The Future of Small Business?

If I would be asked which technology or ‘innovation’ has had the most profound impact on the way I work I would answer: Working remotely – with clients and systems I hardly ever see.

20 years ago I played with modems, cumbersome dial-in, and Microsoft’s Netmeeting. Few imagined yet, that remote work will once be the new normal. Today I am reading about Industry 4.0, 3D printing, the Internet of Things, and how every traditional company has to compete with Data Krakens like Google and Amazon. Everything will be offered as a service, including heating. One consequence: Formerly independent craftsmen become preferred partners or subcontractors of large companies, of vendors of smart heating solutions. Creative engineering is replaced by calling the Big Vendor’s hotline. Human beings cover the last mile that robots or software cannot deal with – yet.

Any sort of customization, consulting, support, and systems integration might be automated in the long run: Clients will use an online configurator and design their systems, and possibly print them out at home. Perhaps someday our clients will print out their heat exchangers from a blueprint generated on Kraken’s website, instead of using our documentation to build them.

Allowing you to work remotely also allows everybody else in the world to do so, and you might face global competition once the barriers of language and culture have been overcome (by using ubiquitous US culture and ‘business English’). Large IT service providers have actually considered to turn their consulting and support staff into independent contractors and let them compete globally – using an online bidding platform. Well-known Data Krakens match clients and freelancers, and I’ve seen several start-ups that aspire at becoming the next matching Kraken platform for computer / tech support. Clients will simply not find you if you are not on the winning platform. Platform membership becomes as important as having a website or an entry in a business directory.

One seemingly boring and underappreciated point that works enormously in favor of the platforms is bureaucracy: As a small business you have to deal with many rules and provisions, set forth by large entities – governments, big clients, big vendors. Some of those rules are conflicting, and meeting them all in the best possible way does not allow for much creativity. Krakens’ artificial intelligence – and their lawyers and lobbyists – might be able to fend off bureaucracy better than a freelancer. If you want to sell things to clients in different countries you better defer the legally correct setup of the online shop to the Kraken Platform, who deals with the intricacies of ever evolving international tax law – while you become their subcontractor or franchisee. In return, you will dutiful sign the Vendor’s Code of Conduct every year, and follow the logo guidelines when using Kraken’s corporate identity.

In my gloomy post about Everything as a Service I came to the conclusion that we – small businesses who don’t want to grow and become start-ups – aspiring at Krakenhood themselves – will either work as the Kraken’s hired hands, or …

… a lucky few will carve out a small niche and produce or customize bespoke units for clients who value luxurious goods for the sake of uniqueness or who value human imperfection as a fancy extra.

My personal credo is rather a very positive version of this quote minus the cynicism. I am happy as a small business owner. This is just a single data-point, and I don’t have a self-consistent theory on this. But I have Skin in this Game so I share my anecdotes and some of the things I learned.

Years ago I officially declared my retirement from IT Security and global corporations – to plan special heat pump systems for private home owners instead. Today we indeed work on such systems, and the inside joke of doing this remote-only – ‘IT-style’ – has become routine. Clients find us via our blog that is sometimes mistaken for a private fun blog and whose writing feels like that. I have to thank Kraken Google, begrudgingly. A few of my Public Key Infrastructure clients insisted on hiring me again despite my declarations of looming ignorance in all things IT. All this allows for very relaxed, and self-marketing-pressure-free collaborations.

  • I try to stay away, or move farther away from anything strictly organized, standardized, or ‘platform-mediated’. Agreements are made by handshake. I don’t submit any formal applications or replies to Request for Proposals.
  • “If things do not work without a written contract, they don’t work with a contract either.”
  • I hardly listen to business experts, especially if they try to give well-meant, but unsolicited advice. Apply common sense!
  • Unspectacular time-tested personal business relationships beat 15 minutes of fame any time.
  • My work has to speak for itself, and ‘marketing’ has to be a by-product. I cannot compete with companies who employ people full-time for business development.
  • The best thing to protect your inner integrity is to know and to declare what you do not want and what you would never do. Removing the absolute negatives leaves a large area of positive background, and counter the mantra of specific ‘goals’ this approach lets you discover unexpected upsides. This is Nassim Taleb’s Via Negativa – and any career or business advice that speaks to me revolves around that.
  • There is no thing as the True Calling or the One and Only Passion – I like the notion of a Portfolio of Passions. I think you are getting to enjoy what you are learning to be good at – not the other way around.
  • All this is the result of years of experimenting in an ‘hyperspace of options’ – there is no shortcut. I have to live with the objection that I have just been lucky, but I can say that I made many conscious decisions whose ‘goal’ was to increase the number of options rather than to narrow them down (Taleb’s Optionality).

