INCURABLE DATA GEEK

World’s leading mobile photo sharing site just sold for one billion dollars. Awesome and congratulations! I think they might have sold themselves short because of how our brains fool us: we often obsess over arbitrary numbers and outcome goals.

People – myself included – get easily obsessed over an arbitrary number or outcome goal that they think defines success and/or ultimate happiness. Take your pick: Build or sell a cool $1Billion-dollar-company, get $10Million in cash, run a sub 3 hour marathon, bench press 400 pounds or finish an Ironman under 9 hours, win an Olympic Gold or Super Bowl. How often have you thought of that specific number or outcome to be your ultimate goal (in life) or the right to finally celebrate and live happily ever after?

I want to make a case that our typical obsession over a specific “number” as the ultimate goal or almost any outcome goal leads to suboptimal performance and not achieving one’s (or a company’s) full potential, and most importantly, creates unnecessary feelings of loss and sadness. I’ll also propose a better way that will help you achieve more and have more fun and enjoyment in the process.

I was recently at a fantastic technology company founder conference where a successful under 30 year old entrepreneur – who had sold his company for deep nine figures (read: for hundreds of millions of dollars) in the recent past and made deep eight figures himself – looked a bit dissatisfied and told me with a straight face that he wants and he must sell his next company for “a billion dollars – that’s the new benchmark”. Now, it’s fantastic to create a lot of shareholder value. And Billion is more than a few million and $1.1Billion is more than a Billion . But there is no special value in $1B relative to $1.1B  or $0.9B other than the +/- $0.1B difference. But isn’t it great to be so ambitious to set the goal of building and selling a company for a cool $1Billion?
It might be cool, but I think that there are at least three problems that will lead to suboptimal performance:

-          First, you are focused on an outcome that is difficult for you or your team or the company to relate to or improve on a daily, weekly, monthly or quarterly basis. If your stated goal is to “build a $1B company”, is that something you or your team can get excited about and build towards every morning they wake up? Most likely not.
Furthermore, most “outcome goals” are partially or entirely out of your control. For example, company valuation is highly dependent on current multiples in the overall equity markets, competitive environment and even inflation, which you or your team can’t do anything about. Measuring your performance or letting your happiness depend on that kind of measure out of your control is pure waste of time and energy.

-          Second, if you make decisions based on that arbitrary number, you’re likely to not be objective and fall short of your potential. For example, your company may have come to a dead end in a highly competitive market and three bidders offer $900M for it. You say no because “it’s billion or nothing” and the next thing is your three bigger competitors destroy your business and are left with nothing. Obsessing over an arbitrary number just cost you all.
Or, your goal may sell you short, as I’m guessing with Instagram: you’re so obsessed over a cool $1Billion dollars that you say yes because it’s a shit load of money for a company with no revenues and only a dozen+, although amazing, employees. Yes, it is. (note: I have no insider information on these particular negotiations or offers or sellers’ motives, so I’m absolutely building this case based on napkin math and for illustrative purposes only). On the other hand, Facebook is mainly a social photo sharing web site and most of our daily digital communication and media consumption is going mobile. At the same time, Instagram is the leader in mobile photo sharing. Assuming Facebook is truly worth $100Billion as reported, their $1B purchase price is 1% of the company stock. Would you pay 1% for the future of their (entire) company? Sounds like a bargain to me. I would have asked for 1.9% or $1.9B or $900M more. If your brain has established billion as the ultimate goal or “outcome goal”, you - with your brain marinating in dopamine and other feel good neuro-transmitters - may make a decision that sells you short and completely fails to achieve your potential as a company. Whether that is true or not in that case, I don’t know. What we do know is that Mr. Zuckerberg did not obsess over a cool $1Billion in 2007 when Y! wanted to scoop the company.

-          Third, if that is the personal goal for “making it” or the “right to be happy in life”, it is most likely going to fail you. Fail you badly. What happens when your buddy sells a company for $2B? Is the new new hurdle to be happy at $2Billion? What if the company absolutely fails and you’re back to eating Ramen noodles: Free meal and and an apartment would probably make you extremely happy and you’d stop thinking $1Billion as the bar for happiness. (btw. Research also shows that big time lottery winners quickly revert back to their base level of happiness and so do quadriplegics after their accident. So much for “the number” being your source of happiness).

