Business

This article is an excellent read for those interested in creating a better business. Worth re-posting the entire article:

Source = Primitus

Why did so many successful entrepreneurs and startups come out of PayPal? I long have been fascinated by the extraordinary achievement from the ex-Paypal team and wonder about the reasons behind their success. In the past, mass media tried to answer this question several times but still couldn’t give us a clear answer.

I once asked David Sacks the same question during an event in Los Angeles. He told me the secret is that Paypal has built a “scrappy” culture. No matter what problems they faced, they would find a way to solve them. I kind of got the idea, but was still confused about the execution details.

So when I saw some of the past Paypal employees answering this question on Quora, I was super excited! After all, they should be the only ones who can tell people the inside stories.

Below are some highlights of their answers. *If you want to check out the sources or leave your comments, please go to here and here.

On Talent Management
“Peter and Max assembled an unusual critical mass of entrepreneurial talent, primarily due to their ability to recognize young people with extraordinary ability (the median age of *execs* on the S1 filing was 30). But the poor economy allowed us to close an abnormal number of offers, as virtually nobody other than eBay and (in part) google was hiring in 2000-02.” (by Keith Rabois, former Executive Vice President of Paypal)

“Extreme Focus (driven by Peter): Peter required that everyone be tasked with exactly one priority. He would refuse to discuss virtually anything else with you except what was currently assigned as your #1 initiative. Even our annual review forms in 2001 required each employee to identify their single most valuable contribution to the company.” (by Keith Rabois, former Executive Vice President of Paypal)

“Dedication to individual accomplishment: Teams were almost considered socialist institutions. Most great innovations at PayPal were driven by one person who then conscripted others to support, adopt, implement the new idea. If you identified the 8-12 most critical innovations at PayPal (or perhaps even the most important 25), almost every one had a single person inspire it (and often it drive it to implementation). As a result, David enforced an anti-meeting culture where any meeting that included more than 3-4 people was deemed suspect and subject to immediate adjournment if he gauged it inefficient. Our annual review forms in 2002 included a direction to rate the employee on “avoids imposing on others’ time, e.g. scheduling unnecessary meetings.” (by Keith Rabois, former Executive Vice President of Paypal)

“Refusal to accept constraints, external or internal:We were expected to pursue our #1 priority with extreme dispatch (NOW) and vigor. To borrow an apt phrase, employees were expected to “come to work every day willing to be fired, to circumvent any order aimed at stopping your dream.” Jeremy Stoppelman has relayed elsewhere the story about an email he sent around criticizing management that he expected to get him fired and instead got him promoted. Peter did not accept no for answer: If you couldn’t solve the problem, someone else would be soon assigned to do it.” (by Keith Rabois, former Executive Vice President of Paypal)

“Driven problem solvers: PayPal had a strong bias toward hiring (and promoting / encouraging, as Keith mentions) smart, driven problem solvers, rather than subject matter experts. Very few of the top performers at the company had any prior experience with payments, and many of the best employees had little or no prior background building Internet products. I worked on the fraud analytics team at PayPal, and most of our best people had never before done anything related to fraud detection. If he’d approached things “traditionally”, Max would have gone out and hired people who had been building logistic regression models for banks for 20 years but never innovated, and fraud losses would likely have swallowed the company.” (by Mike Greenfield, former Sr. Fraud R&D Scientist of Paypal)

“Self-sufficiency – individuals and small teams were given fairly complex objectives and expected to figure out how to achieve them on their own. If you needed to integrate with an outside vendor, you picked up the phone yourself and called; you didn’t wait for a BD person to become available. You did (the first version of) mockups and wireframes yourself; you didn’t wait for a designer to become available. You wrote (the first draft of) site copy yourself; you didn’t wait for a content writer.” (by Yee Lee, former Product & BU GM of Paypal)

On Culture & Ideology
“Extreme bias towards action – early PayPal was simply a really *productive* workplace. This was partly driven by the culture of self-sufficiency. PayPal is and was, after all, a web service; and the company managed to ship prodigious amounts of relatively high-quality web software for a lot of years in a row early on. Yes, we had the usual politics between functional groups, but either individual heroes or small, high-trust teams more often than not found ways to deliver projects on-time.” (by Yee Lee, former Product & BU GM of Paypal)

