of the value created. The network effect alone just isn’t good enough.

TL:DR

- Network effects are great but they don’t ensure a viable business model.

- Though they may prove successful from a growth and engagement perspective, certain marketplaces can be very difficult to monetize.

- Marketplaces where either the buyer or seller expects to choose from an exhaustive listing – so-called “complete” marketplaces – typically give-up far more value than they are able to capture.

- Unless they facilitate the transaction itself, these businesses often find themselves in a bind.

- Complete marketplaces must either cater to a very large market, a la Google, or position themselves to monetize a large share of the value they create.

Follow Nir on Twitter @nireyal

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Formal Management Training Is Still A Problem In America

Trish McFarlane — Tue, 18 Jun 2013 19:52:00 GMT

As the HR leader of a mid-sized company, not a month goes by without receiving a pitch from a training vendor or consultant asking if I’m interested in purchasing training for our managers.

I’m all for formal training, however, I know it’s not the end-all-be-all. To give some perspective, I grew up in my career at PricewaterhouseCoopers back in the 1990s-2000s so it was ingrained in me that management training was critical. It was provided and encouraged. Fast forward to other companies I worked for and it was less readily available. Some courses were offered, but typically not until the employee was already managing people.

Training is a multi-million dollar business in 2013. There are live sessions, webinars, podcasts and more. Training can be available, for a cost, to any company wanting to throw dollars in that direction. Again, I love training. I wonder, though – is it worth the money and does the formal training actually lead to greater success for the leader and better leaders? I decided to take an informal poll of successful leaders and influencers in the HR and recruiting industry as well as accounting, security, and the restaurant industry to find out how many of them received training before or when they were promoted to the manager level.

I received feedback from 19 people when I asked:

When you first managed people at work, were you given training? If not, how did you figure out what to do?

A majority of the respondents said they relied on instinct, on emulating good managers they had, or lessons from the “school of hard knocks”. A few other responses mentioned skills learned while volunteering, trial and error, learning not to micro-manage the team and also taking cues from the team. None of these successful leaders said they received formal training. Only one leader said they work where a formal program was offered. It’s called Manager Detox, and it is a course where managers are told how to avoid the pitfalls of bad leaders.

There are other people questioning the effectiveness of formal manager training programs. Barbara Kellerman is the James MacGregor Burns Lecturer in Public Leadership at Harvard University’s John F. Kennedy School of Government. In her 2012 book The End of Leadership, she states, “For all the large sums of money invested in the leadership industry, and for all the large amounts of time spent on teaching leadership, learning leadership, and studying leadership… There is scant evidence… to confirm that this massive, expensive, thirty-plus-year effort has paid off. To the contrary: much more often than not, leadership development programs are evaluated according to only one, subjective measure: whether or not participants were satisfied with the experience. But, of course, even if they were, this does not prove the program had the impact it wanted or intended; in fact, the opposite might be true — it could be that the most satisfied participants were those who changed the least.”

So, you be the judge. Have you been formally training in the art of managing teams and individuals? Or, like many of us, have you been training in the school of experience on the job?

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Inventors Are Building Tons Of Cool Stuff In This Converted Charlotte Grist Mill

Joe Epstein and Nate Hindman — Tue, 18 Jun 2013 18:49:00 GMT

Exoskeletal body armor designed for protecting guards in prison riots. Infinitely gyroscoping bowls designed for spill-prone toddlers. High-powered pneumatic pogo sticks designed for … people who are really into falling from extreme heights.

They’re the kind of instruments of miscellany you would expect to find in an MIT engineering lab or a Silicon Valley incubator. Turns out, they’re housed in a renovated grist mill on the outskirts of downtown Charlotte.

Hop the ragged chain-link fence behind Panthers stadium, scale a gravel embankment, scramble across the old train tracks, and you’ll come upon a nondescript warehouse with an unmarked door. This is Edison Nation, and inside, you’ll find a winding labyrinth of high-tech design studios, 3-D printing labs, and ultra-modern offices bursting with products that have made millionaires out of amateur tinkerers who came to the company with little more than an idea. Hope you brought a good one.

“Ideas on their own have no value,” says Louis Foreman, chief executive officer of Edison Nation. “You may have come up with something extremely innovative, but without a complex team of engineers, marketers, and lawyers, it won’t go anywhere.”

That’s where Edison Nation steps in. For a 50% cut of the royalties, the 55-person company will take your idea from a table napkin to a store shelf, handling product design, patent filings and pitches to corporate executives who are increasingly looking beyond their firms’ R&D departments for innovations.

General Electric, for instance, said in April that it had inked a deal with Quirky, an online community of inventors, to give its users access to GE’s huge portfolio of patents.

Edison Nation, however, runs more targeted searches for large companies looking to launch particular types of products. One such company, Bed Bath & Beyond, partnered with Edison Nation in 2009 to conduct a search for new dorm room gadgets.

As with all product searches on Edison, anyone could submit an idea confidentially via the firm’s site for a $25 fee.

Bed Bath & Beyond chose Jonathan Smith’s idea for a bed riser that features a built-in AC outlet and USB charger. The retailer plans to carry the item in all U.S. stores during this year’s back to school season, enriching Smith and Edison Nation as the royalty checks come in.

According to Edison Nation, the company runs between 50 and 60 searches per year, charging retailers $5,000 each time.

To be sure, Smith, an industrial designer by trade, could have earned twice as much had he taken it upon himself to develop the product, instead of handing over those duties—and the intellectual property—to Edison.

But he would have had a tough time getting a prototype in the hands of Bed Bath & Beyond execs without Edison’s support.

“It’s not easy to access the attention of the companies we work with,” says Mary Dickson, an Edison spokeswoman. “Big corporations are wary of working directly with inventors given the proprietary nature of inventions.” Rubbermaid, for example, accepts online submission forms from inventors but will typically only consider patent-pending product ideas, Dickson notes.

For its part, Edison has been involved in more than 700 patents during its 12-year existence, serving in most cases as a middleman between large corporations and inventors who don’t have the time, money, or expertise to deal with the patent process.

Foreman, the CEO, is quick to point out—showing off a wall of framed patents in the company’s front foyer—that inventors get to keep their name on each filing. After all, each plaque has a personal story behind it. The IBM employee in Charlotte who came up with a new kind of trash can is now collecting checks from its sales at Williams-Sonoma. The parents in Wilmington whose idea for a spill-resistant bowl for kids became a breakout hit, having generated close to $60 million in sales since 2011.

“They came to us hoping to earn enough money to remodel their kitchen,” Foreman recalls of the Gyro Bowl creators. “Now they’ve bought a few homes.”

Edison Nation’s newest initiative is Edison Medical, a partnership with Carolinas HealthCare System that seeks to bring the ideas of medical professionals, from doctors to physicians’ assistants, to the market.

“We’re looking for innovations that improve patient care, lower the cost of producing care, or improve the patient outcome,” says Foreman in Edison’s brand new medical wing, flanked by massive water jet cutters and buzzing 3-D printers.

Already, Edison has helped produce everything from a prosthetic hand that employs pulleys instead of robotics to a simple latex glove with measuring marks on the index finger. Why? “Nurses were actually sticking Q-tips into people’s wounds to eyeball their depth before,” Louis explains, adding that the gloves allow for a quicker and more accurate measurement in situations when seconds count.

Statistics on the average depth of wounds from extreme pogo-stick crashes were unavailable at the time of publish.

Tour guides Nate Hindman and Joe Epstein are "On the Road With Free Free Enterprise," visiting small businesses and entrepreneurs checking out local events, and telling the story of free enterprise in more than 20 American communities this summer. Follow their travels on Facebook, Twitter and Instagram.

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Watching For Fraud Red Flags Can Seriously Boost Portfolio Returns

Max Nisen — Tue, 18 Jun 2013 18:05:37 GMT

Corporate fraud is widespread, even if we only notice it when it blows up, leading to firings, arrests, or lawsuits.

In fact, fraud costs 3 percent of enterprise value — and thus stock returns — every year for the average U.S.-listed company, according to recent academic estimates.

A new report from GMI Ratings shows that investors can significantly boost returns simply by looking out for certain red flags.

When GMI eliminated the 25% of companies in the Russel 3000 index that scored the lowest on its fraud detection metrics, portfolio returns rose from 7.6% to 9.8% over a 10 year period, a 29% boost.

Here's their chart of the difference between the regular index and one with the worst-rated companies subtracted:

These are a few of the red flags that GMI looks for:

Compensation incentives for CEOs and CFOs that are very high relative to base salary
Late or frequently amended filings
Consecutive uninterrupted growth in earnings per share
Accounts receivable are growing at a different rate of sales
Low asset turnover, and excessively large intangibles

Read the full report at GMI Ratings.

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A Woman Virtually Nobody Has Heard Of Is On The Verge Of Becoming The Most Powerful Woman In The World

Matthew Boesler — Tue, 18 Jun 2013 17:42:00 GMT

It's looking increasingly likely that Ben Bernanke will no longer be the Chairman of the Federal Reserve at this time next year.

In an interview Monday, President Obama said Bernanke has "already stayed a lot longer than he wanted or he was supposed to."

When asked about his intentions regarding plans for the future, Bernanke has not said much, though the Fed chairman has decided to skip this year's Jackson Hole summit of world central bankers in August, where he would normally be responsible for delivering the keynote address.

In recent years, the Jackson Hole keynote has been an important stage for signaling big shifts in U.S. monetary policy, a key driver of economic dynamics not only in America, but around the world.

This year, the most important signal from the keynote may not be in the contents of the speech, but in who is delivering it in Bernanke's place: Federal Reserve Vice Chairwoman Janet Yellen, who is widely tipped as the frontrunner to replace Bernanke when his term expires in January.

If Obama does select Yellen to replace Bernanke, she will become the first woman ever to chair the Federal Reserve, putting her in arguably the most powerful policy-making role in the world. And of course, unless you follow the Fed, you've probably never heard of her.

(Global financial markets have reinforced the notion that the Fed chair is all-powerful in recent weeks: as fears that the Fed will begin slowing the pace of its monetary stimulus have seeped into the marketplace, U.S. government debt has sold off dramatically, causing major reverberations in virtually every market around the world. Because U.S. monetary policy is so influential, economist David Beckworth, for example, has referred to the Fed as a "monetary superpower.")

By every account, Yellen is a thoughtful and brilliant economist, which has allowed her to rise to where she is today.

