Category Archives: Non-school Wisdom

Passion, Ethics and Artificial Leather

Oh wow. Artificial leather! I am not saying that I don’t have mixed feelings. To be honest I am relieved that I don’t have to ethically judge about this topic. Still, very fascinating,  this TED talk from Andras Forgacs. It’s on the one hand very inspiring to see how immensely passionate Andras is about this technology and the dream he’s been following for years. On the other hand, though, you can see even him returning several times during his speech to the ethical foundation of why he is doing what he does – as if somehow his work is constantly forcing him to think about the moral legislation. It’s just an assumption but I think Andras chose to have one of the toughest jobs out there. Imagine yourself in a lab creating artificial leather and I assure you that you’ll be confronted with ethically and morally doubts and questions you’ve never had before. Wow, this TED talk is powerful in so many ways and not only because humans can now grow artificial leather.


At the beginning, design is everything.

Design is a funny word. Some people think design means how it looks. But of course, if you dig deeper, it’s really how it works.

Steve Jobs.

I couldn’t agree more. I see that happen all the time. Do never underestimate design.

When you are starting up, design is the personalization of the dream you have with your venture. Do not let it become your nightmare.

Money is just linear (part 2)

Building up a new venture isn’t easy. After living a meaningful life, it may be the hardest thing to do. It will require everything from you at the beginning while offering only very few moments of joy. And after all, it is a hell lot of work. When questions such as ‘why the f*** am I doing this?‘ will pop up in your head, you’ll know what I am talking about. And sooner or later these questions will be inevitably present all the time. By then at the latest will be in serious motivational trouble whoever decided to create a new start-up only to make money.

So here’s my first advice: Do build up something new only if you have a higher purpose in mind. If you want to change the way people live, work and communicate with each other or if you want to solve a problem people have. If you are sure that the endless time you will spend on this is time well spent.

Keep this non-monetary mindset throughout your whole start-up phase all the time. Do not doubt. Do not listen to what other people are saying. They usually don’t share your higher purpose, they only share the money-part of your new business. That’s something you don’t need in this phase. Make your higher purpose the central thought for your motivation. It will allow you to remain motivated even in situations where a lot of ‘lows’ set you way back. It makes you resilient. And it also allows you to celebrate successes and breakthroughs exponentially. This is good for your long-term motivation. Because the next set back is waiting just around the corner and money is just linear.

Yesterday, we had a breakthrough and it just feels great.

Do you wanna be unicorn or meteor?

Hell, it’s been a while since my last post and to be honest, there is an excuse.

Ok, really there is none, one should always find a few minutes to talk about interesting stuff.

It’s just lately, the earth spins a bit faster and seems to be a little out of control. Don’t worry, this has nothing to do with Russian Meteors or other falling stars, this is more due to recent changes in my life. Extremely good changes that make me feel like a unicorn – sometimes.

A unicorn?

Well, I am still me, but if you can spare a few minutes, listen to Shawn Achor in the video below. The video is not uniquely about unicorns. The metaphor he uses is charming, but what’s even more appealing is his key message –  really impressive and shocking at the same time. Where would the world end if we all embraced the Happiness Advantage? I don’t know but I am sure we would be fewer stars falling down on us.


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From Value and Stock Performance and Apples and Oranges

Yesterday I wrote a few lines about the recent Microsoft Yammer deal for $1.2 billion. My point was that what Microsoft is lacking focus which would result in a big destruction of company value – much more than the premium they paid for Yammer. And today, I wanted to show a chart with the stock performance of Microsoft, Apple and maybe Google to underline my point here. But strangely enough, the chart doesn’t really work out. Microsoft’s stock isn’t actually doing that bad. So either I am wrong with my assumption that Microsoft lacks focus and thus destroys company value step by step or investors see things radically differently.

Or maybe it is not even a contradiction? What’s the story when you ignore the superficial data and dig deep into the fundamentals?

Superficial data cries to be compared to superficial data from others. We all love to compare and we will do it again later this year at the Olympic Games in London. We simply love to put things into perspective and do it almost every time.  We do it now with Jive Software, which sees its shares rise big time because of a comparison with Microsoft/Yammer. Jive Software is apparently in the same “space” so we compare. People and investors create “multiples” of superficial data like revenue, earnings, etc. to benchmark such ratios to similar companies and determine their value. That’s easy to do and they even look incredibly smart when they do that. It just has nothing to do with value.

