Tuesday, March 31, 2009

Rest in Peace Microsoft Encarta

Microsoft announced this week it was shuttering its Encarta service. In the analysis about the decision, most people are rightly pointing out that Wikipedia simply made Encarta obsolete and ineffective by comparison. In effect, Wikipedia was the "Encarta-killer".

However, Encarta was one of the first steps in making the world's information freely available to everyone. Before Encarta, a set of encyclopedias cost thousands of dollars. Having a set was a beyond the reach of most people. Encarta came in and made all this information available to anyone for $60. Overnight, the economics of information changed. Encarta was the "Britannica- killer".

One of the transformative shifts in our society is that information is becoming free and widely available. Microsoft Encarta was an important step along the way as we move from information being expensive and scarce to free and plentiful. Rest in peace Encarta.

Wednesday, March 25, 2009

How to start a company in 5 steps (legal & admin stuff)

Where starting Personforce, I was overwhelmed by all the legal and administrative tasks required to start a business. I thought it might be helpful for folks looking to start a business to have a little checklist of the things you have to do. This is the order we did things and is not legal advice.

How to start business in 5 steps - the legal and adminstrative stuff you need to do

1. Incorporate

Choose legal structure and name. Are you going to be a C-corp (good for startups seeking funding), S-Corp (good for cash flow positive businesses), LLC, or sole proprietorship. There are lots of good websites you can use to get this. You need this to get a certificate of incorporate

2. Apply for an Employer Identification Number (EIN)

3. Get a bank account

You need an EIN before you can open a business bank account.

4. Elect a board of directors

File the documentation about who is on your board of directors with your registered agent (the entity that helped you Incorporate.

5. Allocate founders' shares through share purchase agreement.

Basically, someone has to own the company. Allocate share that the founders need to purchase. Set a vesting schedule for the shares.

Bam, 5 easy steps to start you business. Once you raise money, start making money, or have a payroll things get a little more complicated, but that's basically all you need to do in the beginning.

Stanford GSB Interview Questions

When applying to the Stanford GSB, a bunch of my friends came up with common interview questions for the admissions process. At Stanford, you have to be interviewed to get accepted. They interview only about 25% of applicants so getting an interview is a good sign! Hopefully this non-official list of Stanford GSB interview questions helps:

Stanford Specific Questions

Tell me about your background. Why do you want to change from your current career? What do you want to do? Why? And how will the Stanford MBA help.

Why do you want to go back to school?

Why Stanford?

Clubs you’d be interested in joining at Stanford?

What other schools did you apply to and why Stanford?

If you don’t get an MBA offer, what will you do?

What value you can bring to Stanford?

What are your Long-term/Short-term goals?

Leadership / Team Work

Tell me about how you dealt with someone who was terrible to work with and how you handled it

Tell me about a leadership experience you’ve had.

Tell me about a time you’ve failed – what did you do?

Tell me about a time you were in a team and achieved a great outcome

Tell me about a time when you displayed leadership.

What is you leadership style?


A book you’ve read recently and what you learned from it.

What books have you read that were unrelated to work?

Tell me about something you are interested in outside of work – why does this excite you?

What questions do you have for me? (this was w/ about 15 minutes left, so is important to have good questions)

Tuesday, March 24, 2009

Business School Interview Questions & Tips

I was going through my old files and found tons of business school interview questions, tips, and pointers. Most of this stuff was passed around various email lists at Stanford GSB, HBS, Wharton, Kellogg, and Columbia.

Anyhow, rather than keep this information locked up, I thought it'd post it here so anyone can use it to prepare for there interviews. I'll do it in a few posts which information about specific schools.

Here is a great compilation of generic business school questions you should be ready for in your interview:

Discuss your career progression.

Give examples of how you have demonstrated leadership inside and outside the work environment.

What do you want to do (in regard to business function, industry, location)?

Why the MBA? Why now?

Describe an ethical dilemma faced at work?

Describe your career aspirations?

What would you do if not accepted?

What are your long- and short-term goals? Why?

Why are you applying to business school?

Why does this school appeal to you?

What is an activity you are involved in? Why is it important to you?

Talk about experiences you have had at work.

Why are you interested in a general MBA program?

Why did you choose your undergraduate major?

Discuss yourself.

What contributions would you make to a group?

Name three words or phrases to describe yourself to others.

What is most frustrating at work?

How would co-workers describe you?

Describe a typical work day.

Have you worked in a team environment? What were your contributions to the effort?

Discuss any experience you have had abroad.

How did you choose your job after college?

What do you do to relieve stress?

It's two years after graduation, what three words would your team members use to describe you?

Describe a situation where you brought an idea forward, and it failed.

How do you define success?

