Cleantech VC and the state of the IPO market

Of greatest concern is that as financing for cleantech gets tight, the brightest startups will struggle to find early stage capital and those companies nearing the path to commercialization will find it hard to find scaling capital.

The Social Productivity Paradox is that personal productivity comes first

There is an important paradox looming behind all the discussions of social tools in business.

Yes, a social business is one in which people communicate and coordinate their work activities more fluidly, based on the flow of updates and shared objects in streams implemented by social platforms, and likewise, the same premises of socialized communication allow companies to connect more directly and authentically with communities of users.

But the locus of increased productivity — the leverage that social tools lend — is found in the most tightly defined and narrow of use cases: the work of individuals.

This does not mean that social tools are asocial, forcing us to work in solitude without social interaction. On the contrary. Social tools help us be more social by decreasing the time and effort involved in communication and coordination for individuals, and, to the extent that a tool is tightly focused on work activities in a specific function — like HR, sales, marketing, or customer support — by simplifying or accelerating the work in that function.

In the first case — general communication and coordination among the members of a workgroup — social tools rely on several social motifs that decrease the work needed to remain connected and aware of others. The dominant social motif of all successful social tools, I believe, is the follower model. In the open follower model — the most social form — users opt to follow other users, contexts, and objects based on individual choice. By contexts I refer to the usual mechanisms for compartmentalizing work activities, like projects, rooms, groups, and so on. And by objects I refer to information elements, like documents, discussions, polls, reports, deals, tickets, cases, or whatever sorts of information is managed by the tools. The leverage of following is that new information associated with the followed streams automatically to the follower without any action. There is no polling, searching, or browsing involved. And this is the first and most central productivity benefit of social tools.

Note that this benefit is first personal: when Jane opts to follow John she no longer has to email him, or look at this profile page, or walk to his office to find out what he’s done today. That is her motivation and payoff for following.

Yes, John also benefits since he doesn’t have to field requests from Jane and other coworkers who would otherwise ping him, so he understands the value of the effort he makes to check off tasks and make status updates on work that is critical to others. That’s his personal motivation and reward, as well.

And then there are second-order effects, certainly. This week I wrote about the impact on group productivity by sharing progress made on critical work (see Checking off our to-dos makes us happy, and others, too), based on the research of Robert Meade. And creating a work context when critical information finds its way to people naturally, through follower-to-followed connections, has profound cultural and behavioral consequences.

This can be thought of as the transition from push to pull.

In a social follow model, the person who wants information registers that interest by following: they pull the information. They choose what is important based on their own perspective.

The pre-social model was predominantly push, like old school advertising, or interoffice memos. The classic contemporary example is a company in which corporate communication is channeled through email with long cc lists. Others — the producers of information — decide who should receive it, and the recipients are left with new tasks to do: to read and assimilate these emails, and perhaps take some action, as well.

Social tools generally implement some limited version of the fully open follower model. For example, in many work media tools (enterprise social networks) following is only supported implicitly, through membership in projects. Once you are a participant in a project context status then you will receive updates made there, and changes to the objects stored there.  Sadly, most of these tools today don’t support following of individuals, which is an odd omission, but represents the abiding management concern that people will use the newest communication tools to gossip. This has happened at every previous stage, with instant messaging, the web, cell phones, and even the telephone-on-every-desk movement after WWII.

A number of posts this past week dealt with issues related to this paradox. For example, I reviewed Close.io (see Close.io is a social context for sales communications), a social selling tool:

I have made the case a number of times recently that the most interesting innovations in social tools are going to come from small and simple application, ones that focus obsessively on the activities of individuals in sales, HR, marketing, customer support, or the like. They will create a social context — allowing low friction communication based on stream-bases social metaphors like the open follower model — but a context that frames and accelerates the work of the individual.

[…]

My sense is that the adoption of narrowly defined scope for the software support of work activities will lead to the greatest opportunities in innovation and productivity. This means the tools have to focus at the scale of work undertaken by individuals:  at the task level, if you will. And instead of a defined process with work products — documents, reports, sales data — moving from role to role, we have instead the replacement of process-centric communication with social communication. And social communication is based on personal relationships as defined by social networks. Instead of a fixed sales process with predefined communication built into the process, we see people engaged in sales activities not rigidly defined by a process and where the primary form of communication is social: information moving through streamed updates based on following relationships.

And Close.io is a great proof point for these ideas. By focusing obsessively on the fluid and self-defined activities of sellers, and building deep support for the contextualization of sales-related communications, Close.io upends the data- and process-centric model of sales.

In Work to create a predisposition to innovate in the social dimension I was inspired by a post written by Babak Nivi, one of the founders of AngelList, in which he argued that team members should ask for forgiveness, not permission. I wrote,

[…] individuals should be free to innovate in the way that their own work gets done, or a group should be able to redefine their flow of work, without some huge review process.

Certainly, the feedback of others is still relevant, and you are going to have to take responsibility for the results of your innovation — and clean up any messes that are caused — but the inclination should be toward innovation, and the attempt to improve customer satisfaction, product quality, response times, whatever. And this comes with the need to measure what you are seeking to improve. But the predisposition should be to act, to innovate as understood by the people closest to the work being done.

