unforgiven
Apparently Chris Dixon is my new blog crush, a potential successor to worthies such as Pmarca and Steve Blank. And I’m not alone: Venture Beat picked up on Chris’s suggestion that the 2-and-20 compensation “rule” in venture capital compensation deserves to be revisited.
But my thinking about this whole conversation is best summed up by the immortal (and surprisingly moral) William Munny: Deserve’s got nothing to do with it. People talk about venture capital compensation as if there is some moral justification for what they make, or conversely a moral reason why they shouldn’t make their money.
Now, I don’t belong to the amoral school of thought that says that people “deserve” whatever the market will pay them – sometimes the market is wrong, sometimes the conditions are unfair, so sometimes there are outcomes that are morally unjust. However, this is not one of those times.
Venture capitalists negotiate their compensation terms with extremely sophisticated investors. Those investors are willing to pay VCs an amount that still gives the investment portfolio an expected return that is correct at the time of projection. Sometimes the investor projects incorrectly, but that’s not a moral misjudgment, it’s just people not being good and/or lucky at their jobs. And if the VC sector underperforms expectations, compensation will get adjusted over time. Deserve’s got nothing to do with it – this is a case where the market is perfectly capable of taking care of itself.
trademarks gone wild
I try to avoid drawing parallels between trendy tech issues of the day and my own past experiences – generally I believe that to move forward you have to treat most of your past as irrelevant.
But the parallels are too strong in watching Twitter make a controversial attempt to trademark the term “tweet,” bringing them into a cycle of uncomfortable conflict and limited accommodation with their own developers.
Second Life faced exactly the same issues – a passionate and well-meaning developer community using many terms associated with Second Life that the company hoped to protect as trademarks. We ultimately came up with a comprehensive policy that was and remains a subject of derision in the SL community (see comments to the linked blog post).
It can be very difficult to engage in a productive conversation about trademark law, because even the basics are hard for nonlawyers (and some lawyers) to absorb, and yet because we’re just talking about using the English language, it seems like anyone who speaks English good should be able to comment intelligibly. [Yes, the usage error in that sentence was intentionally ironic.]
I think everyone – the company and the commentators – could make better progress by ignoring the legal issues, and just focusing on the marketing questions. Now, marketing is another one of those disciplines that requires a lot of expertise, and is nonetheless discussed with fervor by anyone who has a couple of IQ points to rub together. But I think the marketing questions here are simple enough even for me to understand.
1st question: Is there a name for the product or service that the company should be able to control? The answer to this question is almost always yes for at least one name – companies are generally better off when they control the primary name for their offering. Once you reach that answer, following trademark law in order to implement that answer is a straightforward process, and having good customer communication around that process is a requirement.
2nd question: When there are words associated with the product or service that facilitate the use or adoption of the service, is that facilitation improved or hindered with greater company control over those words? Marketers and lawyers almost always have the same bias for control (though for different reasons). The bias itself is always wrong – I don’t mean that it’s always wrong to have that control, I mean that it’s always wrong to approach this question with bias.
Does it really do any good for Twitter to own the word tweet? Some brand marketers and lawyers will raise the specter of genercide (basically, losing control over your brand name), but this fear should not be the primary analysis unless we are talking about the primary name. When we are talking about those strongly associated words that help spread the gospel of the company, the analysis should not be of the law and certainly should not come from a place of fear.
The analysis should dispassionately examine whether unrestricted use of the words will help spread that gospel. And it will often make sense to have less control over these words, not more. If religion were a business, it would probably make sense to trademark “The Holy Bible” – but trademarking “Christ” would probably make for a lot fewer Christians.
fighting the good fight
Bernard Moon pointed out these slides on the culture at Netflix, which may be the best presentation on company culture that I’ve ever seen. But does that mean that Netflix actually has an effective culture?
Of course not, you can’t tell from a slideshow how a company really operates. Employee comments are helpful, but not conclusive – Netflix has public reviews at Jobvent, Telonu and Glassdoor, which show a mixed approval rating. But from the outside you never know if the complainers are malcontent underperformers, or if the fans are deluded Kool-Aid drinkers.
At Linden Lab, we spent a lot of time on company culture, creating and periodically revising the Tao of Linden. That document was similar to the stated Netflix culture in emphasizing a high degree of both choice and responsibility. I loved the culture we built, as did many employees, but I can’t say that it’s a culture that works for everyone. And I won’t say that there’s any single best way to run a company (though there are many undeniably wrong ways).
I’ve worked in some centralized, command-and-control environments, and cultures based on internal competition and depersonalization to the point of dehumanization. And I’ve had plenty of fun in most of these places. I’ve come to believe that the single most important thing about a company culture is whether or not management truly believes the culture matters.
Every management team will give at least some lip service to company culture. The companies that stop at mere lip service end up with hollow words engraved in the lobby – these are the truly miserable places to work. The companies that put real time and thought into their culture, in the firm conviction that a great culture is required for enduring success – these are always great places to work, almost independent of the actual values of the culture.
Commitment to the culture, a genuine determination to fight the good fight to make the company a place with a certain cultural identity – this always leads to a great place to work for some set of people. A culture of choice and cooperation works well for certain kinds of people. A culture of command and competitiveness works well for others. Even a culture based on greed and amorality can work, depending on the industry.
Which is not to say that anyone can work in any culture – in fact I’m saying just the opposite: you should understand what preferences and constraints your own personal values carry, for this determines what kinds of cultures you will enjoy. And then it will be easy to identify the companies that express your cultural values. The hard part will be determining whether the leadership is really committed to fighting the good fight.
hey facefeed, let’s just be friends
I can’t help wondering if Facebook’s acquisition of FriendFeed isn’t an overreaction by the giant social network, in response to the deafening buzz around Twitter.
It must have irked Facebook that the tech blogosphere has been obsessed this year with Twitter Twitter Twitter – Facebook’s growth has been just as impressive, arguably more so since it’s rarer to grow a large base much larger than it is to grow a small base into a medium-large base.
So in the past year, Facebook has tried to buy Twitter and has copied features of both FriendFeed and Twitter. And this acquisition appears to be about bringing the values of FriendFeed to Facebook. Among those values are an emphasis on product openness and sharing beyond your circle of friends.
But what if users don’t want to be more open? Could it be that Facebook grew so fast because its users regarded the service as a safe place to share their lives with only a close circle of friends? If Facebook becomes more like Friendfeed, will the service become less attractive to a mass audience? (I’m certainly going to have to rethink my social media use.) Maybe it’s only folks like the 250 that believe that everyone wants to share everything all the time.
Oh sure, Facebook has and will have a variety of privacy settings that give people choices about what to share – but these are terribly confusing and difficult to use. More importantly, a company has to choose a single dominant brand image. Will Facebook remain the place where friends can share their lives? Or will it continue to morph into a knockoff of its less popular competitors?
Early indications are that Facebook will integrate FriendFeed’s staff, which is likely to lead to shuttering the FriendFeed service. I think that could be a lost opportunity. Facebook might do well to reaffirm its core brand as a more private place for friends, and retain FriendFeed as a brand extension that focuses on open data and public sharing. That way they can serve the mass market and the avant garde with different product philosophies and branding.
