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Paul Graham is the most influential investor and mentor in Silicon Valley. His Y-Combinator – part boot camp, part incubator, part master class for young start-ups – receives hundreds of applications each year for a few dozen spots. When I met with him last week in Silicon Valley, he told me that his group has helped launch over 400 start-ups.
One of the first questions Graham asks his young CEOs: what can you do that will disrupt someone else’s business model? A good short video on Y-Combinator is here. A recent article on how Y-Combinator is scaling its incubator success is here.
What is the future of online search? Google’s Larry Page argues that searching and understanding people is the next frontier. He has impressive insights on the future of television, mobile, closed versus open systems, and the importance of forcing complex businesses to focus on fewer things. Page has emerged as a down-to-earth but visionary CEO. Must-watch interview with Charlie Rose.
Regardless of what decisions the Supreme Court renders next month, the question of how business can control health care costs remains an urgent – and unsolved – issue for most CEOs. Zeke Emanuel and Quad Graphics’ Joel Quadracci – have some of the best insights on the subject. Here is Emanuel on what business ought to be doing:
You don’t wait for the patient to come to you. You have active outreach to patients. Providers track their patient’s physiological indicators and call them to ensure that they’re complying with medication and other interventions.
In this provocative article, Claremont McKenna Professor Minxin Pei argues that China’s GDP data is easily manipulated – undermining any claim that government officials are rewarded for economic results:
Another common measure used to judge a Chinese official’s “merit” is his ability to deliver economic growth. On the surface, this may appear to be an objective yardstick. In reality, GDP growth is as malleable as an official’s academic credentials. Inflating local growth numbers is so endemic that reported provincial GDP growth data, when added up, are always higher than the national growth data, a mathematical impossibility.
How can global companies understand the future of China with limited understanding of the larger aims of the government? At our meeting this week, this is one of the questions we will ask Ian Bremmer of the Eurasia Group, one of the closest observers of China’s evolving role in the global economy.
The dust is still settling on Facebook’s underwhelming IPO. But here are two compelling views of the company. First, Henry Blodgett’s assessment of Mark Zuckerberg as a CEO:
When early mistakes risked an employee mutiny, Zuckerberg knuckled down and learned how to lead. He made himself the pupil of some of the best bosses in business but had the maturity never to let outsiders sway his overall vision. He got adept at hiring the right people, and, more important, firing senior employees whom the company had outgrown.
Then there is Michael Wolf’s blistering dissent on the idea that advertising is a stand-alone business model with a future:
I don’t know anyone in the ad-Web business who isn’t engaged in a relentless, demoralizing, no-exit operation to realign costs with falling per-user revenues, or who isn’t manically inflating traffic to compensate for ever-lower per-user value. Facebook, however, has convinced large numbers of otherwise intelligent people that the magic of the medium will reinvent advertising in a heretofore unimaginably profitable way, or that the company will create something new that isn’t advertising, which will produce even more wonderful profits.
In its annual survey of CEO pay, The Wall Street Journal reports that executive compensation is more correlated to stock market performance:
[In 2011], on average, for every additional 1% a company returned to shareholders between 2009 and 2011, the CEO was paid 0.6% more last year, the analysis found. For every 1% decline in shareholder return, the CEO was paid 0.6% less. In 2010, there was no correlation; for every 1% decrease in shareholder return, the average CEO was paid 0.02% more. Shareholder return includes changes in share price and dividends.
Yet the Journal report also highlights the statistic that fuels so much shareholder activism regarding how companies reward the CEO:
CEOs have fared far better than the typical worker over the last several decades. It is also true that CEO compensation has grown far faster than the stock market or the productivity of the economy.
Is CEO compensation really out-of-sync with the rest of the economy? This long-festering topic deserves candid discussion without histrionics.
Fascinating interview with Paul Polman, CEO of Unilever. Polman believes that sustainability is not merely a form of corporate citizenship but “an accelerator of growth.” This view is echoed in a recent article in The Economist, which argues that a new, smarter form of corporate social responsibility is emerging:
Today’s iteration of CSR is less self-abasing and more constructive. It is encouraging businesses to become more frugal in their use of resources and more imaginative in the way they think about competitive advantage.
Economic historian Robert Skidelsky on whether China could ever be a second super power. He is skeptical:
The sensible question, then, is not whether China will replace the U.S., but whether it will start to acquire some of the attributes of a world power, particularly a sense of responsibility for global order. Even posed in this more modest way, the question does not admit of a clear answer. The first problem is China’s economy, so dynamic on the surface, but so rickety underneath.
Two books to kick off your summer. The first is the book version of Clayton Christensen’s now famous speech to his Harvard students about how business theories can be applied to life: How Will You Measure Your Life?. The second appears more controversial; The Oil Curse: How Petroleum Shapes the Development of Nations asks a reasonable question: “Countries that are rich in petroleum have less democracy, less economic stability, and more frequent civil wars than countries without oil. What explains this oil curse?” Author Michael L. Ross suggests that the nationalization of the oil industry was the root of the problem:
Before nationalization, the oil-rich countries looked much like the rest of the world; today, they are 50 percent more likely to be ruled by autocrats – and twice as likely to descend into civil war – than countries without oil.