Most importantly, I think is that the individual should be empowered to make changes — to innovate — in the most personal work context: the activities involved in getting their own work done. Yes, there are limits as to how far an individual can go. In a software company, those working together on an application have to put the code in a single shared repository, for example. But the individual should be free to choose their own text editor.

And one other post touches on these ideas, as well, another example where I was inspired to write by a leader’s effort to create a culture in which individuals are given a great deal of say:

Stowe Boyd, Open email leads to ‘emergent coordination’

Greg Brockman of Stripe — the company that provides a credit card payment service that others can embed in web apps — has adopted a fairly revolutionary model of email use. They have — with a few exceptions — opted to keep all email open, and available to all staff. The original motivation was efficiency, but this experiment has led to a large impact on company structure.

Greg Brockman, Email transparency

Initially, the motivation for having all email be internally public and searchable was simply to make us more efficient. If everyone automatically knew what was happening, we needed fewer meetings, and our coordination was more fluid and more painless if we could all keep up with the stream.

As we’ve grown, the experiment has become about both efficiency and philosophy. We don’t just want Stripe to be a successful product and company. We also want to try to optimize the experience of working here. As as we’ve grown, we’ve come to realize that open email can help.

We value autonomy, rigorous debate, and avoiding hierarchy to the extent that we can. Startups often pride themselves on having a flat management structure but are eventually forced to put a formal coordination infrastructure in place as the number of actors grows. So far, our experience has been that an ambiently open flow of information helps to provide people with the context they need to choose useful things to work on. It doesn’t eliminate the need for other kinds of structure, but it does make emergent coordination much easier and more likely.

By creating an open email system, in which email is posted to topical shared lists, Brockway and Stripe created a pull system using push building blocks. Individuals choose what lists to follow, and updates are pushed to lists, not to people. And from that inversion, from that flip from push to pull, Stripe built a social, lean, and loose culture where individuals choose what is important to work on.

And that reinforces the paradoxical nature of social productivity: social means ‘me first’.

Work to create a predisposition to innovate in the social dimension

I saw this post by one of the founders of AngelList, and I thought it was illustrative of some of the challenges of the lean social approach that I have been advocating.

Babak Nivi, Ask forgiveness, not permission

AngelList “corporate policy” is that team members should ask forgiveness, not permission.

We would rather have someone do something wrong than ask permission to do it.

Or better, we would rather have someone do something right and not need permission to do it. This is the most common outcome.

We would rather have people ship to production whenever they want, than go through an internal review process. We can fix it on production. We prefer the customer’s review process. And it isn’t too hard to reveal a new feature to a small portion of our users and iterate on it as we expand it to more users.

Eliminating permission increases the speed and diversity of our decision-making. Our incubator applications are a good example of diverse decision-making: one of our team members built it even though I was telling him, “This is fine, but I don’t think it is that important. Why don’t you work on something else.” It ended up being very important to our users and mission.

There are some sensitive parts of our product that are walled off from this “ask forgiveness” policy. There are some things we want reviewed by the people who “know better”. But it’s really rare.

This policy only works if you hire insanely smart and capable people, and let go of the ones who are not. We also filter for people who are mission-oriented, care about our customer and want to learn more.

Leaving aside the ‘letting go of the ones who are not’ line, I unreservedly applaud this management dogma. The equivalent in the lean social realm is that individuals should be free to innovate in the way that their own work gets done, or a group should be able to redefine their flow of work, without some huge review process.

Certainly, the feedback of others is still relevant, and you are going to have to take responsibility for the results of your innovation — and clean up any messes that are caused — but the inclination should be toward innovation, and the attempt to improve customer satisfaction, product quality, response times, whatever. And this comes with the need to measure what you are seeking to improve. But the predisposition should be to act, to innovate as understood by the people closest to the work being done.

Now, back to the hiring ‘insanely smart and capable people, and letting go the one who are not’. We have a throwaway culture, and that manifests itself in business — in part — by a lack of real depth in hiring. Too little time is spent to find out if people fit in advance, if they have the skills and mindset needed for a job, or for a long-term role at a company. Especially in the high velocity startup landscape, the credo as laid out by Navi seems to hold. I have heard other West Coast tech CEOs advocate firing the bottom third of workers every year.

Personally, I find myself leaning more and more to the ‘no fire’ policy (see What does a ‘No Fire’ policy change? Everything.), which leads to very different approaches to hiring, and the significant burden of mentoring and stewardship for managers and leaders in a company. But even in a company that hasn’t gone that far, I think there should be a greater commitment to the staff that a cavalier, libertarian attitude of firing everyone who doesn’t match up to some unclear guidelines about being insanely great. It becomes all too easy to say that you want people to innovate, to make mistakes, and learn from them, but then to decide to fire someone because they didn’t learn fast enough, or they didn’t lean exactly the lessons they were supposed to. I think the business has to commit to a deeper investment in people than that.

Seedrs opens: Dragons’ Den crowdfunding for startups

After a long gestation period, crowd investment platform Seedrs has finally opened its doors — allowing British startups to use its platform to pitch for early stage funding. And so far things appear to be going well.

Does Germany need its own Kickstarter or AngelList?

A prominent local VC has called for German venture capitalists to band together and create a seed platform, but others say the likes of Kickstarter and AngelList need to appear naturally and organically if they are to work