Using outcome goals and arbitrary numbers is no better in sports. Three weeks ago my wife decided to run the New York Half Marathon. In just a couple of short months she had improved her running interval pace from 7min/mile to close to 6min/mile with some high intensity training. That’s an absolutely massive improvement in that short time. But due crazy international work travel a week prior to the race weekend, she got very sick, but decided to run anyway. She finished in a good form, although sick, and took more than 5 minutes off her PR. After the race she was crying and depressed, because she was about 30 seconds short of making the NYC Marathon qualifying time. All this, although she wasn’t even going to run the NYC Marathon. She was short of that [arbitrary] qualifying time and absolutely destroyed by it. For several days she was frustrated about the wasted entry fee, time spent for the run, despite her PR and massive gains in running fitness in the past several months. She lost her interest in training for a running event and continuing on the path of improvement.  This week she got an email from the race organizers: “We apologize there were some issues with the race timing, you have qualified for the NYC Marathon from the half marathon run.”. With this new information, was the half marathon now worth all the time, a huge success and a legitimate source of joy and happiness even though she had zero interest in actually qualifying for the NYC Marathon?

So I argue that our typical obsession over a specific “number” as the ultimate goal and most of the “outcome goals” lead to suboptimal performance and not achieving one’s (or a company’s) full potential, and most importantly, creates unnecessary feelings of loss and sadness that further limit your potential.

But there’s a better way.

Instead, focus on improving the actual ingredients of success with relatively short term goals and set a vision that is hugely ambitious but not tied into a specific, arbitrary number or outcome goal. Find enjoyment from the continuous process and improvement and celebrate your outcomes (those numbers) as milestones along the way to achieving your full potential.

How does that work in practice? In the case of an athlete, improving the actual ingredients of success would mean obsessing over continuous improvement in technique, strength, VO2Max, lactate threshold, gear, etc. and measuring them religiously and celebrating continued progress in each area. You would also set specific performance goals, such as a 5% improvement in running pace by end of next month (Vs. an outcome goal “winning my team’s 5K race” which is partly out of your control and not something you can train for day in, day out).
For example, a triathlete who obsesses over a specific end time or podium spot in training or in a race, will likely either go too fast or too slow (e.g., due conditions such as wind or terrain or a new competitor who goes way too fast) in a race or fail to improve each aspect of his or her fitness.
With continued obsession and enjoyment over each detail and their improvement based on short term performance goals, all records will fall and competitors will be left behind. But if your only goal is to “break X hours in a race of Y length next year”, you’ll have many unhappy moments and fail to achieve your full potential that might actually be a MUCH faster time.
In fact, research shows that one of the differences between the very best (those who win several Olympic gold) and the best (who compete in Olympics) is the very best’s focus on continuous improvement rather than an outcome goal, a medal or a specific result. You can find several studies that support this for sports specific goal setting.

Similarly, in building a company, I would not pay attention to outcome goals that are out of your or your team’s control, although I continue to see articles where people talk about building a X Billion-dollar-company. (How about a $100Billion dollar startup that’s not Facebook?)  Instead, I would focus on two things:

(1) identify and obsess over the true ingredients of success and set SMART or SMARTER relatively short term goals to continuously improve these drivers of your success, and;

(2) set and communicate a clear, inspiring and meaningful vision that is ridiculously ambitious.

Then celebrate both the continuous improvement in your success drivers (“our customer net promoter score increased +2 points!”) AND the outcome goals/milestones (“we just hit the first million in revenues” or “we just passed our competitor in downloads!”) as you drive by them and fly by a million, a $1Billion, $2Billion, and so on. But don’t obsess over or stop at any of the numbers or outcome goals - they’re just arbitrary numbers on your way achieving your or your company’s full potential. That, I believe, is the recipe for achieving ones full potential and more.
A great management book somewhat related to this philosophy is The Score Takes Care of Itself by Stanford and San Francisco football coach Bill Walsh.

Does this mean it’s not ok to sell a company for $1.0Billion dollars? Well, board members of a company have a fiduciary duty to shareholders and if that means selling a company for a cool $1Billion dollars at a given point in time, then that’s great.

Enjoy your way onwards and upwards!

