Deliberation
Wikipedia has this to say about Deliberation:
Deliberation is a process of thoughtfully weighing options… Deliberation emphasizes the use of logic and reason as opposed to power-struggle, creativity, or dialog. Group decisions are generally made after deliberation through a vote or consensus of those involved.
I’ve always liked the notion of deliberation and deliberate decision making. I particularly like the notion of using logic and reason as opposed to power-struggle.
Deliberation is the process we use to make decisions at USV. We use our weekly Monday Meetings (something many/most VC firms do) to facilitate the deliberate decision making process. Though it can be frustrating to me at times, the use of “power” or tenure in our firm is not particularly effective. A logical and reasoned argument works much better. Including when it is made against you.
We don’t vote at USV. We use consensus after deliberation to make decisions. The trick to making that work is forcing a decision. The market often forces that on us and, frankly, that is quite helpful. But even without the market forcing our hand, we have developed a sense of urgency in our decision making. Our culture doesn’t like to allow decisions to hang out there. So we discuss, deliberate, and decide.
Partnership driven decision making is not easy. Having a “decider”, as George W Bush liked to say, is a lot easier. But I’ve been working in partnerships for about thirty years now so it’s the way I’ve always worked. And when you get the process right, in our case discuss, deliberate, and decide, it works quite well.
Comments (Archived):
Might be a good process. I can’t decide.#1stComment.
you must decide!
Ha- the Bartender has forced my hand!
the point about lingering decisions is a really important one. that is something I am still working on in my life (within USV and otherwise)
You know sometimes No decision is a good decision.
but that’s deciding not to decide? 🙂
It’s satisficing the urge to decide. Or put your decision on “mute” 😉
From my fav Canadian band ever:”If you choose not to decide, you still have made a choice!”- Rush, Freewill
aka do it or don’t do it…good information / feedback often gets muddled without a decision, but it’s ok not to do something if you don’t have good rationale / feel good about it.
I think that’s something that you have to work on forever. It helps to have colleagues who are decisive and we’ve got that!
What are some of the lingering decisions you have? (Feel free to write to me offline..)
Me too, although one of the things I have come to learn is that it is often better to make a decision now and then change it later than to avoid making a decision at all. A month or two ago I met with an entrepreneur who wanted me to be his co-founder. While he was clearly intelligent the big red flag for me was that he claimed he had been working on things for a year but didn’t have any tangible progress or type of plan. It seemed rather strange to be 27 and give advice to someone in their 40s, but I told him that if he really wanted to do this he should sit down and write out a plan, make some assumptions, and know that he could always change them later. I cannot say that I’m sure if it was right or even helpful, but it has worked for me in the past and I hope it works for him.
+1
Dedication
That’s tomorrow topic probably, judging by the D’s series (ref my comment above).
Tomorrow. You figured it out.
Depreciation, domination, determination, declaration, decoration, demonstration, and destination, comin’ up.
hmm. that’s a tall order. but i might be up for it
can’t skip diversification in the list
But Teren, that is Ian…
You’ve already covered Satisficing in your decision-making, where you said it takes the place of optimizing when the ideal isn’t always achievable.What sorts of decisions do you deliberate on, outside of investment related ones?And do you put a time limit on your deliberation process?
Not pulling rank is good gauge of humility and actual desire to seek truth. Sweep stake for who in the Monday morning meeting pissed you off.
Nobody.
Odysseus at work again : Since I cited Platos republic earlier I cannot resist this:Odysseus set his men to work on sharpening a stout pole, which they did, and then hiding it ready for that evening. As dusk grew close Polyphemus returned, again rolling back the boulder and letting in his flock. He then caught two more Greeks, killed them and ate them raw. After consuming both men he spoke to Odysseus asking, “what is your name”, Odysseus’ reply was “Outis” (in Greek this means “nobody”). As part of the plan, Odysseus offered Polyphemus a full goatskin of wine and when he had finish the last drop, and feeling a little drunk, Polyphemus fell fast asleep. This was the time to take action, Odysseus and four of his men brought out the pole, which they had sharpened, and with one great thrust plunged the point into Polyphemus’ eye, pushing it deep, to ensure it made him totally blind. The agonizing pain made Polyphemus scream out, so loud in fact that it brought the neighboring Cyclopes to see what was wrong. “Who is hurting you” asked the other Cyclopes, Polyphemus screamed “nobody is hurting me”, (which is why Odysseus said was his name was “Outis”). Thinking his screams were a punishment from the gods, the other Cyclopes went away.
Judging by the titles of your last 3 posts, you covered the 3 D’s:DiscriminationDeflationDeliberationWas that a deliberate decision?
Duh
You and Andy are on to me. I’m playing a game with myself this week
you’re Dead-on :)aka D-Week, the week Fred Decided to Deplane in NYC, Determined to Dabble and Doodle with the D word, and to Debate us. Da da da…
🙂 humor akin to a boy scout’s
So that you can win even if you lose, huh? 🙂
Within an operational environment consensus driven or top down end up being similar in the best of cases.If you are the decision maker ultimately and you can’t drive consensus then invariably execution will simply not work.First rule of leadership and marketing for that matter is to make everyone make the decision their own.
I agree. Important to get the team into the process – deliberation, buy-in and ownership of the decision. And the process cannot be perfunctory – good people will see through that quickly.With my teams, I sometimes loosely borrowed the framework of the Hegelian dialectic – Thesis, Anti-thesis, and Synthesis. Helpful to avoid groupthink as well.Hege′lian dialec′tic .an interpretive method in which some assertible proposition (thesis) is necessarily opposed by an equally assertible and apparently contradictory proposition (antithesis), the contradiction being reconciled on a higher level of truth by a third proposition (synthesis).
