Number of shares doesn’t matter

October 23rd, 2014

I am amazed how many people ask “how many shares (stock options) will they get?”.

This question

  • is useless
  •  shows the lack of knowledge

It doesn’t matter how many shares you have. What matter is a percentage of a company you will own (number of shares / (total number of shares aka. “outstanding shares on a fully diluted basis”)). This is much better indicator.

However, even percentage of ownership could be misleading, because I would rather have 0.001% of Google vs 100% of some Acme Inc. filing for a bankruptcy.  So, you want to know

  • Your percentage of ownership
  • Company valuation

BTW. There are some people who are really worried about a dilution. They falls into the same trap. They just take one number into account (percentage of ownership) and disregard second one (company valuation). In the of dilution, the first number goes down and second number (in a good/normal case) goes up. As long as multiplication of these two numbers goes up you are in good shape.

Summary (formula of your future fortune)

The value of your piece of pie = (Your shares / All shares) * Company valuation

 

“Zero to One” by Peter Thiel

October 22nd, 2014

Just completed reading Zero to One by Peter Thiel

Let me start first by telling what I liked about this book.

It has a very clear and well articulated idea (secondary idea). If you want to succeed (and survive) as an entrepreneur you should make your startup a monopoly. Initially, you want to become a monopoly on a tiny market and after you should expand. Clean and simple (and applicable with some stretch to a lot of companies which I know of)

Ugh.. It looks like I was able to squeeze most of usefulness in couple of sentences.

Aside of that (and paying five bucks to a billionaire) I haven’t found this book that useful. There are two reasons for that

  • The core idea of the book is too binary. Binary ideas most of the time are nice for a book (you can paint everything white and black) but don’t cut it in a real life (where you can find whole bunch of different gradations of grey). And frankly, you feel that it’s artificial idea (specially chosen for a book).
  • He has this idea and to prove it he throws everything at you and see what will stick (you can find in the book references to everything starting from ancient Egypt  to singularity and to some kitchen aid appliances).

Summary:

Skip it and treat yourself instead with a venti mocha frappuccino with some soy milk.

How to choose the best software engineer?

October 15th, 2014

Ok. It’s interview time again. And another candidate sits on the opposite side of a table.

What qualities are you looking for? My guess that you want it all and you want it now. However candidates which satisfy all of your requirements doesn’t come too often.. As result, you will have to prioritize what’s important to you.

My take on it is following. I want to see three qualities:

Smart

Frankly, if person isn’t smart enough then anything else just doesn’t matter. A person can be hardworking, experienced and so on, but at the end of the day he or she will be just a liability (decreasing the value of a company vs increasing it).

Passionate

it’s unbelievable luck If you found somebody who is passionate about your cause. Such person will move mountains for you. However, there is a pretty good chance that there won’t be too many people who are truly passionate about cause of your company (especially, if you are classical enterprise b2b). And I believe it’s better to hire a person who is passionate about something (vs non passionate person).

Passionate person is used to spent each free minute on something interesting to him and as result he is used to get into “zone” really fast and be super productive. Getting into “zone” is a skill and I would rather get a person who continuously trains this skill and can apply it at the work.

Get things done

If I had a penny for each smart software engineer who can’t complete straight forward task I would be rich by now. It amazes me how many software engineer have attention span of 1 year old jumping on anything new any shiny.  Each company need some level of jumping and fire fighting but the core of the company should belong to people who move needle forward whether it snows or rains.

That’s kind of it.

I hope at this moment you say: “Hey, how about experience?”

Frankly, experience is overrated (especially very specific experience). I saw smart/passionate/get thing done engineers figuring out new stuff within couple of month way better than seasoned veterans. Way too often companies choose experienced person with dull eyes who just want to get their paycheck and get out of build over less experience but way more passionate engineers.

I would say, it’s important that person had some overall experience but specific area experience is just a cherry on the cake.

 

 

Self-organizing teams – reality or myth?

October 13th, 2014

A lot of agile methodologies (including Scrum) relies heavily on a notion of self-organizing team.

First of all, everybody talks about it but nobody puts a good definition what is self-organizing team. As I understand self-organizing team notion was introduced as an opposite  to a team which is organized externally (a.e. by manager). The main idea behind it was that smart people tend to find the best way to work together (vs being told how they should do their work).

Good in theory. Bad in practice.

Let say we have have a team. Most likely, couple of members of this team will be quiet introverts who don’t want to organize (rather they would prefer to be organized). There will be several more junior team members who may have not enough experience to organize effectively. As result so called “self-organization” is done by one or couple opinionated (and usually experienced) persons on the team who drives the team in one direction vs another.

On top of that, there are couple of interesting questions (specifically related to Scrum):

– Does a team decides what it should do? The answer is No (Product owner does)

– Does a team defines an overarching process? The answer is No (Scrum is well defined process and usually Scrum master enforces it.)

– Is there a person in a company which can override team decision? The answer is Hell yes. The company is paying money to the team, so if the team goes in a wrong direction there will be a person (ultimately CEO) who can override any decision.

What do we have as a result? 

We have a team which doesn’t define what to do, doesn’t define major backbone of the process, can be overridden and driven by one or several opinionated persons.

Frankly, it doesn’t sound as a self-organization to me. It sounds like these several active persons are doing team lead job (without having official title).  I am not saying whether it’s good or bad, all I am saying that the name (“self-organized team”) doesn’t match to the content.