"Ms. Yellen climbed the Fed ranks by being methodical rather than iconoclastic," writes Wall Street Journal reporter Jon Hilsenrath in a recent profile of the Fed vice-chairman. "She shows up at policy meetings with carefully crafted statements. Those who work with her say she arrives at the airport hours early."

"Ms. Yellen climbed the Fed ranks by being methodical rather than iconoclastic. She shows up at policy meetings with carefully crafted statements. Those who work with her say she arrives at the airport hours early."

"[Yellen] is very low-key, but impresses people quickly with the depth of her understanding and the sincerity of her views," said fellow Berkeley professor Andrew Rose in 1994, describing her as "collegial, persuasive and effective."

She has also worked with the academic elite of the economics sphere her entire career. Her mentor at Yale, where she received her Ph.D. in 1971, was Nobel-Prize winning economist James Tobin, whose legacy is enshrined in today's economics textbooks. After graduating from Yale, she taught at Harvard for five years. Then, she did a two-year stint (1976-1978) as a staff economist at the Federal Reserve, where she met her husband, fellow economist and future Nobel Prize winner George Akerlof.

After the Federal Reserve, Yellen was faculty at the London School of Economics for two years. Then, in 1980, she accepted a position at the University of California, Berkeley, where she stayed until her appointment to the Federal Reserve Board of Governors in 1994 by President Bill Clinton.

Months before his April 1994 nomination of Yellen, Clinton had selected one of Yellen's long-time colleagues in the Berkeley economics department, Laura D'Andrea Tyson, to chair the Council of Economic Advisers (making Tyson his top economist at the White House).

According to an L.A. Times report Clinton's 1994 nomination of Yellen, Tyson was "deeply involved in the selection process for filling the Fed vacancies." The report went on to assert that "Yellen, who would succeed Republican Wayne Angell on the board, also fulfills the Administration's desire to name a woman or a minority to offset the appointment of [Alan] Blinder, a white male, to be Fed vice chairman."

(Tyson herself was reportedly tapped by Clinton over then-World Bank economist Larry Summers because Summers and Clinton's vice president, Al Gore, didn't see eye-to-eye on issues related to environmental economics.)

So began Yellen's long career in monetary policy-making, which has already been momentous in reshaping the directives that have emanated from the central bank and driven major changes in the global economic landscape.

One of the defining moments for Yellen that crystallized both her economic views and her character traits came two years into her tenure on the FOMC.

In a recent profile of Yellen, New York Times correspondent Binyamin Appelbaum tells the story:

In July 1996, the Federal Reserve broke the metronomic routine of its closed-door policy-making meetings to hold an unusual debate. The Fed’s powerful chairman, Alan Greenspan, saw a chance for the first time in decades to drive annual inflation all the way down to zero, achieving the price stability he had long regarded as the central bank’s primary mission.

But Janet L. Yellen, then a relatively new and little-known Fed governor, talked Mr. Greenspan to a standstill that day, arguing that a little inflation was a good thing. She marshaled academic research that showed it would reduce the depth and frequency of recessions, articulating a view that has prevailed at the Fed. And as the Fed’s vice chairwoman since 2010, Ms. Yellen has played a leading role in cementing the central bank’s commitment to keep prices rising about 2 percent each year.

Inflation has become one of the biggest stories in economics recently as annual inflation rates have been declining and seem stuck persistently below the Fed's 2.5% threshold for tightening monetary policy. Today's consumer price index release revealed that core price inflation remained stubbornly unchanged at 1.7% in May.

Persistently below-target inflation readings have provided support for the argument that the Fed should continue with its controversial bond-buying program aimed at providing monetary stimulus to the economy.

As arguably the most dovish member of the FOMC – meaning she tends to focus on unemployment concerns rather than keeping inflation at bay – Yellen has undoubtedly had a big role in shaping the course of current policy.

Yet Yellen's record shows that she has not always argued for easy monetary policy and higher inflation, despite her dovish tilt.

"The risk of an increase in inflation has definitely risen, and I would characterize the economy as operating in an inflationary danger zone." — Janet Yellen, September 1996

Later in 1996, the economy was expanding, labor markets were tight, but core inflation was on a steady downward trend.

At the September 1996 FOMC meeting, though, Yellen argued, "I conclude that the risk of an increase in inflation has definitely risen, and I would characterize the economy as operating in an inflationary danger zone."

While Yellen ultimately supported then-Chairman Alan Greenspan's decision to leave interest rates unchanged, she couched her decision by saying, "I find myself very close to the margin and would also have been quite willing to support an upward adjustment of 25 basis points today, had you proposed that."

In 1996, Yellen's argument rested on the thesis that the labor market was too tight.

To be sure, things are much different now – the unemployment rate remains stubbornly elevated around current levels at 7.6%, and concerns over inflation appear to be all but dead at this point.

And given the Fed's current policy stance – committed to unprecedented monetary easing until signs of improvement in the labor market re-emerge – perhaps it's just as accurate to say that Yellen has already become the most powerful woman in history.

Taking over the chairmanship in January would cement it.

MORE — Central Banks May Finally Be Losing Control

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A 12-Acre 'Goat Farm' Is Transforming The Arts Scene In Atlanta

Lynne Guey — Tue, 18 Jun 2013 16:10:00 GMT

If you put enough talented, creative people together in a small space, chances are great ideas will blossom, eventually leading to economic developments.

This is the idea that real estate developer Anthony Harper envisioned when he found an abandoned 19th-century cotton gin factory sitting on 12 acres of land outside downtown Atlanta.

Harper, who was inspired by economist Geoffrey West's economic-innovation theories which attribute population density as the secret to exchanging ideas, wanted to transform the space into a model for arts and culture real estate development. He tells us that the brick buildings detailed with arched windows and doors reminded him of his former musician life when he performed in warehouses with bands.

"We saw potential in the space, we saw that density could cause job creation. If we could attract artists and small creative businesses to the property, we wondered if our strategies could create a pseudo-city," Harper says.

Since its inception in 2008, The Goat Farm Arts Center, a for-profit arts incubator located in West Midtown Atlanta, houses more than 450 artists and is home to one of the most densely packed group of artists in the nation.

How it works

To get a spot in one of The Goat Farm's 27 residential lofts, artists are required to submit applications for upcoming projects to a review board, which is comprised of five people, including Harper and his business partner Chris Melhouse.

It's a selective process with only about 10 events making it through the review board each month. But if chosen, artists receive assistance for putting on a performance, including financial investments. The Goat Farm does not generate revenue from any of its programs, so if artists decide to charge, they retain all profits acquired.

Harper says that The Goat Farm is a business and about $150,000 is invested annually in Arts Investment Packages (AIPs) for artists, which includes direct funding, financial assistance and venue, marketing, management, logistics and aesthetics support that may be provided to performers.

This is all funded by rent received from the Goat Farm's residents, which ranges from $350 to $5,000 monthly depending on the space.

"The word 'investment' is key for us. We want [artists] to have a different mindset," says Harper. "We don't want them to think they're getting donations for free, because we actually do see a strong ROI in the money we invest in artists and performers."

There is a wide range of ages and ethnicities at the Farm, including a 65-year-old and a family with one child.

Life at the Farm

A "typical" day at the Farm is not so typical, says Andrew Tate, a native Atlantan who previously lived at the Farm. He currently works on the Special Projects Team, supporting the many diverse events and performances throughout the year.

"There are always new projects hatching, wrapping up, artists visiting from out of town and that's part of what makes it great. You can probably expect to be woken by roosters and put to sleep by the rumble and squeak of trains passing by — but everything in the middle is anyone's guess."

The Goat Farm has also created non-art entrepreneurial ventures, such as food carts and other businesses needed in a pseudo-city. However, artists have the freedom to choose the projects they participate in. The Goat Farm has been careful not to establish a commune atmosphere, seeking instead to illustrate that the arts are integral to its business model.

In a state where per capita arts spending ranks 48th in the nation, it's an unlikely place to witness an arts revival. But Tate says the results from the Farm thus far proves that the struggling art scene has a chance in Atlanta.

"We're just one developer of one property, but we're trying to show that arts is more than just entertaining value," says Harper. "For us, artists are part of our mechanics. They're part of our business model. At the Goat Farm, they drive our business, they drive our revenue. Without the arts and cultural programming, without them, the business does not work."

Tate, now 27 and a matriculating law student, agrees that the Goat Farm is providing opportunities for artists to try things they couldn't normally afford given the city's limited grant money and philanthropic funding.

"It is a place to grow ideas. Collaboration and innovation need a degree of chaos to come about, and the random collisions of so many artists, engineers, entrepreneurs, and change-makers of all sorts foster an energy of possibility that has always been possible in Atlanta, but needed a place to regenerate itself," he says.

"The Goat Farm is a magnetic campus for the creative spirit."

So far, Harper says there have already been out-of-towners who have decided to stay in Atlanta strictly because they have never seen anything like the Goat Farm. With a satellite location called Erikson Clock in development — this time, mixing artists with scientists — it seems like the Goat Farm will be at the forefront of transforming the art scene down South.

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Why GM Is Overhauling The Data All Of Its Suppliers Depend On

Marty Lariviere — Tue, 18 Jun 2013 14:20:40 GMT

Automakers are just different. Given their size, just what they do matters to people ranging from suppliers to policy makers. Thus it is news when a company like General Motors decides to be a little less transparent about just what it is doing (GM goes dark on output stats, causes stir, Automotive News, Jun 17).

"For decades, GM and nearly all other major automakers have reported the number of cars and trucks produced at their North American plants each month, broken out by nameplate. The data get folded into numerous economic indicators, including ones published by the Federal Reserve, and are a benchmark for industry insiders to forecast GM’s future production.

But this month GM notified several research providers that publish production data — including IHS Automotive, the Automotive News Data Center and Autodata Corp. — that it will no longer give them those figures, providing instead only the number of wholesale deliveries."

Things brings up two questions. First, who was using this data? Second, just why is GM reporting wholesale deliveries instead?

On the user side, the article reports that essentially anyone and everyone who does forecasting related to the auto industry was using GM’s production data and that even GM’s own suppliers are reliant on third-party forecasts.

"GM’s move could complicate suppliers’ planning. Many of them subscribe to the production forecasts crunched by third-party research firms, which use production figures as a key input for their projections. Forecasters will have to replace the firm numbers with estimates.

Suppliers say they rely on third-party forecasts because the projections they get directly from automakers often are off the mark, befouling their plans and crimping their profits.