Great comment.I was brought up under the tutelage of highly brilliant, massively authoritative leaders who changed the industry.I realized early after my first VP role that this was something to learn from not emulate.Collaborative marketing is how I manage or try to manage markets and teams.
“..this was something to learn from, not emulate”.Yes ! Authentic leadership that travels across cultures, geographies, contexts and time-periods is usually about something other than massive authoritativeness.
Want to be clear that I have a very nuanced and deeply felt relationship with these early truly visionary leaders.Jack Tramiel, Auschwitz survivor, taxi cab driver who founded Commodore Computers the leveraged it into a buyout of Atari and gave me the chance at 31 to own and rebuild the product line and brand of the entire Atari legacy on a global basis.Sim Wong Hu, inventor of the Sound Blaster who handed my two friends the calls to the board which owned the DOS window in Windows and allowed us to build a $1B a year company and gave me the ability to build the largest brand in the world across 3500 software companies.Tough people. I owe them huge amounts. I do things differently.They were truly brilliant and gave me huge shots which I took.
Daniele Varè >“Diplomacy is the art of letting someone else have your way.”
I love that line but actually to really win and if you have strong teams you need to make it so that you are completely open.I no longer enjoy as much presenting to large groups cause its just about me making everyone see my point of view. Pretty good at it regardless.Love working with teams of even up to 20 as the result is almost invariably different from the initial point of view.Especially in sales and marketing where execution is where it matters and the team leaders are part of the process.I may still influence certainly the outcome unduly, but riding a flexible dynamics gets everything further down the field.
Agreed – I wouldn’t unless forced let a diplomat run anything !
Size and culture very much determine process.Yes, individual mgt skills define how one interacts with colleagues and subordinates (hate that term), but many orgs, certainly larger ones, are challenged to implement a process of deliberation and consensus bldg. They are inherently hierarchical, defined by title and responsibilities.The world is hardly flat in most orgs.Making everyone believe “the decision is their own” to me frankly seems a tad too ambitious. It’s more about making everyone believe they’re a valued stakeholder, a subtle yet important distinction.Leadership is an art form. For some it’s a natural skill, for others it’s learned, and for a whole bucket of others it’s never truly achieved.
Agree, and trust and values / faith comes from history, not something you can simply say. What you do has to match, over time.
Agree.The biggest companies I’ve worked for I help build, even from a turnaroud perspective so I get this and moreso espect the changes that increase size brings with it.
You are right for 90%+ operational decisions. My third rule of management: Make people do the 10% of hard stuff.Nobody wants to rewrite that boring print driver, I could give an example for every single department.That is the shit that has to get done. That is not consensus. It is what separates great product or company divisions from crappy ones.
Nobody wants to rewrite that boring print driver, I could give an example for every single department.Basic rule of human behavior. When washing the car everyone wants to wash the suds off with the pressure hose (easy, fun and somewhat rewarding) but not the other laborious parts.There is no glory in rewriting boring print drivers. Unless the boss or manager somehow has some reward system for doing so. (And I don’t mean money or gifts either..)In the entertainment business (I am not an expert so this is an observation that I have made) they often blow all sorts of smoke for truly nominal things that the support staff does. So all those pats on the back make even the sound boom guy feel that he is important. My manipulation would be to work this angle (and in a sense I have done that in the past with similar things).
There’s usually a lot of information hidden in the tasks of the daily grind. My personal rule is, don’t ask someone to do something you don’t understand…doesn’t mean you have to do the nitty gritty all the time but it’s something that has helped in every ops role I’ve been in.
We have had a huge argument here, but I have said never ask somebody to do something you haven’t done. Take a support call, go on a sales call, etc, etc. That is what you need to do as a leader.
90% is a good avg.Real team players in my experience at least just suck it up and get the shit stuff, and we all have that, done.
Post in Congress!”Detente”
How do you know you have a consensus if nobody votes?
Head nods and grunts.
You feel it in the room
I would venture to say that some of the best partnerships in life are like that. That’s how it works in my marriage for example. That’s how I deal with my employees down to the most mundane details such as “who’s turn is it to sweep the floor?”But some of the best music was made like that as well. Genesis, Yes, Pink Floyd (prior to Roger Water starting his ego trip) and many other bands had a very torough, deliberate, consensus-driven process to arrive at their uber-creative output.Collaboration trumps power-driven leadership any day of the week, man!It’s no accident your firm is successful, given that’s the prevailing mindset.
Indeed, and I bet you have a framework for making those decisions with your partner and with your employees. Sometimes I think the hardest part of any partnership is to establish the 2 or 3 simple ground rules that everyone can live by.
Hi Joe,I think it goes beyond having a few ground rules or it is separate from that; but the framework, I would say, is about the willingness to take the time to deliberate and reach a consensus rather than taking the easy route and issuing an order and say “That’s it, this is how we do it or take the high road”.
Oh yeah the binary / all or nothing perspective is something to avoid. The first econ / entrepreneurship class I took in college, that was the lesson on Day 1. We got a case study that described a problem, an employee who was being difficult, and the professor asked who would fire the employee. About half the room raised their hand (I think I was confused, so I probably didn’t do anything)…he politely but firmly pointed out the error of that thinking and it’s stuck with me ever since.
“When dealing with people, remember you are not dealing with creatures of logic, but creatures of emotion.”- Dale Carnegie
“Email to get the call, call to get the meeting.” How do you help junior sales staff understand pacing?
