Tag: business

• Don’t fall off the “humor cliff”

  Some of the most successful people I have ever met in business are also some of the funniest people I have ever met. This, of course, isn’t universally true. But I don’t think it’s pure coincidence. These are people you want to be around and do business with. 

  There’s lots of research out there to suggest that humor is an incredible way to build relationships and strengthen workplace cultures. Joel Stein recently penned an article about this at Stanford Business called Humor Is Serious Business. Naturally the article itself is also funny. Here is an excerpt:

  “The reason humor works as a bridge (just go with it) is that laughter sparks the release of oxytocin, a hormone that facilitates social bonding, increases trust, and quickens self-disclosure. This is key in a workplace since all the other ways to release oxytocin are no longer permitted by Human Resources. In a 2015 study, psychologists Alan Gray, Brian Parkinson, and Robin Dunbar had participants watch either a funny or neutral video clip before engaging in a self-disclosure exercise with a stranger: People who watched the funny clip revealed 30% more personal information relative to those who watched the neutral clip.”

  The article goes on to talk about how humor at the negotiating table can lead to increased concessions and how, if you’re in a senior position and you make fun of yourself, people tend to assume you’re highly confident in your abilities. It also humanizes you.

  One of the interesting things about this topic is that, according to research by Stanford professor Jennifer Aaker and lecturer Naomi Bagdonas, most of us fall off a “humor cliff” when we enter the workforce. That’s roughly the moment where we start laughing less and finding stuff less funny.

  We shouldn’t let that happen and I’m going to make a concerted effort. Not just because of business, but because laughter is good for you.

  2017.08.05

• Contentment as vice

  “Contentment used to be a virtue. Now it’s a vice.”

  I came across this line on Brad Feld’s blog. 

  For those of you who aren’t familiar with Brad, he is a successful entrepreneur and early stage VC investor. He cofounded the Foundry Group, Mobius Venture Capital, Intensity Ventures and Techstars, and sold his first company back in 1993. 

  But Brad has also struggled with depression over the years and so you’ll find that a number of his blog posts are also quite contemplative.

  This particular post – where the above line comes from – is about a societal norm that I am sure many of you can relate to. I know I can. Here’s another snippet from the post:

  “We talked for a few minutes about the overall, dominant American culture of achievement. The endless striving. The need to feel busy, important, and successful. The deep cultural norms around ambition.”

  Whether it’s because we’re all deeply insecure or because we just need to fulfill our egos, this has become our modus operandi. It has become all about “the hustle” and about “crushing it 24/7.”

  Just this evening I was at a friend’s birthday party and I couldn’t tell you how many times I said “busy.”

  “Hey Brandon, how are things?”

  “Busy!”

  This is an absolutely terrible response. I know that. And I’ve started introducing other responses into my small talk repertoire. But busy is so ingrained in our culture. Being busy makes us feel important. It means we are in demand. We do things. We create value.

  But is the reverse – not being busy – now a vice?

  Regardless of your position on the appropriate balance between contentment (being ok with what you’ve got) and work (striving for more than what you’ve got), I think the first line of this post is an incredibly poignant commentary on the life that many of us live today.

  2017.07.28

• Why you should sometimes ignore your customers

  

  In business we are told to listen to our customers. Be customer-centric. In city building we are told to listen to the community. Be community-focused. And there’s no question that these mantras exist for a reason. They are paramount.

  But when should you not listen?

  I watched a Chef’s Table documentary last night on Massimo Bottura (pictured above), who is the owner and operator of Osteria Francescana in Modena, Italy. Osteria Francescana is a 3 star Michelin restaurant and widely ranked as one of the best restaurants in the world.

  But it wasn’t easy for Massimo at the beginning. His goal was to bring the Italian kitchen into the 21st century and so his plates are often creative takes on classic Italian dishes. His restaurant blends the old and new; food and contemporary art.

  This approach upset a lot of people at the outset. Massimo was seen almost as a traitor who was turning his back on traditional Italian cooking within provincial Modena. Don’t mess with centuries of tradition they would say. Grandma knew best, son.

  Because of this, his restaurant sat empty in the early years, to that point that he was ready to close its doors. The only reason he kept it open was because his wife encouraged him to give it one more year. She said: This is the kind of food you want to make. If you don’t try, you’ll regret it.

  So he gave it another year and luckily he got a few breaks, including a glowing review by a well known food critic from out of town. Once this hit, the Modenese started to quickly rethink their distaste for Massimo’s idiosyncratic dishes. Before long, his restaurant was full.

  So what changed? It wasn’t the dishes. It was perception. The out of town critics and positive reviews gave people permission to like the dishes. This is critical because nobody needs permission to like tradition. It’s tradition, after all. There’s little risk in that.