So I will finally quote Nassim Taleb, who nailed as usual – in his Facebook post about The New Artisan:

Anything you do to optimize your work, cut some corners, squeeze more “efficiency” out of it (and out of your life) will eventually make you hate it.

I have bookmarked this link for a while – because sometimes I need to remind myself of all the above.

Taleb states that an Artisan …

1) does things for existential reasons,
2) has some type of “art” in his/her profession, stays away from most aspects of industrialization, combines art and business in some manner (his decision-making is never fully economic),
3) has some soul in his/her work: would not sell something defective or even of compromised quality because what people think of his work matters more than how much he can make out of it,
4) has sacred taboos, things he would not do even if it markedly increased profitability.

… and I cannot agree more. I have lots of Sacred Taboos, and they have served me well.

What Entrepreneurs Need to Have

Chances are that many readers had to do one of those things as corporate employees or as members of any large organization that asks management consultants for help: brainstorm on a vision, formulate a mission statement, create a business plan. As an aspiring start-up business owner  you cannot escape trainers who tell you need a have a logo designed by professionals, hire MBAs as CFOs, hire more professionals to dream up a great marketing strategy, and execute That Great Plan based on Your Sincere Belief in That Great Singular Idea.

This does not resonate with my experiences as an entrepreneur though. You might expect correctly that I would rather go for antifragile ‘dilettante’ tinkering – and all those buzz words make me remember that eerie documentary of brave new corporate world.

It is refreshing to find confirmation by a very successful founder of start-ups. I have linked Frank Levinson’s Top 10 Things You Must Have to Start a Business so often – it deserves a dedicated post. As usual I cannot resist pointing out some resemblance with Nassim Taleb‘s ideas.

Note to readers who might miss the physics in this post: Frank Levinson is a physics PhD and self-educated programmer. He has given an extensive interview about his career to the Center for History of Physics of the American Institute of Physics – the transcript can be found here. I was most impressed by his ability to deal with failure – he founded his successful venture Finisar after he had been fired as a CEO of a company he had founded himself. Levinson called it Finisar as he hadn’t finished anything before.

You Need Comfortable, Cheap Furniture – It doesn’t matter how you look but what you do.

This is in contrast to all that advice about branding and (online) reputation. Customers should not be jealous of your Porsche company car or suspect that those high rates they are charged for go into hiring designers that tweak your corporate identity every month.

Remember the coconuts!

The German title of Monty Python and the Holy Grail is: Knights of the Coconut. Horses were replaced by coconuts for budget reasons and this joke has gone viral. Monthy Python were creative and innovative because of constraints and necessities.

Levinson believes that therefore entrepreneurs need not enough money. In addition, the best money you can use is customer’s money – found the company on an existing revenue stream – or literally use your own money.

After all, it is about what Nassim Taleb would call Skin in the Game.

Pride of a Fat Baby and 1000 Ideas

Which pride does a fat baby have? Exactly: None.  In contrast to Focus on Your Core Business and Go for that Great Idea (probably accompanied by Follow Your Passion) Levinson advocates accepting project requests appearing as tangential to your aspired core business. His company did contract engineering for some years, then delivered bad products we considered good ones and finally manufactured really good products.

This is Taleb’s Optionality. Those seemingly odd projects allow for interaction with real customers, collection of feedback from the real world. Levinson also advises to love your tough customers – those who complain about the product – because they are really interested.

Non-core-business projects might give you new ideas and turn change your so-called business plan based. Actually, you should be generous with ideas and give away 1000s of ideas (for money), e.g. in contract engineering, rather than believing you have stumbled upon that singular idea – knowing exactly what the world really needs, based on your impeccable market studies.

“Common Sense”: You Need Customers

Sounds trivial, but isn’t. Frank Levinson’s key message is that customers are people who place an order and pay for services or product received. Customers are not: People who like your idea, would love to get free samples, and do co-development.

It is so simply but yet it cannot be overstated when you read it ten times a day in articles tweeted how important it is to grow your network, exchange ideas, find partners.

