Author: jimmy-guterman

Dysfunctional Boards, Slack Abuse, and Premature Eulogies for Twitter

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This week in the NewCo Daily, we’ve started something different. We’re committed to publishing detailed stories of business and positive change at stories.newco.co, and we’ll let you know about them as we do. In the Daily, we’re aiming to do what many of our favorite newsletters do best: share a curated view of the last 24 hours with our own unique, NewCo point of view. We’re eager to find out what you think, especially in the coming days as we figure out how to make the new format work best for you.

Pull Up These Boards
 You won’t be shocked to learn that independent boards pay their CEOs less (Wall Street Journal) than companies whose boards are packed with their chief executive’s golf buddies. According to a new study by proxy advisory firm Institutional Shareholder Services, CEOs reporting to an independent chairman make $2.9 million less a year. Makes sense. But you might be surprised to learn that relative coziness is pretty much the only variable that makes any difference in determining CEO pay, including a company’s stock price. Remember when owning stock was supposed to align CEOs with “shareholder interest”? Jensen and Meckling’s influential “Theory of the Firm” from 1976 (Journal of Financial Economics, PDF) played an enormous role in tying executive pay to stock options, a trend that in the long term has wreaked enormous damage to corporate giants like Kodak, HP, GM, Xerox, and many more. Boards that don’t hold CEOs accountable to more than stock price broaden the principal agent problem. By aligning stock price to compensation — and because an overly chummy board also holds lots of stock — both CEO and Boards are often incented to act against a firm’s long term best interests.


The Downside of Slack
 No one would argue that communication inside companies is a bad thing. Oh wait, someone would, and that someone is in the business of helping companies communicate. Jason Fried runs Basecamp (nee 37 Signals), one of the early collaboration software platforms. In a Medium post, Fried lays out the pros and cons (mostly cons) about what happens to organizations that think primarily in chat. While Fried acknowledges that “group chat used sparingly in a few very specific situations … makes a lot of sense,” he continues “what makes a lot less sense is chat as the primary, default method of communication inside an organization.” His insights have broader ramifications than just using Slack smarter. He reminds us how software should enable employees, not exhaust them: “Whatever tools you use, keep in mind how they affect other people, not just what they appear to help you get done. Done doesn’t matter if people are wrecked along the way.”

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Mocking Medium, Eating the World, and the Future of Money

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This week in the NewCo Daily, we’re starting something different. We’re committed to publishing detailed stories of business and positive change at stories.newco.co, and we’ll let you know about them as we do. In the Daily, we’re aiming to do what many of our favorite newsletters do best: share a curated view of the last 24 hours with our own unique, NewCo point of view. We’re eager to find out what you think, especially in the coming days as we figure out how to make the new format work best for you.

Medium Might Not Be the Right Size for Everyone
How do you know when your platform is succeeding? When people use it to go on about what’s wrong with your platform. Facebook and Twitter host countless complaints about their services. Now it’s Medium’s turn. What I’ve Learned From Medium 2 Months In — It Isn’t Good and Why I’m Leaving Medium are exemplars of the sound-more-outrageous-than-you-really-are form and the headline on this is so great that you must click on this link and reward the author. It’s a terrific example of the sort of parody posts Medium is now provoking. Maybe complaints about your service on your service will be the new KPI. (Disclosure: We publish on Medium, of course.)

“Eating the World” Is Eating the World
“X is eating the world” is the business cliche of the moment, so it was surprising to not only find a strong piece of analysis under the headline Facebook Is Eating the World, but to find it at a publication like the Columbia Journalism Review — not exactly at the forefront of today’s business conversation (or journalism conversation, come to think of it). Author Emily Bell’s observation that “We are handing the controls of important parts of our public and private lives to a very small number of people, who are unelected and unaccountable” echoes the thoughts of Douglas Rushkoff, who we’ll get to shortly. Her essay is about journalism, but it’s applicable to many industries. And it’s not only Facebook that’s doing the eating. So are Airbnb, Uber, Google, Twitter, or any platform play that is becoming (or has become) a major channel for business value exchange, be it social, informational, or transactional. We want all to tilt toward the open … or does our behavior say otherwise?

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Welcome to the New NewCo Daily

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Today in the NewCo Daily, we’re trying something different. We’re committed to publishing detailed stories of business and positive change at stories.newco.co, and we’ll let you know about them as we do. In the Daily, we’re aiming to do what many of our favorite newsletters do best: share a curated view of the last 24 hours with our own unique, NewCo point of view. We’re eager to find out what you think, especially in the next week or so as we figure out how to make the new format work best for you.