I just recently – finally – finished reading Zappo’s CEO Tony Hsieh’s Delivering Happiness book, which I liked a lot. With my first company I didn’t think much of employee happiness; if something couldn’t be solved with spreadsheets, it didn’t matter.  And something as fuzzy as happiness certainly couldn’t fit into that framework.

The approach that we’ve taken at my current company Trulia since the 2005 beginning is quite different and we had the hypothesis that if we can even try to measure Employee happiness, it will always be front and center in our minds, and possibly we can even improve it as a result.

I thought to share a few insights about our very own Happiness Project.

First, on a quarterly basis we send out a simple anonymous survey that has multiple choice (1 to 5 points) questions around three areas:

1. How happy employees are?
2. How well are we living up to our stated culture as a company?
3. How well we are aligned as an organization (i.e., does everyone know what/why/how we are trying to achieve something)?

The basic idea is that if we truly are what we say (as an organization) and if we are all working towards a well stated goal (that everyone knows and buys into) and if we enjoy the process ,we ought to become very successful! Here are some of the questions we use to try to get into the heart of those issues:

On Organizational alignment:

• I understand company’s top business priorities?
• I believe the company is heading in the right direction?
• My manager keeps me informed about relevant information that helps me do my job?

On Happiness:

• I would recommend Trulia as a place to work?
• Trulia provides the flexibility needed to balance work and personal responsibilities?

I’m sure we’ve got a long way to go to make our system world class, but here (chart) is a good example how we’ve step by step improved our metrics, from 2010 to 2011 while doubling the size of the organization.

Here are a few lessons that I’ve learned along the way:

• It’s easy to create survey fatigue unless the loop is closed with consistent reporting of results back (to all employees) and action plan to improve things. In other words, there’s little incentive to offer feedback, unless participants get something tangible in return.

• Our thoughts about happiness seem to be influenced very heavily by the very recent memories. A raise is the 3 days leading into the survey, will surely spike the results! To get consistent results, it is important to measure results at the same time, e.g., just before quarterly reviews.

• Averages are useful, but I’ve typically found the open ended feedback and business unit (or by function) results most actionable. If, for example, engineers are loving the company every moment, but sales is having tough time,  they both average out the results and you obviously can’t draw many conclusions.

• I’m (still) a huge believer in measuring employee happiness and drawing insights and actionable improvement ideas from the results.

I’d love to hear more ideas and resources how to improve this. Feel free to shoot me an email  sami at trulia (dot) com.

(If you’ve never heard of Trulia where we do all this magic, check out http://www.trulia.com/about for reference)

Through my early experience at McKinsey&Company, I – unfortunately - learned that time is almost an unlimited resource in getting things done: after all, there are 7 nights a week that exist as a flexible resource you can always tap into. But we’ve always been focused on Impact at my company Trulia, not just getting things done or pure output. After having a growing feeling that maybe I’m not maximizing my impact despite lots of to-do’s (and what I thought was a high output), I decided to do what one of my friends, Ron, encouraged to do: take an inventory of time use.

I decided to track my time use by 15minute intervals for three weeks. I used a simple and quick approach:

1. Define three things: (i) activity (e.g., desk work, meeting), (ii) area of impact (e.g., HR, strategy, sales), (iii) specific work (e.g., interview candidate) and (iv) perceived impact on business (1 to 5).
2. Use an always-on spreadsheet to track all activities several times a day to keep an accurate track. This only took <5minutes per day to complete and worked universally across all devices, which was better than some of the time tracking applications I found.

The results were quite interesting and different from what I expected. Most shockingly, of my 70hr and 6-day work week, about 3.5 hours each day went into low-quality meetings and unnecessary emails. So much about being super effective!

Hours worked per day

Turns out my weekly input at work was about 67 hours, typically 6 days a week with Saturday off and a “short” day of about 6-8 hours on Sundays. While this is far from the 100hr weeks, I felt a bit overworked at the end of the period with limited time for “white space” and more creative thinking.

Type of work

The first eye-opener came from the high-level split between type of work: 84% or more than 9 hours of my average 11hr work day went into email and meetings, which seemed like an obvious area of focus to have a bigger impact.

Most shockingly, a deeper look revealed that a total of a quarter (26%) of my total time went into uncategorized email aka “Inbox work”. That’s 17 hours a week cranking email mostly for the sake of email.