“Suppliers depend heavily on forecasting services to build their production schedules,” says Craig Fitzgerald, an automotive analyst at Plante Moran. “If GM’s decision gets in the way of the accuracy of the forecasts, it’ll be a major problem for the supply base.”

It’s quite plausible that external forecasts are more accurate — especially when general trends (e.g., a shift from big to smaller cars dues to rising gas prices) are in play. The article states that at least one forecasting firm believes they can back out production numbers but it remains to be seen just how this will affect forecast accuracy. An interesting point is that this may burn firms that don’t have any business when GM. If the forecast accuracy across all makes and models suffer, then a supplier that is serving, say, only Ford could take a hit.

As for what GM will report going forward, I must admit their explanation has some face validity to it.

"GM says the decision stems from a recent accounting change aimed at giving investors a more accurate picture of its health.

In the first quarter, GM began assigning the profit or loss on a specific vehicle to the country in which it is sold, not where it’s made. For example, a Cadillac ATS made in Michigan but sold in China will be reflected in the financial results of GM’s Chinese operations, rather than in its North American results.

GM says the change will give it a clearer view of its profitability across regions. But it also makes the North American production numbers less relevant, GM spokesman Jim Cain says."

At one level, this new cut on data should give outsiders a better view on just where GM is and is not growing. If more vehicles are being shipped to dealers in a particular area, it is presumably because GM is experiencing strong sales in that area. Further, to the extent that a given model is only produced in one or two facilities, shipments will over the long haul match production. They will only be offset in time. That time offset might matter, however. If irrational exuberance prevails and GM overproduces, it may take a while for market watchers to catch on to an inventory build up.

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How 5 Women Broke Into And Succeeded In Male-Dominated Fields

Erin Scottberg — Tue, 18 Jun 2013 13:14:00 GMT

We’re all too familiar with the stats showcasing the uneven gender divide in the business world.

For instance, only 20 of theFortune 500 CEOs are women. Women hold only 14% of executive positions, and just 16% of board seats. Women earn $0.77 for every dollar earned by men.

But with all the discussions about how to get more women in the upper echelons of the business world (thanks, Ms. Sandberg!), we wanted to hear some real-life stories of leaning in.

We spoke with five all-star women who have succeeded in traditionally male-dominated industries to hear their stories of climbing the mountain—and maybe glean some advice from how they made it to the top.

The Engineer: Karen Purcell, 45

Title: President of PK Electrical
Location: Reno, Nevada
Degrees: BSEE, Electrical Engineering, Widener University

Why I Chose This Field: Growing up, I always liked math and science, but I hadn’t thought about a career in engineering until my high school physics teacher suggested I consider it. At the time, I wasn’t even really sure what an engineer did. When I asked that question, his response was simple: “Well, they can do anything.”

I made it my major and fell in love with engineering from day one. I’m now the president of PK Electrical, an electrical engineering, design and consulting firm—and the author of “Unlocking Your Brilliance,” which explores the hurdles women face in the male-dominated STEM fields and offers pragmatic strategies to overcome them.

Biggest Hurdle in My Career: When I first started going to job sites, out there with the contractors, everyone assumed I was the assistant—not the engineer. But once I opened my mouth, they realized, “Oh, she’s intelligent. She’s the engineer!” I felt like I always had to prove myself. It took about two years for people to believe in me. As a woman, you really have to go above and beyond to prove your value, while a lot of men just get that automatically.

The Best Get-Ahead Tip I Have: One of my best pieces of advice to women is to ensure you’re being heard. Sometimes, when you’re sitting in a meeting or conference, the men can be very overpowering. You need to stand up and be vocal. This can take practice sometimes. Try joining activities where you can practice having a voice in a safe zone. Getting comfortable with your own voice will help give you professional confidence.

The Military Woman, Jill Morgenthaler, 59

Title: Retired Army Colonel and Homeland Security Consultant
Location: Chicago
Degrees: B.A. Economics, Penn State; M.A. International Policy Studies, Monterey Institute of International Studies; Masters of Strategic Studies, Army War College

Why I Chose This Field: Growing up, I watched my father, a career marine officer, lead a very exciting life. I wanted that. When I joined the ROTC in 1972, I was a part of the first class that allowed women. For the first time, they were asking the question: Can women train as equals with men? This was one of the many “firsts” in my career.

How Being a Woman Has Affected Me: There were plenty of men who hated the idea of women in the military and tried to stop me from doing my job. I’d learned a lot from my father about how soldiers should treat one another and conduct themselves, so any time I was in a situation where I wasn’t being treated correctly, I pointed it out. If a male soldier decided not to listen, saying, “I don’t care what a woman says,” I’d reply, “Me neither—I care what an officer says!” I’d bring the focus back to respect for the title, not gender.

How Humor Helped Me Over Hurdles: I also used humor to gain my comrade’s respect. If a male soldier refused to salute me, I’d respond, “Oh my gosh, you’ve forgotten how to salute!” then make him salute me for 15 minutes straight. Sure, it was a bit dramatic, but by using humor, I was able to make a strong point that no one soon forgot.

There were plenty of men who hated the idea of women in the military and tried to stop me from doing my job.

The Best Get Ahead Tip I Have: I have a motto I like: “Times are tough. I am tougher.” As a voracious reader of English and Latin mythology, the theme of the hero’s journey always resonated with me. Remember that you’re there to do a job and you’re facing these challenges for a reason. Knowing that will get you through the tough times. You’ll look back in a few years and know that you had to be tested to get to where you are now—that’s why they call it a hero’s journey.

The Sports Agent, MJ Pedone, 43

Title: C.E.O. of Indra Public Relations
Location: New York City
Degrees: Studied marketing, but fell short of my degree when I left school to pursue some modeling opportunities overseas.

Why I Chose This Field: Athletics have always been a huge part of my life. I’ve always been a sports fan, and my family and siblings were die-hards! My sister and I were considered tomboys growing up—we played everything: softball, swimming, tennis and skiing. I also grew up with the arts, teaching tap, jazz and gymnastics. Going into sports and entertainment PR allowed me to follow my interests.

Biggest Hurdle in My Career: As a woman breaking into the male-dominated sports industry, the biggest hurdle I had to overcome was shutting out the naysayers. Once, a male C.E.O. was unhappy that I’d pulled off an event with the New York Rangers that he’d been trying, unsuccessfully, to do for a long while. He started spreading rumors that I’d hired actors who looked like the athletes to do the appearance, which was a complete lie.

The situation was easily mitigated since I wasn’t doing anything dishonest, but I knew that this was just the first of many obstacles—I knew I had to stay as focused and determined as possible and face all challenges head-on, with a strong mind.

How Being a Woman Has Affected Me: Men and women sometimes handle situations differently. I’ve witnessed first-hand the many insecurities and struggles that men face, especially athletes. They’re more egotistical than women, and sometimes tend not to make logical decisions.

Women process things differently, with a more rational view of the situation. We tend to think before we react, and this has been an advantage. My ability to deal with tough situations with confidence and grace has earned respect not only from the athletes, but from other agents, publicists and high-level executives with whom I interact on a daily basis.

The Best Get-Ahead Tip I Have: My best piece of advice to women is to be confident, work diligently and get as much on-the-job experience as you can. I can’t stress confidence enough. Also: Love what you do—then you don’t mind all the hours you spend working.

The Finance C.E.O., Elle Kaplan, 36

Title: C.E.O. & Founding Partner, Lexion Capital Management
Location: New York City
Degrees: B.A. English and B.A. Chemistry, University of Michigan; Executive M.B.A. in Finance, Columbia University

Why I Chose This Field: My mom, though a genius in many ways, was financially overwhelmed when my father got sick. I was in college and wanted to help, but didn’t know how. I was studying English and Chemistry at the University of Michigan, but I realized that I wanted to do something that would help people like my mom.

Biggest Hurdle in My Career: I came to New York after college with just $200, no job and a dream of working on Wall Street. I had no connections and no formal finance training. Through tenacity and drive, I landed an entry-level analyst position. I was an honors student in both qualitative and quantitative endeavors, and I made sure to highlight that in my interviews. I spoke about myself with confidence, and therefore other people had confidence in me too. Once you land a job, it’s binary: You either learn and do, or you’re out. The latter was not an option! I spent the next decade working my way up “the Street,” learning everything I could.

In 2010 I founded a private bank, Lexion Capital Management, dedicated to helping hard-working people safeguard and grow their assets, even if they may not know much—or anything—about asset management. Before making any decision or taking any action, I always ask myself, “Is this advice good enough for my mom?”

How Being a Woman Has Affected Me: Being a female in the private equity space makes me feel responsible for serving as an example for younger women. I hope to inspire more women and girls to pursue finance as a career. I want them to see me and think, “If she can do it, I can do it, too.” One great way to change the future of finance is to provide younger women with visible female role models in the finance space. As a woman on Wall Street, you’re constantly in a fishbowl. For more than 10 years, I was the only woman in the conference room, but now I’m the C.E.O. of my own firm.

The Best Get-Ahead Tip I Have: While it may be a cliche, my biggest get-ahead tip is to believe in your own success. You have to be your own cheerleader—no one can advocate for you or make it happen like you can.

The TV Exec, Jodi Markley, 47

Title: Senior Vice President of Operations at ESPN
Location: Bristol, Conn.
Degrees: B.A. Communications, University of South Florida; Simmons School of Executive Graduate Studies

Why I Chose This Field: Growing up, I played a lot of sports, enjoyed learning languages and loved—much to my parent’s chagrin—watching TV. So when I started working at ESPN International in 1989, one year after joining the network in operations control, it was everything I wanted wrapped in a bow!

Biggest Hurdle in My Career: Learning to come to terms with the fact that not every project was going to be a win was one of the biggest challenges of my career. Some projects, no matter how hard you work on them, still may fail. When you fail—and you will—use it as a learning experience and move on.

How Being a Woman Has Affected Me: We’re all trying to balance our personal and professional lives on a daily basis, and some days are better than others. In the early days, when I was traveling internationally, I was away from my children more than I would have liked. But I developed a way to handle it: Before I went on a trip, I would show them where I was going on a map and bring them back a small gift from that country—that way they were part of the adventure. They would bring the gifts to school for “Show and Tell.”

The Best Get-Ahead Tip I Have: I eventually ended up leading all of ESPN International’s production and operations and am now ESPN’s S.V.P. of Operations, but I didn’t start there. It took a lot of work, and one thing I think is crucial to professional success is to learn as much as you can as your responsibilities grow. Not every aspect of every role is going to be absolutely thrilling, but it will make you a better manager and leader, so make sure to learn as you grow.