“Email to get the call, call to get the meeting.” I follow that practice all day long. Not sure of it’s context with regard to today’s topic.But primarily I reference that concept to help sales people keep emails brief and to the point…kind of like headline writing: If you can remove that word from the headline, and the headline still works, then remove that word from the headline.I test different email templates and then we (the whole sales team) go with the one that works best at getting the call.
I’d love to see some of those emails (privately)..
Has there been a notable time when this particular process has worked against USV? Where the process itself defined an outcome that wasn’t optimum? Honest inquiry.
i am sure there has been.
How do you avoid groupthink? That’s always fascinated me about partnerships. Certainly George Bush’s administration looked like it had some groupthink-almost every President has them (I can name a number of instances that look like it with Obama too). In the old days of the Vatican, the appointed a “devil’s advocate” so the Cardinals and Pope would avoid it.
So what you are saying is the cows rarely veer off from the cows path?
No. In groups one line of thinking can set in. Sometimes it comes from habit or ritual. Sometimes disciplined decision making processes have blind spots. Group think preys on them.
we have strong minded people who like to debate
I’m not sure there is any single answer, but to Fred’s point about strong minded people who like to debate – flat decision making requires strong / healthy mindsets and people who can bring their whole self (ego and all) to the table. Leadership that asks for / rewards truth telling and a team that’s willing to go there.
Most often times, especially on critical projects that I have been in, a concrete decision is made well ahead of time. A deliberation is just a pretense and formally takes place to judge the pulse/character of the team around. This kind of deliberation is a process setup so the black sheep is usually out at this time. This is a practice followed in the Army and has now taken over the corporate boardrooms all around the world. I bet @JLM will have more insight on this.
My gut is the decision is not made at USV before the meeting. I too have been a part of boards where the decision is made well ahead of the meeting. That creates politics.
I can’t speak for one single entity but this kind of setup is employed to weed out politics than to create one, all in the name of deliberation. Brings out a healthy atmosphere so to say.
.The Army has a very strong decision making process and at times it can be deliberative but it is a command and control structure.The American General Staff process is based on the Prussian model that goes back to von Moltke the Elder, chief of staff of the Prussian Army for 30 years.Reading his original writings echoes the current teachings of the US C & GS — command and general staff school where very sharp Captains and Majors learn their trade.http://en.wikipedia.org/wik…The subdivision of the staff into G1 (personnel), G2 (intel), G3 (plans & ops), G4 (supply), G5 (psy ops, civil affairs) makes the staff coherent and organized and complementary.The commander has an executive officer at his right shoulder — providing a sounding board and a successor if the CO catches a bullet — who is, in effect, a commander in training.Most of the staff is exquisitely experienced for their jobs and have deputies who may provide years of continuity in that discipline.The CO deals with his subordinate commanders — in the case of a battalion it would be the 3-4 company commanders commanding about 200 men each.You have to remember that the Army is only training or fighting. There is nothing else for them to do so when it comes time to plan an operation, they have done it before and they should know what they’re doing.The S-3 comes up with a couple of plans in accordance with a set 5 section outline (at the lowest level, the 5-paragraph field order) and briefs the CO and the company commanders usually in the presence of other staff officers.Really good commanders let the subordinate commanders indicate their views and their favorite of the competing plans — they will, after all, be the maneuver element.One of those companies is likely to be the point of the spear and that Captain or Lt Col or Col is going to be pretty damn vocal about the plan.The CO also has one subordinate unit that is better than the others and that unit is likely to get the point of the spear assignment repeatedly to where it is essentially unfair. I lived through that. When it came time to write my OER, the CO made good on it.Once the CO makes a decision, there is no discussion. The discussion up to that point can sometimes get pretty damn heated and it is not unusual to have a CO send the S-3 (battalions,. brigades, regiments have “S” and divisions have “G”, same meaning) back for another crack at it.You also have to remember that this group has likely worked together long enough that if they have had a really bad experience, it is imprinted on their minds.Every op has an after action briefing and sometimes the plan works like magic, sometimes the plan is saved by some good soldiering by the subordinate commanders and sometimes the plan is a freakin’ mess.The first casualty after contact with the enemy is always the plan.This why the best combat commanders are those who have the flexibility to instantly exploit the advantage and to immediately dump the stuff that isn’t working. Part of the plan is to consider and plan these alternatives — a contingency plan.Eisenhower had an extraordinary decision making process and it is exactly why he was able to run the Allies and be a President who balanced 8 budgets, built the American nuclear arsenal and launched the interstate highway system (modeled after Hitler’s autobahn system that allowed large troop movements across Germany).A deliberative process coupled with a firm decision making process is probably the most efficient in the real world. It takes a very strong and smart commander and it does require a hierarchy.JLMwww.themusingsofthebigredca…
As always, very informative and well said. If I were an influential authority and had my own druthers, I would have inculcated this army discipline straight into the academic level.Hats off to the Koreans and the Chinese for exercising this practice for centuries now
.The delivery of an education in a military wrapper is one of the best kept secrets in the world even today.As a VMI cadet I went to engineering classes on Saturdays in addition to M-F.There were no excused absences and classroom discipline was fierce.JLMwww.themusingsofthebigredca…
Hey Jim, Disqus has been acting a little weird here lately, both on desktop and mobile. Just signed in and lost the oh-so-thoughtful comment I made…(heh)
(And hopefully you feel the love on that, I’m a #disqusfangirl. And now, dashing out the door.)