Value is not superficial. Value is fundamental. The intrinsic value of a company is its continuous ability to solve one or more problems for which one or more markets require a solution. Focus is the ability of  management to secure the company’s capabilities and resources to solve market problems. Lack of focus is the contrary. These are qualitative measures. They cannot be compared. But they are actually the source of long-lasting company value and still they are largely ignored in investors’ metrics.

Value and stock performance seem to me like apples and oranges now and I wonder why I ever wanted to show a chart to underline my previous point. I’ll never try to do that again.

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Focus is unique, vital and creates value – Lesson learned, Microsoft?

I am always late with news and that’s why I don’t blog about news. Others are much better at that anyway. I am late with news because the news sensation doesn’t interest me that much. I am more thrilled to see what’s going on after the news broke. What comes after the big bang is more crucial than the actual bang. But much too frequently, the sensation dominates the web and its long-term impact is not of interest. That’s really dangerous, and it’s even existential.

Let’s take a recent example of huge news, the Microsoft Yammer deal for $1.2 billion. It’s been huge because the number is really big. And now stories go on and on if Microsoft’s decision was right or wrong and if they paid too much and why. All is followed by lively discussions on Microsoft’s strategy, motivation and odds for making this a success story. And Microsoft probably enjoys this unusual level of attention and feel good about it.

Truth is, every company has its own DNA, its own winning formula in its markets. This can change over the years and successful companies do change a lot. At the same time, they maintain their raison d’être.  Some call this corporate strategy, but I don’t like it.

I like to call it focus. Focus is unique, vital and creates real value.

If a company executes a losing corporate strategy but maintains focus, it will sooner or later correct this strategy. But if the company loses focus, it’s the worst thing that can happen. Losing focus really destroys value. Being focused also means always being proactive. Now, acquisitions generally look like the acquirer is very proactive. And here it get’s tricky. This might be true for some acquisitions, but sometimes, acquisitions are also either a result of being not proactive enough (you may also call it innovative) or, even worse, an alarming sign of lack of focus. And when I hear that Microsoft’s R&D budget is $9.6 billion of which 90% is directed to the Cloud and at the same time $1.2 billion is spent on acquiring a social enterprise networking company, I feel like Microsoft’s losing focus of what they are and want to be. Eventually, this will destroy a lot of value, much more in fact than overpaying a few hundred millions for an acquisitions.

That’s not the news Microsoft seems to focus on. But this will eventually have a bigger impact.

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Money is just linear

If you can spare 10 minutes and 48 seconds of your time, watch the video above, it’s the best I’ve seen so far on this topic. For those who only have time to read the few lines in here, a really short summary is this:

For tasks requiring mechanical skill only the equation the bigger the reward (=pay), the better the performance holds true.

For tasks requiring even only a little bit of cognitive skill, this equation is not only rejected, it is actually inverse: the larger the reward, the poorer the performance!

As human beings, we are not predominantly driven by rewards, we are not linear. This is ok, we all knew already that those linear rewards work only so much. But that these rewards actually decrease our motivation to perform? That’s pretty big. Isn’t it exactly this behavior that inspired Steve Jobs to create the Mac? And that led so many other people in our world do the most beautiful things? It is. It is exactly this behavior what separates us from all other God’s creatures and I am not sure the saying “money rules the world” is correct. After all, money is just linear.

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Not-so-crazy ‘Unreasonable at Sea’ incubates team success

Some days you just stumble upon them, usually on the web. Great things you really like. Game changing projects and disruptive ideas. Supposed-to-be-crazy visionaries. Don’t believe Steve Jobs was the only one, there are far more out there than you think.

One of this crazy ideas seems to be ‘Unreasonable at Sea‘, a mentor-driven accelerator for tech entrepreneurs looking for the next big thing. If you and your start-up gets on board, you sail around the globe to 14 destinations for 100 days together with 20 highly successful mentors. Total costs are estimated to be $120k and are fully covered by the accelerator.

Sounds crazy? Actually not so much.