“Willingness to try – even in a data-driven culture, you’ll always run in to folks who either don’t believe you have collected the right supporting data for a given decision or who just aren’t comfortable when data contradicts their gut feeling. In many companies, those individuals would be the death of decision-making. At PayPal, I felt like you could almost always get someone to give it a *try* and then let performance data tell us whether to maintain the decision or rollback.” (by Yee Lee, former Product & BU GM of Paypal)

“Data-driven decision making – PayPal was filled with smart, opinionated people who were often at logger-heads. The way to win arguments was to bring data to bear. So you never started a sentence like this “I feel like it’s a problem that our users can’t do X”, instead you’d do your homework first and then come to the table with “35% of our [insert some key metric here] are caused by the lack of X functionality…” (by Yee Lee, former Product & BU GM of Paypal)

“Radical transparency on metrics: All employees were expected to be facile with the metrics driving the business. Otherwise, how could one expect each employee to make rational calculations and decisions on their own every day? To enforce this norm, almost every all-hands meeting consisted of distributing a printed Excel spreadsheet to the assembled masses and Peter conducting a line by line review of our performance (this is only a modest exaggeration).” (by Keith Rabois, former Executive Vice President of Paypal)

“Vigorous debate, often via email: Almost every important issue had champions and critics. These were normally resolved not by official edict but by a vigorous debate that could be very intense. Being able to articulate and defend a strategy or product in a succinct, compelling manner with empirical analysis and withstand a withering critique was a key attribute of almost every key contributor. I still recall the trepidation I confronted when I was informed that I needed to defend the feasibility of my favorite “baby” to Max for the first time.” (by Keith Rabois, former Executive Vice President of Paypal)

“Extreme Pressure – PayPal was a very difficult business with many major issues to solve. We were able to see our colleagues work under extreme pressure and hence we learned who we could rely on and trust.” (by Keith Rabois, former Executive Vice President of Paypal)

Source = BusinessWeek
Related Article from ComputerWorld

"The world is finally waking up to the full implications of Google's business, and they're not all pretty.

Leading the rebellion is News Corp. (NWS) CEO Rupert Murdoch, who is threatening to keep his newspaper content beyond the reach of Google (GOOG) searches. Murdoch wants to keep Google from reaping so many of the financial benefits of advertising placed adjacent to News Corp. content. He's being aided and abetted by Microsoft (MSFT).

In a scenario under consideration, Microsoft would pay News Corp. for making articles from The Wall Street Journal and other Murdoch-owned publications searchable exclusively through Microsoft's Bing search engine. If the effort encourages other powerful content providers to demand compensation from Internet companies that generate revenue from online ads, the Murdoch-Microsoft partnership could create a big problem for Google."

Source = Paul Graham's blog

I am just citing the entire article...I am amazed to find other people understand and have defined terms for my work life!

"One reason programmers dislike meetings so much is that they're on a different type of schedule from other people. Meetings cost them more.

There are two types of schedule, which I'll call the manager's schedule and the maker's schedule. The manager's schedule is for bosses. It's embodied in the traditional appointment book, with each day cut into one hour intervals. You can block off several hours for a single task if you need to, but by default you change what you're doing every hour.

When you use time that way, it's merely a practical problem to meet with someone. Find an open slot in your schedule, book them, and you're done.

Most powerful people are on the manager's schedule. It's the schedule of command. But there's another way of using time that's common among people who make things, like programmers and writers. They generally prefer to use time in units of half a day at least. You can't write or program well in units of an hour. That's barely enough time to get started.

When you're operating on the maker's schedule, meetings are a disaster. A single meeting can blow a whole afternoon, by breaking it into two pieces each too small to do anything hard in. Plus you have to remember to go to the meeting. That's no problem for someone on the manager's schedule. There's always something coming on the next hour; the only question is what. But when someone on the maker's schedule has a meeting, they have to think about it.

For someone on the maker's schedule, having a meeting is like throwing an exception. It doesn't merely cause you to switch from one task to another; it changes the mode in which you work.