Sorry to hear.
I know you’ll pass it along. Thanks, Jim!
Congrats on the Etsy IPO
D’Bomb
well it’s not done yet
It’s funny. Without realizing it, I think seeing this first hand definitely informed my mindset going into jury deliberations–specifically, focusing on the logical argument vs. playing to power/group dynamics. https://medium.com/@garycho…
i really enjoyed your jury post. i read it last week.
@fredwilson:disqus – Deliberation Reblogged from Platos Republic :Polemarchus said to me: I perceive, Socrates, that you and our companion are already on your way to the city.You are not far wrong, I said. But do you see, he rejoined, how many we are? Of course. And are you stronger than all these? for if not, you will have to remain where you are.May there not be the alternative, I said, that we may persuade you to let us go? …Glaucon said: I suppose, since you insist, that we must. Very good, I replied.- Seems an appeal to reason is still reasonably appealing !
While I’m all for consensus, esp in a startup, sometimes the decision ends up being to go forward with a half baked option – which can leave a lot of disgruntled, passive-aggressive members of the team who may want more information before making a decision.Whats the hedge against a bad decision and how much of it ends up becoming “Cover Your Ass” as opposed to “This is Not Good for Us”Thanks
I think the embedded problem there is often a combination of people who aren’t willing to take the risk of owning a problem and leadership that doesn’t encourage and reward that risk before you get to the point of making a decision on the product.
Do you limit the amount of data that can be presented during the deliberation process or do you have a consistent set of data that everyone must present during a deliberation process?
neither. it is wide open.
That sounds very corporate … like an assignment. Like schoolwork.To me things like “give me 3 paragraphs” or “have the report on my desk in the morning” flies in the face of passion, creativity and the required internal motivation to get your point across which should be driven internally, not externally.
Yep real challenge is framing the problem….if you do that correctly the solution is much easier to get to. Frankly that’s one of the things I like about the shift towards collaborative economy (admittedly there are downsides). Myself and other Millennials I know prefer to be given the problem, and help framing it, but leave the deliverable / solution / etc open.
Myself and other Millennials I know prefer to be given the problemMy feeling is that that runs in the face of entrepreneurship and is more similar to schoolwork. Where they tell you exactly what you need to do to get ahead, get into law school or graduate medical school. No guesswork, just work hard and get good grades and do what the teacher tells you to do. Not very creative and leaves little room for deviation.
Hmm, I think we agree but I probably didn’t speak clearly.Was doing research / talking to teens recently about resources they need to pursue entrepreneurship, one of them mentioned that she’s had mentors who tell her what to do and where to go vs. mentors who helped her define the problem herself, and think of approaches to solving. She far preferred the latter, which I can relate to. I think it’s that model that’s really appealing, but maybe that’s just something that entrepreneurs self-select for…as I know there are plenty of folks who like stability / set parameters and we wouldn’t enjoy being in each others shoes.
It appears this week is the “Week of Posts for words that start with the letter D.”
that is Dawning on us, inDeeD.
and end with “ation”i’m playing a game with myselfit’s mildly amusing to me
I look forward to see what Thursday and Friday bring.
as always, the AVC community is providing some ideashttp://avc.com/2015/04/deli…another suggestion was defribillation!!!!
Ever since I saw last December’s Venture Beat photograph of Mattermark CEO Danielle Morrill flanked by her two co-founders, my appreciation for her work has only grown (I originally met her here; she popped into Fred’s bar once or twice and I think she ordered a Negroni). She wrote recently in Techcrunch that she thought “the traditional Monday partner meeting feels outdated,” and I always meant to question that statement, so I’ll do it here, and echo what you’re saying in this post. I have worked inside many partnership firms and as lead marketer often contributed intel to the decision-making process. I understand completely the effectiveness and efficiency of the Monday partner meeting. It’s the wisdom of the crowds; it’s the advice process (see Reinventing Organizations); it’s Socrates; it’s the human factor. At least so far the darling robots cannot deliberate, discuss, and decide as effectively as we can; they cannot change their persuasion technique on a dime when faced with our changing emotions, our changing conditions, our changing criteria. Not that I am not rooting for Mattermark to overtake USV one day, because I am! Wink wink!
danielle is smart and scrappy but she thinks she knows more about VC than she actually does
She is 29 years old and I get the sense she does not at all mind being called out on her blind spots.
correct. she’s into the “public conversation” which is fantastici would just advise against taking what she says as correct
but she thinks she knows more about VC than she actually doesDon’t we all?
Not that I am not rooting for Mattermark to overtake USV one day, because I am! Wink wink!Why? Not to mention that if everyone has access to the same data then it more or less neutralizes any advantages.
Companies like Mattermark and Buffer are providing new templates for management. Buffer is doing away with managers and has published all salaries. Mattermark has a woman in charge and many elements are transparent. Personally speaking, I have shown up at avc.com almost every day since 2003 and have witnessed dozens (hundreds?) of male-dominated conversations about women in leadership, which have on the whole been helpful yet obviously problematic. Danielle’s company may succeed or fail, but her visibility and voice provide an exciting template.
+everything!