It’s also important to have mentors, both inside your industry and outside, whom you can get advice from and bounce ideas off. Your “Board of Directors”: the people you know who will take your call and for whom you’ll do the same.

And, most important, make sure to always take yourself seriously. Otherwise, no one else will. Recognize that you matter and what you say matters. Speak up and get your ideas heard.

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The 50 Best Employers For Older Workers

Vivian Giang — Mon, 17 Jun 2013 23:01:43 GMT

America's population is aging, yet they're still working past retirement age.

The National Institutes of Health (NIH), a federal agency based in Bethesda, Md., takes the top spot in a list of the best 50 employers for older workers published on Monday by the American Association of Retired Persons (AARP) and the Society for Human Resource Management (SHRM).

Jean Setzfand, AARP’s Vice President for Financial Security, says that employers should take advantage of Boomers' positive working traits, such as loyalty, by offering programs that will attract and retain them.

At NIH, workers are offered flexible telecommuting programs, a "Fit Plus Program," which is a health initiative aimed at older workers and two phased-retirement programs, which allow workers to choose to gradually transition to retirement by reducing hours or a trial-retirement program that allows retirees to return to work within one year of retiring in case they decide they aren't ready to leave the workforce.

“My boss lets me telework one week a month from my home,” 63-year-old Philip Lenowitz, deputy director in the office of human resources at the National Institutes of Health, tells Andrea Coombes at MarketWatch. "That’s one of the things that keeps me here rather than retiring."

Nearly half (47%) of NIH workers are older than the age of 50.

All of the companies in the top five spots are health-related organizations: Atlantic Health System of Morristown, New Jersey; the University of Texas MD Anderson Cancer Center, Houston, and Mercy Health System of Janesville, WI.

A full 41% of this year's top employers for Boomers are hospitals, health insurers or medical research organizations.

“By the nature of their operations, hospitals and some other health care providers operate 24 hours a day, seven days a week, so it is a business necessity for them to offer flexible and compressed work schedules to their prospective and current employees," Setzfand says.

"These practices are appealing to older workers, and other industries should consider adopting them on a more widespread basis."

Any company based in the U.S. with at least 50 employees is eligible to apply for a spot on the list, which evaluates areas incluing recruiting practices; opportunities for training, education and career development; workplace accommodations; alternative work options, such as flexible scheduling, job sharing and phased retirement; employee health and retirement benefits, and retiree work opportunities.

Below is a list of the top companies:

1. National Institutes of Health (NIH)

2. Scripps Health

3. Atlantic Health System

4. The University of Texas MD Anderson Cancer Center

5. Mercy Health System

6. The YMCA of Greater Rochester

7. West Virginia University

8. Bon Secours Virginia

9. National Rural Electric Cooperative Association

10. WellStar Health System

11. Cornell University

12. West Virginia University Hospitals

13. George Mason University

14. Department of the Interior, U.S. Fish and Wildlife Service

15. Monongalia General Hospital

16. S&T Bank

17. Virginia Commonwealth University

18. FCCI Insurance Group

19. TriHealth Inc.

20. Financial Industry Regulatory Authority (FINRA)

21. Stanley Consultants Inc.

22. Southern Company

23. Yale-New Haven Hospital

24. Michelin North America Inc.

25. Department of Veterans Affairs-Veterans Health Administration

26. Saint Vincent Health System

27. Cianbro Corporation

28. SSM Health Care

29. Solix Inc.

30. Mountain States Health Alliance

31. Central Florida Health Alliance

32. Securian Financial Group

33. One Nevada Credit Union

34. Swarthmore College

35. MEI Technologies Inc.

36. School Board of Brevard County

37. Avera McKennan Hospital and University Health Center

38. Tufts Health Plan

39. Massachusetts Institute of Technology (MIT)

40. Coconino County

41. Winston-Salem Industries for the Blind

42. BlueCross and BlueShield of North Carolina

43. Ochsner Health System

44. University of Pittsburgh

45. American University

46. Lee County Electric Cooperative

47. Massachusetts General Hospital

48. Pinnacle Health System

49. Perkins Coie LLP

50. CheapCaribbean.com

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The New Rules For Thinking In A Digital World

Annie Murphy Paul — Mon, 17 Jun 2013 22:05:00 GMT

Is technology making us stupid — or smarter than we’ve ever been? Author Nicholas Carr memorably made the case for the former in his 2010 book The Shallows: What The Internet Is Doing To Our Brains.

This fall we’ll have a rejoinder of sorts from writer Clive Thompson, with his book Smarter Than You Think: How Technology Is Changing Our Minds For The Better.

My own take: technology can make us smarter or stupider, and we need to develop a set of principles to guide our everyday behavior, making sure that tech is improving and not impeding our mental processes.

Today I want to propose one such principle, in response to the important question: What kind of information do we need to have stored in our heads, and what kind can we leave "in the cloud," to be accessed as necessary?

The answer will determine what we teach our students, what we expect our employees to know, and how we manage our own mental resources. But before I get to that answer, I want to tell you about the octopus who lives in a tree.

In 2005, researchers at the University of Connecticut asked a group of seventh graders to read a website full of information about the Pacific Northwest Tree Octopus, or Octopus paxarbolis. The Web page described the creature’s mating rituals, preferred diet, and leafy habitat in precise detail. Applying an analytical model they’d learned, the students evaluated the trustworthiness of the site and the information it offered.

Their judgment? The tree octopus was legit. All but one of the pupils rated the website as "very credible." The headline of the university’s press release read, "Researchers Find Kids Need Better Online Academic Skills," and it quoted Don Leu, professor of education at UConn and co-director of its New Literacies Research Lab, lamenting that classroom instruction in online reading is "woefully lacking."

There’s something wrong with this picture, and it’s not just that the arboreal octopus is, of course, a fiction, presented by Leu and his colleagues to probe their subjects’ Internet savvy. The other fable here is the notion that the main thing these kids need — what all our kids really need — is to learn online skills in school. It would seem clear that what Leu’s seventh graders really require is knowledge: some basic familiarity with the biology of sea-dwelling creatures that would have tipped them off that the website was a whopper (say, when it explained that the tree octopus’s natural predator is the sasquatch).

But that’s not how an increasingly powerful faction within education sees the matter. They are the champions of "new literacies" — or "21st century skills" or "digital literacy" or a number of other faddish-sounding concepts. In their view, skills trump knowledge, developing "literacies" is more important than learning mere content, and all facts are now Google-able and therefore unworthy of committing to memory.

There is a flaw in this popular account. Robert Pondiscio, executive director at the nonprofit organization CitizenshipFirst (and a former fifth-grade teacher), calls it the "tree octopus problem": even the most sophisticated digital literacy skills won’t help students and workers navigate the world if they don’t have a broad base of knowledge about how the world actually operates. "When we fill our classrooms with technology and emphasize these new 'literacies,' we feel like we’re reinventing schools to be more relevant," says Pondiscio. "But if you focus on the delivery mechanism and not the content, you’re doing kids a disservice."

Indeed, evidence from cognitive science challenges the notion that skills can exist independent of factual knowledge. Dan Willingham, a professor of psychology at the University of Virginia, is a leading expert on how students learn. "Data from the last thirty years leads to a conclusion that is not scientifically challengeable: thinking well requires knowing facts, and that’s true not only because you need something to think about," Willingham has written. "The very processes that teachers care about most — critical thinking processes such as reasoning and problem solving — are intimately intertwined with factual knowledge that is stored in long-term memory (not just found in the environment)."

Just because you can Google the date of Black Tuesday doesn’t mean you understand why the Great Depression happened or how it compares to our recent economic slump. And sorting the wheat from the abundant online chaff requires more than simply evaluating the credibility of the source (the tree octopus material was supplied by the "Kelvinic University branch of the Wild Haggis Conservation Society," which sounded impressive to the seventh graders in Don Leu’s experiment). It demands the knowledge of facts that can be used to independently verify or discredit the information on the screen.

There is no doubt that the students of today, and the workers of tomorrow, will need to innovate, collaborate and evaluate, to name three of the "21st century skills" so dear to digital literacy enthusiasts. But such skills can’t be separated from the knowledge that gives rise to them. To innovate, you have to know what came before. To collaborate, you have to contribute knowledge to the joint venture. And to evaluate, you have to compare new information against knowledge you’ve already mastered.

So here’s a principle for thinking in a digital world, in two parts: First, acquire a base of fact knowledge in any domain in which you want to perform well. This base supplies the essential foundation for building skills, and it can't be outsourced to a search engine.

Second: Take advantage of computers’ invariant memory, but also the brain’s elaborative memory. Computers are great when you want to store information that shouldn’t change — say, the date and time of that appointment next week. A computer (unlike your brain, or mine) won’t misremember the time of the appointment as 3 PM instead of 2 PM. But brains are the superior choice when you want information to change, in interesting and useful ways: to connect up with other facts and ideas, to acquire successive layers of meaning, to steep for a while in your accumulated knowledge and experience and so produce a richer mental brew.

That’s one principle for thinking in a digital world; over the next few months I’ll be introducing others. Now, your turn: Have you discovered any rules for using your mind in a world full of technology?

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HUBSPOT CEO: 99% Of Corporate Cultures Are Stuck In The Past

Max Nisen — Mon, 17 Jun 2013 20:08:00 GMT

Marketing software company HubSpot has gotten attention from media and even academics for its radical transparency.

The Cambridge, Mass. company reveals everything from cash burn rate to valuations on its Wiki page.

It turns out this is only the start of HubSpot's push toward a modern corporate culture that's vastly different from most companies out there.

We got the lowdown from CEO Brian Halligan, who started the company in 2006 with MIT Sloan classmate and current CTO Dharmesh Shah.

Here's our conversation, lightly edited for length and clarity.

BUSINESS INSIDER: Did you have a clear focus on culture from the start or did it evolve?

BRIAN HALLIGAN: We didn't think at all about it when we first started the business, we didn't ever talk about it for the first two years of HubSpot. Then two things happened at the same time. I joined a CEO forum of 10 Boston-based CEOs who got together once a quarter. In the first forum [I attended], the topic was culture, and I kind of rolled my eyes about it, and I thought, "Well that's stupid, when are we going to talk about selling or hiring — the meaty stuff?"

