Comedy before Competence

I was discussing the previously-cited Netflix Culture Deck with a few new colleagues, one of whom pointed out that the word ‘failure’ is conspicuously absent from the presentation.

That highlights a key difference between big companies and startups. In a large, publicly traded company, there’s a lot to lose. While not all new initiatives can be successes, it’s at least as important that few are damaging failures. Whereas, in a small company, chasing the upside of continually swinging for the fences is the only way to grow substantially. Focusing primarily on not screwing up keeps a startup from ever getting off the ground.

In that light, it’s interesting to consider Facebook, which attributed a lot of its early success to the internal motto, “move fast and break things.” A few months ago, it shifted the motto, to “move fast with stable infra.” By now, Facebook has more to lose than to gain by excess speed, but it never would have reached its current dominant position had it played conservatively from the start.

I’d have been curious to read the deck Reed Hastings might have crafted in Netflix’s earliest days; by all accounts, they were a hard-charging, risk-taking culture. Because, in particular, I’d have been curious to see how they balanced accountability and encouragement. On the one hand, Netflix fosters a competitive culture, where people are held to high performance standards; on the other, for employees to take necessary risks, they have to feel safe getting things wrong.

In building Northstar, we’re trying to strike a similar balance. But, in my experience, the more serious early stage danger tends to be too much conservatism, not too little accountability. Which is why I’m posting a ‘Comedy before Competence’ sign on my office wall; I don’t mind if we get things wrong, so long as we try them out aggressively, and can laugh about it along the way.


I’m down in DC for the weekend with Jess and her business partner Catherine, working as their intern at a Dobbin holiday show.

In the past, we’d have left Gemelli behind for this kind of trip, but Penne is young enough – and terrible enough at walking on leash – that we didn’t want to dump them both on my brother (as he’s already regularly out walking Brooklyn, his cockapoo, he’s an excellent first line of doggy daycare defense), so they’re both in tow.

Traveling with two dogs has been an adventure. Penne, it turns out, gets carsick, and tossed her cookies within a few minutes of hitting the highway (and again, after a rest stop pitstop). Gem, who’s used to living in a building with just one other apartment on our floor, stayed up all night, growling at the door each time someone headed to or from one of the forty other rooms just down the hall.

That said, the Kimpton staff (dog-friendly across the entire chain) has been awesome, and both dogs were happy to nap together in the room last night when we hit the hotel’s newly re-cheffed restaurant Urbana, a current DC hotspot. And, as it’s been a few years since I was in Washington, it’s been fun to walk them through Dupont circle, or down K Street, enjoying the capital in its crisp, wintry best. I think we should all make it through the weekend in one piece.


Still on the theme of hiring: if you run a business, and haven’t read Netflix CEO Reed Hasting’s ‘culture deck’, go read it now. It’s a cogent philosophy for hiring great people, running a company and scaling up an ‘A player’ team.

A few gems:

“We’re a team, not a family. We’re like a pro sports team, not a kid’s recreational team. Netflix leaders hire, develop and cut smartly, so we have stars in every position.”

“The Keeper Test: Which of my people, if they told me they were leaving, for a similar job at a peer company, would I fight hard to keep at Netflix?”

“Netflix Vacation Policy and Tracking: there is no policy or tracking. There is also no clothing policy at Netflix, but no one comes to work naked. Lesson: you don’t need policies for everything.”

and a personal favorite:

“Adequate performance gets a generous severance package.”

Technical Hires

Back in the 1990’s, during the first internet bubble, there was a real divide in the startup world between the ‘tech people’ and the ‘business people’. Sure, you needed the tech people to actually build the products you were selling; but everyone knew that tech people couldn’t run companies. (The old joke: how can you tell the engineer you’re talking to is an extrovert? He’s looking at your shoes.) That’s why you needed to hire a recent b-school grad, with marketing experience and good hair, to lead the charge.