.I am not absolutely certain there is a unique voice about “leadership” which can be characterized as either male or female. I haven’t thought enough about it.The women CEOs with whom I work are, on average, more impressive than the men — again, on average. May just be an accident.But what I do know is this — I never really take anyone serious on this issue until I see a picture of their company.This is one of those subjects in which a thimble full of reality trumps an ocean of talk.Please do not lecture me about diversity when your company pic shows —– none.JLMwww.themusingsofthebigredca…
Buffer is doing away with managers and has published all salaries.I am typically 100% against that type of thing. That’s one of the drawbacks of unions. All pay is disclosed and equal. Little chance if you do more, or are of more benefit, that you can get paid more. Understand that in certain situations that’s necessary but just rubs me the wrong way.Mattermark has a woman in charge and many elements are transparent.That wouldn’t be a reason for me to give them business (and I can think of a few things that I could use them for). All I care about is whether the product is worth $499 per month and provides value. Are you a customer? Did this influence your decision to use or keep using them?As far as the transparency I guess you have to weigh the additional business you get by being transparent vs. not. [1] . Businesses are typically (and have always been) opaque about their operations unless there is a specific business reason not to be (publicity, misinformation as only two examples). This is kind of a well worn principle that has stood the test of time. Sure things have changed but business has been done for thousands of years like this. All the sudden in the last 15 or 20 years not sure everything has been turned on it’s head. I know people who haven’t seen many business cycles might though.All this new age stuff isn’t always right by the way. Here is an example with parenting time along the same lines “thousands of years”:Though American parents are with their children more than any parents in the world, many feel guilty because they don’t believe it’s enough. That’s because there’s a widespread cultural assumption that the time parents, particularly mothers, spend with children is key to ensuring a bright future.http://www.washingtonpost.c…The next one might be “don’t spank your child”. Done for thousands of years and most kids didn’t end up being aggressive or axe murderers. And so on.[1] Like Fred does..
This reminds me of something I read by Nassim Taleb a while back referring to the Lindy Effect:”For the perishable, every additional day in its life translates into a shorter additional life expectancy. For the nonperishable like technology, every additional day may imply a longer life expectancy.”
I’d ask Fred and other top investors how many home runs they’ve had with “managerless” companies.These companies are running an experiment. With people. It’s an interesting one. We’ll see how it turns out.
Well to your point besides the fact that the sample size is small, so are the size of the companies. A larger company is a different animal entirely nobody is going to disagree with that.The other thing that I have always observed with anything is the law of larger numbers (for lack of a better way to put it).For example in business if you don’t do many transactions then statistically you don’t run into problems that you perceive need to be prevented from happening. That is one of the reasons why large companies have these extensive long contracts (they’ve “been there done that” and have gotten burned) whereas smaller companies can fly by the seat of the pants. They haven’t had the bad things happen yet (and may not if they aren’t doing many transactions).The other day I signed a contract with someone for something. I told him “this contract puts so much friction into the process”. And he responded predictably. He told me “well I used to do things on a handshake and by email but then…” (and you know how that ended, right?).On a small scale many things work. Before you have “been around the block”.
I agree with you more than you agree with yourself. To coin a phrase.Efficient market theory fans might say that if “managerless” companies worked, then all companies would adopt the managerless form, and gain benefits of being managerless.Oversimplification. And yet…
My other favorite is “take as much vacation as you want”. I love that one and how it actually plays out in the workplace.By the way do you remember back when credit cards started offering all of those “you break it we pay for it” guarantees as well as price protection?Of course they still do but they have 100 pages (exaggeration) language which exclude everything and anything making it of greatly reduced value. Wasn’t like that at the start. I remember very clearly how they were worded. And I thought “oh boy this won’t last long”.What happened was they put the program out there and then they found out how people game the system and rip them off. And it didn’t take long because the sample size is so large and there are many devious actors out there.This also happened with domains at the start. At first they were free and people just started registering as many as they could. Then they started charging and registration still increased (because the internet was becoming widespread) and people grabbed up names they thought they could resell to others.The thing I love the most about things like this is the academics and non street smart people who don’t even come close to anticipating how normals might take advantage of things.
I’ve only seen this policy deployed in very small firms that are overwhelmingly young — so it will at the very least be tested when people start wanting to take maternity/paternity leave.Main thing I’ve heard here in NYC about “take as much vacation as you want” is that companies then have a hard time getting people to take *any* vacation.When I worked in banking, people at a certain level and in sensitive jobs (i.e. you could influence or execute significant wire transfers) had a regulatory (as I recall it) requirement to take two consecutive weeks. Conventional wisdom was that if you were a solo fraudster, you wouldn’t be able to hold the fraud together during a 10 day absence.In reality, it showed who was good at managing and who wasn’t. If someone was out for just 10 days, and things broke, something was wrong.Now, this is a hard argument to make in a very early stage startup, where things can be held together with a lot of workarounds and manual interventions. But by the time you get to the later stages that Brittany is documenting? By then you should have grown a little bit of redundancy, and people should take some vacation.http://www.brittanymlaughli…
Conventional wisdom was that if you were a solo fraudster, you wouldn’t be able to hold the fraud together during a 10 day absence.A similar theme in small business is the dedicated bookeeper who never takes a vacation turns out to be embezzling.Here is an example (I knew these people in the 90’s they were a client of my ex wife):http://articles.philly.com/…so it will at the very least be tested when people start wanting to take maternity/paternity leave.That’s something that I’ve wondered about since I first saw these companies and their poing pong tables. What happens when the labor force gets older and has “older people problems”.Do they figure out a way to have people leave like McDonalds [1] so they keep a constant stream of the type of people they need? Or?[1] McDonalds doesn’t want you to stay since it’s so easy to train someone new and they have no need to pay more for a job that really isn’t going to get anymore productive. Hence they want the turnover in the labor force. (Along the same lines McDonalds dining tables are designed to notbe so comfortable that you linger to long and prevent table turn as well).