I was glad to see that I was spending a good amount of time on other areas that were actually real focus areas for the quarter:

• - Clients, partners, sales, other external relationships: 25% of my time, which was important given my focus on growing revenue top line and cultivating client relationships.
• - Recruiting top talent: (only) 15% of my time. I’ve always considered recruiting as one of the most important roles of a founder (and any senior leader in a company). I thought I was making a huge effort to recruit top talent, but I should spend way more than 15% of it; Clearly an area for improvement for future.
• - Strategy work: 12% of time. This was longer term planning, things beyond current quarter. Seems too low for a founder. Staring at your feet when running fast is the easiest way to stumble, so another area of improvement.
• - Logistics/prep includes travel, driving to meetings and other “hanging out at office kitchen” type of time use, which was only 4%.

It is clear to me that if I want bigger impact, I need to focus on eliminating or getting more out of meetings and email, rather than adding more hours to a 70hr work week.

Re-engineering meetings

When I looked at the actual use of meeting time,  the good news was almost 45% of it was in client/external meetings, close to 20% in recruiting and the average Perceived Impact Measure (1=low, 5=high) was about 4.1, so I wasn’t totally wasting the time. However, 1.1hrs/day was wasted in low impact (<4.0) meetings, or almost half a work day per week.

I’ve decided to implement the following improvements to my meetings in the future:

• - Stop participating in “nice to know” –meetings.
• - Define my personal meeting goals and contribution before a meeting. If impossible, skip.
• - Stop scheduling 1 hour meetings, instead 15, 30, 45minute meetings.
• - Try to do 5 minute “meetings” at the water cooler without scheduling them

Re-engineering email

Email was the biggest time sunk with almost 3.5hrs per day, of which most was uncategorized “stuff”. I’m now focused on getting rid of that by doing the following:

• - Outlook/gmail always offline, only sync it a few times a day
• - Batch process email: flag anything that seems to take more than 15seconds and reply/delete the rest immediately.  Flagged emails I batch process at least once a day (end of day). Keep inbox always empty.
• - More effective use of BCC and stop (or limit) sending unnecessary “ok” , “thanks”
• - Encourage everyone to write short emails with a clear summary and next steps in the beginning.
• - Fast delegation of tasks and responsibilities to one (or more people) to stop huge group emails and chains in the beginning
• - Sort long chains by subject at the end of day: either delete, make a decision or delegate after reading only the last email in the chain

Final thoughts

This exercise confirmed again that the best gains for bigger impact come from more effective use of time rather than adding more hours to work week.

In addition to re-engineering my meetings an email use, I am trying to implement more white space and proactive and long-term planning/thinking to minimize reactive work (aka firedrills). One way of achieving that is to have mini-breaks between meetings and focused work periods. These guys have some good principles that I’ve been using for some times: Energy proj. Of course, sleeping helps too.

Another change I’ve already implemented is better weekly planning: I try to allocate time for the really important things each Sunday, before the start of each week. For example, to be more effective in recruiting, I define specific tasks for each day or week that drive towards that goal.

I plan to repeat the time inventory exercise in the next 6-12 months to keep myself accountable and track progress…

I’ve had an obsession with the world’s most widely consumed psychoactive drug, caffeine, since I had to perform caffeine extraction in my 10^th grade chemistry club. In the last couple of years this obsession has turned into a frustration for two reasons:

1. shopping caffeine FREE products has become increasingly difficult, and;
2. too many people are getting ripped off by ridiculously over-priced caffeinated products that are marketed as magical innovations when in fact they only “work” due to their caffeine content.

First, for reasons I don’t understand, FDA does not require listing caffeine content in any products. It is enough to mention “caffeine” or any of the sources, such as cola nut, green tea extract or guarana in small print and most people don’t even know that means a source of caffeine. I was hoping we had reached the limits of imagination with caffeinated soda, energy gels, energy bars, mouth spray, lip balm, “5 hour energy”, chewable sheets and caffeinated beef jerky.  But no. Today I stumbled on a product to snort caffeine called Turbo Snort. Yes, snorting caffeine. It must be easier to profit from Turbo Snort than from selling a good night sleep.

