Aligning Incentives

One of the most important things you can do to optimize the chance of getting a positive or successful outcome is to align incentives at the beginning. We think of this often at a micro level when designing compensation such as commission plans or bonus plans but it is true at a macro level in general organizational design and even for marketing and business strategy. The aligned incentives need to be inherent and structural to the strategy and organization. When you get it right it’s like biking downhill – everything takes less effort. When incentives are not aligned there is a resultant continual management overhead dealing with the consequences.

My experience managing both advertising-based businesses such as Yahoo Mail as well as subscription businesses such as SugarSync and Catch taught me that aligned incentives between company and customer make it so much easier to manage day-to-day implementation against strategy. At Yahoo mail we were constantly trying to balance competing interests – we needed a large enough volume of advertising impressions and impression formats that were aggressive enough to yield clicks but not too many or to obstructive so as to detract from the user experience beyond the point where it would reduce usage. There was no science behind this balance leading to endless organizational thrash and, arguably, poor decisions and eventual loss of market share.

A freemium business model approach such as the one SugarSync took while I was CEO from 2009-2013 had the opposite dynamic. The more our customers used the product, the more data they would store, the more likely they were to run out of storage and upgrade from free to paid or to a higher paid plan. The marketing tactic in this situation was simple – improve usability and/or add features such that people will want to use it more. Unlike the ad supported example, usability and revenue are tightly aligned. Day-to-day decisions were therefore more straightforward and easier to delegate. Other freemium businesses have experienced this same phenomenon, certainly it was true for Catch.com and for Evernote as explained here by Phil Liblin’s.

If you find yourself as a constant arbiter of small decisions and prioritization questions ask yourself where incentives or goals might be misaligned.

Just as organizations can be misaligned I believe that same misalignment can apply to the inherent design of products. We have seen it frequently in particular in apps that focus on anonymous communication. I read an interesting article about the army of labor being employed to fight bullying and other harmful behaviors on the various anonymous apps (Secret, Whisper etc).  They simply can’t keep up with the volume of the problematic behaviors that are rife in these apps. While of course there are many well-intentioned posts, anonymous apps are a draw to those who want to harm. Almost any application will suffer from abuse and the app provider will need to come up with some method, usually a combination of automated and manual intervention, to manage it. But the situation described by Gigaom shows, in my view, that the incentives built into the app actually encourage abuse. It is, as the underwriters say, a form of adverse selection. Sick people are quicker to buy health insurance and the bullies are quicker to join apps and troll on sites that allow them to abuse with impunity.

Recent examples have only served to heighten my concern about the harm caused by anonymous apps and anonymous commenting by trolls. People who are obviously vulnerable and suffering such as Zelda Williams just after the death of her father are attacked. In fact any public figure is likely to suffer at the hand of internet trolls. But you don’t even need to be famous to be a victim of trolls. We are witnessing a dramatic chilling effect – misogynistic trolls have silenced many serious articulate female voices.

Does anonymity encourage bad behavior? Psychologists and sociologists have long observed that we restrain ourselves from self-interested bad behavior based on two systems – our internal conscience or “superego” as designated by Freud as well as societal pressure and feedback. Our relationships, commitments, values, norms, and beliefs and desire to participate fully in society encourage us to meet societal behavioral norms. Take away the societal element through anonymity and we’re left with only our individual consciences. For most people our conscience and empathy is enough to keep us following the “golden rule” but the internet is so vast that a small percentage of the population can make things miserable for many people.

Yes, there are some excellent reasons to allow anonymity (as described by the EFF here  and further discussed here by Fred Wilson). But the harm from anonymity enabled trolling and messaging is a very real, even deadly problem.

I suppose that any technology that can be used for good can be used for harm.  Twitter is a great example of this. There has been harm, as in the Zelda Williams example, but also very important and positive social benefits have occurred where the cloak of anonymity has protected the vulnerable. But we must not stand behind the shield of the legitimate benefits of anonymity when there are some technologies and settings that seem to be at worst, designed for harm or, at best, designed in such a way that the ratio of harm to good is negatively balanced.

It does not have to be this way.  I find it amazing that smart application design and community standards can make seemingly scary things like selling valuable goods over the internet or renting your guest room to strangers surprisingly secure while poor design can make you the “go to” app for cyberbullies. If your app requires an army of labor in the Philippines to police user behavior its time to question what are you really trying to do. It comes down to aligning incentives.

