Thursday, December 22, 2016

Linkedin UK Country Manager talks about bringing your whole self to work

This post talks about transparency in the workplace and Microsoft's recent acquisition of Linkedin

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 precisely 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 organization 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 fulfil specific problems they have. Once you have completed that you are on to the next job solving the next set of questions. Apparently, Linkedin has lots of great data showing that employees leave companies!

A few weeks ago I attended an Audience with Linked organized by Sandy Pepper, a Management Professor at the LSE. He has plenty of real-world experience since before this position he had a long career at PricewaterhouseCoopers (PwC) where he held various senior management roles, including the global leader of the Human Resource Services consulting practice.

Joshua Graff, Linkedin UK Country Manager and EMEA Head of the Marketing Solutions business, began by 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 proliferating.

Mark Zuckerberg of Facebook coined the term 'The Social Graph'. Linkedin has 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 massive amounts of salespeople. 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 Subscriptions (20%).

All this is going to drive the company forward, particularly now that Microsoft has just completed acquisition of Linkedin for $26 Billion on the 8th of December. Josh said it was ironic since before 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 its 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 merely 'walking a mile in someone else's shoes'.

 Equally, he talked about Linkedin's culture of transparency. This was the most potent 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 on Linkedin He finally published a piece talking about his homosexuality and embraces that in the workforce today.

Josh was apparently keen to get everyone publishing on Linkedin. In addition to his own story, He shared two 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, apologized 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.

After the talk, we all retired to the bar/restaurant in LSE's new building. I met a fascinating array of Professionals from all walks of life; Financial Services, Marketing, Recruitment, Management Consulting, even a Surgeon.

Tuesday, October 11, 2016

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

<!-- Global Site Tag (gtag.js) - Google Analytics The 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 anaemic growth since the European monetary union was formed. You can see this demonstrated here:

At the other end of the spectrum, you have crumbling economies like Spain, Portugal and particularly Greece that according to Stiglitz is 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 too high for their exports to be competitively priced; 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  at The London School of Economics and Political Science (LSE) with Professor Robert Hall of Stanford University, originator & author of ‘The Flat Tax’   & one of the founders of Macroeconomics (author of one of the first books on the subject and now the standard University textbook on Macroeconomics )

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 labor 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.

Professor Hall speculated about a number of reasons for this. One rather novel one, was that fifty or sixty years ago, there was very little in the way of entertainment. If you chose not to work, even with a high income, life could be quite dull. These days there are a variety of interesting pursuits, that can occupy people all their life, without them having to work.

It would be interesting to pull a chart of video game use in the last thirty years and match it with the fall in work participation rates for high-income youth.

Another interesting chart to look at would be the increase in benefits and the fall in the work participation rates. My suspicion is that a lot of people claiming benefits are not truly unable to work.

I myself had a medical condition, that was classed as a disability for seven years. I could have claimed disability benefits for it. Fortunately, I worked through it and now I'm healthy again.

The toll on one's self-esteem of claiming money for doing nothing is rarely considered when debating the government benefits system.

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 GDP per hour worked, G7 countries 2013 and 2014

We rounded off the night with dinner at The Delaunay.


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, it's 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 exciting 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.

Byron Deeter, who is a managing partner in Bessemer’s Menlo Park, California Office, where he focuses on investments in the cloud computing, mobile and Internet sectors.

Bessemer's 10 Laws of Cloud Computing and SaaS

He was the founding CEO of Trigo Technologies, acquired by IBM. Byron is the 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 the principal investor in Criteo, France's most successful IPO of recent years.

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.

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).

Finally, the Chief of Staff of Lord Rothschild's investment group, Magnus Goodlad, was also on the panel.

Right away I learned 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.

11% of US businesses are venture-backed companies, which makes up a whopping 21% of the US Economy. So it's apparently crucial to US business. This article was referenced at the beginning of the talk. 9% of US Venture-backed companies IPO versus only 4% in Europe. While 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, while in the US it started in the late 1980s

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, funding 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.

4) Fear of failure in the UK and Europe versus the US. Psychology of Europeans - are they more risk-averse than Americans? 

5) 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 

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 (and now owned by Microsoft) is a great template to look at for aspiring European Entrepreneurs.

Monday, February 08, 2016

Dinner with the founder of Justgiving

Bela Hatvany was in town, He comes to Boston a lot since He has family and Business interests here as well as some history (although He now lives in the South of France). He's a very old family friend who has known my parents for almost fifty years. I actually went on holiday with his family when I was sixteen and even lived at his house in Kensington Park Gardens (featured in the film 'Notting Hill') for some time.

So we ate some steaks at Grill 23 near Newbury Street, where I used to live when I was taking my MBA. He's a fascinating guy. His dad lost his fortune in Hungary during the war. So He came to England & made another fortune as a bridge player, Buyer of art & backer of racehorses.

Bela told me that He was treating me, as my dad bought him & his wife dinner in Holland Park, London, last week. Bela told me a great story about when He was at Harvard Business School. He was asked by IBM to complete a data/software project at the end of the first year of his MBA.

IBM told him it would take 14 software programmers a year to complete. Bela explained that He figured out a way to do it much quicker - He actually completed the project alone, & in only 12 weeks. After that, he was in quite a lot of demand.

Here's one of his other companies, Silverplatter, which He sold to Wolters Kluwer for $113 Million in 2000. These days He invests in a whole host of new companies, such as Justgiving, which has grown immensely as a business.

I remember clearly Bela telling me about his idea to set up this online giving site back in 2000. I was more than a bit skeptical at the time since the internet was still at quite an embryonic stage plus there had just been a major ' crash', which took shares in my wife's company, Akamai, from $400 a share to $1 a share.

However, his idea was spot on, and they got first mover advantage in the market, so everyone knows the Justgiving brand now. Looking back, I realize that this did teach me a valuable lesson; to be more open-minded about start-up ideas.

Since then, most of the start-ups or early-stage companies I have worked at have been successful and proliferated, sometimes by 2 or 3 times a year.

One of them, Visual IQ, was acquired by a Multi-national, Nielsen, for two billion dollars Another, Zscaler, the cyber security company, just had an IPO which now gives the company a Market Cap of $9 Billion.

Now Bela does have some political views that I'm not exactly on board with. For example, he has financed a team that includes several Economists, who lobby on various issues. particularly that of universal income.

In my opinion, whenever the government gives one group of people money, they have to take it from another, usually, the group that has earned that money. The problem of universal income is that you are rewarding one group of people for doing nothing and taking that money away from those who have actually earned it.

It's similar to the moral hazard issue of bailing out mismanaged banks, instead of letting them deal with the mess they have caused.

Bela is in the George Soros (another Hungarian, a financier who studied at my alma mater, LSE and infamously 'broke the Bank of England'  and the chancellor of the Exchequer, Norman Lamont, and now supports many left-wing causes) mold, using his wealth to back left-wing causes.

Bela Hatvany recently sold Just Giving for £95 Million. Now that's not a bad deal for a company Bela set up as a project after he had 'retired', to do some good in the world!

Newbury Street, in Boston's 'Back Bay', where I lived while studying for my MBA