A study by the Kauffmann Foundation revealed that the management team is one of the most critical success factors for a start-up, right after former business experience. And believe it or not, a great and functional team is all the more important if you wanna change the game. When you sail big disruptive waves, you will face a strong headwind for most of the time and basically see no tailwind. That’s really challenging and only great teams can keep up with that. Seems like ‘Unreasonable at Sea’ understood that pretty well. Being for 100 days on the same boat leaves no room for excuses. After such a journey, you will know where your team stands at, if it has what it takes and, most importantly, if it can stand the headwind. Knowing that is priceless for you and your team.

And for Unreasonable at Sea, it’s not unreasonable at all. They invest a little bit upfront, offer a great experience to promising tech companies and give away some of their wisdom through their mentoring. But what they get is actually worth much more than their initial investment – the certainty to have a great team minimizes their risk for the game-changing ventures they support. And that’s actually really smart.

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At 81, Warren Buffet has the balls

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I don’t know much about Warren Buffet, except the boring things that the press tells us – things like that he is one of the richest guys in the world, he is the “Oracle of Omaha”, he gives away all his wealth, et cetera. Apparently the media is content with this sensationalism and superficiality. But I found something really surprising and in its way fascinating in Warren Buffet nobody else seemed to care to write about. Maybe because it is a simple thing, but it is powerful.

I recently looked for the first time at Warren’s latest Shareholder Letter from 2011 which he publishes openly (disclosure: I am not in any way affiliated to Berkshire Hathaway, Inc.). It is a pretty long letter, but if you find time you should look at it in detail here – it is totally worth it. Not because it provides a great investment advice how to become as rich as Warren, in fact I couldn’t find much of advice in it that you could use.  But it is an example of what character traits one person needs to be able to come as far as Warren Buffet. Reading through this letter to his shareholders, you find text passages such as:

A few years back, I spent about $2 billion buying several bond issues of Energy Future Holdings, an electric utility operation serving portions of Texas. That was a mistake – a big mistake.

Wow. When was the last time you’ve seen any external manager telling publicly “yes, I made a mistake, let’s go on”? Let alone any politician! I’d even say no politician in the last 20 years has come up with that level of truth. People are simply no longer straight forward.

And it goes on:

I totally miscalculated the gain/loss probabilities when I purchased the bonds. In tennis parlance, this was a major unforced error by your chairman.

So this is not just a one-time thing, this is an essential feature in Warren Buffet’s character and certainly one of his secrets to success. It is fascinating and living proof that being honest, straight forward, direct but not unfriendly are the foundations to build the necessary trust among whoever surrounds you to achieve great things. At 81, Warren Buffet has the balls.

This ‘Tipping Point’ is freaking me out…

Did you read Malcom Gladwell‘s book “The Tipping Point” ? No? Good for you. Because I’ve read it and it is driving me crazy ever since.

The ‘Tipping Point’ Gladwell is referring to is that magic moment every entrepreneur is dreaming of achieving. It’s the small event or action that finally gives you, your product, your service or any other adventure that critical mass to spread like wildfire. And when you read through the examples in this book, you certainly learn why this observation is perfectly reasonable and that very little things can really make a big difference. You begin to understand a bit how trends evolve, how products can become popular and all this is very interesting and insightful. I don’t want to criticize anything in this book, it all makes perfect sense. It is just that now I am in a situation, where I believe it would be better for me not knowing about all this stuff. But I cannot erase these thoughts and ideas anymore, they stick in my head and I have tried everything, including drinking.

So I am screwed.

I am screwed because right now I am in a situation where one of my goals is to get exactly that critical mass, to pass that very threshold. But now, that I know how very little things can have a huge impact, this very thing starts driving me crazy. Seriously. You change your way of working to the extent that you reformulate every sentence in an email a dozen times because you think that maybe the recipient doesn’t understand what you were trying to say in your first version. And maybe this recipient is just your tipping point. And because you haven’t reached that tipping point yet, you try different things and apply changes very often because, you know, sometimes it could be just that you used a different word than before that could tip the whole thing and make it work, right?

I don’t even have a remedy for you. As much as I try not to think of the tipping point, it always remains in my head. The more you work and the more decisions you make per day, the more ‘possible tipping point” situations appear. It is a book that is driving someone crazy, even three years after reading it. I guess that is what you call a ‘powerful book’.

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