I remember during the meeting one of the other CEOs was this brilliant guy named Colin Engle, he's the CEO of iRobot — they make the the Roomba — and he spoke so eloquently about it, and talked about how powerful it was as a tool to manage a growing business. He sold me on the fact that I was missing the boat, and I needed to get going. So I came back all fired up about culture. It turned out that at that exact same time we had done our first survey of the HubSpot employees. When we surveyed them one of the questions was something like "what do you like about working at HubSpot?" Almost everyone came back and said that they really liked the culture.

I remember talking to my co-founder and saying, "Well that's funny I didn't think we had a culture, we never talked about it." Those two things sort of came together at the same time, so we decided we needed to invest in this and figure it out because it seems like it's a key asset. It also seems like a key tool we can use to scale the business.

BI: What's something that people get wrong about culture?

BH: At the core of it the happy hour and the ping pong table are not culture, they're like health insurance or a 401k. I think of culture the way I think about marketing. The main thing behind Hubspot is that we feel like humans have radically changed, they've changed the way they shop, and Hubspot is building a modern marketing platform that enables marketers to change the way they market to match the way humans actually buy stuff.

The way I think about culture is that modern humans have radically changed the way that they work and the way that they live. Companies need to change the way they manage and lead to match the way that modern humans actually work and live. We're trying to re-craft culture in a way that really matches that. I think that 99% of companies are kind of stuck in the '90s when it comes to their culture.

BI: What's the biggest change you've had to make going from being an employee to being CEO?

BH: In a weird way, going from employee to CEO hasn't hasn’t changed me that much. The way I think about management is, it’s overrated. I think it's a little silly and antiquated how in startups that the frontline employees are talking to customers, and the CEO has like a 50X difference in salary, it seems a little silly to me.

We’re trying to create an extremely flat organization, an extremely transparent organization, and there's all sorts of things we do around that. I think that if you were in the company, on a day-to-day basis, you’d have a hard time figuring out that I was the CEO of the company versus just one of the employees.

I’ll give you an example: I sit out with everybody else, I don’t have a desk inside of HubSpot, I don’t have an office or anything like that. My salary is not that different from regular employees. There’s a Wiki inside of HubSpot, probably the world’s most active Wiki, and people have no problem calling me out on the Wiki.

I believe the Gen y-ers coming into the workforce, the millennials, they like this idea of the highly transparent organization, and they expect transparency and authenticity from their leaders. So, I’m trying to be as transparent as I possibly can. I feel like people who grew up on Facebook and Twitter and social media sites just have a different a sense about hierarchy in life, and so we’re a little bit allergic to hierarchy over here.”

BI: What's your involvement in the hiring process?

BH: In the early days, I interviewed everyone and at some point that wasn't scalable. We hired 40 people last month, and of all the people we hired, we probably interviewed 10 for every opening. I work more on the criteria than I do on the actual interviews themselves.

Hiring sales people — it’s a pretty inefficient process. Most companies have very high turnover in their sales organizations. What I’m trying to put in place is a much more scientific way to hire sales people. What I'm doing is I want all of our existing sales people, and all of our past sales people who we've let go, to take a relatively long survey, and map the results of the survey to their performance. That’s why it’s key to have people leave; if we push them out for non-performance we need their data here. Then I want to get a sort of good profile of what the recipe is — here’s how they answered certain questions. Then I want to shorten that test and then for every candidate who comes in — for sales we get about a hundred candidates for every person we hire — rather than have the first step in the process be a big staged interview or role-play, that first step is just, take the test.

If you look and smell, based on the survey results, like a current star employee, then you get to that next step. And that next step isn't an interview, I think interviews are radically overrated. The next step in the sales process is you’ve gotta go and start a trial of our software and learn about it and, then we’re going to do a sales role-play with you on the telephone. If that goes well, then we’ll do an interview itself and we’ll hire you. So I want to have a much more scientific way for hiring sales people than most companies will.

BI: Have you guys experienced a tech talent crunch?

BH: Absolutely. And I have a theory behind it. I feel like there’s a massive supply and demand problem, and there are two reasons for it in my mind. One reason, I think for a long time people didn’t go into computer science because they thought the whole computer science industry was going to be outsourced to India. It turns out that wasn’t true. While that was going on, kids and fathers and mothers didn’t rush into computer science. That's one thing that really hurt from the supply side. The second thing that really hurt from the supply side is there are so many alternatives for good software developers today. They can go to a Google or Facebook, they can go to a HubSpot, they can start their own darn company. There's just this plethora of nice opportunities for them, so the supply and demand ratio is way, way off. There's a massive demand for high-quality developers and a low supply. We’re being extremely aggressive about it.

For example, our referral bonus for new software developers, is $30,000. If you know a software developer, and you refer them to me and I hire them, we cut you a check for $30,000. That's 10X more than we do for any other function inside of HubSpot. So we're working hard to try and get the best and brightest developers here.

We're doing crazy stuff to coax them in. That supply and demand problem doesn't exist for us on the sales or services side where we get 100 resumes for every opening, and it's all inbound. On the software developer side its 10x harder, so we think about our funnel, referrals, and everything about that in a very different way than we do the rest of the business. I think everyone's going to have to deal with that reality. You're going to have to think about hiring and raises and stock options and all of that stuff in a very different way for software developers than other parts of the company.

BI: Is there a particular company out there that you look up to?

BH: It's totally cliché but it's Google, and it's Google for a couple of reasons. A lot of companies, when they're in hyper-growth mode, they win awards for being the best place to work and stuff like that. Google always won those in the early days, and people are like, "Yeah, yeah, yeah, it's a goldmine — they've got AdWords, they're printing money, its growing fast, of course people like it, people like working for a winning team."

Now Google's in much more of a steady place, their growth is slower, their stock price is relatively stable, but it's still a remarkable place to work. People love working at a talent magnet — they've scaled that unique culture over time and they use that as a real competitive advantage. And when I say unique culture, what I like about the Google guys is that they reject conventional wisdom in so many ways. They'll look at a playbook of how to hire people, the playbook of how to motivate people, they'll look at the playbook for every aspect of culture: hiring, and motivation, and HR, and they throw it away and start from scratch on everything

They built a very unique culture which makes it a very attractive place to work not just as an early-stage startup not just as a high growth company, but as a big stable-state company.

BI: Do you remember the moment when you realized you wanted to start a company?

BH: When we were going to start HubSpot I had three choices in my career. At the time I was an entrepreneur in residence and a venture partner, so I could keep doing that. I could go run sales at kind of any company — I had grown up through sales I had a strong sales background. Or I could be a CEO at kind of a crappy company. I wasn't quite pedigreed enough to get a CEO at kind of a top-tier startup, so I was interviewing for CEO jobs at re-starts.

My fourth choice was to start HubSpot. I never thought I would start a company, and I'm absolutely thrilled I did it. But the idea was, "Could I start HubSpot and turn it into a great company?" Fortunately that happened. With lots of luck along the way, a lot of good decisions and good hires along the way but that was sort of the decision tree.

I don't consider myself born and raised to be a founder of a company. I always thought I'd be somebody who would help the founder of a company move it along. But I had the right idea, I had the world's perfect co-founder and we just kind of closed our eyes and did it.

BI: How'd you find that perfect co-founder?

BH: My co-founder's name is Dharmesh, and I'll tell you a funny story about him. He and I went to MIT together, and there was an event the night before the first day of classes at MIT and he's very introverted. So what he does at parties is he has his wife go out and kind of scout people and look for people who she thinks he'll like and get along with. So she came over to me and she chatted with me, and we had a nice chat. I realized about halfway through the conversation that she was the spouse of a student. So she went away and went back to Dharmesh and she said, "I met this guy Brian, I think he's kind of interesting, he's got a software background. I don't think you'll get along with him though, he's kind of a sales guy, kind of a jock, I don't think you'll like him very much."

I think that's so funny because two years later we started a company together, and eight years later we got one of the hardest startups on the East Coast together. We're pretty close and best friends at this point. We took some classes together and got along and I thought we were a good match. I think of the Venn diagram of so many firms is you've got a real tech person and a real kind of marketing sales person, and there's a Venn diagram that overlaps a little bit not too much. It's where you have somebody who can really sell, and somebody who can really build, and that really worked for us, it's a little one plus one equals three.

BI: How do you deal with rapid growth?

BH: We're growing fast, we've probably added 200 people in the past year, and we grow in kind of spurts. When we grow too fast the way I think about it is like a car, if I put my foot all the way down on the gas, the car starts to shake a little bit, you can physically feel it start to shake a little bit, the decisions aren't as good, and things start to break. And so we've gone through a couple starts and stops. When we've hit the gas hard and started to hire very aggressively things tend to break so we're a bit "fits and starts" on how fast we grow in terms of head count, and we've found it hard to manage that.

Interestingly along the way our culture's been a great guide. The culture and the systems and the processes really broke around 150 employees. We changed a bunch of stuff around then, and kind of got back on track. It's been relatively smooth since then. I don't know what that rate is but I can kind of feel it when we're growing too fast.

BI: Why'd you stay in Boston?

BH: There are a couple of reasons. I'm from here, I like it here, my network is here, so we didn't even consider moving to the Valley. I think there are a couple of big pluses to starting a company in Boston relative to the Valley, let's say.

One is just the corporate talent is rough here, it's not even close to as rough as it is in the Valley, particularly for that R&D talent, it's so hard to get up there. That's one big thing. The second big thing is the pond syndrome. We're a pretty big fish in a pretty small pond here in Boston and that pond in the Valley is a very large one and it's hard to get heard, it's hard to be seen out there. So I think Boston is sort of underrated in terms of a place to start a company. You walk around in the Valley and go to LinkedIn or Google or any one of many great companies, and it is chock full of kids from MIT and Harvard. So what we try to do is catch them before they go to the West Coast. The talent here is excellent and we try our best to keep it here.

In Boston we missed the PC revolution and we really missed the internet, and to bring it back I think we need to build anchor companies that really stand alone as a business. Employees make some money and they leave and they take some risks and start a company and the other employees fund it. Very much what happened with people at Facebook and PayPal and all these great companies on the West Coast. We want to be one of those anchor companies in Boston that's around for decades and spawns out lots of other companies. That's part of it; we're real Boston boosters.

BI: What do you think about the assumption that millennials are bad workers or narcissistic?

BH: I think the disconnect there is that Gen Yers think, work, act differently, and we're trying to manage them with the Baby Boomer or Gen X playbook, and it just doesn't match very well. If you have a new playbook that embraces them, they're plenty loyal, they're not narcissistic, and they're terrific.

I think when the history books are written they'll be the best generation that's come along. They're just smart. They grew up on the Internet, they know how to get stuff done, they're much more sophisticated, I've found, at least than I was when I graduated college. So we do a whole bunch of stuff to embrace that.