It resonates with my experience: The most enjoyable business relationships start with a client really in need what I offer – I do it – the client is happy and pays in due time. Actually it always was those business relationship that naturally morph into friendships. But the alleged friendships with people who want to discuss market potential over a coffee hardly ever turn into business.

Sure, customers need to know you exist. But as Levinson I feel that advice for start-ups over-emphasizes the importance of marketing to the point of replacing the requirement of having a very product with sophisticated marketing! Professional marketing, business plans, Vice Presidents (suits) should materialize very late in the company’s growth process – before an IPO, thus probably never if you decide to remain a small privately owned business.

Social media can help to connect with potential clients – your mileage may vary depending on the very nature of your business. Yet I believe Levinson is still right in being wary about the significance of a website as engineers are shy and hope to replace face-to-face customer contact by virtual online communications.

But watch the video yourself – 19 minutes well spent:

 

More Capitalism, Less Zen. Tackling Existential Questions Once More. In Vain?

Usually you make things worse by trying to explain again what you didn’t get across the first time. I do it nonetheless.

My post on Zen Capitalism might have been interpreted as advocating Follow Your Bliss and Anything Else Will Follow (Money, in particular).

I cringe; this is exactly what I intended to avoid, but it serves me right in a subtle way as I ridicule clichéd ‘new age-y thinking’ often.

I believe my cardinal error was to introduce over-used terms such as passion in a hand-waving way.

What I actually tried to get across was:

I believe we deprive ourselves of viable, commercially reasonable business opportunities because we simply don’t see them.

Options are obscured by a filter built from our interactions with ‘society’ – their expectations and doubts, their questions about what you are going to do based on your degree and your experiences. I don’t want to blame ‘society – theoretically we are old enough to take our own decisions; this is rather an observation and I am preaching to myself also, not only to the blogosphere (This is true for all of my posts, I should add this disclaimer more often.)

I picked my stint as an IT freelancer for SMEs deliberately in my previous post – as it was the most stressful transition in terms of having to come to terms with ‘expectations’ and comments like But you do not need a PhD to do that?? I argue that I put all my alleged smartness into overcoming that silly pride of an academic and just offering some services that somebody else really needs right now, no matter how menial or mundane former colleagues might consider that.

This is just an anecdote of mine, there is no silver-bullet-style philosophy of work ethics to be derived from that. Your mileage may vary in terms of your blind spot. Or worse, all options you could come up with in your wildest dreams might still not be converted into something business-y.

However, my theory may be faulty and incomplete anyway:

You consider me a geek – but there is a darker side of me: A penny pincher, a controller, a professionally paranoid consultant. The underlying truth is maybe that the paranoid part of me has forced and driven me to thrive in this capitalist world (this is drive, not passion) – until I reached a state that would have made even the most risk-aware coward taking a leap of faith.

So most ironically you might accuse me of having lived Randy Komisar’s Deferred Life Plan and I cannot deny. I could just argue that I didn’t consider it a plan at all – I thought (felt) it was the best thing to do at that moment of time. Randy Komisar’s theory of matching your portfolio of passions resonates strongly with me  – exactly because of that. He states (I am paraphrasing, this is not a quote)  that the current match between your passion(s) and your options, however imperfect, allows you to get a bit closer to some ideal state – a state you cannot even describe yet.

It might be the right thing to do to deliberately embark on a job or a project that is definitely not the epitome of Your Ultimate Passion, but it allows you to take a twisted, but reasonable step in the right direction.

Some years ago I said very often that my job scores about 85% on the scale of True Calling, but it gives me more and more financial freedom. Truth is, I was not aware of what I am really heading at, and I cannot say for sure that I know it now – but it felt like the right direction. Not in a ‘spiritual way’ – no revelations here, rather assessing options and risks, probably paired with great gut feeling in a down-to-earth way. Or simply dumb luck.

For full disclosure I need to add that I have neither been born rich nor have I married rich – I daresay anything I own is due to my very own achievements,  and I am darn proud of that.

But the definition of one’s true achievements is debatable. I am guilty of having been born in a wealthy, politically stable country with an over-developed social system. Education is nearly for free – there are no student loans. But on the other hand my country is over-administered in a legendary way and infamous in throwing in intricate, bureaucratic wrenches (think Vogon bureaucracy) into the careers of aspiring entrepreneurs, and we use to say If Bill Gates would have been born in Austria he wouldn’t have been able to found Microsoft.