  But there’s risk in liking something new that hasn’t been done before. Change creates uncertainty. And if Massimo’s wife hadn’t encouraged him to stick with it just a bit longer and ignore the naysayers, the world may not have one of its top restaurants.

  Sometimes we don’t know what we like and want until we are shown.

  Image: Osteria Francescana 

  2017.06.24

• We are all biased against creativity

  

  I would like to do a follow-up to yesterday’s post about innovators and creators, because I recently stumbled up the following quote:

  “We think of creative people in a heroic manner, and we celebrate them, but the thing we celebrate is the after-effect,” says Barry Staw, a researcher at the University of California–Berkeley business school who specializes in creativity.
  

  It is taken from a Slate article called: Inside the Box – People don’t actually like creativity. And it’s supported by a bunch of research, including a 2010 study conducted by professors at Cornell University, the University of Pennsylvania, and the University of North Carolina.

  The key finding was that people generally hold a bias against creativity, and it’s activated when we become motivated to reduce uncertainty. This might be because we fear rejection or because we’ve come to learn that reducing uncertainty and promoting the status quo is often better for career advancement. 

  There’s less perceived risk.

  But here’s the thing: celebrating creativity after the fact is meaningless. There’s no genius in that. Everyone now knows this truth. The heroics come into play when you’re both willing to be misunderstood and willing to be dead wrong.

  Of course, talk is cheap. 

  Here are 5 suggestions for promoting greater creativity at your company taken from Tom Tunguz’s blog, who himself is borrowing from Barry Staw (author quoted above):

  1. Hire people who’s skills aren’t precise matches for the needs of the company.
  2. Encourage employees not to listen blindly to corporate policy and conventional wisdom; not all to speak with the same voice.
  3. Those in power should go as far as possible to encourage active opposition to ideas. (Similar to Drucker’s obligation to dissent).
  4. Optimize for adaptiveness. Have extra labor capacity and explore side projects. (How many creative companies started or were reinvigorated by side projects? Twitter and Slack are two that immediately come to mind).
  5. Lead rather than follow. Take risks.

  2017.05.24

• The value of relative pricing comparisons

  

  I find the topic of pricing incredibly interesting. How much is someone willing to pay for item X? I’ve said this before, but pricing was one of my favorite classes in business school.

  Here is a line that I really liked from a recent blog post by Tomasz Tunguz’s on price anchoring:

  “Relative pricing comparisons are among the most common method of price rationalization.”

  The topic of his post may not be all that interesting to this audience – it’s about software as service platforms – but the principles should be. 

  In Tomasz’s post he talks about how companies building SaaS products aimed at salespeople will often have their pricing compared to that of Salesforce. In other words, people might say to themselves: Salesforce costs $X per seat. Is this other product worth half of $X? Salesforce is the anchor.

  I can tell you that I do this all the time. (Do you?) I’ll say to myself, condos of this build quality are selling for $Y in this neighborhood. Is this other neighborhood better or worse? If better, how much of a premium might someone apply to it?

  So if you’re in the business of pricing products, you may want to give some thought to how your customers might be anchored when assessing your offering. Relative pricing comparisons allow us to rationalize dollars in our mind.

  2017.05.11

• I’m so busy

  “How are you?”

  “Busy!”

  How many of you say this? I say this all the time, even though I am trying to resist and come up with more creative responses.

  I recently tweeted this idea out and then my friend Brad sent me this article from HBR: Why Americans Are So Impressed by Busyness. It’s a fascinating topic because, historically, not being busy was a sign of status. It meant you had enough money to not have to do anything. 

  But things have changed – at least in this part of the world. (Italy doesn’t seem to feel the same way based on some studies.) Here’s a snippet from the article:

  “What has changed so dramatically in one century? We think that the shift from leisure-as-status to busyness-as-status may be linked to the development of knowledge-intensive economies. In such economies, individuals who possess the human capital characteristics that employers or clients value (e.g., competence and ambition) are expected to be in high demand and short supply on the job market. Thus, by telling others that we are busy and working all the time, we are implicitly suggesting that we are sought after, which enhances our perceived status.”

  So the reality is that there’s actually a good reason for always talking about how busy we are. But as Silvia Bellezza points out in her article, there are also physiological consequences to always being: “busy!” 

  On that note, I think I’ll go snowboarding.

  “How are you?”

  “Just living the dream.”

  2017.02.02

• Your own signpost

  Work Market is an “on-demand talent marketplace.” They connect companies who need work done with skilled freelancers who are looking to do work. Conceptually, we’ve seen this before.