What would you do if a team member wasn't pulling his own weight?

Is there anything you would like to ask me/us?

Have you faced a situation at work where you had to convince your colleagues

describe your idea of a manager

What character will you chose that represents your long term professional goals?

Describe an interesting experience from work

How will you contribute to your class?

Tell me about a problem you faced at work and how you resolve it.

What has been difficult/challenging about working in teams?

What extra-curricula activities are you going to participate in?

Why this school? Why now?

How are you in a team setting?

Describe a time when you worked with a team and the team didn't see eye to I on an idea. What did you do to make it work? What didn't you do to make it work?

How I will use my current skill set in my next career after business school?

If someone approached me with an idea, would I take the risk of developing the idea if they would not?

What is something from your past that you wish you would have done differently and why? The experience can be from work, school, other activities, or from your personal life.

Who is a client you admire and why?

Since submitting your application, how have you continued to take leadership roles?

With all of your experience, why do you need an MBA?

What makes you think that you are prepared for the academic rigors of XXX?

Which of my skills would help me most in my post-MBA career.

Tell everything there is to know about yourself.

How do you see yourself in 10 years

What should I remember you?

Tell me about your past experiences, don't tell me about your accomplishments as your resume details those, but more your thought processes as you went through those experiences

If you are in a situation where a team member is not pulling their weight on the team what would you do?

Describe how you have dealt with a difficult person you had to work with

Starbucks Refill Policy is Now Worse!

Part of my daily routine is a cup of delicious coffee at Starbucks. I pick one up on my way to work and then get a refill a couple of hours later for 50 cents (or free if you have a registered starbucks card). The staff by our office is extremely friendly and the experience is great.

Unfortunately, as of March 25, 2009, Starbucks is eliminating free refills (and 50 cent refills) unless you consume the coffee within 1 hours while at the store. The Staff at my local Starbucks broke the news to me last week.

I guess the company is trying to come up with ways to penalize its best customers. I was calculating that because of their prior refill policy I would go to a Starbucks about 50 times a month (2x per day, 25 days a month). Generally I would just buy a coffee (or get a refill) - but about 1/3 of the time I'd upgrade to a higher margin item like food or an espresso based drink.

Under the new policy, I have no incentive to come back in the store for a second time during a day, so I'll probably start going to Peet's in the afternoon. My visits to Starbucks will drop from 50 times a week to probably about 25 times a week. Starbucks will have 1/2 has many touchpoints and opportunities to sell me things.

Looking at these numbers I'm struck by two things. 1) Starbucks is penalizing their best customers who often evangelize about their brand. 2) I go to Starbucks way too often. I should cut back. Seriously.

Tuesday, March 17, 2009

I feel like we should start twittering

I still can't bring my self to set up a twitter account for myself, but we did set one up at Personforce.com.

You can follow us at www.twitter.com/personforce. Like resurrecting my blog at Silicon MBA, setting up a company twitter account is more an experiment in understanding how social media works than anything else. It seems like everyone else is doing it, so I we should just start twittering.

I'm not sure exactly what we'll do it, probably broadcast recent job listings, blog posts, and "witticisms". We have 10 followers so far, 8 of whom are spambots.

Monday, March 16, 2009

The Principal-Agent Problem & AIG

The employees have gone wild!

I think that's the root cause of this current financial crisis. Basically, employees at financial institutions like AIG took on some big risks in hopes for a huge payday if the bets turned out well. If bets went sour, then the shareholders (or taxpayers) are left holding the bucket.

If we're going to rehabilitate the economy, we need to reaffirm the core capitalist principle - businesses exist to enrich their shareholders, not their executives. Just because asset prices are rising, employees have very little entitlement to share in the upside.

Economists describe this problem as the "principal-agent" dilemma. Owners hire managers to run their businesses. Managers, however, tend to promote their own interests above those of the owners when unchecked. In scenarios where shareholders have weak control over the management, the management inevitable will misbehave by:

1. Taking on excess risk
2. Creating excess volatility
3. Benefiting from the upside of these risks
4. Leaving equity holders or the government to cover downside

Shareholders need to assert their rights over irresponsible management to prevent the inevitable re-occurence of these financial bubbles. When the Obama administration tries to strip AIG derivatives traders of their bonuses, I view this as a fundamental reaffirmation of our capitalist system that prizes equity-holders rights above managerial compensation.

Thursday, March 12, 2009

Adsense can undermine your message

I put Adsense on this blog a couple of months ago to better understand how online advertising and monetization of content works. It's still a bit of a mystery to me if/why people click on advertisements so I thought perhaps I could learn by minor experimentation. The downside of using these ads are it sullies the purity of your site while simultaneously not making you very much money (based on the traffic of Silicon MBA anyways).