 

 

Thoughts on Privacy

Privacy has always been an important topic but has taken on increased attention in the last year. But first – what do we mean by privacy?  I think a good definition is that privacy is the ability to be free from being observed or bothered and to determine whether, if, and how information isto be revealed.  Privacy is a broad concept and ranges from the physical to information about us to our thoughts and ideas and can be related to both individuals and groups or organizations.

Our society sees privacy not just as a desirable state but as a basic human right.  The right to privacy, while actually not explicitly stated, is thought to be clearly implied in the Bill of Rights and later constitutional amendments via their protection of beliefs (1st), home (3rd), person (4th), information (5th) and basic liberties (14th).  Similar protections exist in other free countries.

Psychological research has shown what is intuitively obvious – privacy is a basic human need, perhaps not at the level of our physical or security needs but a strong need nonetheless. It is natural to want and to protect a private space.  We lower the blinds on our windows and seek out places in nature to be alone.  Young children have very little privacy, they gain more as they mature.  Privacy affirms our dignity and makes us feel respected.  The founders of our nation recognized this need and protected it. They also recognized the risk and tendency of government to overreach and drew a protective line.

The importance of this need and subsequent right to privacy leads to the tremendous anxiety we feel when this right is violated.  Learning that our online account is hacked is the modern day equivalent of the enemy tribe invading our territory or a robber entering our home.  It is not surprising that emotions run high when this happens as many women shared in this SheByShe survey.

Despite its importance, we willingly and frequently make compromises around privacy.  At a personal level, sharing private thoughts and feelings leads to intimacy – intimacy cannot be achieved without relinquishing some privacy – and our intimate relationships are precious.  We compromise privacy to enable others such as doctors to help us.  More commonly, we compromise privacy for convenience.  There are innumerable benefits we reap when we use modern technologies to manage our lives.  But we make those compromises based on the promises of the companies whose products we are using. And they are our compromises to specifically make.

When we give up some of our privacy to loved ones, professionals or organizations we are trusting them with something precious. When our government crosses the privacy line or the promises of a company we relied on were not kept, it is our human nature to react viscerally. We go beyond the intellectual and feel it in our gut.  It is a violation.  There is even more sensitivity to this topic in places where those violations were systematic in the past.  The Orwellian state so well depicted in “The Life of Others” actually happened.  It is no wonder that Europe has led the US in advocating for privacy protections.

Modern internet businesses have tremendous responsibility.  The most sensitive of information can be in our online accounts and too often those responsibilities have been breached.  To make matters worse, those breaches have often not been accompanied by adequate acknowledgement of or remorse for the breach. I am amazed by the lackadaisical and casual attitude from Facebook on their most recent “research” project.

Not surprisingly, I am in favor of stronger privacy protections from our government.  At the moment it seems as if we have the “fox watching the chicken coop” and both political parties are guilty (something about absolute power corrupting absolutely).  Stronger oversight and privacy advocacy is needed.  Stricter rules for company privacy and consequences for violations are important as well. If they care about this topic, consumers need to vote with their feet and patronize companies that better respect and value privacy.

In the case of services dominated by large near-monopolies such as Google and Facebook, however, that vote becomes impractical. The tremendous economies of scale in search have meant that solutions offering enhanced privacy such as DuckDuckGo are less robust and the tremendous network effects in social networking have made it incredibly difficult to create a real alternative to Facebook.

When facing difficult problems I often think of this phrase by John Sloan Dickey, which I first heard at Dartmouth.   “The world’s troubles are your troubles … and there is nothing wrong with the world that better human beings cannot fix.”  Humans created this problem so I’m optimistic that “better humans” can solve it. Technology is part of the problem but can also be the solution.

Brilliant humans have invented the many forms of modern cryptography and encryption and the public key architecture that makes it usable at scale.  There is still a tremendous gap, however. These secure encryption solution are not easy enough to use – there are simply too many usability hurdles.  For instance, TrueCrypt and its alternatives can be used in combination with public cloud solutions such as SugarSync and DropBox to ensure data privacy but this is not usable or practical for most people. Secure email solutions and private browsing options such as Tor also lack ease of use.

