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Often there are nuggets of wisdom from other professions or careers that you can leverage in your own career or life.
One of my favorite nuggets is a technique I learned when I worked in venture capital.
Venture capitalists, like John Doerr or Vinod Khosla, are investors in start-ups that risk a lot of money on a bare concept or idea and – if things go well – make a fortune for themselves and their investors. Examples of such investments are Google, Intel, Sun Microsystems or even simple websites like Mint.com.
Venture capitalists must weed through literally thousands of investment ideas that people pitch to them before they find a diamond in the rough like Google. In fact they will invest in hundreds of companies and only a handful of them will be true blockbuster successes.
For that reason, the best venture capitalists are true masters of managing the funnel: weeding through thousands of ideas effectively without wasting too much time on the duds, and carefully betting their time and mental focus on the most attractive ideas.
In particular they use a technique that I call “finding the weakest link”. This technique allows them to very quickly test the validity of a very complex idea. I think this technique is useful in many situations in life and worth knowing about.
The technique
1. Spell out logic chain
2. Find weakest link
3. Test weakest link
4. If fails, kill idea, if holds true test next weakest link
5. Repeat until entire logic chain is successfully tested
Every investment opportunity venture capitalists come across is based on some sort of logic chain – a set of assumptions and conclusions that all must hold true for the idea to work out.
For example, if my idea is to become the internet’s premier source of tuna sandwiches, my logic chain (in a much simplified form) probably sounds something like this:
In order for my tuna sandwich website to succeed:
I need to be able to make tuna sandwiches that customer really enjoy AND
I need to be lower cost in making tuna sandwiches than anyone else AND
I need to be able to ship my tuna sandwiches for very low cost to my customers before my sandwiches spoil AND
Customers need to be willing to wait for my sandwiches to be shipped.
If I would pitch this idea to a venture capitalist, he would develop a logic chain and then try to guess which assumption is the weakest link – which assumption is most likely not true. There is no science to making that guess – it is based on experience and intuition. For the example above, the VC might have a hunch that customers really don’t want to plan their tuna sandwich consumption ahead of time and won’t want to wait for FedEx to deliver the sandwich.
Next the venture capitalist will do his homework to try to verify that weakest link.
So in our example, the VC will try to talk to several tuna sandwich connoisseurs to see if his hunch is right or wrong. If is hunch is right – and the assumption is wrong and busted, he will realize that he broke the logic chain. The idea is no longer viable and he will drop it. If the connoisseurs surprise him by saying they would totally wait for a day or two for a great sandwich, he will then identify the next weakest link and pressure test it.
If he tests all links in the value chain to his satisfaction he will consider the idea for investment. If one of the links fails the test, he will move on unless he can think of a way to fix the problem.
The takeaway
So aside from getting you excited about having a tuna sandwich for lunch, why should you be interested in this technique? I think it is very helpful approach whenever you need to make a choice and important decision in your career. It will allow you to get to the right answer very quickly and ensure that you don’t waste time on dead end paths. Examples:
Picking the right market for your new product
Hiring the right person
Choosing the best strategy for your marketing plan
Picking the next best career move

Background

Often there are nuggets of wisdom from other professions or careers that you can leverage in your own career or life.

One of my favorite nuggets is a technique I learned when I worked in venture capital.

Venture capitalists, like John Doerr or Vinod Khosla, are investors in start-ups that risk a lot of money on a bare concept or idea and – if things go well – make a fortune for themselves and their investors. Examples of such investments are Google, Intel, Sun Microsystems or even simple websites like Mint.com.

Venture capitalists must weed through literally thousands of investment ideas that people pitch to them before they find a diamond in the rough like Google. In fact they will invest in hundreds of companies and only a handful of them will be true blockbuster successes.

For that reason, the best venture capitalists are true masters of managing the funnel: weeding through thousands of ideas effectively without wasting too much time on the duds, and carefully betting their time and mental focus on the most attractive ideas.

In particular they use a technique that I call “finding the weakest link”. This technique allows them to very quickly test the validity of a very complex idea. I think this technique is useful in many situations in life and worth knowing about.

The technique

  1. Spell out logic chain
  2. Find weakest link
  3. Test weakest link
  4. If fails, kill idea, if holds true test next weakest link
  5. Repeat until entire logic chain is successfully tested

Every investment opportunity venture capitalists come across is based on some sort of logic chain – a set of assumptions and conclusions that all must hold true for the idea to work out.

For example, if my idea is to become the internet’s premier source of tuna sandwiches, my logic chain (in a much simplified form) probably sounds something like this:

In order for my tuna sandwich website to succeed:

  • I need to be able to make tuna sandwiches that customer really enjoy AND
  • I need to be lower cost in making tuna sandwiches than anyone else AND
  • I need to be able to ship my tuna sandwiches for very low cost to my customers before my sandwiches spoil AND
  • Customers need to be willing to wait for my sandwiches to be shipped.

