Andrew Lisy's Blog

These are the Glengarry leads. And to you, they're gold. And you don't get them. Because to give them to you is just throwing them away. They're for closers.

A few weeks back, Groupon, everyone's favorite startup, offered a nationwide Gap coupon -- $25 for $50 at Gap. By the end of the day, Groupon/Gap had sold over 400,000 of the deals -- over $10 million in discounts to customers purchasing the offer and likely around a 75% discount to Gap stakeholders after Groupon's cut. Based on their latest 10-Q (June 2010), GAP Stores has a gross margin of 42.1% (this is averaged across Gap, Old Navy and Banana Republic). Therefore, every $50 Groupon they sell has a cost to them in the neighborhood of $29 (technically a bit less, since a few costs like rent are fixed but included in the gross margin calculation). After Groupon's cut (assuming 50%), Gap receives $12.50, leaving a shortfall of $16.50. For Gap to break even, every customer entering the store must therefore spend an additional $40 (.421*$40=$16.84). So with the numbers out of the way, how does Gap, or any business, make this deal worthwhile? They key is how much value a company is able to extract out of a customer once they're in the door.

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When an organization is still in the small, startup phase, it's not hard to have employees that each feel like they have a stake in the company and are willing to rally behind it. As the company grows, however, subsequent employees get distanced from management and from company success, so it is easier for them to treat the job less like their own undertaking, and more like a paycheck. Too many employees treating their work as just a job will end up affecting company culture and ultimately, product. Identifying and rewarding torchbearers helps to ensure that the cultural message is effectively conveyed and carried out at all ranks.

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Jotted down in a file I keep called "life rules", I have a simple phrase. Create, don't destroy. It sounds trite, and perhaps it is. But I firmly believe that the most successful people in the world follow this principle every day, whether or not they have specifically written it anywhere. While it may not make you rich and famous, if you spend your time creating instead of destroying, it will undoubtedly make your life far better.

What does it mean, "create, don't destroy"? There are countless opportunities every day where we make decisions to add to or subtract from something. Projects at work started by an adversary that you'd rather see fail, cynical observations that don't have any constructive benefit, favors that you could easily do for someone, but choose not to -- these are all chances that we have to build on something, but instead choose to detract from it. There are all sorts of underlying roots -- jealousy, political gain, personal grudges -- but in each case the effort in the task is designed to undermine.

Instead, spend your time improving anything and everything you can. Even if you secretly want a project to fail, put that aside and contribute earnestly. It might feel good or be easy to criticize or be cynical, and often it is. Far more difficult is actually helping out and building. You'll find, however, that those that build are far better rewarded and end up far happier than those that destroy. Creation itself is an additive process -- the more you create, the more you'll be able to create. Why waste effort in making something fail when you could have a hand in making it succeed?

The most successful companies are the ones that work every day toward building what I call a "culture of ideas". Google is the prime example of this -- if you work at Google, you're encouraged to spend 20% of your work time on ideas that interest you. Think about this -- Google "loses" one day a week of productivity from their workers while they pursue projects that they find interesting! Dig a little deeper, however, and you'll find that it is anything but losing for Google. In fact,

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As legend has it, the humanities program at MIT was started by an MIT president who quipped "too many MIT graduates end up working for Harvard and Yale graduates". The thinking then, which remains to this day, is that engineering classes make a person narrowly focused whereas humanities classes help a student to see the full picture. Although I can see some truth in this, I would argue that a person is far better equipped to be a great manager having taken engineering than its "softer" alternatives.

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