As a person that focuses on speed a lot of the time to get to the big things I make a habit to keep the philosophy that good is never good enough close to heart.  As my natural tendancy can be to speed over the big idea or the important thing never recognizing its big or important nature.  So, this has become a focus for me in my work life.  Trying to slow down and catch all the important things and squeeze value out of them.

I’ve recently moved on to a Chief Financial Officer position and for the last six months have been adapting to new rolls and responsibilities.  And have made a few minor mistakes here or there trying to step up to a new challenging level of work.  It is my hope that my latest and largest mistake is the end of the beginning of my adaptation phase.

My latest learning experience has been in the realm of time management and it’s clash with the success philosophy that good is never good enough.  I had considered myself to be an absolute expert in (NOTE: Pride Always Comes Before a Fall) time management.    Planning out my years, months, weeks and days in detail allowing of course for flexibility and other things.  If you plan out your time you can get a lot done and you also know what to focus on most to get that “a lot” done.  Focus is power.  And prioritized power creates value because value is squeezed out of core activities.

However, I had never before recognized the competing demands of not good enough to get things done and placing to much time and focus on the big things.  Often times their are many core things which one can and MUST due which create value.  And time is a limited resource.    I found out when two things of value collided with limited time.  One was neglected and the other was over focused on.  Writing strategic planning documents for grant funding caused the more mundane and regular things to be put off which created other more complex issues.  I didn’t have to put some much time into the big thing to still pull enough success and value out of it.  I was pushing towards perfection.  I should have let it slide at 70 to 80% which was good enough for all conceivable purchases.  The extra time moving the big idea from perhaps 80 to 90% was to much time.  It should have been good enough at 80% because sometimes time is limited and things have to be good enough.

When time becomes constrained and there are high value things and low value things the ROI has to be thought about and analyzed.  What value is necessary to have does it have to be perfect or 90%, would 70% be sufficient when other things are pressing too.  I didn’t priortize and scheduled mass amounts of time working on the big thing and put off the smaller things.  Can’t do that and won’t do that again.

Occam’s Razor and the current state of venture

I have made many posts in the past about focus and doing more with less, and as I continued on this path it reminded me of Occam’s Razor, the idea that the simplest explanation to any problem is the best explanation.  Of course Occam’s Razor can get more complex but over the years it has been associated with the idea that “less is more.”  And when I apply this philosophy to the current state of venture, I can see many applications of this theory.

From a VC fund perspective, there has been much discussion about how venture funds have become too large to deliver outsized returns.  First with the lack of an IPO market it is much harder to generate $1.5b for investors on a $500mm fund then it is to deliver $300mm on a $100mm fund.  Secondly having too large a pool forces VCs to invest much larger amounts of capital into companies pushing up valuations and also exit hurdles for success.  Finally, as I have written in the past, I have learned firsthand the problem of giving companies too much money too early.  It can lead to a growth at all costs mentality, a lack of focus which means chasing too many opportunities at once, and a lax attitude on how to generate revenue. Enter Occam’s Razor as it seems that the new trend is for smaller groups of GPs to form smaller funds to be able to invest in earlier stage companies.  With the new operating model of capital efficiency, a little amount of money can go a long way and help VCs generate excellent returns at much lower valuations.  Having a smaller fund allows VCs to write smaller checks and take advantage of the current market.

From an entrepreneur’s perspective, Occam’s Razor can be applied to many different avenues. As we all know, a great entrepreneur must be able to effectively allocate his scarce resources of time and money to fulfill a market need.  The longer it takes to develop a product that the market wants means that it will cost more money and that it also opens the door for a competitor to step in before you.  If you look at the current Internet and SAAS market, the idea of “release early and release often” certainly fulfills the Occam vision.  Rather than spend cycles creating the perfect product with every bell and whistle, many nimble startups have focused on a more reductionist theory of releasing an often simpler product quickly with the idea of getting market feedback for the next iteration. 

Occam’s Razor also applies to how an entrepreneur should operate his business.  Don’t pursue too many markets at once, focus on what is delivering the most return for the dollars invested, and hire people and scale your business when you absolutely have a repeatable revenue model.  I have been burned like many others by aggressively building out a sales team too early without a repeatable sales model.  In addition, from a sales and marketing perspective, we have seen a movement to more of a frictionless sales model where there is less hands-on interaction with customers selling and delivering a product.  This would include customers being able to go online and sign up for free trials or download software versus having an expensive direct sales force sell million dollar licenses and one month of professional services to install a product.  Finally and most importantly, the idea of less is more certainly applies to raising capital. With the rise of open source software and cloud computing, companies can now get started with less dollars and scale more cheaply and efficiently than before.  As all entrepreneurs know, raising less capital means retaining more ownership.

In summary, it is becoming increasingly clear that Occam’s Razor and the idea of less is more will continue to spread as the cost of technology continues to decrease, as entrepreneurs get even more efficient in building businesses, and as a non-existent IPO market and the factors above lead more VCs to create smaller more nimble funds to capitalize on the new market realities.

via BeyondVC: Occam’s Razor and the current state of venture.

The administration will strive to tighten rules that have encouraged thousands of Americans to open offshore bank accounts in an effort to duck U.S. taxes. The plan would increase information reporting and tax withholding as well as penalties, and make it harder for foreign account-holders to win cases in court. The administration promised new enforcement tools to crack down on tax-haven abuse.

“What we really have is a system that is in many ways broken,” a senior administration official said Sunday, one that “allows people to play games…to almost completely avoid paying taxes on active foreign earnings.”

What does this mean?  Well, basically Companies that operate in the U.S. and abroad will begin to be double taxed.  They will start to pay taxes in the country they opperate in plus U.S. taxes.  This will further destroy our competitiveness overseas as Companies and Individuals will pay taxes on their earnings overseas even if they choose not to repatriate the money.   As those at CATO so perfectly point out.

Furthermore, the Huffington Post points out, “Obama said that his plan would generate $210 billion in new taxes over 10 years.”  So much for tax cuts huh…  He’s really doing some serious tax increases.  The President will be working with the tax cheat Geithner, of course, to see this get’s done according to Henry Blodget.  Of course as those at Daily Finance point out as follows:

By adding the tax incentives to the program, the administration may find it easier to get this legislation through the Congress. But do expect major business opposition to water down the bill.

In other words the administration can raises taxes while some of the large companies buy off politicians and can rightfully continue to legally avoid oppressive taxes which therefore will further consolidate the current governments power grab from the American individual.