So sad, I know of a very similar story from my hometown.I’ve seen businesses in every domain (i.e. mom & pop, tech startup, global organizations) that lack the kind of basic financial controls that would allow a version of this story to play out — or more frequently than bad actors, for money to leak out of their businesses. (Paying the same bill more than once, failing to collect what’s owed on a timely basis, etc.)Sigh.
A logical and reasoned argument works much better. Including when it is made against you.I was raised with “argue it like a lawyer or I’m not going to listen to you”. I learned very early that the only thing that matter (in getting something from my parents) was to convince them by using logic and reasoning. [1] (Note: My dad *was not* a lawyer).[1] A few examples: Getting my dad to buy my mom a brand new Red 1976 Camaro (totally impractical car for her and my dad was 100% practical ) so I could drive it to high school. Getting out of having to go to religious high school (in addition to regular high school). Getting another dog when they swore they would never do that again. And so on.
Discrimination, Deflation and now Deliberation. Is this some kind of a D for Dummies series going on or is it just a coincidence 🙂 ?
D for experts. otherwise you’ve nailed what’s going on.
When you break the deal into it’s components, where does the team typically find consensus? disagreemt? debate?
Though it can be frustrating to me at times, the use of “power” or tenure in our firm is not particularly effective.It would be interesting if you could play back the “monday morning” when you were discussing investing in airbnb. I know you had mentioned that the younger members were in favor of that (or positive, whatever) but you (and perhaps some of the other elders) couldn’t wrap your heads around the idea of having strangers stay in your house. [1][1] I am the same way. Which is why I would find it fascinating to know exactly what the people in favor of airbnb investment said to try and sell that idea to the partnership.
We do the same when deciding what features should go into the next release. Its my second management principle: orchestrate between departments. If for instance you treat development as the hired help, your product will reflect that, the same as if you treat sales as a bunch of whining dummies.The only thing I have seen that you have to be careful of when you have a decision that is made by deliberation:There can be a tendency for some people to keep trying to re-open the decision or not work as hard as possible to get a great outcome, because it was not a direct order by a decider as you say.That is where leadership has to be very strict.
because it was not a direct order by a decider as you sayDoes that have something to do with the fact that if it’s a direct order by the decider then it has the needed “You have CYA” branded on it?
Well I am talking from the company operational point of view. So its a little different than having 5 partners coming to consensus.I don’t necessarily think it is CYA.What I am saying is that there are some people that after a decision is made (where they didn’t necessarily completely agree) will keep trying to reopen that decision or do it the way they think it should be done or best suits their interest.If it was a direct order these people will realize they will get their head stomped on. If it was not they think they can get away with not following the decision. So what I’m saying is that after a decision has been made it has to be operationally delivered like a direct order.This is from the operational company point of view, not VC partnership point of view. I especially see this in bigger companies when I sell my little ones to them. You watch people literally working against the common goal because it suits their interests.
.A lot of “deliberation” is just thinking out loud, testing your own words in the open air, providing a framework upon which others can hang their thoughts and flesh out the entire notion — and that is a very good thing.It is essential to ensure that decisions — yes, no, table it — are eventually made but decision making doesn’t work unless you have the right intel upon which to deliberate.Partnerships are entirely different organizations than hierarchical companies. They are a fragile combination of thoroughbreds — hopefully, thoroughbreds.This fragility also creates the balance of respect that makes them a combination in which the collective talent and wisdom is more powerful than the constituent parts.Like many things in business, the most important decision you will ever make is with whom to do business. You may not have the top person but ‘can y’all work together?’ is way more important.No sooner than I say that than I observe it is also essential to have some friction and debate — not peeing on the other guy’s leg but a real search for the truth.I have seen a lot of confirmation bias posing as decisionmaking.JLMwww.themusingsofthebigredca…
Curious your take on what goes wrong in real estate decision making when a casino like the Revel gets built for 2 billion and then goes bust 2 years later? Is that just an example of everyone involved simply feeding at the trough and/or blowing so much smoke up the you know what that it’s literally impossible to come to the right decision? Or is it mania related to “build it and they will come?”.[1] http://en.wikipedia.org/wik…
.A casino is both a real estate project and an operating business.I think it would be safe to say that Atlantic City — which collapsed the TIF bonds and turned them over to the state to avoid default — was a bad idea from the beginning.They built enough real estate to choke a horse and then, apparently, the operating business didn’t generate enough money to pay for it all.The proliferation of gambling on the east coast from other neighboring states seems to have been — in retrospect — predictable.Gambling and everything with it is driven by a sense of larceny which morphs into corruption on a grand scale.Atlantic City was dying and now it is spectacularly dying.JLMwww.themusingsofthebigredca…
No I know that. My question was how do bad decisions like this get made when there is a wealth of available info that shows it’s a bad idea? The psychology of it all. [1][1] This is quite different than an Walt Disney Orlando gamble in my mind.
.If I had to put one reason forward, I think it was because Morgan Stanley was the driving force. They are investment bankers and not operators or company builders.At one time, they owned about 90% of the entire deal.So, yes, it was a mass hallucination.JLMwww.themusingsofthebigredca…
How the heck do you lose money running a casino? I suppose you spend too much building it.But then again I can’t figure out why anyone would drop $1 into a machine that guarantees to return $0.98 and pretends like that’s a good thing.