If I would pitch this idea to a venture capitalist, he would develop a logic chain and then try to guess which assumption is the weakest link – which assumption is most likely not true. There is no science to making that guess – it is based on experience and intuition. For the example above, the VC might have a hunch that customers really don’t want to plan their tuna sandwich consumption ahead of time and won’t want to wait for FedEx to deliver the sandwich.

Next the venture capitalist will do his homework to try to verify that weakest link.

So in our example, the VC will try to talk to several tuna sandwich connoisseurs to see if his hunch is right or wrong. If is hunch is right – and the assumption is wrong and busted, he will realize that he broke the logic chain. The idea is no longer viable and he will drop it. If the connoisseurs surprise him by saying they would totally wait for a day or two for a great sandwich, he will then identify the next weakest link and pressure test it.

If he tests all links in the value chain to his satisfaction he will consider the idea for investment. If one of the links fails the test, he will move on unless he can think of a way to fix the problem.

The takeaway

So aside from getting you excited about having a tuna sandwich for lunch, why should you be interested in this technique? I think it is very helpful approach whenever you need to make a choice and important decision in your career. It will allow you to get to the right answer very quickly and ensure that you don’t waste time on dead end paths. Examples:

  • Picking the right market for your new product
  • Hiring the right person
  • Choosing the best strategy for your marketing plan
  • Picking the next best career move

(Photo:Unhindered by Talent)

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Whether you are negotiating a brand new job offer or a simply trying to get your boss to give you a pay raise, here are 5 levers or hooks to drive a negotiation.

Five levers to start a salary negotiation
1.) Goodwill – Sometimes all you need is a smile or actually just need to ask. “Thank you for your offer, I really appreciate it. However, I was hoping for a slightly higher salary – is there anything you can do?” If you are nice, calm and sympathetic about it, the person you are negotiating with will try to help you if they can. So don’t be afraid, just ask.
2.) Hard data – Hard, cold facts are always a good thing assuming they are in your favor.
For example, research salaries for the specific company or industry in question on websites such as glassdoor.com, payscale.com or salary.com. Sometimes industry guides such as those from Vault and other also contain hard data. Next, you can also poll folks in your network if they know the industry – just ask them “what kind of salary should I expect?”. Use the data you collected thoughtfully and carefully in your negotiation, mainly as a “proof-point” in your reasoning. “You are offering me $70k for this position. However, my research tells me that your competitors pay $80k for the same position. Can you raise your offer to match the industry standard?”
3.) Profit share – Ask for a share of what you bring in. If your job allows you to measure your impact (not every job does), then ask for a cut of the proceeds. Ask what they expect you to achieve (sales, cost savings, etc) and then ask them for a small cut of anything you do above and beyond their expectation. If you don’t meet their expectation, it won’t cost extra, if you exceed their expectation they are still better off than before.
4.) Better offer – Now we start to play hard ball. Here you either bluff or actually have a better offer in hand and use that for leverage “I would love to work with you guys, you seem like the perfect fit. However, I also have an offer from XYZ, and they are offering me $20k more for the same position. Can you improve your offer? I would really prefer to be able to chose your offer over theirs”. This is a risky play – you can quickly offend people – so be careful in your tone (don’t be arrogant or aggressive), body language and messaging (be polite and friendly!).
5.) Threat – This is the toughest and riskiest approach. Here is simply say that unless a certain condition is met you cannot accept the offer – fix it or else you will walk. All the points above about tone etc apply here aswell. But be very careful, if you mess this up you might end up with a successful negotiation but with an unhappy boss who felt he was taken advantage of – not a good start to a new career.
Remember, salary is not the only variable in a negotiation – consider things such as benefits, timing to promotion, future salary increase promises, bonuses, job responsibilities, work hours etc.
We will discuss these issues in another post, but keep them in mind.
Also, remember to go into the negotiation with a clear threshold in mind. Set your minimum expectation. Be willing to walk away if they don’t hit that threshold, be willing to shake hands if they do.

Five levers to start a salary negotiation

1.) Goodwill – Sometimes all you need is a smile or actually just need to ask. “Thank you for your offer, I really appreciate it. However, I was hoping for a slightly higher salary – is there anything you can do?” If you are nice, calm and sympathetic about it, the person you are negotiating with will try to help you if they can. So don’t be afraid, just ask.