As early 2000’s stock market returns attest, that didn’t turn out to be a great long-term strategy. Which is why, in the tech world of today, there’s a bias towards founder-run startups. Using lean methodologies, the guys who actually understand what they’re doing build the companies, with little initial capital, retaining control, and growing based on traction with customers and real results. The tech team rules, and smaller-scale acquisitions are even valued by the number of engineers on staff.

In that light, the parallel growth of CrossFit makes a lot of sense, as the affiliate model similarly puts domain experts in the driver’s seat. Consider a Globo Gym, the soul-sister of the failed late–90’s big tech startup: an executive team, bolstered by a ‘coffee is for closers’ sales staff, run the show, while the trainers are treated roughly akin to the cows at a dairy farm – the core leveragable asset, sure, but certainly not a voice at the table. Then along comes CrossFit, with what’s essentially a lean startup approach to the gym business. With a few thousand dollars, an excellent coach can open a garage gym and build organically from those humble roots, keeping technical concerns (ie, good training) at the forefront and making more money (with more autonomy and control) than she did in the Globo world.

But here’s what’s interesting to me: in the tech world, companies like Facebook and Google have grown to huge sizes, while still keeping the technical talent at the forefront. A Google gig post-graduation is a big win for a computer science grad. Yet nothing similar exists in the fitness world. There’s no large-scale company that puts coaching first. There’s no opportunity at an Equinox that looks better than starting your own CrossFit Box.

In fact, even in the CrossFit world, there’s really no long-term career path aside from starting a box of your own. For some people, that’s a great choice. But many others don’t want to deal with running a company – they just want to coach. Much as more top computer science grads choose to take jobs at Apple, Google or Facebook than choose to go it alone and start their own company. So how come there’s no Apple job for the best CrossFit coaches in the world? How come there’s no place for them to get respect, autonomy and control, along with stability, great compensation and long-term career growth propsects?

I’m betting that, if such a place existed, it would quickly attract the very best coaches in the CrossFit world. And, because a gym is only as good as its coaches, that place would quickly clean up. Let’s see what happens.


A bit of Movember inspiration, courtesy of our friend, the Emperor Tamarin:


Doubling Down

Welcome, Penne Newman, (biological) younger sister to Gemelli, and new addition to the family!

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“If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea.”
– Antoine De Saint-Exupery, author of The Little Prince

Get What You Pay For

Here’s something I’ve learned in years of running companies: people know exactly how much they’re worth. For every dollar you over-pay them, they give you back several times more in value; for every dollar you under-pay them, they find a way to stiff you by an equal margin.

Find the very best people. Then pay them very well. It’s a much easier, and much more effective, way to manage.


“A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”
— Andrew Grove, Chairman and former CEO, Intel Corporation

I met Jess on Friendster. Which, for those of you too young to remember the web ten years ago, was at that time a successful predecessor to Facebook. Famously, Friendster turned down a sizable Google acquisition offer, as the social network market seemed wide open in those early days, and Friendster’s CEO didn’t see any serious competition.

By now, Friendster has long since been relegated to the dustbin of history, Facebook having eaten their lunch. But the object lesson remains. Being the first, or being the biggest, is often a substantial competitive advantage for a startup. But as markets mature, it’s rarely a sufficient one. Competition for customers (and for employees) means a company needs to continue to innovate, to adapt to the realities of a changing world, to find a way to continue capitalizing on that early lead. And at the same time, pressure on management (who perhaps confuse brains with a bull market in explaining their growth to date) often makes it tempting to simply double down on the exact same strategies that previously worked, this time with an increased eye towards cost-cutting to hang on to earlier margins.

I’ve been watching that happen of late to a business near and dear to my heart, though one where I’m now ill-poised to prevent what’s clearly the early stage of a slow-rolling disaster. I can already play out what’s likely to happen – stalling growth, the gradual departure of key personnel, the eventual decay of customer-base eventually leading to the company’s fixed costs collapsing the entity under its own weight. I’d love to jump in to help. And, indeed, I still might be able to find a way to do so. But there’s also the reasonable point that, in many cases, it’s just about as easy to build a Facebook from scratch as it is to keep a Friendster in its early lead, especially when a market is still young enough to have huge room for growth.