I’ve written previously to Beware of False Dichotomies.  I’m convinced that security v. usability is ultimately a false dichotomy and the person or company who proves this will enjoy tremendous business opportunity.  You should not need to be a hacker to be able to have confidence that your browsing or communication will remain private.  We can fix the privacy problems we face.

Speech at Georgetown Masters in Foreign Service Commencement

I was honored to be invited to speak at the graduation for the Georgetown MSFS, georgetownthe program where I received my degree in 1986.  The text of my speech is below.  This photo was from the dinner with other speakers and dignitaries before the ceremony.  Pictured is the other speaker Ambassador Lakhdar Brahimi UN and Arab League Special Representative for Syria, MSFS Dean Anthony Arend, Secretary of State  Madeline Albright and me behind her.  I’ll post the video when available.

May 16, 2014, Washington, DC

Congratulations fellow MSFS graduates. I am honored to be here to share this special day with you, your families, friends and teachers.  The fact that you are here today speaks to your hard work, dedication and significant accomplishments.

The study of international affairs has never been more important. In a world where thousands of nuclear weapons exist and terrorist states are trying to acquire them, where suicide bombers kill without warning and thousands die each day from poverty caused simply by the way the international system operates, we need to understand international relations.  Put simply, international relations is about war and peace, conflict and cooperation, wealth and poverty – these are literally life and death matters.  We need to understand the issues and behavior patterns between the actors in the world, be they individuals, societies, states, and corporations so that we can lead and influence them for good.

International affairs has never been more important to business – the world in which I have operated for the last 25 years.

I was bitten by the international bug during a foreign exchange program in high school.  I loved learning languages and studied international relations, economics, Spanish and French. I followed a non-traditional path after Georgetown.  I enrolled believing that I would become a diplomat and was fortunate to study under one of the most impressive ones at our school – Secretary Albright.  However, an internship at A.I.D. writing memos that would literally be “through” layers of bureaucracy before getting to the “to” person convinced me that I didn’t have the patience nor personality for government work.  I made a course correction (in Silicon Valley we call them pivots) to focus on international business.

As I graduated Georgetown the typical international business recruiters, natural resource firms or commercial banks, were growing relatively slowly.  The companies whose exports were and still are growing the fastest were technology and life sciences.   According to the Brookings institute, the US industries with the most patents, export the most.  This makes perfect sense of course – we are competitive in intellectual capital and innovation – not manual labor.  That observation (and marriage to a Californian enrolling in UC Berkeley law school) led me to Silicon Valley.

My first job was at Informix, a young growing database company.  After 4 years in marketing I seized my first big international opportunity – Latin American sales.  I had no sales experience but knew the product, knew the region and spoke Spanish (unlike my boss).  I spent many months in Mexico and the Andean region setting up our distribution channels and then moved (with my 2 children and nanny) to Brazil to open our first office.  I was only 27 and not the typical demographic to go open a new subsidiary but I was in fact ready.  Prepared by my MSFS experience with unique international skills of analysis, language and ability to connect across cultures.  It was a whirlwind but successful 6 challenging months of learning Portuguese, hiring staff and selling lots of software to companies as varied as Sao Paolo banks and the largest iron ore miner in the world.

I made my way to Netscape at the dawn of the internet where I managed international marketing and development for the browser.  Highlights included striking a deal with IBM where we jointly translated the browser to 23 languages – a critical development in making the internet accessible in new markets.  When we open sourced the browser we also open sourced the localization toolkit allowing anyone to translate the browser to their native tongue, an important step for preservation of such cultures as Maori and Welsh and other indigenous languages.  This was diplomacy albeit in a nontraditional venue.

While leading the Mail team at Yahoo we aggressively expanded into Asia and Europe.  Just as many of you will work for foreign companies, I then went to work at the leading Israeli security firm, Check Point, heading up several US functions and bridging the sometimes wide cultural gap with headquarters in Israel.  As CEO of SugarSync, a cloud company, we leveraged international partnerships in Korea, Japan, Italy and France early on to grow our business, which was half international in our second year of revenue.  In fact, in 2011 there were more people working on the SugarSync product in Korea than in California.

In summary I found that the tech world is a great place to exercise and develop your international skills in a growing, challenging and constantly changing field.