  But this morning, as I was reading this interview with the CEO, the following lines got me thinking:

  “By 2040, I’m pretty confident that every skilled worker will have their own signpost. You will be your own enterprise, in a much more meaningful way than the lip service of today.”

  We are already seeing this phenomenon play out. Social media, for instance, has made all of us our own media brands. So it’s not outlandish to believe that we will also see more, not less, of this in the labor market.

  But what I started thinking about is how this changing relationship between business and labor will ultimately manifest itself in our cities. 

  If we are indeed shifting toward a fluid and dynamic labor market where not only do people switch jobs more frequently, but they have their own signposts, then I have got to believe that urban density will only become more important. We’ll all need to be “plugged in” to the market – both online and offline.

  But what are your thoughts? I think this could make for an interesting discussion in the comments.

  2016.11.18

• The 2×2 investment matrix

  Today I am thinking about product/market fit.

  Product/market fit is startup speak for being in a good market and having a product that satisfies the needs of that market. This may sound intuitive, but having the best product doesn’t matter if there’s no market for it. I like this line from Marc Andreesen: “Markets that don’t exist don’t care how smart you are.”

  So the first takeaway is to create products that people care about. Sounds simple enough. But another reason why this is a thing worth talking about is that markets evolve and there’s always a chance that you can unlock a new market that nobody else is servicing. That’s obviously riskier, but it’s an ideal scenario.

  Below is another way of thinking about that. It’s a quote from Andy Rachleff.

  “Investment can be explained with a 2×2 matrix. On one axis you can be right or wrong. And on the other axis you can be consensus or non-consensus. Now obviously if you’re wrong you don’t make money. What most people don’t realize is if you’re right and consensus you don’t make money. The returns get arbitraged away. The only way as an investor and as an entrepreneur to make outsized returns is by being right and non-consensus.”

  It’s a lot scarier to be charting new territory and sitting in the non-consensus camp. Consensus is comforting. But this is how the game works. I try and remind myself of this on a regular basis. I would like to say more, but I will leave it at that for today’s post.

  2016.09.30

• BARED: Michael J. Cooper, Dream Unlimited Corp

  In 1974, at the age of 13, Michael J. Cooper won his first sailing championship in Toronto. And at this very young age he quickly learned that if you’re good at something, people treat you better. You become influential.

  But the real lesson came when he and colleague Jason Lester started making money by cleaning and taking care of other people’s boats. What Michael learned was that different professions seemed to attract, or perhaps cultivate, different personalities.

  The doctors weren’t the best customers. They weren’t that engaged. And they weren’t that personable. The lawyers were marginally better, but even then they weren’t like the business people. The business people were engaging and overall better customers.

  But then, in Michael’s words, you got to the real estate people. Now, they were charismatic. These are the people that Michael wanted to hang around. They were funny and interesting. They were the people that young Michael admired. His career wasn’t a direct line to real estate, but this early experience would later impact its trajectory.

  Like David Wex (previous BARED post), Michael started out as a lawyer. He went through law school and loved every minute of it. He found it conceptually fascinating. It was a different way of thinking. But after his first day working in a firm, he said to himself: “I can’t believe lawyers do this for a living!”

  He quickly discovered that his personality wasn’t a good fit for law. Michael framed it to me in the following way: “I asked myself, was I going to be an airline pilot or a baseball player? As an airline pilot, like a lawyer, my job would be trying to be 100% mistake proof. However, as a baseball player, I could make audacious plays, only be right 30% of the time, and still be considered excellent.”

  He wanted to be a baseball player.

  I would argue that most entrepreneurial minds think of themselves more as baseball players than as airline pilots. Billionaire Mark Cuban has famously said: “All that matters in business is that you get it right once. Then everyone can tell you how lucky you are.” Nobody remembers all of the failures.

  So Michael decided to go back to school, get an MBA, and figure out a way to do the most exciting thing possible – which in his words was “ABL, baby!” (Anything But Law!)

  In order to complete his MBA and not put himself deeply in debt, he decided to “pull a George Costanza.” Meaning, he continued to work full-time, but he also enrolled at the Schulich School of Business full-time. He would simply come into the office in the morning, put down a cup of steaming coffee, and then take off to class.

  Anything but law, baby.

  Upon graduating and upon reflecting on his childhood experience cleaning boats, he decided that real estate was the most exciting thing he could get into. So he drafted up a bunch of letters and sent them over cold to 10 different real estate developers. His offer was that he would work for free. (He had the ability to do this because of his clever George Costanza-like employment moves.)

