How Will You Measure Your Life?

Clayton Christensen's essay How Will Your Measure Your Life? is a must read.  The essay provides a framework for living a life of purpose rather than regret, for investing in what matters versus what's topical.

Please read the full essay - note, the essay is for business school students about to graduate but has broader relevance and resonance. In brief, he writes that everyone must think through the answer to three fundamental questions:

1. How can I be sure that I'll be happy in my career?
2. How can I be sure that my relationships with my spouse and family become an enduring source of happiness?
3. How can I sure that I'll stay out of jail?

The article goes on to define:

• How to Create a Strategy for Your Life
• How to Allocate Your Resources
• How to Create a Personal and Family Culture
• How to Avoid the "Marginal Costs" Mistake - aka "Just This One Time"
• How to Remember the Importace of Humility
• How to Choose the Right Yardstick

Rethinking Display

Jessica Vascellero's recent article in the WSJ, "Tech Firms Tout New On-line Ad Formats" is a wonderful read.  The article, written from Allen & Company's Sun Valley "mogul" retreat explores the future direction of the display market.

The US display ad market is worth ~$8 bn. Display ads today, however, are virtually identical to the very first display ads of fifteen years ago - static pictures of products that increasingly fail to capture the interests of consumers and the nature of today's web- video, Twitter, real-time content, etc.  Given the lack of innovation, ROI is suffering and both publishers and advertisers are exploring new alternatives.


Google is making display innovation a priority and the article quotes Eric Schmidt as saying that he "championed "interactive video ads," which he said are on the way. Such ads, which could appear anywhere on a Web page, not just inside a video, would be like mini-Web pages. That means they could allow Web users to watch a video, leave a comment and see real-time updates within the ads that are more customized to their interests."


I very much enjoyed reading that paragraph. Why?  


Widgetbox's ClickTurn ad platform already delivers on the vision outlined by Mr. Schmidt - ClickTurn ads transform display ads into nanosites programmed by best of today's real-time and interactive web.  For example, here is an ad for Halo that includes video, real-time content updates, and delivers, via an ad unit, the very "mini-Web page" that Google's CEO promises is coming. 


ClickTurn now powers dynamic display solutions for many of the web's top publishers. Working with our publisher partners, we are working to redefine display ads and to deliver ROI - through detailed interaction metrics - that will help the display market deliver greater value.

Solitude and Leadership

Solitude and Leadership, by William Deresiewicz, is an essay based on a lecture on leadership that he delivered to last year's West Point plebe class.

The essay argues that elite educations today produce people who are expert at excelling in systems and bureaucracies and not people who will excel as leaders. Leadership for WD is not about "jumping through hoops" to progress up the "system" but rather leadership is best exemplified by those who are self-aware, deeply thoughtful, and able to think creatively and independently.

Elite education, he argues, conditions people via a system of rewards and progression to excel in systems rather than forge independent and risky paths. He writes,

"Why is it so often that the best people are stuck in the middle and the people who are running things—the leaders—are the mediocrities? Because excellence isn’t usually what gets you up the greasy pole. What gets you up is a talent for maneuvering. Kissing up to the people above you, kicking down to the people below you. Pleasing your teachers, pleasing your superiors, picking a powerful mentor and riding his coattails until it’s time to stab him in the back. Jumping through hoops. Getting along by going along. Being whatever other people want you to be, so that it finally comes to seem that, like the manager of the Central Station, you have nothing inside you at all. Not taking stupid risks like trying to change how things are done or question why they’re done. Just keeping the routine going."

In many companies, the incentive for creativity, for challenging the normal, for innovating processes is close to nil. Too often, the lack of senior support and the inertia of big companies "break the spirit" of those who have vision to see a new way forward. Rather than reward creativity and iteration, the system throws roadblocks in the way that eventually wear the innovator down.

Big companies are often hollowed out - ie the best and brightest are driven out by those content to manage the system rather than to challenge it. What's left is deadening - both to those who work in the system and, ultimately, to the system itself.

What's fascinating is his argument regarding the pernicious effects of today's elite educational systems - arguing, convincingly, that leadership is not learnt by excelling in educational system - doing what is required to advance to the next level - but rather through introspection, self-awareness, and the ability to concentrate on what matters rather than what is rewarded.

A great read.

England

I lived for in England from 1982-1989. Formative years, where I fell in love with English football, the teams, tradition, and national team.

My boys - 10 and 8 - wear EPL jerseys most days to school and Sunday nights are reserved for the EPL game of the week and top highlights. The backyard holds two goals and a daily game where the boys pretend to be Rooney, Lampard, or Gerrard.

Imagine then the shock and confusion when their EPL idols went out not like the 3 Lions but rather like the 3 lambs.

Tears were spilled as they processed the 4-1 pasting by the Germans and the humiliation that was England's World Cup.

All sports fans live vicariously through their teams, but this World Cup is allowing me to see the depth to which children believe in their idols and the real pain the children feel when their heroes fail to live up to expectations.

Twitter - pricew

If you read this blog - please do add me on Twitter - http://twitter.com/pricew

Good luck with the end of Q2!

Instructions for Life from the Dalai Lama

I found this list today in my office - no idea where it came from, but I like it.

1. Take into account that great love and achievements involve great risk
2. When you lose, don't lose the lesson
3. Follow the three R's
1. Respect for self
2. Respect for others
3. Responsibility for all your actions
4. Remember that not getting what you want is sometimes a wonderful stroke of luck
5. Learn the rules so you know how to break them properly
6. Don't let a little dispute injure a great relationship
7. When you realize you have made a mistake, take immediate steps to correct it
8. Spend some time alone every day
9. Open arms to change, but do not let go of your values
10. Remember that silence is sometimes the best answer
11. Live a good, honorable life. Then when you get older and think back, you will be able to enjoy it a second time
12. A loving atmosphere in your home is the foundation for your life
13. In disagreements with loved ones, deal only with the current situation. Do not bring up the past
14. Share your knowledge. It is a way to achieve immortality
15. Be gentle with the Earth
16. Once a year, go someplace you have never been before
17. Remember that the best relationship is the one with  yourself
18. Judge your success by what you had to give up in order to get it
19. Approach love and cooking with reckless abandon

Iteration and the Start-up Path

Mark Gainey, the founder of KANA, once told me that the hardest part of the entrepreneurial journey is the first step. But that once begun, the journey takes on a life of its own.

The journey opens up into an endless series of forks in the road, where each fork taken provides new context, learnings, and guidance.  Each fork provides both a new direction and momentum with which to carry the company and team on wards. If you listen to experience start-up people, they emit a wisdom and authenticity that comes from that journey - for it is a humbling one full of challenge and challenges overcome by tenacity, hard work, and a healthy dose of luck.

Since, I have been at Widgetbox, we have evolved into a market focus and set of product offerings that I could have never predicted on my first day on the job. What began as a widget platform, is now powering ad units for the world's largest brands and publishers. In addition, HTML5 has opened up an entirely new market opportunity for our widgetserver runtime and platform.  The ability to pivot, to make decisions based on the market's guidance, and the insights that come from iteration are fundamental.

Great ideas are a function of context - white boards do not allow for great ideas, rather great ideas and insights require a gestation period of months and develop over a series of small moments - rejection, minor tweaks, and finally clarity and insight emerge as the product evolves to fit the market need.  Importantly, the particular nature of a start-ups journey makes it hard for others to follow and gives rise to the myth of overnight success when all of a sudden the company meets the market need far ahead of the competition.

While a certain direction needs to be set a priori - the strawman is simply that - an early hypothesis that brings resources together - both human and financial capital. Then the market takes over and the process of learning begins.

My journey required an ability, uncomfortable for me, to live with ambiguity - to trust in the team to walk the journey together - not always certain of the final destination but confident that we had the flexibility and determination to orient to a good place over time - one step at a time.

Moreover, the early uncertainty fades as the market opportunity is better characterized and understood and the early conviction becomes steeled by a certainty that the company is right and onto something great!

Comments on Drive: The Surprising Truth About What Motivates Us

This animated video of Dan Plink's RSA talk is extremely interesting.



Key argument: after a certain level of income, we are no longer motivated by purely financial gain. He argues that financial incentives work best for piece meal work - ie bonus tied to how many widgets are made per time period.

But for knowledge workers, science shows that financial incentives alone do not lead to higher performance.

What does?

1. Autonomy - self directed work
2. Mastery - challenge and the desire to master a domain
3. Purpose - making a contribution to a transcendant goal

Fascinating food for thought and given that the tech industry is comprised of knowledge workers - very instructive with respect to organizational behavior.

AAPL vs MSFT -what happened to best-of-breed?

During my time at the Kellogg School, I took a class on competitive strategy.  One of the quintessential strategy cases explored the battle between Apple and Microsoft for the computer market.  At the time, Apple had less then 3% of the market and the company was heading for obscurity, or worse.

Today, Apple's market cap passed that of its long time rival.  Twelve years ago the conventional wisdom held that the PC OEM model and the Wintel (Windows/Intel) platform allowed for a greater rate of innovation and a cost curve that Apple could never match.  In hindsight, this argument seems farcical.

At that time, strategy orthodoxy encouraged companies to specialize at the component level - chips, operating systems, applications, assembly - and that specialized best-of-breed vendors would outperform vertically integrated companies.   In fact, the idea of a company that produced both hardware and software was laughable and a strategy destined for a stale product line, bloated costs, and market share losses.

What happened and why was conventional wisdom so wrong?  The world of best-of-breed has been replaced by a world of vertical integration, whereby the frictions of assembling best-of-breed components are driving people to buy pre-integrated systems.  Oracle's acquisition of Sun is based on Jobs' vision of system level selling - hardware, software, peripherals.  Ellison argued that customers want to buy a a solution - not a set of components that are integrated by systems integrators to deliver value.  He argues, why not sell an pre-integrated solution, whereby each layer of the solution is designed to work best with the layer below and above it?

iPod/iTunes - software, computer, device, peripheral

iPad- App Store

Perhaps the insight is that as systems and "solutions" grew more complex - the incremental value of driving down marginal costs on a per component basis was overshadowed by the increase in marginal costs of assembling the components to solve the intended problem - ie listen to music, watch a movie, use an application.

Apple moved from competing on abstract utilities and generic cost per cpu to competing on systems designed to satisfy higher level consumer needs - consume media, produce media, share, network.... Integrated value not only supports much higher prices - compare a Dell laptop to a MacBook Pro - but also much higher level of consumer satisfaction.

Best of breed is dead - long live systems.

The Welfare State Killed Itself

A narrative is emerging across the developed world - General Motors, Greece, Spain, the United Kingdom, federal, state, and municipal pensions....Put simply, the welfare state is no longer able to fund itself.


Defined-benefit pension plans and cradle to grave social systems- that are funded by subsequent generations - are driving massive deficits. Moreover, investors are refusing to finance deficits, forcing gut-wrenching but necessary cuts to the welfare state.


Importantly, the culpability of these cuts lies not with international investors, the IMF...but rather with the politicians, both Republican and Democrat, that ignored years of warnings and continued to enact welfare programs and pensions obligations that were impossible to deliver.  The villains are politicians who insisted it was a "right" to receive benefits that are simply impossible to pay for.


The private sector went through a painful, but necessary migration from defined-benefit to defined-contribution pension plans over the last thirty years.  Moreover, in the US, flexible labor laws allowed companies to restructure and eliminate tens of thousands of jobs that were no longer viable or necessary.


The public sector, however, has simply refused to confront the hard facts that laws and programs enacted for the "public good" - life time teacher tenure, full pensions for public workers, job guarantees - were in fact creating a fiscal monster that is eating an increasingly larger share of government budgets.  


The system is killing itself and its proponents need to move from defending existing programs to taking a vested interest in making changes, as soon as possible, that will make changes, while painful, not disastrously so.

How Creative is Changing and Why the Real-time Web and Analytics Force a Change in How we Think About Creative

Since Widgetbox launched ClickTurn last year, I have become a student and participant of the online ad industry. This post marks the first in a series, where I plan to share my learnings to date.  This post deals with how technology is impacting the very nature of banner ad creative and why that harbors big changes for the industry. 

Over the last fifteen+ years, the banner ad markets has grown into a $20bn global industry.  Despite the industry's scale and size, the nature of today's banner ads remains very unchanged from the very first internet ads - static pictures of products that increasingly fail to capture the interest of consumers nor the nature of today's web.

Banner ads are akin to highway billboards - static combinations of text and images - seeking to encourage the driver/consumer to take the next exit and visit the advertiser's location.  The creative process, therefore, focused on building the "perfect" creative - one that best captured the product, the call to action, and the brand's goals.  Given, that ads were developed for a seasonal or temporal campaign, the creative process sought to build the best possible set of assets and to then pass them onto media planners for distribution to relevant sites and media properties.

Two big changes make the concept of "finished" creative a relic. The first is the rise of the real-time web - Twitter, Facebook YouTube, blog posts, etc.  Brands are no longer investing in "snap shots" of their brand, but rather in conversations with their target audience, whereby the "creative" is the dialog.  The real-time web requires a shift in perspective regarding creative from something that is fixed to something that is programmed by ongoing marketing initiatives.  The brand does not seek solely to craft a static campaign that will live through the season, but rather it is also investing in daily, even  hourly, updates that build on the brand experience.  Creative, therefore, needs to reflect this change in frequency of message and provide a way to reflect the real-time brand in the creative being trafficked.  Creative also needs to reflect the two-way nature of conversations and the ability of the web to amplify said conversations through social sharing.

Since these changes occur each and every day - the traditional and serial process of locking down creative no longer makes sense.  And since these changes are real-time, the creative must become a living asset that can be programmed by the brand's marketing channels.  This is a huge change and means that traditional creative will not work. 

The second key change is analytics and retargeting.  Rather than design the "optimal" creative - brands are leveraging dynamic creative solutions that seek to personalize ads based on retargeting and analytic optimizations.  Again, the traditional creative shop is no longer a credible provider of the solution.  Each ad load can be programmed and "designed" based on observed behavior to date over the life of a campaign, information known about a given web surfer, and other variables.  Ads, therefore, become a set of programmable config options - with the final config of a given ad impression occurring at run-time.  

ClickTurn is working to leverage both trends - the shift from episodic to real-time banner ad marketing and the reality that "perfect" creative is evolutionary and will be a combination of a series of defaults combined with a series of variables that the web at large will program. The real-time nature of such changes means that traditional "locked down" creative will slowly fade away.

Negotiating Via Docs vs Over Coffee

A friend of mine is square in the middle of a financing.  His company is raising money and a prospective new investor is looking to join an existing syndicate.

Today, he called to update me on the process and to run some key issues and terms passed me.  In listening to the process to date, one key issue stood out.  The current and future board members had yet to talk, either by phone or, better yet, in person.  The negotiation, moreover, is taking place via redline markups sent over email.

In our email culture, it is increasingly common to see vast amounts of communication take place electronically - emails, texts, IMs....In many cases, electronic communication is a huge productivity boost and an enabler of commerce and progress.

In getting to a good deal, however, I find it can be problematic.  Rather than send email - which is a terrible medium for conveying intent, logic, context, tone - I highly recommend talking in person.  The social connections built from human contact and dialogue provide the context, trust, body language, tone, and other important "social greases" that foster understanding, collaboration, and common ground.

In summary, important business relations benefit hugely from in-person interaction. Second, deals feel "better" when the key issues are reviewed over coffee rather than over a redlined document delivered by an email server.

What We Can Learn from the UK

The United Kingdom is facing dire financial and structural problems. 


Deficit spending as a percentage of GDP is over 10% and forecast to increase. The future requires cuts to treasured social programs and a need to increase taxes.  


Moreover, the electorate is split - leaving no party the clear winner in elections.  Sound familiar.


However, the British are now forming the first coalition government in over 65 years.  The Conservatives and Liberal Dems formed a power sharing agreement and argued that the crises afflicting that nation calls for collaboration not confrontation, for a focus on national priorities rather than factional differences.


Wow!


I used to believe that democracies are at their best in times of crisis - hard decisions are made and the differences that define us all are put aside to face existential challenges that threaten our way of life and security.


Today, we are facing such crises and existential threats - notably a looming fiscal crisis that makes us look worse than Greece.  And yet, our political leaders are incapable of finding common ground, of meeting in the middle to drive consensus, of putting the national good ahead of politics. It is a sickening indictment on our political system and makes one incredible fearful for our future. 


California is nearly bankrupt - and yet, due to gerrymandering and permanently safe seats our elected leaders are incapable of collaborating and instead rely on petty confrontations that may make partisans feel a brief sense of "victory," but the victories are truly Pyrrhic.



The US is fast approaching "Greek" level debt issues.  Debt is projected to equal 140% of GDP within two decades, while Greece is suffering with debt levels at 110% of GDP.

With respect to Greece...today's NYTimes noted, "Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem. We, the people, are. We have not figured out the kind of government we want. We’re in favor of Medicare, Social Security, good schools, wide highways, a strong military — and low taxes. Dealing with this disconnect will be the central economic issue of the next decade, in Europe, Japan and this country."

At some point the problems will be so acute that financial markets will force our hand, as they did in Greece. Investors will demand a "risk premium" to finance our deficit budgets and we will pay the piper.

Wouldn't it be wonderful, though, if our leaders took note of the British model of coalition government and left behind the rigid strutures of two party government and formed, what Abe Lincoln so famously did, a Team of Rivals!!!!

The False Comfort of Regulation

The US Government's typical response to man-made and natural disasters is to leap into a frenzy of creating new regulations.  The idea is that with stronger regulation, future disasters will be prevented and the nation as a whole will be made sounder.  The logic makes perfect sense - let's close loopholes, oversights, systemic problems that create pain and suffering.


Unfortunately, we need to only look at how current regulators are performing in order to understand the efficiency and efficacy of future regulations.  Let's start with Bernie Madoff - under the nose of the regulatory body designed to protect investors, the SEC, Bernie Madoff staged a $50 billion fraud.  The SEC received frequent warnings regarding the implausibility of his returns, however, Madoff was not caught until his own sons turned him in.


Regulations create codes of conduct that are supervised by a regulatory body charged with ensuring compliance.  The regulations are only as sound and as effective as the regulators themselves - regulators, moreover, are often ideology aligned with the very people they are tasked with regulating.  They are very poorly compensated relative to the businesses they regulate. Finally, they do not attract the same caliber of talent.


The myopia of regulators can be seen in dramatic fashion looking back at what they missed, however, it is not surprising that brilliant people can cheat the system in ways impossible to police or prevent.


What's the point - the point is that we should all recognize the fallibility of regulation to protect us.  There is a huge amount of legislative effort invested in creating regulations that will almost certainly fail to prevent future disaster.


We can, however, think through incentives.  The cost of moral hazard is very real - if banks, oil companies, car companies, Madoff's investors, can expect the Federal government to backstop their losses then the potential "costs" of their decisions do not factor in their calculations.  I understand that after the Exxon Valdez spill, Congress passed a law limiting future oil-spill related losses to $75m.  This paltry "cost" of a spill creates a huge lack of incentive for oil companies to prevent spills.  Similarly, large companies in the US today know that the Federal government is much more likely to bail them out than to let them fail.


Allowing companies to bear the true costs of their actions is most likely a more effective measure to prevent future pain.  We need to create incentives such that malfeasance and misfeasance is borne by the shareholders of companies responsible.


Simply passing laws does not make it so.

Google, AdMob, and the FTC

The FTC is now considering moving to block the Google-AdMob deal.  The post below lays out my logic on why this is an insane position to even consider and further evidence of government run amok.


As I noted in an earlier blog post, free markets are the most efficient and equitable organizing principle for economic activity. Moreover, government monopolies, command and control resource allocation, and top-down/centralized decision making limit our freedom and destroy value in society. 


Silicon Valley is perhaps the best example of free markets in this country - groups of individuals, free of any government subsidies, direction, or policy, are able to come together, free of labor laws that limit hiring or firing, and pursue their individual utility.  The ideas and the allocation of resources are highly decentralized and the net result is an incredible wealth and productivity machine.  No one orders that we invest in search engines, new chemical entities, iPhone apps - and yet the market somehow magically delivers innovation and value year after year.


I believe that it is better for a million people to make one decision than for one person to make a million decisions - the logic of such a premise is undeniable and yet we routinely expect government decision makers to solve complex issues fairly and optimally. Markets move so quickly - think mobile over the last 24 months - that it is insane to think that the government can truly understand the issues and make a sound decision. Think APPL vs Flash, HTML5, iAd, iPad, Android - the market is moving a billion miles an hour and yet government bureaucrats are expected to understand the pace of change, market dynamics, and decide who can buy whom.


The recent news that the FTC is considering blocking Google's acquisition of AdMob is a powerful example of government regulation run amok.  Let's consider the premise of the FTC's position - because Google is THE player in paid-search, the government is considering blocking their acquisition of AdMob, a leading player in mobile advertising.  This "concern" flies in the face of logic - for one, Apple not Google dominates the mobile Internet, Apple not Google runs a closed system, Apple not Google decides what content can execute on the market leading devices, Apple not Google is working to kill Flash, 3rd party analytics services, non-iAd ad units....


When we consider health care reform, financial industry reform, merger activity - it behooves us to remember that regulators cannot possibly understand - no one can - the complexities at work.


Market competition is the best remedy - think MSFT over the last five years - Apple is kicking their butts....


All of us in Silicon Valley should be ALARMED at the value destroying role government plays when they step into the legislate or litigate in hopes of preserving competition, fairness, or some other impossible to define and measure goal.


We are all the beneficiaries of free markets - let's remember that when we vote and let's all let the government know they should not play God in markets that move at a speed and complexity that no one person, let alone a group of smart people, can fathom, understand, or benignly influence!

Mentors

One of life's pleasant surprises is how we continue to keep learning as we age. I am sure my kids think that I know everything and have all the answers.

Each year, I realize how little I do in fact know and how much there is to learn.  We grow via experiences or people who stretch us and help us better understand ourselves, the world at large, and what really matters.

As an executive, I am constantly looking to learn and to expand my understanding of best practices, problem solving, leadership styles, etc. 

Earlier in my career, I could look within my employer's organization to find mentor, role models, and people who could help me improve, stretch, learn.

Now as a start- up CEO, it is harder to rely on internal resources to keep the learning curve steep.

Recently, I asked a long-time CEO and very successful software entrepreneur to serve as a mentor to me.  We meet once every 6-8 weeks and spend time talking about the market, life, in addition to focused conversations around areas of personal growth or challenge.  It is well-known that the world's top athletes use coaches to improve, stretch, and develop.  It is not as common, however, for business people to invest the time and energy in improving through outside mentoring and coaching.

I am very glad that my mentor agreed to spend time with me - it is a gift I plan to repay in years to come both to my mentor and to those who are like me now - self-aware enough to ask for help and hungry enough to use it to improve their game.

Fear and Mindfulness

Omar Hamoui, AdMob's CEO, is featured in this week's Sunday NY Times' Corner Office Segment.

The Corner Office is a weekly segment that interviews CEOs on management techniques, lessons learned, and pearls of wisdom borne from the pressures, trials, and triumphs of CEO-dom.

Omar, in explaining his leadership philosophy and lessons learned, notes

" One was that insecurity is incredibly damaging in a corporate environment. You end up making really poor decisions, a lot of things you do are based on fear, and eventually it will fail. When people are playing defense and they’re primarily focused on their own jobs, it ultimately ends up being a sort of losing strategy....Don’t be afraid. What I mean by that is lots and lots of decisions are made by fear and they’re made by people who think they have more to lose than they actually have to lose."

To Omar, fear is a great inhibitor of potential, leads to poor decision making, and is in some sense self-fulfilling.  

When we are scared, we are overly cautious, tense, defensive, paranoid... the list goes on.  Athletes talk about "playing tight" or "hearing footsteps."  When we are afraid, we begin to doubt ourselves and the stories going on in our head, which are in no way true, become true as our inhibiting behavior and actions prevent us from reaching our goals.

"Manny being Manny" is a pejorative joke, however, it is precisely because Manny Ramirez plays without fear and a seeming indifference to the world that he is so clutch.

There have been many times at Widgetbox when I have been afraid - afraid of not knowing where we were going, how we were going to build a great business, how the board would react to this or that piece of news, how my team was doing, what our competition was doing....I have learned that fear, doubt, and worry are incredibly corrosive to one's self, the harmony of a team, and the energy force that is necessary to achieve.

I have worked very hard to realize that too often I let environmental factors impact by sense of self, mood, energy, etc. For example, think how you react when someone who you don't know smiles at you....ok, now think how you feel when a stranger frowns at you or worse yells at you.  Tiny examples of how we are literally programmed by external and environmental inputs.  Now imagine the market frowning our your product, the board dumping on your product strategy...a bad traffic jam or a delayed flight.

What mindfulness allows is the cognitive ability to intercept external inputs, to consider them, and to avoid the unconscious triggering of each input into a hard wired reaction. Frown = sense of concern. Smile = feeling friendly to someone.

I am working to build a buffer between the environmental inputs I receive all day long and how I react to them - an ability to recognize them for what they are...random inputs that should in no way dominate my reactions to events, people, meetings, etc.  Rather, by building a sense of mindfulness and awareness, the events can be processed for what they are and I can choose how to react to them, how to learn from them, and maintain an ability to project myself to the world at large rather than simply react to the world and let it dictate how I feel.

As Omar notes, fear is an inhibitor - both personally and institutionally.  Tennis players, golfers, CEOs...all share this common view that staying present is vital to success - anxiety related to past mistakes or fear about an imagined future derived from past mistakes can dominate the mind and cripple performance.

Omar's comments spoke to me and the journey I have walked in trying to be mindful, to stay present, and to not let fear and inputs program my outputs.

This I Believe: Part 1

This post is the first in a series where I try to lay out what I believe and why. 

The project, This I Believe, inspired me as did the really complex issues being debated today. What do I believe? And why?

The This I Believe project collects essays that capture the core beliefs that guide peoples' daily lives. As an earlier post noted, writing allows one to step back, consider the world at large, and formally draft a position that captures what we believe and why. 

"Faulkner said, "I don't know what I think until I read what I said." That's not just a joke. You learn what you think by codifying your thinking in some way. Codifying one's thinking is an important step in inventing oneself. The most difficult way to do it is by thinking about thinking  - it helps to speak or write your thoughts. Writing is the most profound way of codifying your thoughts, the best way of learning from yourself who you are and what you believe."

Given the highly divisive nature of today's political environment and the big issues facing the country, our state (CA), and our communities, I wanted to take some time to think through what I believe to be true and to develop a set of first principles that can help navigate "big" decisions.

What do I think of the government's healthcare plan, the financial regulation bill, deficit spending?  How should I think about these issues and what first principles may help to develop a position?  Too often it seems that peoples' positions are driven more by their party affiliation and the personalities of the politicians involved than by the merits of a given bill or policy.

I hope that this post will be the first in a series of posts that lay out my thoughts.

This I Believe, free markets are the most efficient and equitable organizing principle for economic activity. Moreover, government monopolies, command and control resource allocation, and top-down/centralized decision making limit our freedom and destroy value in society.  I believe that pro-business policies -subsidies, quotas, bailouts, no bid contracts - are equally damning and increase costs for the many to the benefit of the few. I believe that each major party suffers from a related flaw - the Democratic party believes that government can allocate resources more effectively than the people who fund it, while the Republican party protects specific businesses and industries at the cost of the consumer, think of sugar quotas/farm subsidies.

To help me develop a position, I am rereading Milton Friedman's Free to Choose, a book that he co-wrote with his wife, Rose, and a project that explores the relationship between economic freedom and personal freedom.  

The central tenet of his book is that political freedom is only possible with economic freedom. People must be free to choose to pursue where they work, for what wages, what they buy....independent of coercion - he argues that free markets provide a mechanism for voluntary cooperation amongst people. The freedom to exchange goods and services is the most efficient system for exchange we know and is vital to maintain political freedom. For when people are not able to act in their own interests they must be commanded to - we will only do what is not in our interests, and only we can know what are interests are, if we are forced to do so.  

This can be subtle - does the CA state government know how best to spend our tax payer money as it relates to education, for example?  If we let schools compete for the dollars per student our government spends we would receive far better value.  We are not free to choose how we invest our tax dollars in our the education of our children - rather we live subject to a state monopoly and we can only choose alternative education choices if we wish to forgo the tax dollars we have already contributed to education.

Friedman writes, "In addition to what government spends directly, it exercises extensive control over the deals that people can make in the private market. It prevents you from buying sugar in the cheapest market; it forces you to pay twice the world price for sugar. It forces enterprises to meet all sorts of requirements about wages, hours, antipollution standards, and so on and on. Many of these may be good, but they are government dictation of how the resources shall be used."

If we believe that individuals are best able to define what they want, where they are willing to work, what they want to do - then it then follows that government policies that limit such freedom are sub-optimal and will stifle individual freedom.

Government policies suffer from the good intentions and yet have unforeseen consequences that are frightening - for example, using tax payer money to guarantee mortgages and to extend credit made it possible and profitable for banks to underwrite mortgages and then offload the risk to Fannie Mae and Freddie Mac.  A great idea, everyone should own a house, became the root of mis-priced financial risk.  It must be better to let markets compete to supply credit and to price risk based on a voluntary exchange between lender and creditor.

Silicon Valley is perhaps the best example of free markets in this country - groups of individuals, free of any government subsidies, direction, or policy, are able to come together, free of labor laws that limit hiring or firing, and pursue their individual utility.  The ideas and the allocation of resources are highly decentralized and the net result is an incredible wealth and productivity machine.  No one orders that we invest in search engines, new chemical entities, iPhone apps - and yet the market somehow magically delivers innovation and value year after year.  And yet, on many other "needs" we believe that centralized planners can choose on our behalf what we need and how to deliver it to us - postal service, schools, health care, who we can hire, who we cannot hire... 

Decentralized decision making must then trump centralized decision making - complex allocation decisions need to be left to markets where individuals are free to choose.  The role of the policy maker then must be to design markets that maximize decentralized allocation and to work hard to limit any interference, be it government or business, that limits such freedom and decentralization.  Quotas, subsidies, mandates, protected markets, monopolies etc. distort the markets and serve to cheat us all to the benefit of a few.  While it is tempting to believe that a group of smart people can design complex systems that will be optimal - history suggests that is not possible.

As residents of Silicon Valley - we are beneficiaries of the freedom to choose in action.  

We need to urge all political actors to recognize their limitations in making decisions that we should make for ourselves and to open competition in all economic activities to drive the most equitable allocation of our resources.

As much as I admire Barack Obama - I fear the unintended consequences of good intentions whereby a small group of people seek to allocate resources and solve complex issues on our behalf. 

  

Twitter Handle: pricew

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Supply Side Exchanges - They Are Coming

The venture community is very excited about the promise of demand-side exchanges - markets whereby advertisers can buy audience independent of publisher.

To date, advertisers have bought "audience" via publishers who provide demographically/topically relevant audience. If you want to buy sports enthusiasts, ESPN is a good buy. If you want to buy car lovers, Edmunds is your ticket.

Demand side exchanges theoretically allows advertisers to buy audience anywhere on the web and rely on various targeting technologies to match ads to audience - you can now buy a sports enthusiast across the web at large and not just via sports sites.

The net effect of ad networks and demand side exchanges is to put tremendous pressure on tier one publisher CPM rate cards - why spend $15 CPMs on ESPN when you buy the "same" audience for $3 CPMs through an ad network or exchange.

Publishers are being force to do two very important things:

• pull inventory off exchanges and ad networks to maintain their pricing
• break the fungibility argument by delivering more custom, more rich, more engaging ads than those available through a network or an exchange

In my meetings with publishers, it is clear that they are moving to pull their content off the exchanges and our working quickly and thoughtfully to develop custom ad products that outperform display and serve to add value to the advertiser beyond audience alone.

The next logical development, in order to raise net fill rates, will be to develop supply side exchanges - whereby tier one publishers pool unsold inventory and offer it on their terms for premium prices.

Demand side exchanges will be left with remnant crap inventory, and the tier one publishers will work to add value via direct sales, pooled inventory, and through in-house product teams that deliver high-value ad experiences.

I am not bullish on demand side exchanges and feel they will be left holding the bag as the premier sites build a supply side exchange and refuse to allow networks or exchanges access to their premium content.