And it is a worthwhile place.  Technology has tremendous impact, clearly supporting the Georgetown mission of “pursuing justice and the common good” and “creating and communicating knowledge.”  Internet connectivity plus inexpensive devices plus a Khan academy or MOOC gives a child in Central Africa many of the tools previously found exclusively in the first world.  Sure it’s not the Cathedral school down the street, but the gap is dramatically narrowed.  It has always been said that access to information is critical for democracy and free society.  Technology facilitates the sharing of information and as such has supported transitions to democracy.  By accelerating mass communication, YouTube and Instagram are like the printing press of half a millennium ago – altering the structure of society.  Technology can be a tool for increasing the voice of women, one of my other favorite subjects.

It’s commonly thought that, like travel, technology is a force for homogenization between cultures.   That may be true but short of a dystopian homogeneous world we still need to bridge differences and technology brings us into cross cultural and political contact more frequently and more deeply.  I see this happening even in the diplomatic corps.  In the pre telegraph and telephone stage diplomats had more independence – that waned as those technologies allowed decisions to be made back in the home country.  But I believe the trend has reversed towards a larger role in-country.  I see local staff in embassies with twitter feeds and engaging in social media as part of their people to people efforts.  The State Department TechWomen program, in which I have mentored two Jordanian women technologists, is another on-the-ground example.  It is not just about working in technology but using it.

As productivity gains from technology can be had dramatically cheaper, it can be a force for reducing poverty. Technologies such as the cloud and mobile devices democratize access to capabilities previously only available to big companies in rich countries.  Technology is so ubiquitous that there are more mobile phones then toilets in the world!  We see technology democratizing many fields – agriculture, business, healthcare, media – the list goes on.

But it’s not so easy and technology companies need people like you, with international sensitivity.  A case in point is Yahoo – failure to recognize all the implications of its actions, handing over email to the Chinese government, led to a dissident being jailed, Google’s European privacy disasters, Ebay selling Nazi souvenirs.  The dilemma of engagement in order to influence versus withdraw or sanction to try to force change happens for technology companies such as Google withdrawing from China similarly to countries such as the US today with Russia.   The exact same technologies that protect companies from hacking are used by governments for surveillance on their citizens.   The iron curtain has been replaced with an electronic curtain. We have seen this dramatically in regimes resisting Arab Spring.  And speaking of Arab spring, technology was a critical amplifier, not causing the change but surely accelerating it where news is breaking first on Twitter.  Our intelligence agencies need to be social media experts.

Companies have significant international businesses earlier in their evolution.  It is not only the Google’s and Yahoo’s of the world facing international issues.  In 2010 SugarSync, like Facebook, Dropbox, Twitter and others was blocked by the great Chinese Firewall.  Some of the most dramatically successful companies – WhatsApp, Skype, & ICQ were primarily international in their customer base from day one.  The model of figuring out the product and customer fit first in the home market then going abroad is becoming antiquated in non-regulated markets.

As you graduate and go off into the world, my concluding message to you is this – technology is quite impactful on the international stage – mostly for good but sometimes for evil.  It is important.  It is exciting, and, it is fun to work on.  So I invite you to join me on this exciting journey.  Some of you may do this directly – starting or working in a technology company but I encourage all of you to join me at least indirectly, leveraging the power of technology to amplify your international skills and efforts wherever you chose to apply them.

Thank you again for inviting me here and congratulations!Enhanced by Zemanta

Hitting our Stride

Last fall, Steve and I went back to Boston for our 25th HBS reunion.  We had an incredible turnout and great fun reconnecting with old friends from literally around the world. In addition, I just happily celebrated a milestone (50th) birthday.  Both of those events, I suppose, leads me to become more thoughtful on the topic of age and  work stage.

It was interesting to see the broad range of stages people were at in their careers. A few of our friends that were in semi or complete retirement mode.  At the same time many, particularly women, were just gearing up.   Several of our female friends were going back to work after some time focused on children with a few starting brand new enterprises.  For example it was great to reconnect with MaryAnne Gucciardi and discuss ecommerce strategies for her cool new startup DragonWingGirl.  Others hadn’t left the working world to parent but were clearly putting the pedal to the metal now that they are becoming “free birds” (a.k.a. empty nesters).  I could certainly resonate with that pattern.  While I have been continually intense in my career focus, the jump to entrepreneurship was a better fit for me when my kids were past the baby stage.