One weird thing I've noticed so far is that adsense can seriously undermine the message of your post. Yesterday, I wrote about critizing FreeCreditReport.com for engaging in a predatory business model. Today, I open up the post and my site is full of advertisements for FreeCreditReport.com and other online credit led generation services! My message about criticizing it's business model is a little undermined, don't you think?

I imagine this happens a lot. If you write a negative review about some company or practice and then ads endorsing that company or practice start showing up. I wonder how many vegans write blogs financed by ads from Omaha steaks?

Perhaps as Google Adsense gets smarter and understands the semantic meaning of the text, this sort of mistargeting won't take place.

Wednesday, March 11, 2009

How Acai Berries could save the New York Times

I was struck by two articles I read today about Acai Berries and what is says about why newspapers are failing in this digital age.

Via a link on Hacker News, I found an post on Black Hat SEO about a fellow that makes $15,000 a through Google adsense. The basic formula was 1) Pick a valuable industry 2) Create content in that industry 3) Take steps such at people find this content through Google 4) Profit when people click on valuable advertising.

The fellow gave an example of creating a site about Acai berries and how he makes $5 everytime someone clicks on a link on the site. After setting up the site, he basically has very little to do and makes some nice passive income. People who coming to his site have "purchase intent" for things regarding Acai Berries and therefore are valuable leads for advertisers.

That same day, the New York Times has an article about Acai Berries. It's a well researched, intelligent piece about Acai Berries. Because the New York Times is such a reputable source, many people will find this content through search engines when they are seeking Acai related products.

How does the New York Times monetize this valuable content? Through flippin ads about Ralph Lauren clothes! It's nuts, this is possibly the worst way to make money from this content. The people who are reading this content are interested in Acai Berries - serve them some ads about Acai Berries. Of course the New York Times has some Google Adsense advertisements on the page in the lower right hand corners where no one would have click.

It seems the little guys might understand internet advertising business models better than the big guys like newspapers. Newspapers need to understand:

1. Many people will find their content through search engines
2. Many people who see their articles will have purchase intent regarding that content
3. This is not ideal advertising space for "branded advertising"
4. This is ideal advertising space for products related to that purchase intent.

Newspapers - learn it and love it; these are the rules.

The FreeCreditReport.com Business Model & Ethics

The internet is full of scams and deceptive practices centered around "recurring billing solutions". While technically not fraud, how many businesses make their livelihood by convincing consumers they are getting something free (or a one-time fee) but in reality charging the unsuspecting consumer every single month for the service? The best recent example are all the "stimulus checks" websites out there today.

I call this the FreeCreditReport.com business model. Credit reports are actually available for free, but not through this company. Their entire business model is built around convincing someone to sign up and then making it very difficult for them to cancel. This business a pure wealth transfer between the unsuspecting and the predatory - it creates zero value for society.

The current push among Web 2.0 companies to move from a "ad-supported" to a "paid-subscription" business model. I hope that as people make this transition, the companies take care to avoid this predatory model. In the jobs space, I see companies are increasingly charging job seekers monthly fees to access "exclusive jobs". I hope that these services are providing real value and not just taking advantage of people's insecurities about finding work right now.

The world doesn't need another FreeCreditReport.com. I hope entreprenuers will remember that as they design their businesses. Moreover, I hope the ad network and websites (like Google, Yahoo, Facebook) will work hard to make sure that they deceptive business are not allow to advertise on their grounds.

Google Checkout raises prices

When we first started using Google checkout, it was free. Then they raised the price to 2.2% + $0.20.

Now Google is announcing a massive price increase. A tiered structure that penalizes the vast majority of merchants. See below.



We're writing to let you know that on May 5, 2009, Google
Checkout's transaction processing fees will be changing. We'll be
transitioning from our 2.0% + $0.20 per transaction rate to a new
tiered fee structure, where the rates will vary depending on the
dollar amount of your monthly sales processed through Checkout.
The rate you'll be charged beginning on May 5, 2009 will be based
on your sales processed through Checkout during the month of April
2009. Each month thereafter, we'll continue to use the prior
month's sales volume to determine your transaction processing
rate. For more details about the new rates, please visit

We'll also be discontinuing the AdWords free transaction
processing promotion on May 5, 2009. Any AdWords transaction
processing credits accrued during April 2009 will be applied
towards transactions that occur on May 1-4, 2009.