Most of these products are obvious buzz generators and marketed as such, but many other (sports) drinks and snacks have purposefully hidden caffeine. The immediate buzz and feel-good that comes from ingesting the product creates a quick feedback loop: “this works!”. When in reality you are just paying for ridiculously over-priced commodity product: caffeine. All the other ingredients and herbs, for the most part, are just for confusion. For example, 5-Hour-energy’s “2100mg Energy Blend” would do little pick up without the 138mg of caffeine the tiny bottle has. Go to any well stocked sports store and it is quickly clear that it is now harder to find a caffeine FREE energy gel, energy blocks or a bar than with doses of caffeine. The most recent addition to the list of caffeinated sports products: salt tablets with caffeine. Brilliant innovation.

Second, those who actually are proactively looking for more buzz, more caffeine, are increasingly getting ripped off financially. Case in point: SaltStick’s new salt tablets with caffeine, are a combination of table salt and caffeine (for the most part). Both are commodity products that cost nothing; however, this product has a 3,897% market-up compared to caffeine retail price sold at Walgreens. Similarly, 5-Hour-energy sells at a 8,575% mark-up.  The “snortable caffeine” tops the list though: 13,357% markup! Many Internet entrepreneurs dream of these kind of (gross) margins.

If you need a safe, strong and economic buzz: buy pure store-brand caffeine tables from Walgreens or any other convenience store. That “cup of coffee” costs less than 4 dollar cents. (Or: sleep more and better.)

I just had the pleasure to visit Europe and upon landing at one of the Middle-European airports,  I saw hundreds of people around me and something seemed off in the scenery. Soon I realized what looked so different from what I was used to in American airports:  I didn’t see a single truly obese person in sight, except one: a lady carrying an American passport in her hand on my right (for real). But that hardly is surprising; by now everyone knows that we’ve  become the fattest country (the U.S.)  in the world and by far the number one killer of Americans is obesity - either directly or indirectly.

Although the causality map of obesity is ridiculously complicated, the final gate for gaining or losing weight is practically always one’s mouth and the food that goes in there. And as I was shopping food after returning from Europe, I accidentally picked the wrong brand of Almond milk. This “milk” had water and sugar as ingredients and a cup of it had 190kcal – in comparison a cup of Coca Cola has only 100kcal. I thought this is so screwed up. Does it really make business sense to produce horrible junk and throw sugar and other needless ingredients into every product?

While grocery shopping, I decided to take a look at some of the typical products sold in super markets (Safeway in this case). I compared the daily cost of each product assuming a 2,000kcal/day diet and getting all energy from that single product.  The frustrating list of results is below: You can easily live on $1-$3/day, eating highly processed food and fill your fuel tank with them. The problem: it’s all horrible junk you should never be touching anyway = Oreo Cookies, Twinkies, RedVines, soda, chips and cerials diet? All easily less than $4/day on a $2000kcal/day diet. Rather disgusting. You would think highly processed food ends up being expensive, but no.

Ramen Noodles also makes the top of the list. I wouldn’t recommend it either, as it’s all refined carbs and comes with a long list of stuff you want to avoid (courtesy of Safeway.com): Ramen Noodles: Enriched Flour (Wheat Flour, Niacin, Reduced Iron, Thiamine Mononitrate, Riboflavin, Folic Acid), Vegetable Oil (Contains One or More of the Following: Canola Oil, Cottonseed Oil, Palm Oil) Preserved by Tocopherols and/or TBHQ and/or Ascorbyl Palmitate, Contains Less than 2% of Salt, Sodium Tripolyphosphate, Potassium Carbonate, Sodium Carbonate, Sodium Alginate. Seasoning Mix: Salt, Monosodium glutamate, Hydrolyzed Soy, Corn and Wheat Protein, Chicken Powder, Soy Sauce Powder (Wheat, Soybeans, Maltodextrin, Salt), Onion Powder, Garlic Powder, Spices, Chicken Fat, Calcium Silicate (Anticaking Agent), Celery Powder, Sugar, Dehydrated Leek, Turmeric Color, Autolyzed Yeast Extract, Citric Acid, Disodium Guanylate, Disodium Inosinate, Natural Flavors, Artificial Flavors.

I’m waiting for the day when producing, selling and eating junk food is considered as bad (and is as expensive) as smoking today. I am sure that day will come, but it might be another 5+ years away. Junk food tax, anyone?