I am seeing a similar pattern outside of my alumnae network.  Since selling Catch.com as I have been exploring new startup ideas I have worked with, advised or met several 40’s and 50’s women embarking on an intense entrepreneurship journey.  Examples include Sarah Frisken of MadeWithMischief to Trish Costello of Portfolia and my former employees Tanya Roberts starting SheByShe and Melinda Byerly, founding Vendorsi.

I am thrilled to see such accomplished women as Janet Yellen (67) and Christine LaGarde (58) in literally two of the most powerful positions in the world.  While I cannot deny the uncanny abilities of Mark Zuckerberg in creating a multibillion dollar company in his 20’s, I must say that I’m glad that the leaders of the free-world’s financial system have a bit more experience under their belt!

Sadly, closer to home, another accomplished female economist, my cousin Pearl Kamer passed away at 74 during the height of her career.  The obituaries and eulogies, noted her impressive accomplishments as the foremost economist for the Long Island region.  They also remarked on what she was recently in the process of doing and what she could have still accomplished.  She clearly had more to contribute.  Her insights were astute – forecasting the real estate bubble and other key economic trends.

I get a thrill every time I see my former professor and thesis adviser Madeline Albright lecturing or on the talk show circuit making mincemeat of tricky questions or difficult presenters on the other side and I hope to have the opportunity to support Hillary Clinton running for and achieving the Presidency of the US.  The supreme court of our country includes among its three women an impressive octogenarian.  Ruth Bader Ginsburg must be one of the toughest human beings on the planet.  Not only has she survived two bouts with cancer she was back hearing oral arguments 12 days after pancreatic cancer surgery and didn’t miss a day of work when battling colon cancer.  While in law school and right after the birth of her daughter, Ginsburg’s husband was diagnosed with cancer.  She attended class and took notes for both of them; typed her husband’s papers from his dictation; and cared for their daughter and her sick husband – all while making the Harvard Law Review.

I am fortunate to have role models in my family for prioritizing continued work and contribution.  My great-uncle Frank Kamer (father of Pearl) practiced as an attorney until age 98.  Both of my parents, and my father-in-law, all in their 70’s, are actively practicing as physicians.  In fact, just a few months ago, my mother who worked as medical director of the North Shore Hospital Drug Rehabilitation program for more than 30 years was offered a promotion to lead an even larger program at a neighboring hospital

I aspire to follow in their footsteps.  While able to leverage my years of experience, I believe that I still have much to learn and contribute.  With each new technology, market or situation I find myself on a steep learning curve which is what makes work so exciting.  For this reason, I find biases such as the ones described here  and here to be so distressing and damaging.

This article provides a more nuanced and explanatory view and explores solutions.  As bad as the biases may be in real life, the fact that the media portrays them as completely pervasive makes their impact even worse.  In fact, the reality of startup land is much, much more diverse than the media portrayal.  This was clear to me even at the recent Launch festival here in San Francisco.

There are many great startups being founded and managed by 40 and 50 somethings.  In February, I visited Paula Long, my former board member at SugarSync, cofounder of Equallogic and now cofounder of the hot startup DataGravity.  DataGravity raised a $30million series B led by Andressen Horowitz – they are innovating at the intersection of storage and big data – exciting and critical fields today.  I didn’t see a single hoodie or masseuse at their office in Nashua.

Of course, in addition to startups being founded and led by this demographic, there are impressive members leading some of the biggest and most important companies in tech – HP, IBM, Xerox and beyond – eg GM to name a few.

Lets be sure to get the story of these women as publicized as the male 20 something story.  Half the battle towards ending these biases is awareness and information.  I believe that seeing these role models frequently and in a fair and reasonable light would encourage young women to stick it out in their careers during the challenging baby stage or maintain their skills part time or even simply dive back in later.  This pool of talent has so much potential and our society and they have so much to gain

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Next Generation Collaboration – ICT Spring Luxembourg

I had the opportunity to speak last week at the ICT Spring conference in Luxembourg.  My topic was next generation collaboration – a subject near and dear to my heart these days.  Lots of great discussion followed – I was happy to see the genuine interest in how to best use the new technologies of Cloud, Mobile and Social to improve collaboration.