If your mission is to increase your bottom line by three-fifths this year, gouging customers and gouging the Earth — that really turns off Gen Yers. I don't think Gen Xers care about that stuff, but I think these new folks do.

BI: How do you maintain a work-life balance?

BH: I do work a lot. One of my hacks is that every Wednesday is my work-from-home day, so if I'm not traveling in a given week, or even if I am traveling, I keep Wednesday open and that's the day that I can just think and get stuff done, so that's one big hack — staying at home on Wednesdays.

The other hack I have, I find that people work work work and don't think think think, and that the percentage of time people work versus think is off. I've tried to shift that, and I try to think lot and try to increase the amount of time I spend thinking about things versus on the phone or in a meeting or emailing people. So I see people working a lot and I say what's your time spent thinking versus working?

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Heroes And Psychopaths Have Similar Personalities

Stephanie Pappas — Mon, 17 Jun 2013 18:42:00 GMT

Heroes and psychopaths may have something in common, according to new research that links psychopathic personality traits to selfless behavior.

The finding may seem incongruous, given that lack of empathy for others is a key trait of psychopathy, which is also marked by impulsivity, superficial charm and lack of remorse. But some personality traits of psychopaths may be, in some situations, positive, said study researcher Scott Lilienfeld, a psychologist at Emory University in Atlanta.

"Personality traits can be good or bad depending on the person and depending on the situation and also how they're channeled," Lilienfeld told LiveScience. Take fearless dominance, which describes a boldness frequently seen in psychopaths, he said.

"Being very fearless has its downsides to be sure, there's no question about that," Lilienfeld said. "But being fearless may have its upsides as well, like being heroic." [What Really Scares People? Top 10 Phobias]

Two sides to the same coin?

Anecdotally, many psychopaths sometimes show altruistic sides, and sometimes, heroic people act badly in other areas of their lives. In 2005, for example, an Australian businessman who saved as many as 20 people from the Indian Ocean tsunami in Thailand was arrested on assault and burglary charges upon returning home. Even serial killer Ted Bundy, who murdered at least 30 people and who is generally considered to be a psychopath, once volunteered for a suicide-prevention hotline, said Sarah Francis Smith, a doctoral candidate at Emory University and co-researcher on the new study.

"Not to say that Ted Bundy is a hero," Smith said. "But he definitely engaged in some pro-social behavior."

These contradictory behaviors spurred the researchers to examine the links between psychopathic personality traits and heroism, which they defined as altruistic behavior involving some risk, whether physical or social.

In two studies of undergraduate students, involving a total of 243 volunteers, and one study of 457 adults recruited online, the researchers asked people to fill out questionnaires regarding their heroic acts, even ones as minor as breaking up a public fight or helping a stranger push a car out of a ditch. The volunteers also took a personality questionnaire to determine their level of psychopathic personality traits — none of the volunteers were The 10 Most Controversial actually psychopaths, but because personality is a spectrum, some people were closer than others.

The personality of a hero

The results revealed that a couple of psychopathic traits are, indeed, linked to heroic behavior. In one undergraduate sample and in the sample of adults, a psychopathic trait called fearless dominance — essentially boldness — was linked with greater heroism and altruism toward strangers. In the other undergraduate sample, people who had higher levels of impulsive antisociality (marked by aggressiveness and antisocial behavior) were also more likely to report heroism. [7 Personality Traits You Should Change]

Fearless and antisocial people might be more likely than the average person to lie, of course. To control for that possibility, Smith, Lilienfeld and their colleagues inserted a few stealth questions into the surveys. Some were designed to out self-aggrandizers: People who answered "yes" to questions about whether they'd ever taken the controls of an airplane during a crash-landing scenario or saved people from multiple volcanic eruptions were assumed to be lying and tossed out of the study.

Some of the other questions were subtler and designed to catch people who answered questions in ways that made themselves look good. The researchers statistically controlled for high scores on these questions.

Finally, the researchers did one more test: a look at heroism, psychopathy and U.S. presidents. Using psychopath ratings from biographers and experts in presidential history, the researchers compared likely psychopathic personality traits of the 42 presidents up to and including George W. Bush with their war records. Although this study was small and limited, it did show that the more psychopathic the personality, the more likely the president was to have a record of heroic behavior in war before taking office.

"At least some of the traits of psychopaths may be adaptive at least in the short run," Lilienfeld said. In the future, he and Smith hope to study law enforcement officers, since such officers are more likely to show heroic behavior than the general population.

And whereas it may seem obvious in retrospect that the bold, impulsive or fearless might be more likely to run into a burning building or pull an accident victim from wreckage, the study could help answer the question of whether heroes are born or made. Some people are likely just in the right place at the right time and rise to the occasion, no matter their personality traits, Lilienfeld said. Others might be made for the job.

"In some cases heroism may find them," Lilienfeld said. "In other cases, they may find heroism because of who they are."

The researchers reported their results online May 29 in the Journal of Research in Personality.

Follow Stephanie Pappas onTwitter and Google+. Follow us @livescience, Facebook & Google+. Original article on LiveScience.com.

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Don't Blame Employers For High Medical Costs

David Dranove — Mon, 17 Jun 2013 16:53:45 GMT

In a recent New York Times blog, Uwe Reinhardt places much of the blame for high and rising medical prices on passive employers. He argues that employers should work just as hard to reduce healthcare benefit costs as they work to reduce other input costs. But he then observes:

“One reason for the employers’ passivity in paying health care bills may be that they know, or should know, that the fringe benefits they purchase for their employees ultimately come out of the employees’ total pay package. In a sense, employers behave like pickpockets who take from their employees’ wallets and with the money lifted purchase goodies for their employees.”

I think that Reinhardt gets the economics wrong here and, in the process, he puts too much of the blame on employers. Reinhardt is right in one respect – employees care about their entire wage/benefit packages. If benefits deteriorate, employers will have to increase wages to retain workers. Thus, it seems that if an employer reduces benefit costs, it must increase wages by an equal amount. If that is true, we can understand why employers are passive.

The correct economic argument is a bit more nuanced. Employees do not care about the cost of their benefits; they care about the benefits. If an employer can procure the same benefits at a lower cost, the employer need not increase wages one iota. In this regard, there is nothing special about health benefits. Suppose an employer offers employees the use of company cars. Workers don’t care what the employer paid for the cars, and if the employer can purchase cars at a deep discount, it will pocket the savings.

Reinhardt may be wrong about the underlying economics, but he is correct in the big picture. Employers may have an incentive to reduce benefits costs yet they are passive purchasers. With a few exceptions, nearly every American corporation outsources its healthcare benefits to insurers and ASO providers and then looks the other way as the medical bills pile up. Sure, they complain about the high cost of medical care, but they don’t take direct action by aggressively shopping for lower provider prices. Doesn’t this passivity demonstrate a lack of interest? No more so than the fact that auto makers do not aggressively shop the lowest rubber or silica prices implies that they are disinterested in the costs of tires and windows. Auto makers outsource the production of tires and windows (and most other inputs) and let the Michelins and PPGs of the world worry about rubber and silica prices. By the same token, American companies outsource the production of insurance and let the Blues and Uniteds of the world worry about provider prices. This is entirely appropriate.

Could employers do more to reduce healthcare spending? Employers have dramatically increased deductibles in recent years, and this has had some effect (though no one is certain just how much.) Employers tried forcing employees into narrow network plans in the 1990s, mostly in the form of HMOs, but employees rebelled against the lack of choice. (Some of you may remember the “Patients’ Bill of Rights” that Congress nearly enacted.) I don’t expect too many employers to repeat that mistake. Employers might offer cheaper plans alongside expensive ones, but they probably won’t pass most of the savings on to employees. For one thing, employers want to keep most of the savings for themselves. Perhaps more problematically, there is a growing body of evidence that this could lead to an adverse selection death spiral that would disrupt employee choices.

It is hard to imagine that American businesses have been willfully negligent about healthcare spending. If only by accident, some employers would be worried about health spending. And if worrying about costs was enough to actually lower costs, then those that worried would outperform their competitors and gain market share. By now, every American would be working for a company that worried about health spending. The logic is pretty compelling: America’s firms are worried about health spending and are appropriately outsourcing these worries to insurers.

So why are medical costs and medical prices so high? I could give a list but this has been discussed ad nauseum so I will not repeat it here. Employer-sponsored insurance is on the list, but largely due to tax deductibility. If employers are otherwise on the list, they are towards the bottom.

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A Ton Of Serious Applicants Responded To Lululemon's Joke Job Posting For A CEO

Ashley Lutz — Mon, 17 Jun 2013 15:45:00 GMT

More than 160 people responded to Lululemon's fake job listing for a new CEO, according to CNN Money.

The company told CNN Money that the job description, which it posted on its website last week, was a joke.

Lululemon's stunt was intended to show it has "always been a fun and irreverent brand...not afraid to spark a conversation in our communities," a spokeswoman told CNN.

CEO Christine Day announced last week that she would be moving on after five years with the company.

Here's the job description, in case you missed it:

description

You report to no one, you are the CEO (duh). You are passionate about doing chief executive officer type stuff like making decisions, having a vision and being the head boss person.

a day in the life of a chief executive officer

- You communicate powerfully, often through Sanskrit

- You are disciplined, focused and can hold headstand for at least 10 minutes

- You’re a long-term thinker. You already have a plan to bring yoga and luon to Mars by 2018

- You break all the rules like getting your OM-on (loudly) whenever the urge arises

- You elevate and cultivate the level of talent within the senior leadership team by holding The Bachelor lululemon. Only one successful SVP will get the final rose

- Not only do you lead the organization to create components for people to live long, healthy and fun lives, you know the secret to how they got the caramel in the Caramilk bar

- You wear The Mansy to lead our company-wide morning chant and kombucha ritual

the finer print

- Your go-to party trick is your dead-on impression of the yogi in “Sh*T Yogis Say”

- You voted for Pedro

- You have Chip Wilson, Bill Clinton, Ellen DeGeneres and Oprah Winfrey on speed dial

- You actively live and breathe the lululemon culture – on Friday afternoons you hit up wheatgrass and tequila shots (it’s called work/life balance)

- You use your third eye to channel innovation

- Your lineage is directly related to Phidippides

- You own yoga

Apply here.

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Cheesecake Factory's 174 General Managers Are Given New BMWs Every 3 Years

Max Nisen — Mon, 17 Jun 2013 14:29:53 GMT

After a a few years of good service, most employees expect a decent reward, whether it's a salary bump, promotion, or cash bonus. The Cheesecake Factory goes a bit farther than that.