I suppose you spend too much building it.In the case of this particular casino, I am not sure that is the case. If the casino had cost only 1.5 billion it would have still went under.Part of the business case for building something so costly is to set it apart “build it and they will come”. The thinking might be that you need a certain critical mass in order to get lift. Building a 500 million casino (it would be argued) wouldn’t provide that lift, at least in that market at that time. Look at all the projects in Vegas (where there is a market) that were over the top that worked? And big gambles at that.So when you boil it down it comes to the nuance of when something works and when it doesn’t not what you spend. Not that you can’t spend to much. Of course you can.Walt Disney World in Orlando was a tremendously costly undertaking. So was the gamble that Boeing took on the 747. Both of those gambles paid off because they were huge costly projects and literally over the top. Boeing bet the whole company on that airplane. And it all started (from what I read) when Juan Tripp played golf with the CEO of Boeing.I am not advocating risk taking of that nature and I am not fawning all over it like some reporter writing for Forbes. Just stating my observations. I never bet more than I can afford to lose. Period. In the case of any of these projects that you read about that succeed or fail people are truly betting the ranch.
This was pattern matching as I discussed yesterday. The Venetian put up as much money and was successful.
The other key thing about The Venetian is that it was driven by Sheldon Adelson. Revel was a “camel is a horse by committee” project of Morgan Stanley it’s unclear to me if any single person was the vision or driving force behind it (at any point).While you could argue that a single person could be susceptible to a bunch of ass kissing that allows them to make a bad decision, I have always thought that there is a reason why some of the most notable names in business that are successful (large, small or medium) are for lack of a better way to put it “strong and dictating entrepreneurs”.Kroc, Walton, Jobs, Fred Smith, Ellison, Disney and of course millions of guys that nobody has ever heard of. Guys who don’t (and this is important) have to walk on fucking eggshells and gain consensus unless they want to.I’ve told people that I “do work” for that I won’t take on a project that I don’t have 100% creative control over how to make it play out (with their input of course). (I don’t need the money but more importantly it makes me mentally stutter and I can’t have that happen). Gut doesn’t work well by committee for me.
Isn’t this probably an example of agency problems or simply personal interests. I mean, most people working on the project made boatloads of money, and the only people who lost were bondholders and perhaps the initial equity stakeholders (who still may have cashed out much of their equity.. ie how PE shops can make money even when their investments go bankrupt). Likely 90% or more of individuals did great off this transactions.. you know that old Upton Sinclair statement about getting a man to believe something when his income depends on him not understanding it
Revel totally misread the market.They presumed there was a legit need for a high end Vegas style hotel/casino w/ full amenities catering to an affluent clientele. You can easily see there was a void relative to the many “down-at-the-heels” hotels that populate AC, but the prob is AC just isn’t a vacation destination like Vegas, where people travel from all over. AC also caters predominantly to day trippers and pensioners, while their convention biz is relatively non-existent.Curious how much MR Revel actually conducted, if any, in advance of funding/launch? How did they assess market demand/potential? Obviously AC, the city, has huge economic/image problems and far more local competition than LV w/ casinos popping up in close proximity in PA, CT and NY.In the past 10 yrs. I’ve been to LV many, many times but only once to AC. Once was enough, frankly.
As somebody who knows the area pretty well (I own a small property in an adjoining town) and was at Resorts when it first opened (with a date from college, I don’t gamble), the core problem really is that they didn’t move the poor people out of town.I agree with Reese Paley and it’s exactly what I thought prior to Reese writing this op ed [1].Christie ignores – as everyone has for three decades – that other ghetto, made up of poor people who could not afford to move out of Atlantic City. This other ghetto has prevented the city from becoming what many hoped for in 1980: the Las Vegas of the East.People want to visit a nice environment. Now I know people will counter with a bunch of islands that are successful and have poverty on the way from the airport but that is different. People don’t view something that is on an island or in a foreign country the same as they do in their own back yard. That’s a hard concept for some people to understand apparently. Just like some people don’t understand why I don’t want to go to dinner and listen to their kid carry on at the next table.Meanwhile, the towns of Margate, Longport and to a lesser extent Ventnor (and even LBI and Brigantine) are nice, attractive, safe with no, for lack of a better way to put it “riff raff”. And valuable housing. If people could just discuss these issues as a reality perhaps Atlantic City would have become a nice economic engine that it isn’t.[1] http://articles.philly.com/…
Yes, AC’s blight is depressing, “in your face” and very much a contributing factor to both the city’s lack of potential and demise. On a side note, as a child my grandparents used to take me and my siblings to the St. Charles hotel, a stately old palace built during AC’s “golden era.” The place was torn down many years ago but I still have fond memories of walking the boardwalk, jitneys, the Steel Pier, Mr. Peanut and getting sick from eating way too much salt water taffy and fudge.
Really like how you put this. I think to some extent it depends on one’s personal belief – I subscribe to the idea that if I figure out a good framework for collaborating with others, what we create will always have more potential than something I did on my own. But I know not everyone believes this, and even many of those that do are in a hurry to get past the framework part of it.
confirmation bias is a killer
The Green Party makes all their decisions by consensus.I think there’s a lot to be said for consensus in any creative endeavor. You can see it in the progression of films made by many once-great directors. Like, Ridley Scott. Started out amazing. In the early days I’m sure he had to get consensus from his team. Now that he is all powerful, not so great. The sum of consensus is greater than the total of its parts.