I find one meeting can sometimes affect a whole day. A meeting commonly blows at least half a day, by breaking up a morning or afternoon. But in addition there's sometimes a cascading effect. If I know the afternoon is going to be broken up, I'm slightly less likely to start something ambitious in the morning. I know this may sound oversensitive, but if you're a maker, think of your own case. Don't your spirits rise at the thought of having an entire day free to work, with no appointments at all? Well, that means your spirits are correspondingly depressed when you don't. And ambitious projects are by definition close to the limits of your capacity. A small decrease in morale is enough to kill them off.

Each type of schedule works fine by itself. Problems arise when they meet. Since most powerful people operate on the manager's schedule, they're in a position to make everyone resonate at their frequency if they want to. But the smarter ones restrain themselves, if they know that some of the people working for them need long chunks of time to work in.

Our case is an unusual one. Nearly all investors, including all VCs I know, operate on the manager's schedule. But Y Combinator runs on the maker's schedule. Rtm and Trevor and I do because we always have, and Jessica does too, mostly, because she's gotten into sync with us.

I wouldn't be surprised if there start to be more companies like us. I suspect founders may increasingly be able to resist, or at least postpone, turning into managers, just as a few decades ago they started to be able to resist switching from jeans to suits.

How do we manage to advise so many startups on the maker's schedule? By using the classic device for simulating the manager's schedule within the maker's: office hours. Several times a week I set aside a chunk of time to meet founders we've funded. These chunks of time are at the end of my working day, and I wrote a signup program that ensures all the appointments within a given set of office hours are clustered at the end. Because they come at the end of my day these meetings are never an interruption. (Unless their working day ends at the same time as mine, the meeting presumably interrupts theirs, but since they made the appointment it must be worth it to them.) During busy periods, office hours sometimes get long enough that they compress the day, but they never interrupt it.

When we were working on our own startup, back in the 90s, I evolved another trick for partitioning the day. I used to program from dinner till about 3 am every day, because at night no one could interrupt me. Then I'd sleep till about 11 am, and come in and work until dinner on what I called "business stuff." I never thought of it in these terms, but in effect I had two workdays each day, one on the manager's schedule and one on the maker's.

When you're operating on the manager's schedule you can do something you'd never want to do on the maker's: you can have speculative meetings. You can meet someone just to get to know one another. If you have an empty slot in your schedule, why not? Maybe it will turn out you can help one another in some way.

Business people in Silicon Valley (and the whole world, for that matter) have speculative meetings all the time. They're effectively free if you're on the manager's schedule. They're so common that there's distinctive language for proposing them: saying that you want to "grab coffee," for example.

Speculative meetings are terribly costly if you're on the maker's schedule, though. Which puts us in something of a bind. Everyone assumes that, like other investors, we run on the manager's schedule. So they introduce us to someone they think we ought to meet, or send us an email proposing we grab coffee. At this point we have two options, neither of them good: we can meet with them, and lose half a day's work; or we can try to avoid meeting them, and probably offend them.

Till recently we weren't clear in our own minds about the source of the problem. We just took it for granted that we had to either blow our schedules or offend people. But now that I've realized what's going on, perhaps there's a third option: to write something explaining the two types of schedule. Maybe eventually, if the conflict between the manager's schedule and the maker's schedule starts to be more widely understood, it will become less of a problem.

Those of us on the maker's schedule are willing to compromise. We know we have to have some number of meetings. All we ask from those on the manager's schedule is that they understand the cost."

Source = Yahoo News

"Federal prosecutors hit Pfizer Inc. with a record-breaking $2.3 billion in fines Wednesday and called the world's largest drug maker a repeating corporate cheat for illegal drug promotions that plied doctors with free golf, massages, and resort junkets."

Source = The Nation
I came across this awhile ago, finally got around to documenting it...

The twenty-five-to-one ratio ought to become our national pay standard, not just for bailed-out companies but for all enterprises that get government support, whether through contracts or subsidies or tax breaks. Last year Mark Hurd, Hewlett-Packard's CEO, took home $42.5 million. HP's biggest subsidiary gets more than $2 billion a year in federal contracts. Our tax dollars are, in effect, subsidizing CEO pay windfalls.

How do we start reversing this outrage? California Representative Barbara Lee is pushing legislation that would cap the amount of executive compensation firms are permitted to deduct from their corporate income taxes at twenty-five times the pay of their lowest-paid worker. If that became law, corporations could opt to continue paying their top executives tens of millions of dollars a year. But they would have to find somebody other than taxpayers to help them foot the bill.