  As luck would have it, he ended up getting a job with a man whose boat he had washed as a teenager. It was a man by the name of Walter Zwig. Walter Zwig had a 50-year real estate career in Toronto. He was responsible for developing over six million square feet of space in 13 downtown Toronto office towers, before eventually selling his portfolio to Olympia & York Properties; the legendary Toronto-based development company started by Paul Reichmann and his brothers. It was alleged to be largest development company in the world before going bankrupt.

  Michael started in 1986 and he would eventually work for Walter until 1993. However, Walter didn’t want him to work for free so he started him at $1,000 per month.

  Michael would cut his teeth with Zwig and eventually go on to develop office properties such as the Dynamic Tower at 1 Adelaide Street East, the Zurich Centre at 400 University Avenue, and the Atrium on Bay at 595 Bay Street. It was a small and flat organization without titles and Michael was able to learn a lot.

  But then the early 90’s hit and everyone went broke. The industry went into dormancy.

  However, as luck would again have it, he got a call from Ned Goodman who felt that there were great opportunities emerging in the market. (Ned also appeared in my BARED post about David Wex.) Michael had met Ned’s son, David, while he was looking for office space and Michael had greatly impressed him.

  Michael had brought David to five office buildings. Two of the buildings were owned by Zwig, but three of them weren’t. However, Michael knew that with the current economic climate, the buildings now had more debt on them than they were worth. So if the Goodman’s needed the space, he could simply buy the debt at a discount and take it over. Michael was showing buildings that his company didn’t own and he had a damn good reason why.

  On January 4, 1994, Michael, Ned, and Walter sat down for lunch at the Victoria Cafe in Toronto’s Financial District. The agenda was to figure out how to merge both Goodman and Zwig’s businesses into one and capitalize on what was starting to happen in the real estate market.

  However, Walter said that he was too old to join. He was out. But he encouraged Michael to seize the opportunity. In 1994, Michael Cooper became co-founder of what would eventually become Dream Unlimited Corp. He was 32 years old at the time.

  Remember, if you’re good at something people treat you better.

  Since 1994, Dream (TSX: DRM) has grown to over 1,000 employees and over $15 billion of assets under management in North America and Europe. They provide asset management services for 4 funds listed on the Toronto Stock Exchange and they have operating businesses that span master-planned communities and condominiums to renewable energy infrastructure and retail centre development.

  But what is not necessarily obvious from the above numbers is that, alongside Dream’s incredible growth, Michael also became one of “the real estate guys” that he admired so much as a young teenager cleaning boats. After sitting down with Michael to learn about how he got to where he is, I can honestly say that he is one of the funniest and most charismatic people I have ever met. He is the kind of guy you want to do business with and then go out drinking with afterwards.

  Perhaps not surprisingly, when I asked Michael if he had any advice for young aspiring developers (which I know is a lot of you readers), he quickly suggested that people study the classics. Speech. Drama. He said: learn how to connect with people.

  Because as a developer, your job is to conceptualize what the future could be and then get other people to believe in that same vision. Michael describes navigating all of the constraints on building as one of the most creative things you can do. And in a market like today where you have to be willing to pay the most for a piece of land, it’s the best ideas that win.

  That doesn’t sound like a lawyer or airline pilot to me. That sounds like a real estate guy with one hell of a batting average.

  ———————————————————

  This is the second post in my blog series called BARED (Becoming A Real Estate Developer). A big thanks to Mariane for helping to coordinate this piece. More posts to come in the following weeks. Subscribe to stay in the loop.

  2016.09.13

• I can’t spend unrealized gains

  

  Earlier this week the Wall Street Journal published an article claiming that the celebrated venture capital firm Andreessen Horowitz was lagging behind its elite peers in terms of returns.

  The firm then responded with a well-written blog post explaining why this accusation is off the mark. Their response was simply that you can’t measure returns on “unrealized gains.” Until there is a liquidity event – that is, the company gets sold or goes public – it’s just paper returns. And what matters is cash. 

  As the post clearly states: “I can’t spend unrealized gains.”

  But beyond just a rebuttal, the blog post is a great primer on how the venture capital industry works. We talk a lot about the tech space on this blog, so I thought some of you might find it interesting. 

  One of the reasons I like to follow the VC space is that there are many similarities to real estate development. Not only in the way that the funds are structured, but also in the way that the gestation periods are incredibly long.

  The post talks about this as a “J curve.” In the early years of a fund, the returns are negative. Money is going out the door to invest in immature and risky startups. And it’s not until the harvesting period (7+ years later) that the realized gains start getting paid out to investors (LPs).

  It’s also interesting to note that the exit timing for companies – at least according to Andreessen Horowitz – seems to be increasing (10+ years). This is yet another similarity to real estate development where it seems to be getting harder and harder to build and deliver new supply.

  2016.09.04