Episode #85 - Free-rider Friday - March 2016

Ron’s Topics

Netflix Reinvented HR

Article from HBR Jan-Feb 2014, “How Netflix Reinvented HR.”

Reed Hastings, CEO, 5 tenets to approaching talent:

Hire, Reward, and Tolerate Only Fully Formed Adults—don’t hire the problem 3% in the first place

Tell the Truth about performance—Building a bureaucracy and elaborate rituals around measuring performance usually doesn’t improve it. 360 feedback went from anonymous to signed, then to face-to-face

Managers own the job of creating great teams—no performance bonuses. Market-based pay. Let employee select % of equity, no vesting (no golden handcuffs)

Leaders own the job of creating the company culture

Good talent managers think like businesspeople and innovators first, and like HR people last: I’ve never seen an HR initiative that improves morale!

“There’s no reason the HR team can’t be innovative too.” Ron’s question: is this asking for a barking cat?

And from the Feb 20, 2016 The Economist, Schumpeter columnist in “The measure of a man,” argues that the death of performance appraisals is greatly exaggerated.

Kevin Murphy at Colorado State Univ: “Performance reviews are “an expensive and complex way of making people unhappy.”

IBM, Accenture, Adobe, Deloitte, GE, Microsoft and Netflix have all scrapped annual performance appraisals.

Uber for Trucking

From The Economist, March 5, 2016, “The appy trucker.”

The top 5 airlines in the USA account for 90% of the industry’s revenues. In contrast, the top 5 logistic firms account for 20%. Trucking is much more fragmented (much lower barriers to entry).

Trucking is a $700B per year industry in the USA, projected to grow at 3% per year for the next decade. Yet trucks drive empty 50B miles per year, 28% of the total (25% in Europe). This is incredibly inefficient.

Brokers charge 45% to arrange a haul, but the process is really inefficient. Startup Apps like Cargomatic, in Los Angeles, lists jobs, pings nearby drivers, and arranges payment. So does Transfix out of New York, which charges a 10% commission.

Amazon is working “On My Way,” whereby anyone can get paid for delivering packages.

Economist Russ Robersts, on his EconTalk podcast, recently interviewed Marina Krakovsky, author of The Middleman Economy, where she lays 6 value-added roles that middleman play:

  • Concierge
  • Insulator
  • Enforcer
  • Risk-bearer
  • The Bridge
  • The Certifier

Marina claims that the middleman, far from being disintermediated by the internet, have grown, and that we are all, in a sense, a middleman. Examples of web-based middlemen:

  • OpenTable
  • Powersellers on eBay are 4% of sellers and 50% of sales
  • Craig’s List sellers
  • CarLotz, flat fee, takes car on consignment, connects buyers and sellers

The End of Moore’s Law?

From The Economist, March 12, 2016, Technology Quarterly, “After Moore’s Law.”

Moore’s Law has had a glorious 50 Years: “Computer power doubles every two years at the same cost.”

Peter Lee, VP, Microsoft Research: “The number of people predicting the death of Moore’s law doubles every two years.”

In 1971, the Intel 4004 had 2,300 tiny transistors, each the size of a red blood cell, which could be counted by a kid with a decent microscope.

Today’s Intel’s Skylake has 1.75B transistors (size: 100 atoms across), at 400,000 times the power. If cars and skyscrapers improved at same rate, cars would be capable of traveling at 1/10th the speed of light, and the tallest building would reach ½ way to Moon.

Three ways computers will continue to become more powerful, but in different and varied ways:

  • More clever software (AlphaGo, Watson, Deep learning, AI, etc.)
  • The cloud—30% growth last yr, projected to remain until 2018
  • Specialized chips for particular jobs

The industry is at an “inflection point”: It needs a replacement for silicon, such as:

  • Silicon-germanium alloy
  • Graphene
  • Electronic blood: provide energy and regulate the temperature

HP, Google, IBM, Microsoft are all entering chip-design business. There will be new tradeoffs on the three key metrics of power, performance, and cost.

Remember: computer firms are not, fundamentally, in it to make ever-smaller transistors. They’re in it to produce useful products, and to make money.” Amd consumers don’t care about Moore’s Law.

Google’s AlphaGo Beats World’s Best Go Player

From The Economist, March 12, 2016, “Showdown.”

Google’s AlphaGo AI beats Lee Sedol 4-1 in Go Series, from The Verge.
(Ed)itors note: Go and Othello are NOT the same game. 

Ed’s Topics

Lobby for Driverless Cars

From The Huffington Post, Google testifies before Congress to allow driverless cars.

Can Ethereum Restore Online Freedom?

From ReasonTV:

Uber Saves Lives

Ed’s friend had a heart situation, and rather than calling for an ambulance, he called Uber. Hospital said it probably saved his life.


Ed Kless

Ed Kless joined Sage in July of 2003 and is currently the senior director of partner development and strategy. He develops and delivers curriculum for Sage business partners on the art and practice of small business consulting. Courses include: Sage Consulting Academy, Business Strategy and Customer Experience Workshops. Ed is the author of The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, a compendium of a few of the episodes of his VoiceAmerica talk-show The Soul of Enterprise: Business in the Knowledge Economy with Ron Baker, founder of the VeraSage Institute where Ed is also a senior fellow.