And yet, there is another, much simpler explanation:

Some people are luckier than others because they truly enjoy what is considered dreadful work by a majority – and that majority is in turn happy to pay somebody for that.

For example I really enjoy troubleshooting technical systems to a greater extent than most people. This invokes the explanation ‘dumb luck’ in my case.

We should start a research project or search for existing statistics on people’s intended passions, any careers that might be derived from those(*), and the economic needs of a society. Probably we find that 20% of the world population would enjoy making a living of spam poems, but this planet only needs one or two spam poets really.

I’d like to ponder on (*) a bit more as I feel this is the hidden escape.

I do still hope that we are not yet creative enough enough to apply those skills that are fired my passion to some economically viable venture. I conjecture that everybody has some skills that allow him or her to do joyfully what is dreaded by a majority. Can we work out the math in a self-consistent way? I am already considering that pie chart diagram of skills of every individual – skills I enjoy versus employable skills I have but I just apply in order to pay the bills.

Can we sort this out and bestow joyful jobs to all of us?

Or do we need to distort and twist the definition of ‘joyful’ in a sophisticated way?

I would like to hand that question over to you again and add Michelle’s epic quote here as a motto:

“I’d want to study the life cycles of Devonian brachiopods and an oil company would like me to project natural gas deposits.”

As she pointed out – probably we should have some blog carnival of a series of posts (by different bloggers) on these existential questions as comments would grow quickly into full-blown posts.

Vampire

Vampire from Wikimedia – as sort of requested in a comment by Search term Haiku Zen Master Mark Sackler. See the comments. I don’t understand the description on Wikimedia as it is in French. But this matches my existential mood. Very Sartre.

So-Called Zen Capitalism and Random Thoughts on Entrepreneurship

In this blog and in the comments’ section of other blogs I have repeatedly ridiculed: management consultants, new age-y self help literature and simple-minded soft skills trainers. Let alone all other life-forms in the lower left quadrant of the verbal skills vs. quant skills diagram.

Now it is time that I give you a chance to ridicule me: I come up with a simple-minded philosophy of life, adorned with a new age-y tag.

I am a true fan of Randy Komisar’s book The Monk and the Riddle: The Art of Creating a Life While Making a Living and his video lectures on entrepreneurship at Stanford university.

I have to apologize to hardcore long-time followers of his blog: I had already embedded one of my favorite videos in this post on my most recent career change.

Originally I planned to write a more detailed review, but somebody did exactly that already and summarized both the book and this video. I learned about the term Zen Capitalism from this article, and I am breaking one of my silent rules on re-using it: Normally I detest this marketing lingo of oxymorons such as corporate responsibility. But it simply sounds too cool to be a gentle and wise capitalist, running your business on the wisdom of an Eastern mystic. I think it helps a lot that I know next to nothing about Zen and not a lot about capitalism.

Reader, if you are still here and not lost in the multi-verse opened up by clicking all these URLs, I will offer you my shortcut version of Komisar’s philosophy.

I had struggled with the existential contradiction between true passion and what to do for a living for half of my life. But the solution might be simple, or I turned into simpled-minded believer. Anyway, it works!

Komisar worked odd jobs while studying at the law school, e.g. as the manager of an unkown band. But he finally settled to the type of career that’s expected of a JD – until he realized that his future was going predetermined by the hierarchy of job levels at a law firm, from Junior Consultant to Senior Partner. I was intrigued by his story about the moment he recognized that – by looking down the aisle, framed by the doors of his colleagues offices’ all nearly ordered by hierarchy. This is probably one of the few times ‘hierarchy’ is used in the original sense of the word – sacred order. This is so very The Matrix!

He said that he is interested in the creative side of business – the metaphorical blank sheet of paper. So he abandoned his Matrix-like career and supported new businesses in the start-up phase a a Virtual CEO, denying the Deferred Life Plan – do what you have to do, then do what you want to do.

I had been incredibly self-disciplined for such a long time, so I feel entitled to state: Self-discipline and perseverance are all good and fine, but protestant work ethics has been ingrained into our society in a way that turned these virtues into self-replicating demons. I do not have a link to share as anything I read about the history of work ethics and its detrimental effects on Corporate Culture and the Cult of Overtime was written by German authors. So probably this is a German or middle-European issue anyway.