.Arnold makes a great point — who owns the decision?I have always been an acquirer of things — businesses, turnarounds, real estate. Early in my business career I made an acquisition which was analyzed by one guy, reviewed by another and embraced by the guy who was going to operate it.The acquisition was a flop.When it came time to conduct the autopsy, suddenly I was the only person willing to admit that I had championed and approved and supported the deal. Everyone else said they were not keen on the deal and had never been from the start.Thereafter, I developed an acquisition discipline — worked in different companies for buying apartment complexes, high rise office buildings, operating businesses, units — which ended up being a 50-page outline and a 35 page checklist. This was well before the Checklist Manifesto was written.I wrote a Decision Memorandum which analyzed the deal and recommended it. It was circulated among the acquisition guy, the CFO and the operator who would have to run it. They got to edit the Memo and to put their two cents into it.At the end of the Decision Memo, they had to sign on the dotted line that they recommended it and approved it. This cut out all the baloney.This Decision Memo then went to the Board for approval.That simple methodology worked for about 30 years but it was the result of the earlier orphan failure. To this day, I still remember how vexed I was when I was the only one who admitted I wanted to do the failed deal.I always had the normal conflict between the acquisition guy (compensated on commission) and the CFO — it was hard to believe sometimes they were both looking at the same deal. They each ran their own set of numbers.I never tried to make their numbers match. I never negotiated with them. I just tried to make sure that the deal met my hurdle criteria with either set of numbers — inside a chalk stripe so to speak.A year after we did a deal, I would sit everyone down and look at actual operating results. Sometimes they were quite spectacularly better — usually, actually. Sometimes, they were a chastening view of things. Not too often.This after action debriefing made everyone’s future numbers better and better.It took me about 5 years to really get this approach honed and sharpened until it essentially ran itself. The interface with the Board was also streamlined incredibly. I would always recuse myself from the vote to ensure no undue advocacy.This takes a little time and discipline — not for a startup but for a slightly more mature business.JLMwww.themusingsofthebigredca…
>This was well before the Checklist Manifesto was written.What is your opinion of the Checklist Manifesto? I was going to buy it for someone I know, who I think could benefit from it. I know who the author is, and that it has good reviews, but I always like to get a personal opinion if possible.
.Probably the most practical and useful business book I have ever read. I used to give it to everyone I could get to take it.JLMwww.themusingsofthebigredca…
Thanks. I’m ordering it.
Interesting. Did you get to make use of a good amount of your army experience in business?
.Everything — EVERYTHING — I ever needed to know to run a business, I learned in the Army as a platoon leader and a company commander.At age 25, I had a combat engineer company of 450 men — way overstrength because the Viet Nam war was almost over and the Army was contracting. They had nowhere to put the soldiers — many draftees — until they were discharged.It was an awesome experience particularly at that age.I always got along well with troops as my Dad had been a Sgt Major and I grew up on Army posts.I could promote, award decorations, send to schools, discipline, reduce ranks, take some of their pay and kick them out of the Army. I ran my company 5-10 miles every morning which knocked the edge off discipline.Interestingly enough, I had a few deserters — gone for more than 90 days — who were draftees who just wanted to go home.I used to put them in the stockade until I got their paperwork done and then threw them out of the Army with a Dishonorable Discharge. Only one objected to getting a DD. That guy promised to shape up and finished the rest of his enlistment. I got him an Honorable Discharge.JLMwww.themusingsofthebigredca…
Interesting stuff …
One of my one liners: Success has many Fathers, Failure is an Orphan.
“Defibrillation”When things go really south and you believe a good “jolt” (e.g. change in mgt, a restructuring, a pivot) will get a biz back on track. Conversely, when/how do you just cut bait and let the biz “flatline.”
that’s a good one
I guess that’s Fred’s cruel April 1st joke – hiding the reality of a dictatorial regime run by a certain autocrat named Brad hiding in the shadows… 🙂
ha!my april fools joke, if there is one, is stitching together successive posts with alliterative headlines
Sidd Finch, best public April Fool’s joke of all time.
“The market of ten forces that on us and, frankly, that is quite helpful.”to me this is the key. there are people who complain about competition and customer demands. i think that’s all a bless.
This seems great! I would really like to observe how this approach to decision making plays out over time — with a partnership of more than two (since my husband and I seem to make this work) — and the dynamics that get a leadership team to this place.Did this approach develop based on the type of people that you partner with? Or did you partner with certain types of people in order to be able to take this approach?Are there any on the team who tend to drive the direction? For instance, do stronger personalities influence? or… Are some perceived as more authoritative?One of my favorite things in the world is to be in a setting involving people with strong opinions and personalities trying to reach a decision on something. But maturity, mutual trust, and an overriding objective seem to be necessary for this to work. And humility doesn’t hurt, either –but I guess this is part of maturity.
Did anyone else see what Zappos is doing?Tony Hsieh is all in with a No Bosses approach company wide… http://www.washingtonpost.c…
Deliberation made you miss out on AirBnB. So it works most often, but sometimes your biases and blind spots get reinforced in the deliberations. Do shakeups sometimes.
This is the reason why I think early-stage VC is not a very scalable business 🙂
On a lighter side, three consecutive posts with a pattern “Dxxxxxxation”.Am I the only one noticing this ? Or is there any meaning to it ? xxx
it’s intentional and just me having some fun
Since we’re also creatures of habit (picking up earlier comment thread), it’s really important in the deliberative process to be able to keep an open mind. That’s easier said, than done.What to do? Best tool I discovered in past sixteen years for thinking differently, getting a fresh, intuitive perspective is to find a way to activate the right side of the brain, thus providing an independent perspective from more conventional thoughts. This is scientifically possible due to the Nobel prize winning discovery about hemispheric division in the brain. We can learn to use our brains in a more creative, intuitive manner and we may “change our own minds” more often.