According to The Wall Street Journal, the company's CFO Doug Benn recently told a consumer conference that each of the company's 174 General Managers get a brand-new BMW every three years.

That's just part of a compensation package including stock options, salary, and bonuses, which leads to most GMs staying on average for more than 10 years.

That's the kind of longevity you don't usually see in the restaurant industry, which has extremely high turnover, especially at large chain restaurants. Longer tenures means more stable restaurants, and a more consistent experience for patrons.

Want to get on board? You might have a chance as the company plans to open 10 new restaurants this year.

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How McCormick Got Its Electricity Use Down To Net Zero

Sponsor Post — Mon, 17 Jun 2013 14:00:00 GMT

This post is sponsored by Constellation.

To most of us, zero means (literally) nothing. But for executives concerned with energy use, zero is a magic number.

Reaching "net zero," or producing more electricity than you use, isn’t easy: Costs are rising, and energy policies and regulations are complex. Yet flavor company McCormick & Company managed to achieve net-zero electricity status for its 363,000-square-foot distribution center in Belcamp, Maryland.

A factor in meeting this goal was the installation of a 1.8-megawatt rooftop solar power system from Constellation, one of the nation's leading energy suppliers. "McCormick is a model to emulate, but most businesses don’t start out with the goal of going net-zero," said Cherise Seals, business development manager at Constellation. "Reducing electricity costs at a facility by even 10-to-20 percent certainly is a meaningful achievement."

"Our strategy is to combine renewable generation when applicable, with energy supply and energy efficiency," Seals continued. "Many customers, like McCormick, roll out upgrades in phases. It’s wrong to assume meaningful upgrades are budget-breakers. Many projects quickly pay for themselves through reduced energy costs."

Jeff Blankman, sustainable manufacturing manager at McCormick, added his company's perspective by answering some questions on how McCormick met its goals.

How did the achievement at your Belcamp facility fit in with your overall objectives?

Jeff Blankman: At McCormick, sustainable manufacturing is one component of our larger corporate social responsibility effort. It means being mindful of our role in supporting the environment by investing in the infrastructure we have to optimize energy performance, as well as reducing solid waste, water consumption, and packaging.

What else have you been able to achieve in terms of reduced energy use?

JB: From 2005 to 2009, we reduced our electricity consumption, per unit of production, by 17 percent. We have a goal to reduce electricity consumption an additional 20 percent by 2018. To date, we have achieved an 8 percent reduction towards this goal, so we are about 40 percent of the way there.

What kinds of investments did you have to make?

JB: We've invested in a host of efficiency upgrades over the past decade and with our strategic energy provider, Constellation, added more than three megawatts of solar generation. During a five-year period, we reduced electricity use at our Belcamp facility by 55 percent through energy efficient interior and exterior lighting, occupancy sensors, HVAC upgrades, and energy efficient pallet conveyors. Combined with Constellation's 1.8-megawatt solar system, the facility generated a surplus of more than 16,000 kilowatt-hours of electricity in a one-year period.

How do you sell potential energy projects to your CFO?

JB: For every upgrade we consider, we need to reach a predetermined return on investment. We're continuously looking at potential projects: Constellation is finishing up the installation of a chilled water plant that will lower cooling costs at our Hunt Valley Plant by about 70 percent.

As for the solar projects, we purchase power generated by the panels under 20-year agreements with Constellation. That model works, because it eliminates upfront capital costs and we get cost-effective power supply over a long period.

Get more information at the Constellation website.

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12 Of The Shrewdest Business Maneuvers Of All Time

Max Nisen and Alexandra Mondalek — Mon, 17 Jun 2013 12:54:00 GMT

The success of failure of a business can come down to one single bold decision.

A recent thread on Quora asked users to name the "the shrewdest, smartest maneuver you've ever seen in business."

We've broken out some of the best answers, including critical decisions by Bill Gates, Steve Jobs, and Henry Ford.

Puma paid Pelé $120,000 to tie his shoes at the 1970 soccer World Cup final.

Via Quora user Roberto deLeon:

Amidst a "sneaker war" between Adidas and Puma in the late 1960s, the "Pelé Pact" was informally created between the two companies, which stipulated that neither company was allowed to promote their products via soccer legend Edson Arantes do Nascimento, aka Pelé.

According to the LA Times, Hans Henningsen, a representative for Puma, approached Pelé before the 1970 World Cup.

Before the opening of the final match, Pelé asked the officials for a moment to tie his shoes before beginning play. All of the world watched Pelé tie his Puma sneakers.

Henry Ford did something unheard of and doubled worker salaries, while cutting their day down an hour. It massively boosted production.

Via Quora user Balaji Viswanathan:

In the early 20th century, workers were seen as something entirely interchangeable. Ford's independent move to boost worker salaries was particularly brilliant for a few reasons:

It drastically reduced worker turnover, reducing training costs and keeping the best people around.
The PR impact was hugely positive.
Absenteeism dropped because there was a real reason to stay.
The quality of the applicant pool massively improved.

The result was skyrocketing productivity and production, and the beginning of a new middle class that could actually afford Ford's vehicles.

Porsche acquired nearly all of Volkswagen's shares in 2006, ultimately making €30-40 billion.

Via Quora user Mohammed Chang:

In 2006, European sports car company Porsche, having a close relationship with Volkswagen, decided to invest in a larger stake in VW, fueling speculation that it would ultimately take the company over.

While Porsche did not intend on buying out VW, it did create a "short squeeze" and buying frenzy by hedge fund managers. The price of VW subsequently soared, "briefly making VW the world's most valuable company," according to the Economist.

See the rest of the story at Business Insider

Miss Utah Falls Apart While Answering An Easy Question About Women Earning Less Than Men

Julia La Roche — Mon, 17 Jun 2013 12:16:00 GMT

Miss Utah Marissa Powell, who looked stunning in a white strapless evening gown at the Miss USA pageant, bombed her final onstage question last night at the Planet Hollywood Casino & Resort in Las Vegas.

"Real Housewives of Atlanta" star/Miss USA judge NeNe Leakes asked Powell, who was named the most photogenic at the pageant, to answer the following question:

"A recent report shows that in 40% of American families with children, women are the primary earners, yet they continue to earn less than men. What does this say about society?"

This is a great question, and something you'd expect a Miss USA candidate to be well-prepared for. It's part of a much larger discussion that has been going on for a long time now and it's a great opportunity for a Miss USA contestant to totally nail it.

Here's Miss Utah's incoherent response, though:

"I think that we can relate this back to education and how we are continuing to try to strive to...figure out how to create jobs right now, that is the greatest problem. I think especially the men are, um, seen as the leaders of this so we need to try to figure out how to create education better so we can solve this problem.

You can really see the heartbreak and disappointment in Powell's eyes in the video posted below. She clearly knew she messed it up.

Even Host Giuliana Rancic said a sympathetic "Thank you, sweetheart" when Powell finished her answer.

Keep in mind, though, that these ladies generally spend over a year preparing for the pageant. It's not easy.

What's more they have spent an exhausting two weeks in Vegas packed with red carpet events, photo shoots, restaurant and club outings, charity work and the preliminary competition (swim wear, evening gown and interviews) prior to the live competition.

Once they've made it into the top ten, all of their hard work and dreams come down to the final question, which is aired on live television to an audience of millions.

Watch the video below:

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10 Ways to Avoid Making A Huge Hiring Mistake

Allison Fass — Sun, 16 Jun 2013 18:01:00 GMT

Entrepreneur Vanessa Merit Nornberg knows the incredible importance of strong salespeople.

The founder of New York-based Metal Mafia, a wholesale line of body jewelry, sells over the phone 7,000 products like eyebrow and belly rings that cost just 2 cents to $2.

But how your employees sell--and how you allow them to sell--is not just about moving your product, she said Tuesday at the Inc. Leadership conference outside San Diego. "It's what your company stands for, and what customers can expect from your company when they order or call to ask for help."

As a result, if you don't get a new-sales hire right, it is catastrophically expensive for your company, not just because of the time it takes to post a job and do interviews, but because of the longer-term damage that can happen when you allow bad salespeople to meet your clients, answer your phones, send your bills, and generally create a poor perception of your company.

So Nornberg developed a 10-part process that weeds out bad sales hires every step of the way.

1. Know who you're looking for.
At Metal Mafia, Nornberg categorizes sales job candidates into three types: a) those who want to sell and have done it for a while b) those who would do sales because they would do any job and c) those who have never done sales but consider it an intriguing opportunity. Which would she take on, after nine years leading her own company? Only the third. Why? They're open-minded, and interesting. The first group already has bad habits, and the second won't be passionate about the work.

2. Make your job post matter.
You should tell candidates about what your company does and stands for. Include your mission statement. Make clear what your expectations are, from the start. For instance, Nornberg doesn't allow employees to use Facebook during business hours, so she includes that fact in her job descriptions. You want potential employees to proactively identify with what you're all about--before they even submit an application.

3. Test your applicants.
You can find out if people are detail-oriented and care about your job opening--and you can do it long before you take time to meet them. Nornberg plants three questions in her job descriptions that seekers must answer in their application (but without automated fields that prompt them to do so). She asks: a) What drives your principle motivation? (If you're motivated by money or perks, forget it. That said, recognition would get you in the door.) b) Have you ever played a sport and, if so, which position? If not, what competitive activity have you participated in? (Nornberg skips soccer goalies, for instance. She's not looking for those are "waiting for the ball to come to" them.) c) If you could do anything in the world, what would it be? (Nornberg has no interest in "yes men" who say they'd like to open an accessories company.) But if a candidate doesn't respond to all three of these questions, in the manner that was requested, she won't look at his resume either. "Delete," said Nornberg.

4. Screen out applicants through a 10-minute phone interview.
Nornberg recommends you find out how the applicant sounds, what information she learns about your company between application submission and a call--and if she makes you excited to continue the conversation, like you would want her to do with new customers. "A great salesperson would be pouncing on the opportunity," said Nornberg. In addition, suss out what sales means to the individual. You can do this by having the person talk through what they might do in a sales scenario. In her case, Nornberg asks, for example: If we open up a new line of rings, and the first customer you call says he already has rings, what would say? ("Thank you, good bye," is not the right answer.)