Abandoning the deferred life plan leaves you with the need to navigate through spacetime though. You need to take decisions that take you closer to … wait, closer to what actually?

Zen Center of NYC 500 State St jeh

The Zen Center in New York City. Investing about two minutes time in random searching Wikimedia – this was the image most related to Zen Capitalism I could come up with.

Komisar argues that it is passion that pulls us and drive that pushes us. Nevertheless, your quest for the one and only true passion will paralyze you. He said he was passionate about so many different things – trying to pick a single discipline or career once for all will drive you crazy. The good thing is that there are many options out there as well – options that should be aligned with what Komisar calls your portfolio of passions.

I believe the single most common error we all make – and I am not at all excluding myself – is denying existing options that are laying before us. In the discussion linked at the very top of this post I stated pretentiously I re-invented myself as an entrepreneur three times. This post – with its  references to a virtual CEO and Silicon Valley investments ninja – is probably the right place to add that this didn’t mean I funded three fancy fast-growing tech start-ups.

The very first time I became an entrepreneur I did so by seizing an obvious and fortunate option available particular in the years before the dot com crash. I swallowed all the pride I might have had as a physics PhD and set-up a plain and simple website marketing myself as an IT consultant for small enterprises. In contrast to today’s self-marketing mantras (as I see them tweeted every few seconds) I did not add a single detail related to my CV. I basically said ‘I will do it’.

This freelancing job was my leaving-academia-option. At that time I had worked for two years in a non-university research center (I believe this is similar to a National Lab in the US) – which was my first post-university job. I quit this job although it was a tenured position … for many reasons, most of which are not relevant to this post.

Above all, I saw the option that I might turn my IT experience into a business that allows me to determine how and where I am going to work. My IT experience was rather limited at that time – I had never been your typical physics graduate who worked in the lab during the day and compiled his own Linux kernel during the night. I did even use Microsoft Word instead of LaTeX for writing my theses.

My experience in business as such and economics was zero – in contrast to today’s science degree programmes I had never been force to take at least some mandatory economics lectures. So I learned double-sheet accounting from high school books from scratch.

Given that level of experience it worked out fine. Although I did turn to the epitome of the dark side later and become an employee again whose job title included the term Manager seizing this freelance option was crucial. It finally opened up more options. Later I made a decision for another job I called a 60:40 decision – but again, it opened up rather more than less options.

I shunned getting stuck somewhere with a single option left. Probably this is due to the early traumatic experiences of colleagues of mine who spent too much time as post-docs at the university. I am not sure even sure if this is correct but they felt that there is an maximum age or [time spent at the university] – and after that you are lost for industry forever.

But I am now trying to return to the first narrative level now as I do not want to turn this into a Douglas Adams novel. Currently I have a hard time following Arthur Dent and Ford Prefect through all those nested levels of meta-explanations.

I basically want to emphasize that we often don’t recognize and appreciate options – most likely due to applying a filter whose logic is crafted from statements about what you ought to do. When I had transitioned to the more prestigious management job later I had been told my colleagues that this is finally an appropriate job again, fortunately. But troubleshooting computer networks at small, rural business? That was inappropriate, out of place!

I haven’t talked about Zen yet. The opening story in Komisar’s book is about his visiting a monastery in Myanmar and a riddle given to him by a monk. I could hardly believe the story is true – because adding the monk’s riddle to the tales from Silicon Valley seems so cliché. It is really unfortunate that many good stories and excellent quotes gets so over-used in management trainings, in particular the ‘spiritual’ ones. But I digress again.

The solution to the riddle implies something which is again very simple – paraphrasing to The journey is the reward and You are in charge of defining the details of the story. I don’t find a clever example to illustrate it in a non-stereotyped way, sorry. Read the book – it is a story of a guy who wants to found a start-up that sells coffins online. His pitch to Randy Komisar starts with Putting the fun back into the funerals.

Now I hope for better search terms for my poetry – including funerals, monasteries, and management.

Finally I share another wise and entertaining video about entrepreneurship with you:

Top 10 Must Have For a Start-up, by Frank Levinson, physics PhD.

You need common sense. You don’t need market studies, you need customers. You need to have the pride of a fat baby (that is: no pride).

I am watching this video regularly.  I am also re-reading my own motivational posts – I am not only the author, but the audience as well.