Microsoft Opens Up
The move from closed to open is becoming inevitable among even those tech companies whose success is due to a proprietary platform. Yesterday Microsoft announced that it is expanding its SQL Server so it could run on the open source operating system Linux (New York Times) as well as its proprietary Windows. As Microsoft CEO Satya Nadella put it, “Data is the core asset now.” It’s fascinating watching the archetypal technology company of the PC era embrace, first hesitantly and now with enthusiasm, the new world of open. (We’ve previously covered the Microsoft reboot.)

The Secret to Better Customers
Anyone who’s ever worked at a place that delivered on its mission knows that smart decisions in one area often have positive ramifications in others, sometimes in unexpected ways. For example, a McKinsey study says the best way to delight your customers is to put your employees first. The study offers useful prescriptions, some of them obvious (listen to your employees), but one really stood out for us: “Instill frontline workers with purpose, not rules.” Bingo. Focus on what you need to create for your customer more than the rules for delivering it. Best practices, not rules, will win the day.

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My Picks for NewCo Detroit in April

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Last fall I had the great pleasure of moderating a conversation featuring four Detroit companies that showcased a community of businesses on a mission. I was impressed by the collective imagination and grit in the room. I am looking forward to returning next month when we hold the citywide NewCo Detroit festival on April 13.

There are many ways to plan a full-day NewCo festival. In Detroit this year, there are two pre-planned tours, one focusing on women leaders and the other examining Detroit 2.0. Or you can plan your own route. One of my favorite — and most frustrating — tasks here is deciding which companies to visit during a NewCo festival. We often have more than a half-dozen simultaneous events. And they’re all great; we wouldn’t select organizations as NewCos if we didn’t think they were worth visiting. Choosing just one company to visit each hour is tough. But choose I must, so here goes:

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Is Facebook’s Big Connectivity Report About the Right Thing?

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The new Facebook report, State of Connectivity 2015: A Report on Global Internet Access, both demonstrates how the company is dedicated to making a better world, and frames the problem such that the company’s approach seem like the only one worth considering. Along the way it reveals, inadvertently I think, that connectivity isn’t the primary problem that organizations as well-funded and far-flung as Facebook ought to be solving.

The Facebook report is a formidable document (PDF). Sixty-one pages deep, it clearly aims to justify Facebook’s commercial and associated philanthropic work (with a strong, smart emphasis on capturing and learning from data). Yet it tries hard to be evenhanded. You’d never know from reading this report the intensity of the competitive and political issues Facebook encounters in its attempts to get more people connected. Best of all, it emphasizes parts of the connectivity story that are rarely considered in the West, such as the fact that more than four billion people don’t have any Internet connectivity. That number is decreasing — the report notes that from 2014 to 2015 the number of people using the Internet increased by 300 million — but more than half of the world’s population remains offline. It is, as both the for-profit and philanthropic parts of Facebook and its competitors recognize, the biggest business opportunity on the planet.

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When Companies Should — and Shouldn’t — Back Down

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If you want your company to create positive change, you have to pick fights worth fighting. In recent days, we’ve covered genuine scandals, like Zenefits’ scheme to hoodwink regulators, and we’ve shared the lessons from companies that have had to grow past scandals and mature in public. But sometimes a clueless response by a company can elevate a kerfuffle into a genuine scandal — and that can yield useful lessons. One such lesson comes from an unexpected source: Lands’ End.

The venerable catalog marketer learned that standing for something isn’t easy, especially if what you’re standing for doesn’t connect to your core mission and might not even be intentional. Lands’ End CEO Federica Marchionni interviewed Gloria Steinem as part of a series called “Legends” in its spring catalog. It was a friendly, deferential conversation, not particularly deep and with no revelations or provocations. Steinem is a feminist and publishing pioneer, but a number of groups and individuals with anti-abortion views called out Lands’ End on the interview (even though there was no talk about abortion in it). Some called for a boycott. Shortly thereafter, Lands’ End released a statement:

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Does Your Company Break Things or Add Value?

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Good online essays start conversations. That’s how I feel about Growing Up Is Hard To Do, my colleague John Battelle’s tough-minded look at how companies need to change as they move across the continuum from insurgent to incumbent. Here’s my attempt to continue the conversation.

It’s hard to not be optimistic about the idea of NewCos and OldCos learning from one another. Their dialogues have already spawned partnerships, which in turn may yield breakthrough products and services. But what are the “established insurgents” — those NewCos that have moved from startup to dominance in their markets — teaching up-and-coming NewCos? It’s easy to look at the behavior of Uber or Facebook and determine that your company should move fast and break things — but only until you’re so big and visible that the risk of doing so becomes greater than the potential reward. The reasoning goes: It made sense for Uber to ignore laws that prevented its very existence or for Facebook to smash through privacy norms as it reached scale. But once they become grownups, with much more attention and responsibility, companies have to start acting like, well — grownups.