2.) Hard data – Hard, cold facts are always a good thing assuming they are in your favor.  For example, research salaries for the specific company or industry in question on websites such as glassdoor.com, payscale.com or salary.com. Sometimes industry guides such as those from Vault and others also contain hard data. Next, you can also poll folks in your network if they know the industry – just ask them “what kind of salary should I expect?”. Use the data you collected thoughtfully and carefully in your negotiation, mainly as a “proof-point” in your reasoning. “You are offering me $70k for this position. However, my research tells me that your competitors pay $80k for the same position. Can you raise your offer to match the industry standard?”

3.) Profit share – Ask for a share of what you bring in. If your job allows you to measure your impact (not every job does), then ask for a cut of the proceeds. Ask what they expect you to achieve (sales, cost savings, etc) and then ask them for a small cut of anything you do above and beyond their expectation. If you don’t meet their expectation, it won’t cost extra, if you exceed their expectation they are still better off than before.

4.) Better offer – Now we start to play hard ball. Here you either bluff or actually have a better offer in hand and use that for leverage “I would love to work with you guys, you seem like the perfect fit. However, I also have an offer from XYZ, and they are offering me $20k more for the same position. Can you improve your offer? I would really prefer to be able to chose your offer over theirs”. This is a risky play – you can quickly offend people – so be careful in your tone (don’t be arrogant or aggressive), body language and messaging (be polite and friendly!).

5.) Threat to walk away – This is the toughest and riskiest approach. Here is simply say that unless a certain condition is met you cannot accept the offer – fix it or else you will walk. All the points above about tone etc apply here aswell. But be very careful, if you mess this up you might end up with a successful negotiation but with an unhappy boss who felt he was taken advantage of – not a good start to a new career.

Remember, salary is not the only variable in a negotiation – consider things such as benefits, timing to promotion, future salary increase promises, bonuses, job responsibilities, work hours and others. We will discuss these issues in another post, but keep them in mind.

Also, remember to go into the negotiation with a clear threshold in mind. Set your minimum expectation. Be willing to walk away if they don’t hit that threshold, be willing to shake hands if they do.

Good luck!

Image by Photos8.com

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Jan/10

8

How to find a good mentor

succeedOnce you succeeded in finding a great new job, you can accelerate the process of acclimatisation by finding and working with a good mentor.

What is a mentor?

A mentor is someone, typically a couple levels senior to you, that gives you advice, makes introductions and generally helps smooth you path in your job. Good mentors will invest effort and call in brownie points to help you. The most important job of a mentor is help you think through difficult situations either in dealing with your supervisors, the company’s bureaucracy or other impediments such as company politics. They take the time to talk to you, listen and offer advice based on their much longer experience in the company or in their specific career.

How can you tell if someone will be a good mentor for you?

There are a couple good indicators that will help you identify a good mentor:

  • Personal chemistry: First off, you actually need to like each other – share the same sense of humor, passion for non-work topics, e.g. sports and plain get along well with each other
  • Good samaritan: Next, the person should be someone who actively invests in others and is interested in more than just themselves; most people fall into this category, but once in a while you will come across egocentrics that you should best avoid
  • Not your boss: Avoid someone you report to, as you will not be able to have the honest and open discussion you need
  • Willing to take time: Very important is that the person is willing and able to take the time to talk to you. A rock star mentor who is never around because she has to travel to Tokyo half the time is not useful. Nor is someone who is ruthless about maximizing the utility of every last second, and would never take the time for the “fire-side chats” that you are looking for
  • Not too far up the ladder: Clearly you would love it if the CEO of your company became your mentor. However, unless you you are very high up in the organization yourself, that is a bad idea: folks who are too far ahead of you – I would say more than 2 levels up from you – a.) don’t have the time, but more importantly b.) are out of touch with the problems you face
  • Actually know what they are talking about: Also very important is that your mentor is actually good at what they do.  Don’t ask the village idiot for advice, ask someone who knows much more than you
  • Respected within the organization: Finally, your mentor should be well respected. That means that they have plenty leverage with the organization, and people listen if and when your mentor speaks up on your behalf

How can you get someone to be your mentor?

Getting someone to be your mentor isn’t difficult. Often you can establish a mentor relationship without ever using that word in a conversation. Just make a habit of taking some time to talk to the person, especially asking them for advice. Everyone loves being asked for advice and then getting a positive reaction in return – makes people feel self-important, appreciated and happy.  Start off by asking for non-controversial advice, easy stuff that you have figured out the answer to but where you would like to have a 2nd opinion. Then slowly work your way to meatier discussions over time. But don’t forget to also have simple social conversations, best on topics your mentor enjoys (”Did you see the game last night?”). Go to coffee and lunch with your mentor – make it a habit.

Reciprocate – become a mentor yourself

When the time comes, you should be a mentor as well. Find a worthy mentoree and invest effort into them.

Good luck!

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