5. Bring candidates in for a face-to-face interview with you.
At Metal Mafia, an in-person interview with Nornberg lasts an hour to hour-and-a-half. Nornberg uses the time to look analyze actions more than words. First, she pays careful attention to the candidate's time of arrival. If he's late, even by three minutes, she won't see him. She notes his walk. A purposeful, enthusiastic walk is what she's on the lookout for; she cuts a meek meander. She also notices if he brings anything "extra" to the meeting (say, a cell phone or coffee cup) and eliminates those who do. Of course, a deadfish handshake or interaction is a no-go.

6. Find out how the person thinks.
During the interview, Nornberg poses questions like, "You have 30 days to open 30 accounts, how do you know who to call?" If the potential hire says he'll turn to Google, he'll get 50,000 results, and no specific direction; he can't work for Metal Mafia. But, if like a recent candidate, he says he'll start by going to Korean beauty shops because he's fluent in Korean, and they carry jewelry on their counters, he's onto something. Nornberg also asks potential hires to tell her about a difficult or challenging situation they overcame as a child, and if they can, she takes note. "As a salesperson, you face objections and rejection on a regular basis," explained Nornberg. She needs to know if they're "the kind of person who's reflective enough to learn from situations"--even the good ones.

7. Try a candidate out at the job.
Since Nornberg is keen to hire those who have never done sales before, she needs to find out if they can actually do it, and like it. She gives candidates a list of 12 to 15 shops to call immediately during an interview to find out if they'd like to carry Metal Mafia products. Those who get through the whole list and come back with a lot of interesting insights (which could be used to follow up) are on track; those who skip some, with no notes, are not going to like the job, and can't work for the company.

8. On the fence? Get your team to weigh in.
Nornberg invites her eight-person sales team to meet with any iffy candidate who made it this far, and each person can pose one question. "These people sell for my company on a daily basis, so they know what it takes to get the job done," she said. If they too have some sort of misgiving, the candidate can't work for Metal Mafia.

9. Train your new hire.
Recruitment doesn't end with the offer letter. You've got to give new people the tools to do the job well. Nornberg trains new staffers herself--for three weeks, eight hours a day. She focuses on teaching new people about Metal Mafia's products. "No one wants to talk on the phone with someone who says, 'Uhh, I don't know. Let me ask my manager'," Nornberg said. She also makes sure new people study competitors' product lines, so they can offer up Metal Mafia's in contrast.

10. Instill new behaviors.
When it comes to sales, Nornberg needs new people to focus not just on making deals but on listening to what customers say. She wants them to "not only hear what's said, but also what's not said." She emphasizes the value of accuracy so that what new hires hear turns up correctly in an order, and that they communicate with customers exactly when to, say, receive an order. She also introduces a sense of what Metal Mafia's value is to her customers, which is not price. Instead, they need to know it's shipping on the same day as long as you order by 3 p.m., with packages 99 percent complete (compared to a 65 percent competitors' fulfillment rate), and always getting a person on the phone in two rings or less if you call Metal Mafia between 7:30 a.m. and 8 p.m. eastern time. "Every time you make a sales call, your competitor can undercut you at any moment by a penny, $1, or $10 dollars," she said. "It's not going to get you where you need to get and your sales team won't either."

Only once a candidate makes it through all 10 steps is she confident of his candidacy. "If I think my customers are now willing to put their faith in your judgment, that everything you do screams Metal Mafia, you can sing my anthem, you can work for my company," said Nornberg.

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Meet The Design Geniuses Who Made Vogue, Mashable, And The Verge Look So Good

Daniel Goodman — Sun, 16 Jun 2013 16:55:00 GMT

Brandon Ralph and Dan Gardner met when they were just kids. Then they ended up working together as designers at DraftFCB. Later, in 2001, they launched Code and Theory, a full-service design and advertising firm.

Since then they've worked with clients ranging from Lenny Kravitz to Dr Pepper to The Daily Beast. And despite the adage against starting businesses with friends, Gardner attributes a big part of their success to just that.

In 12 years, the two have built a company with more than 175 employees across the U.S. and Asia and have designed websites including The Verge, Mashable, and Vogue.

Watch below to learn some of their tips for company builders looking to get to the next level and keep their thinking fresh and exciting:

Produced by Daniel Goodman and Kamelia Angelova

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Dumbing Things Down Is The Best Way To Alienate Millennials

Kathleen Davis — Sun, 16 Jun 2013 11:59:00 GMT

The millennial generation is one of the most sought after -- and most misunderstood. Will Pearson, president and co-founder of mental_floss, a trivia-based magazine that he started in his college dorm room in 2001, has managed to hit the right note with this young audience in print, online, books, board games and T-shirts.

Pearson shared his insights for communicating with 20- and 30-somethings at this week's World Innovation Forum in New York City. Here are his top five tips.

1. Don't dumb down your message.
Millennials are goal setters, Pearson says. To understand their ambition, just look at their pop-culture heroes: overachievers like Steve Jobs and Mark Zuckerberg. While the stereotype might be that this generation is irresponsible, he says, "Millennials start saving for retirement four years before Gen X did, and 10 years before baby boomers."

To reach this ambitious generation, Pearson says that you should recognize their intelligence. Present information in a fast-paced way through social media and in a way that helps them feel like they are making progress towards their goals.

2. Include a bit of playfulness in your content.
Unlike the anti-establishment boomers or the slacker Gen Xers, millennials aren't rebellious, Pearson says. They get along with their parents. The media they love is a combination of goofy, earnest and confident. Think Buzzfeed, Youtube and the recent explosion of kitten and puppy memes.

Tailor your messages with "quirk in an authentic voice," he says. In other words, don't be afraid of adding a little whimsy to your messaging, but be genuine about it. For example, mental_floss noticed the popularity of dog and bacon memes with their readers and started a successful reader-submitted short trivia section called Puppies Wearing Hats Eating Bacon Sharing Facts.

3. Create flexible content.
Pearson says that millennials switch their attention between electronic devices up to 27 times an hour, so you have to create content that can capture that fleeting attention in every medium, around the clock.

Successful content might include a tweet that can be consumed in seconds while waiting for coffee, a top-10 list that can be read in 10 minutes on the train, or a longer video or blog post that can be enjoyed in 20 minutes at home.

4. Give them an opportunity to engage with your brand.
Millennials are used to interacting with brands on social media, and they are more likely to share their opinions of things they strongly like and dislike, as well as drive conversations on topics that they care about, Pearson says. To get the conversation going, ask questions and give them something that they want to share.

Engaging with millennials on social media isn't about driving traffic to your site or making quick sales, he says. Your social media content shouldn't always include a link. For example, mental_floss creates trivia e-postcards that fans share on Facebook. The postcards include the brand's name but not a link or sales pitch. "Most of our posts are focused on giving them meaningful content that they want to share," Pearson says, which builds their trust and loyalty.

5. Establish and uphold the value of your product.
Millennials are used to streaming music and videos and reading news for free online. But Pearson insists that if they want something, they will find a way to pay for it. He says that mental_floss shies away from offering discounts. Instead, they set a normal magazine cover price that is currently $5.99. They established early on that their product had a certain value, and their customers so far have been willing to pay for it.

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McDonald's Late Night Breakfast Means It's Running Out Of Ideas

Tim Calkins — Sun, 16 Jun 2013 11:30:00 GMT

You have to give the team at McDonald’s a lot of credit. Over the past decade, they have found a way to substantially grow sales at existing restaurants. This is a huge accomplishment.

The stock has certainly responded. Shares traded at about $30 in 2005 and closed yesterday at over $98.

The formula for growth wasn’t complicated, at least in theory: Embrace the core customer, improve the dining experience, capitalize on a struggling economy by addressing value and identify new meal occasions. This last strategy was particularly important; it is difficult to build volume during the lunch peak. So McDonald’s built volume in shoulder times such as mid-morning and afternoon.

Apparently McDonald’s is low looking at building the late-night segment. The company is considering offering the breakfast menu for an extended period in a bid to bring in people at 2 AM and 4 AM.

This makes sense to me; it is another meal occasion and an opportunity increase volume during another off-peak period.

But it also is a little concerning. The 3 AM meal occasion can’t be that big; most people are asleep at that hour. So if McDonald’s is studying that slot, there must not be easier, bigger ideas on the table.

Which means McDonald’s is looking at three strategic options.

First, the company could embrace slower growth. There isn’t anything wrong with delivering stable profits. Of course, growth investors are not likely to be thrilled with this approach, nor will franchisees.

Second, McDonald’s could focus on bigger growth platforms. These will be a challenge; with bigger opportunities come bigger risks. The new ideas might not work or might impact sales of existing items.

Third, McDonald’s could add a second brand. After pushing McDonald’s as far as possible, the only clear path to growth might be a new brand. This would probably be an acquisition, since starting from scratch would likely be too slow to have an impact on the overall company outlook.

Will McDonald’s buy Panera? Chipotle?

There are interesting times ahead for the Golden Arches.

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3 Questions That Top Candidates Ask In Job Interviews

The Build Network — Sun, 16 Jun 2013 11:16:00 GMT

Here at The Build Network, we’re open to criticism. If you dislike what appears in our catalog, on our website, or in our Twitter feed, we want to hear about it. And we want to know how you’d improve it.

Kathy Rapp’s recent recruiting article on Fistfuloftalent.com embodies this spirit of constructive criticism. She critiques a post on Recruiter.com titled “7 Questions Great Candidates Ask” and then offers an improvement, or “3 Questions Freakin’ Awesome Candidates Ask.”

Her questions are tough ones. As an executive, you should prepare to answer them. You don’t want a top candidate thinking her future manager is shy about sharing the organization’s inner details. They are:

1. Why should I leave a job I love to come here?

“This question says, ‘I’m an extremely passive candidate, and you’re going to have to really convince me to even continue in the interview process,’” she writes. “It is also asking for transparency: What’s the real story about your org and this role?”

2. What would my priorities be for the first six to 12 months?

“Your candidate is intrigued. He/she is now looking for detail about what their first year would look like. It’s also a question to test if you (the hiring manager) have really thought through your priorities and expectations of the role. You’d better be able to answer this one — and with more than ‘I want you to build relationships.’ Duh.”

3. What do you tell your mom/spouse/best friend about why you love working here, and what happened on your worst day here?

“OK, so yes, this is two questions in one: It’s the culture question, and it’s also the real question — the one where the candidate wants to see if you can get out of interview mode and get gritty. This is where the candidate not only learns about the culture, but your style and how you handle the good and the bad. It’s probing, shows interest, and indicates they want to know the cool stuff and the not-so-cool stuff about your culture.”

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