I recently had lunch with another entrepreneur, who was complaining how he’s again gaining weight after increasing exercise. Not all weight gain is bad; everyone knows that the same volume of muscle weighs more than fat and it’s possible to gain muscle weight with increased exercise, especially weight training. But now we are talking about fat! (I’ve yet to find a healthy person, who wants to gain fat on purpose)

I’ve now heard this same question so many times from friends, colleagues and recreational and more serious athletes. And, several times, I’ve fallen into the same trap myself, gained more fat especially after increasing exercise intensity. But I’ve found an easy way out of that cycle.

First, why is this happening? Exercise burns more energy, no matter what is the intensity of exercise. Higher intensity exercise burns more glycogen (i.e., carbs) – both in absolute energy and relatively(%) speaking - from the muscles and liver, which are the limited fuel tanks we carry. I’ve noticed anecdotally from myself (and my wife and other people around me) that when the glycogen stores get very low, our normal appetite picks up significantly. Even a short (say 45min) high intensity workout during which you can burn ~1000kcal and mostly carbs, can empty most of your glycogen stores (most people carry about 2000kcal of glycogen in muscles when fully loaded).
I don’t have scientific proof of this, but appetite (and especially carb cravings) pick up VERY significantly in the following 24hrs to “force” you to refuel that lost glycogen. 2-3hours of hiking or very easy cycling that also burns that 1000kcal (but mostly from fat, which is pretty much unlimited energy source for 99.9999% of us), doesn’t have that impact on appetite.
So the bottom line is that appetite increases and I believe it increases much more if you’ve depleted your glycogen stores during the exercise. This is obviously a good thing, but gaining fat in the refueling process is not.

Second, why are we then gaining fat? Everyone knows that you gain weight when you eat more than you burn. The more nuanced version of this is that when you eat, that energy can be stored in different parts of your “fuel stores”. Optimally, all the carbs are packed into your high-octane glycogen tanks (muscles) and NONE goes to your fat stores. Then you can hit hard in your exercise session and have the energy to work out at high intensity, while further burning your fat too.

The best way to ensure that food is not stored into fat, is to only eat moderate amounts of carbs (And food in general) at any one sitting and leave the fast carbs (sugar, enery gels, bread, drinks etc.) for just before/during/after exercise. On the other hand, the best way to GAIN fat is the sumo-wrestler diet, in which you skip breakfast and then eat massive amounts of food (mainly carbs) in a rested state, and mainly just before going to bed. Your body tries to get rid of all the sugar traveling in bloodstream and with the help of insulin, that sugar is transported to fat cells and muscles as rapidly as possible.

Most people who gain fat while exercising and/or increasing high intensity exercise, tend to skip food during or right after exercise. They may exercise in the morning and think “I just had a great workout and burned 700kcal, why would I eat it back when I can just drink a cup of coffee and go!” and have their first real meal at lunch. Then eat lightly and eventually the (carb) cravings get so bad that you gorge bread, rice, bars, candy, etc. And after eating all those carbs, great majority of them are quickly transported to your fat cells. This is the sumo wrestler’s diet here. Congratulations!

So what is the solution? You need to break two things:
1) Get rid of the hunger that follows from depleting your glycogen stores
2) Make sure the fueling carbs are transported to your muscles, not to your fat cells.

The solution is simple: Eat 300-400kcal of carbs (glass of juice and a typical 250-300kcal bagel will do it) immediately or within 20minutes of finishing your workout (do not wait for 1-2hrs). Two things will happen: you’ve curbed the carb cravings for good. Secondly, right after exercise, certain enzymes (and processes I don’t even understand) transport the carbs from your blood to your muscles, NOT to your fat cells.

I’ve tried this approach and helped others to do it as well and it works very very well.

If you’re exercising for 2+ hours (e.g., bike riding) and doing high intensity exercise, that 300-400kcal is obviously not enough. In that case, it is important to eat carbs even during the exercise and eat more during the hour(s) following the workout. I’ve witnessed (with myself and others) 48hr long massive carb cravings after big workouts that totally deplete glycogen stores if I haven’t re-fueled quickly after the exercise. The net results of eating massive carb meals 6 hours after the workout and just before bed time is very often gaining more fat.

So my simple recommendation: Never finish a workout without an immediate carb snack or meal.