Fees are the same for all payment types (Visa, MasterCard,
American Express, and Discover) and there are still no monthly,
setup, or gateway fees. For cross-border transactions, there will
be an additional 1% fee assessed per transaction. To learn more
about Google Checkout fees, please visit

Google is committed to the continued growth and development of
Checkout and to helping merchants increase sales by driving more
leads and higher conversions. Advertisers who use Checkout have
the opportunity to display the Checkout badge on their ads, which
has proven to be an effective way to differentiate ads and attract
user interest. Checkout users click on ads 10% more when the ad
displays the Checkout badge and convert 40% more than shoppers who
have not used Checkout in the past.

For more information about this change and how it affects the
product, please read our post on The Official Google Checkout
Blog: http://googlecheckout.blogspot.com/2009/03/google-checkout-fees-in-2009.html

If you have any questions, please visit our Help Center at
Thank you for using Google Checkout.

The Google Checkout Team

Friday, March 06, 2009

MBA rankings (that are actually right)

Whenever, I look through the business school and mba rankings produced by magazines, I'm struck that the rankings are stupid. It's as if they just randomly selected criteria, scored the schools along the criteria, and then said here are the rankings folks!

The problem with this approach is it is wrong. The two reasons it are wrong are 1) The criteria are arbitrary 2) The variance in the results (the fact that the rankings change ever year dramatically) is completely unexplained and probably wrong.

Since I've noticed a lot of the traffic to this blog is by people looking for information about MBA programs, I'm going to give you my opinion about business school rankings.

I think better approach rankings schools would be to ask the question - what schools do people want to attend? Using a statistical method called "conjoint analysis" you can look at what schools did people get in to, and based on that choice set, where did they choose to attend. If someone chooses Stanford over Wharton, you can rank Stanford over Wharton. If someone chooses Wharton over Tuck, you can rank Stanford and Wharton over Tuck. With a large enough data set, the preferences are fairly stable.

As my data set, I'm going to use my "vague memory" of what business schools my peers decided to attend based when I was at Mercer Management Consulting (now Oliver Wyman). I'm also not actually going to perform the analysis (that is beyond the limits of me and this actual faux data), but instead guesstimate the results based on observed behavior. I hope another institution (maybe someone like McKinsey that would have large data set) would perform this actual analysis some day. This is of course biased by the time at Stanford GSB and all my other biases since this guesstimate is essentially a qualitative assessment.

MBA rankings by Silicon MBA

1. Stanford
1. Harvard
3. Wharton
4. Kellogg
5. Tuck
5. MIT
5. Chicago
8. Columba
8. Berkeley
10. NYU

There you go. You'll notice they mostly fall in bands/tiers. Again, this result is heavily based on my own opinion, but my opinion is informed by observations of what business schools prospective applicants actually choose to attend.

Wednesday, March 04, 2009

Facebook takes on Twitter!

Facebook's announcement to allow 1-way following of friends amounts to a direct assault on Twitter.

If you haven't heard, Facebook members can now have as many friends/followers as they like. Moreover, the can allow people who they don't know to follow them without having to reciprocate.

What has made Twitter popular is it gives anyone the ability to broadcast to the world. Facebook is now opening up this feature to its 175 million active users. Will users start using Facebook as a broadcasting platform? The companies has a few advantages over Twitter:

1. 175 million users is huge head start
2. With Facebook you can broadcast more rich and interesting information since you're not constrained by 140 characters.

Hitherto, Facebook has just been used to connect people who know each other in the real world. Will it take off as a broadcasting platform? Only time will tell.

Tuesday, March 03, 2009

SEO for Job Sites - a Race to the Bottom?

Google is the starting point for most people's navigation of the internet. For hr, recruiting, and job sites, this is no different. As a result, job sites focus intently on SEO (search engine optimization). SEO broadly refers to making the content on your site accessible to search engines (ie The Google!).

People Google the term "jobs" about 150,000,000 times a month. Because of this, almost all job sites want their pages to show up for common (and long tail) search terms. The result is that job search sites are all following the same best practices and focusing more on the question "will Google find this content?" than on "is this good content?"

Try searching for any job-related search term on Google. Try the term "miami jobs". Look at the first 10 sites; they are all following the same employment SEO formula, have similar page titles and meta data, and show the same jobs. Not one of the results gives you a website that is generally that useful or unique for someone conducting a Miami specific job search. This pattern continues for almost any job-related search, no matter how obscure.

I don't want to call the results spam, but they are just not interesting. Many sites out there have great content, but it seems the industry is focused more on gaming the Google SEO guidelines and less on producing interesting content. The result is that most sites are pretty much repackaging the same ole crap, competing against each other in a race to the top of Google, but to the bottom of the job seeker experience. More and more, all the job search sites out there are just starting to look the same.

Google, to its credit, recognizes that when sites create content for the sole purpose of search engine optimization, the quality of search results goes down. I wonder how Google will adjust it's algorithm to ensure fresh interesting results for career sites. It certainly will create a ripple in the industry.