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Cheap at sea, pricey on the plate: The voodoo of lobster economics
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People often say “don’t fix what isn’t broken.” Said another way, keep doing what has worked before. The problem with this mentality is that what worked in one context may no longer work in the next. People often fail to update their assumptions and change their actions which is why I think many people’s careers stall and they don’t even realize it.

For people transitioning from individual contributor roles to more manager/partner levels, I often give this career advice:

"Most people assume just doing their current assigned job well is enough – so many associates at law firms think doing all the paperwork and litigation properly is the road to partnership, and many PR account executives think that getting a few articles written about their clients will earn them a promotion, but becoming a principal, partner, or senior executive with P&L-level responsibility requires a completely separate set of skills from entry and mid-level jobs."

A venture capitalist, whom I respect, has written about “crossing the people management chasm.” He contends that even after getting to the manager level, that there are multiple levels of manager roles that you can’t just re-use previous skills you’ve accumulated. \

First, you are a team lead who manages a handful of people with 50% of your time and still continue as an individual contributors for 50% of the time. Then you become managers of team leads who really are team builders and don’t do any individual contribution to a team’s effort. Last, you become a manager of managers who need to identify, hire, and evaluate managers whose contributions aren’t easily identifiable in the form of deliverables or individual work.

As managers move up these tiers, they often find that their previously finely honed skill set just doesn’t work for succeeding in the new role. The key is to understand this reality and assume you have to always be learning. Otherwise, you’ll stay stuck by doing the same old things but in a new position. This fact underpins PaperG’s culture and hiring requirements of finding people who are always learning and investing in their skill sets.

Promotion at PaperG on a managerial level is based on whether you’ve shown the abilities to do the next tier’s work rather than simply promoting you based on having done really well on your existing tier (this isn’t to say you can’t get salary raises for staying in your tier and just keep doing that well and better over time). We’ll do trials where you might get some managerial responsibilities on the next level and set expectations on what it takes to get the actual promotion. Otherwise, you end up promoting the managers who are absolutely terrible at their new jobs and can’t get promoted further but then keep their whole team down by being terrible in their current role.

Ultimately, I believe if you ever find yourself stuck in your career, you have to ask yourself if it is because what you used to do is no longer enough in your new role.  What got you here isn’t going to be what will get you there.

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Recently, I was trying my luck fishing and was reminded of one of my favorite parables, “The Mexican Fisherman and the Investment Banker.”

An American investment banker was taking a much-needed vacation in a small coastal Mexican village when a small boat with just one fisherman docked. The boat had several large, fresh fish in it.

The investment banker was impressed by the quality of the fish and asked the Mexican how long it took to catch them. The Mexican replied, “Only a little while.” The banker then asked why he didn’t stay out longer and catch more fish?

The Mexican fisherman replied he had enough to support his family’s immediate needs.

The American then asked “But what do you do with the rest of your time?”

The Mexican fisherman replied, “I sleep late, fish a little, play with my children, take siesta with my wife, stroll into the village each evening where I sip wine and play guitar with my amigos: I have a full and busy life, senor.”

The investment banker scoffed, “I am an Ivy League MBA, and I could help you. You could spend more time fishing and with the proceeds buy a bigger boat, and with the proceeds from the bigger boat you could buy several boats until eventually you would have a whole fleet of fishing boats. Instead of selling your catch to the middleman you could sell directly to the processor, eventually opening your own cannery. You could control the product, processing and distribution.”

Then he added, “Of course, you would need to leave this small coastal fishing village and move to Mexico City where you would run your growing enterprise.”

The Mexican fisherman asked, “But senor, how long will this all take?”

To which the American replied, “15-20 years.”

“But what then?” asked the Mexican.

The American laughed and said, “That’s the best part. When the time is right you would announce an IPO and sell your company stock to the public and become very rich. You could make millions.”

“Millions, senor? Then what?”

To which the investment banker replied, “Then you would retire. You could move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos.”

It reminds me that financial success isn’t necessarily freedom. It reminds me you can enjoy life and spend time with those you care about while providing enough to live on. Freedom comes making time as much as it is making money.

The Startup Mass Extinction

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A startup is a constant struggle for existence. Every day you face new challenges to the very survival of the company whether it be customers leaving, missed launch dates, hackers extorting you, dwindling cash, key employees leaving, or regulators passing new laws to shut you down.

Survival normally trumps all other considerations in the animal kingdom but perhaps what makes humans unique is moral reasoning and rational thought. Now, people obviously still do a lot to survive and who knows what anyone will do in a desperate situation, but it’s interesting to think about how a group of people put in a situation of moral conflict balances their firm’s survival and the consequences of poor decisions. I can see the arguments for survival at all (legal) costs, but it’s perhaps more interesting to think about the cases where it isn’t absolute live or die but rather thrive or starve. 

Here is an example:

Elon Musk said he lost a multi-billion-dollar contract when SpaceX didn’t hire an Air Force official. That corrupt individual then ended up giving the contract to the competing firm and went to go work for that firm. I can believe that happened because I see it all the time. PaperG has been offered on two different occasions to hire a key decision maker behind a potential multi-million dollar contract and when we didn’t, the deal went to someone else. These contracts could have ensured the survival, if not success of the respective companies for some time.

Now, is it illegal to hire that person? Possibly for the case of SpaceX since that person is in public office, but for many other private players it isn’t. I wouldn’t because my thinking is that if you end up hiring someone in that situation even if he/she is qualified, everyone else in the organization will question the judgment and realize that positions are rewarded based on leverage and benefit to the firm rather than the merits of the individual. It can quickly destroy the whole culture of the company and demoralize individuals who want to work their way up. It also puts someone in your organization who clearly disregards the organization’s interests relative to his or her own.

That said, I can see how a firm reaches such a decision to hire an individual. Is it wrong? If you believe you have the best product already and just want to make sure the right decision is reached, I can see how a person might rationalize that it would be okay. But what are the downstream impacts? Do you want to normalize for your team the idea that agents can act at odds with their organization? 

It’s all icky. It’s all messy. That’s why it’s a dilemma and so interesting. It’s why startup life is interesting to me. 

In some ways, grasping at these issues makes me think that sometimes to be a leader of a startup you in fact need to have strong values and thought out positions and not simply a great innovator. It makes me think that Steve Job may be right that “it’s technology married with liberal arts, married with the humanities, that yields us the result that makes our heart sing.” 

You can certainly have a financially successful company that not only survives but thrives by ignoring values but it’s hard to say it’s a place that people will be overjoyed to be part of or doing business with. In the end, what are you trying to make? money? or a better place in the world? or the world a better place? Your goal likely will determine your ideals.