Catching a Wave

When I wrote about my transition recently, I mentioned my excitement about the possibility of working with up-and-coming startups and helping them develop their products and businesses.  I also can’t seem to ever get enough of the productivity tool space – (e.g. Yahoo! Mail, Netscape Communicator, SugarSync – I’m hooked!)  I get a thrill seeing how these tools and technologies can improve people’s lives.  So when the founders of Catch asked me to consult with them as acting CEO I was thrilled to jump in.

I’m so impressed with what this small team has accomplished.  They have an absolutely gorgeous app – so beautiful that Apple has it plastered all over their home page, store and headquarters.    applehqCatch is at the intersection of some of the most exciting trends in technology – mobile, collaboration, ideation, search, cloud and b.y.o.d.   At the same time, Catch, like many early-stage, technology driven companies, has yet to figure out and implement its long-term business model.

So what is Catch?  Catch is a mobile-based collaborative note taking application.  While simple note-taking functionality a la Evernote or Google Keep is great, I believe that notes achieve their true power as the most natural basis for collaboration.  We see this clearly in the usage patterns of Catch – all kinds of business teams sharing notes to manage projects, update status – even manage field sales teams.  And the best part is it’s super light-weight, intuitive and easy-to-use.

Having a couple of months off to enjoy my family (including my east-coast children), reconnect with friends, read, hike and recharge has been great but not a long-term state for me, at least not now.  I love my work and feel fortunate to have been connected to Catch and for this timing to work out.

Some exciting things in the works here that you’ll be hearing about in the weeks ahead – stay tuned!

The Danger of Assumptions

An assumption is something we take for granted or accept as true without proof.  Assumptions are a necessary and important part of life – without them we would waste a tremendous amount of time verifying every detail of life’s operations. Assumptions make daily living more practical in matters ranging from interacting with our family to driving a car and doing complex projects at work.

But assumptions can be dangerous – they can limit our options and creativity, even our growth and development.  My focus here, however, is when assumptions lead us to errors in our actions and judgement with negative consequences.  I’ll give an example.

Early on at SugarSync we identified the need to improve many of our written documents – marketing, support articles, product documentation etc.  We were still small and only had  budget for a part time contractor.  One of our team members knew of such a person from a prior technical company where she also was a part-time contractor.  She is a mother with young children, her husband traveled quite a bit for work and at the time she wanted a part-time flexible arrangement.  This was a great mutual fit and she joined our team in this capacity.  She was highly competent and well liked by her colleagues.  As SugarSync grew we realized that we really needed full-time efforts on this function.  It didn’t occur to us that she would be interested in such a role so we started recruiting.  A couple of months later (we hadn’t hired the full-time person, in part because they didn’t measure up) our contractor gave notice that she had a full-time offer.  How could this be?  She assumed that we must not have liked her very much if we didn’t offer her the position.  We assumed that she was not interested in full-time work or would have spoken up when the workload increased or when we posted the position.  Fortunately this situation had a happy ending and she joined SugarSync full-time but it was an unnecessarily close call with a lot of avoidable heartache and time spent by both sides on recruiting.

This was a reminder to all involved about the need for extra communication and especially about the need to validate assumptions.  These types of assumptions about an individual’s career goals are particularly risky and can be incorrectly influence by gender.  Assumptions that were once valid can become erroneous in even short periods of time.  People change, their situations change.  Marketplaces and business, especially in technology, are extremely dynamic making assumptions particularly risky.

I believe that consciousness of our assumptions is one of the key foundations of critical thinking skills.  Engaging in a Socratic thought process of “what are we assuming” “how did we choose those assumptions” and “what could we assume instead” can raise this consciousness and open up creative avenues for solving existing problems with new ideas.

Assumptions are at the heart of bias and stereotypes and recognizing and questioning our assumptions is the key to change.  I believe the overwhelming evidence that diverse teams create better results is founded on the higher likelihood of those teams to overcome false assumptions and biases.  Successful leaders foster an environment that challenges assumptions and associated limits.  Innovative companies by definition have successfully challenged widely-held assumptions.  That’s why my favorite saying on the topic is this one by Ken Olson “The best assumption to have is that any commonly held belief is wrong”

I’d love to hear any examples you want to share of interesting or important false assumptions!