Why You Should Figure Out How To Pay For Abstraction Layers


Thursday, 8.07pm

Sheffield, U.K.

The brain is a wonderful organ. It starts working the moment you get up in the morning and does not stop until you get into the office. – Robert Frost

I am not a fan of suits.

I feel like I have to wear them at certain times, because that’s what people do.

But really, there is very little reason in stuffing oneself into polyester or cotton, wearing uncomfortable shoes and constricting the flow of blood to your brain.

The same goes for offices. