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Thursday, December 22, 2016

Microsoft's $26 Billion Acquisition of Linkedin; What it means; Meeting Linkedin's VP of EMEA





You arrive on your first day at a new job, you're ushered into the induction room for your first day of training. The first thing the HR Director tells you is that they know you will leave the company one day. This seems strange, but is exactly what happens on your first day at Linkedin. Reid Hoffman, the CEO, in his book 'The Alliance' says that the days of the 'Company man', where you could be expected to work at the same organisation for 30 or more years are long gone.
Nowadays, Reid sees a job more as a Military 'Tour of duty'. The Company needs your skills to fulfill certain problems they have. Once you have completed that you are on to the next job solving the next set of problems. Apparently Linkedin has lots of great data showing that employees leave companies!
 A few weeks ago I attended an Audience with Linked organised by Sandy Pepper, a Management Professor at the LSE. He as plenty of real world experience since prior to this position he had a long career at PricewaterhouseCoopers (PwC) where he held various senior management roles, including global leader of the Human Resource Services consulting practice.
  The main event was Joshua Graff, Linkedin UK Country Manager and EMEA Head of the Marketing Solutions business, talking about his vision for Linkedin. Linkedin's mission statement is to create economic opportunity for the entire Global Workforce. This seems like a wildly ambitious aim. However of the 780 million Professionals worldwide, already 487 million have linkedin accounts; and that number is growing rapidly.
 Mark Zuckerberg of Facebook coined the term 'The Social Graph'. Linkedin have tremendous amounts of social data that can show what skills are leaving your company and what skills are coming in. They can even predict what skills will most be in demand in 5 years time. For example the job 'Data Scientist' was relatively unknown 5 years ago. Today it is one of the most sought after job titles in the world.
 Josh told a great story about a High Tech company that he had worked with that was growing exponentially and hiring large amounts of sales people. Linkedin was able to show that they were only reaching 1% of their potential talent pool with their current methods.
 He elucidated some of the more detailed aims of the company which revolved around creating value through their talent solutions business (60% of Linkedin's revenue), Marketing Solutions, including sponsored content (20%) and of course Premium Subcriptions (20%). All this is going to drive the company forward, particularly now that Microsoft has just completed acquistion of Linkedin for $26 Billion on the 8th of December. Josh said it was ironic since prior to working at Linkedin, He was working at Microsoft, and now he will be back there again.
 He rounded off the talk with a discussion of values. 50% of employees would not consider taking a job at a company unless they had visibility into it's culture and what it stands for; so obviously this is important. Linkedin espouses compassionate management, which is not necessarily empathy, but rather being able to imagine what it's like to do your colleague's job.
Josh said that empathy may debilitate you if you feel too much. But to understand what, for example your team members are going through will enable you to manage them much more effectively. As he put it it's simply 'walking a mile in someone else's shoes'.
 Equally he talked about Linkedin's culture of transparency. This was the most powerful part of the discussion since He shared his own deeply personal story of coming out as a gay man in the workforce. When He first came out to his parents, he immediately went back 'into the closet'. This is what 60% of Millenials and Generation X's do in the workforce. Yet at Linkedin He finally published a piece talking about his homosexuality and embraces that in the workforce today.
 Josh was obviously keen to get everyone publishing on Linkedin. In addition to his own story He shared 2 other situations where publishing stories had had a really positive impact. The first was around the well known Cyber breach at Target. At this time the CMO of Target wrote a piece on Linkedin which admitted Target's mistake, apologised and showed the steps they were taking to rectify the matter and ensure it never happened again. This was widely shared and appreciated.        
             Similarly when a very unpleasant article came out in the New York Times, criticizing the work culture at Amazon, an Amazon employee published a piece disputing this and saying it was a great place to work; this quickly went viral and garnered more than 1 million views.
    I was inspired by this value. According to research, workers who are more transparent about who they are end up as more productive, more engaged and happier. Since Josh's epiphany came from publishing his piece in Linkedin, I was also motivated to publish more myself. Here is the podcast, including my question to Josh on using Linkedin for Account Based Marketing at 54:40 : http://richmedia.lse.ac.uk/alumni/20161129_HRM_alumni_event.mp3
After the talk we all retired to the bar/restaurant in LSE's new building, which is pretty impressive. I met a really interesting array of Professionals from all walks of life; Financial Services, Marketing, Recruitment, Management Consulting, even a Surgeon who had taken a Master's degree in Management at the LSE a few years previously - a great evening all round!


Tuesday, October 11, 2016

The Euro: How a Common Currency Threatens the Future of Europe

The Euro: How a Common Currency Threatens the Future of EuropeThe Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz
My rating: 4 of 5 stars

I went to see Professor Stiglitz talk at the LSE a few months ago and that's when I purchased this book, which I also got Joseph to sign for me. I've enjoyed quite a few of his books before including 'The Roaring 90's' about the boom in the Economy in that decade.

This is compelling reading. He shows that even the Success story of the European Union, Germany, has only had fairly anemic growth since the European monetary union was formed. You can see this demonstrated here: http://www.tradingeconomics.com/germa...

At the other end of the spectrum, you have crumbling economies like Spain, Portugal and particularly Greece that according to Stiglitz are being decimated by the austerity measures imposed on them by the EEC and heavily enforced by member States like Germany.

The book made me feel better about Britain's decision to leave the European Union. Though admittedly this book is about the damage that the European currency has done to Europe, whereas Britain retained its own currency.

It also went some way to explaining some of the Economic struggles the EEC has gone through since the Euro was introduced 17 years ago; That the EURO has shackled a lot of Economies that may need the financial independence of their own currencies to perform to their highest potential.

He also questions the fact that an unelected body is imposing budgets on countries that their own people have rejected, for example in the case of Greece, which actually voted against these measures but had them imposed upon them by the EEC nevertheless This may be the reason why tax revenues have fallen significantly in some of these countries. 'No taxation without representation' was the rallying cry of another well known revolution.

In addition the Economics Nobel Laureate Joseph Stiglitz raises the question of Currency manipulation and who really benefits from the Euro. Much is made in the News about China artificially reducing the value of the Yuan in order to make their exports cheaper so that they operate with a trade surplus. However Professor Stiglitz shows that actually German has a larger trade surplus than China. It's entire Economy relies extremely heavily on exports.

In February Germany's trade surplus--or the balance of exports and imports of goods--increased to 252.9 billion euros ($270 billion), which marks the highest surplus since records began after WWII. Because all the weaker Economies in Europe bring the value of the Euro down, Germany ends up with a currency that is 15% undervalued; thus creating their imbalance. Conversely, countries like Greece, Spain and even France, operate with a currency that is value too high; Hence their poor economies, high unemployment, lower exports and trade deficits (as opposed to Germany's surplus).

It seems counter-intuitive, but Professor Stiglitz believes that the only hope of saving the Euro in the long term is for Germany to leave the European Economic Union.


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Saturday, May 07, 2016

The Economics of Persistent Slumps


This week I went with a friend to the Philips lecture  http://www.lse.ac.uk/economics/newsEventsSeminars/EconomicaCoasePhillipsLectures.aspx  at The London School of Economics and Political Science (LSE) with Professor Robert Hall https://lnkd.in/ek88vS7 of Stanford University, originator & author of ‘The Flat Tax’ https://lnkd.in/eqttU6b  & one of the founders of Macroeconomics (author of one of the first books on the subject and now the standard University textbook on Macroeconomics  https://www.amazon.co.uk/Macroeconomics-Principles-Applications-Robert-Hall/dp/1111822352 )
The gist of the lecture was how productivity has declined in the USA. Areas of concern included the rapid fall in the Labour participation rate, which has now started to affect women (who previously were increasing in the labour force quite rapidly) too.



The biggest surprise here is that almost all of the decline in the Labour force is in the top levels of income and education.

Almost all the Labour participation shrinkage in the US Economy is from the richest and most highly educated sectors













 Professor Hall calculated that US GDP would be approximately 15 percentage points higher if this and a few more minor issues were addressed. He was only covering the US in his lecture. However I'd imagine these issues with productivity will only be worse for some of the other developed countries, if you look at this chart below.


Current price GDP per hour worked, G7 countries 2013 and 2014



We rounded off the night with dinner at Delaunays https://www.thedelaunay.com/ 





Wednesday, April 06, 2016

Has Venture Capital finally arrived in Europe ?


Now that I'm back in London after 10 years working and studying in the USA, its fortuitous that my office is a stone's throw away from my Alma Mater, The London School of Economics. They have regular lectures and recently I decided to go back to attend one on Venture Capital in Europe. The LSE Finance Department invites me to these from time to time.
There was quite an interesting bunch gathered in the Conference room, including my neighbour, a Consultant at KPMG specialising in due diligence accounting for Venture Capital. The host for the evening was Ulf Axelson, who is the Abraaj Group Professor in Finance and Private Equity at the London School of Economics and the director of the Financial Markets Group. LSE has just started a Master’s degree in Private Equity Which He now runs.
Right away I learnt a new word - 'Decacorn' - it's like a Unicorn (Tech start-up that reaches the 'magical' $1 Billion valuation) but instead it reaches the even more magical $10 Billion valuation. On the panel included the Chief of Staff of Lord Rothschild's investment group, Magnus Goodlad; Magnus has 14 years’ private equity experience, including early stage UK technology and venture capital investment. Magnus previously spent ten years at Top Technology Ventures/IP Group where he held various roles, including Chief Operating Officer.
Felda Hardymon, who is a senior partner at Bessemer Venture Partners and the Class of 75 Professor of Management Practice at Harvard Business School. His investments have included Parametric Technology, a provider of product cycle-management software; sporting-goods chain Sports Authority; office-supply company Staples; and Axis Networks (acquired by ACE) a 4G, wireless-remote radio head supplier.
Byron Deeter, who is a managing partner in Bessemer’s Menlo Park, California Office (working at the same company as Felda Hardyman) where he focuses on investments in the cloud-computing, mobile and Internet sectors. He was the founding CEO of Trigo Technologies, acquired by IBM. Byron is co-author of "Bessemer's 10 Laws of Cloud Computing and SaaS", the BVP cloud index, BVP's cloudscape and BVP's next cloud unicorns. He was a main investor in Criteo, France's most successful IPO of recent years.
Saul Klein who most recently co-founded Kano and Seedcamp, as well as being co-founder and original CEO of Lovefilm International (acquired by Amazon). He was also part of the original executive team at Skype (acquired by eBay).
11% of US businesses are venture backed companies, which makes up a whopping 21% of the US Economy. So it's clearly important to US business. This article was referenced at the beginning of the talk: http://www.telegraph.co.uk/technology/technology-startup100/8325627/Start-Up-100-Whats-wrong-with-European-venture-capital.html
9% of US Venture backed companies IPO versus only 4% in Europe. Whilst 28% of US companies are bought out versus 20% in Europe
Some of the theories on why Europe is behind the US in Venture financing included:
1) Venture Capital is a younger business in Europe. It only really got going in 1999, whilst in the US it was going strong in the early 1990's
2) There is less of a network of VC's and support organisations (Law firms, Consultants etc.) in Europe than in the US. Part of this problem is caused by employees not moving around enough in Europe. In the US it's far more common to change jobs quickly than in Europe. This change creates bigger and bigger networks, with much more interplay between individuals.
3) Financing - in the US the entrepreneur is the star, financing plays second fiddle. In Europe (particularly London which is dominated by the Financial Services Industry) it's the other way around. At one point someone asked 'what's more important - the Venture Capitalist or the Entrepreneur? and everyone agreed it was the Entrepreneur. However, in Europe entrepreneurs are often left feeling like they are begging for scraps from bankers, not creating a potential gold mine.
Aside; my other favourite quote of the night was 'There's nothing more useless than a Venture Capitalist without a cheque book'
4) Regulatory problems - Byron Deeter talked about the difficulties he had trying to set up Criteo in France. Though a French company they chose to have their IPO in the US on the Nasdaq http://www.reuters.com/article/criteo-ipo-idUSL3N0IJ62D20131029 
5) Psychology of Europeans - they are more risk averse and They have a greater fear of failure.
Although the 50 square miles of Silicon Valley creates more companies than the whole of Europe, this talk did leave me feeling optimistic; that now is the time for new companies to take off in Europe.
Skype, which was founded in Denmark, is a great template to look at for aspiring European Entrepreneurs. I've been using it constantly since I moved to the US in 2005.