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Basic Income Goes Mainstream

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Rarely does a plan to do research gain much attention beyond those directly affected. But when Sam Altman of incubator Y Combinator announced last week his firm’s plan to fund a five-year study on basic income, it felt like every business thinker wanted a piece of it. This is happening for two reasons.

First, we’re at a moment when inequality has brought people as unlikely as Thomas Piketty and Bernie Sanders to the forefront, when people are reaching a consensus that things aren’t fair even if there’s no consensus as to why. We’re also at a moment when experiments trying to ameliorate the problem are getting attention and sometimes even funding. Switzerland is set to vote on a proposal to make it “the first country in the world to provide a basic unconditional monthly income.” Swiss pundits say the bill is unlikely to pass, but this is one of the most high-profile attempts so far to see whether there’s good in guaranteeing people income regardless of whether they are employed.

Second, it’s fascinating that this work is being funded by Y Combinator. Those whose memories go back to January will recall that Paul Graham, a Y Combinator founder, wrote an essay more or less defending inequality, saying that poverty itself is the primary problem, not inequality. The essay quickly turned into a pinata, although with few exceptions responders were more interested in attacking Graham’s argument than inequality itself. (Perhaps the most pungent and comprehensive response came from Tim O’Reilly.)

Regardless of how you respond to Graham’s essay (it’s easy to both nod your head and get furious in the same sentence) or whether you think his firm’s plan to fund basic income research is sensible, what’s more important right now is that people with platforms are talking about the issue and backing up their talk with action. If a key purpose of a NewCo is to create positive change, Y Combinator’s research can be a step toward discovering whether basic income might be a way to make some positive change. And, if this is research work that appeals to you, you have until February 15 to apply.

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Why I’ve Joined NewCo

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Why I’ve Joined NewCo

Several times in my career I’ve wanted to work with a team that seemed to know where things were going just a little bit ahead of everyone else. That’s why I was desperate to write for WIRED early on, why I was eager to write columns and edit newsletters for The Industry Standard, and why I wanted to test at Federated Media whether content marketing might be something I could be part of without taking a scalding shower afterward.

I’ve been lucky enough to do that with other employees and clients too, but the three places I mentioned up top had one thing in common: my contact there or my contact’s boss was John Battelle. So when I talked over the summer, after a much-too-long break, to my editor at The Standard, Jonathan Weber, to congratulate him on his new gig at Reuters, he told me about the project he was working on before he took the position at Reuters. It sounded like a smart, next-generation mix of an events business and a media business. And then he mentioned he was working on it with Battelle. Of course it was the next thing.

I’ve been helping NewCo in an advisory capacity since the summer, but I knew pretty quickly that I’d want to jump into the deep end with the people there. Their citywide festivals are a canny flip of the usual high-end conference model; the media business we’re building alongside the festivals covers the people, companies, and stories driving what may be the biggest shift in business and business culture since the industrial revolution. We’re getting started with a daily newsletter and a website and — I’m going to say this in public so we have no choice but to deliver — we’ll launch another editorial product before the month is out.

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The State of the NewCo

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Welcome to the last NewCo Daily of 2015. We’ll be back January 4 to chronicle what NewCos are doing and start delivering a number of new editorial products (including one in January). It’s too early for us to run a comprehensive year-in-review piece (hey, we’ve only been publishing this newsletter since October) but today we’d like to look at the state of the basic unit of measurement for the NewCo: the company.

The NewCo Daily covers the organizations and the people in them trying to make meaningful change. Our founder John Battelle calls them companies on a mission, which is a subtle but important difference from being a company with a mission. Most companies have a mission. But companies on a mission are more likely to be open, driven by purposeful ideas, connected to their cities and communities, and connected to one another.

A report recently published by the JUST Capital Foundation investigates the role of the corporation in American society. It’s an impressive undertaking — more than 43,000 respondents — and we’ll address it in more detail in the coming year. But two data points jump out. One is that, across ideology and incomes, nearly 100% of respondents said measuring “corporate justness” is important. And no matter how JUST sliced the ideological pie, it never saw more than 50% of respondents say they trusted corporations. The desire to make businesses better is universal, and the belief that companies must earn our trust is strong.

Most important is what a company does, but what a company says has a great impact on its behavior. For example, if you’re on a mission, your mission statement has to be more than a series of rote bromides. NewCos like Patagonia (which we profiled recently) say what it believes upfront. Its mission statement: “Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.” It captures both the idealistic and realistic reasons to build a business. Another NewCo, Warby Parker, says it was founded “with a rebellious spirit and a lofty objective: to offer designer eyewear with a revolutionary price, while leading the way for socially-conscious businesses.” A great mission statement says how a company will do well and how it will make good. It describes what it means to be on a mission.

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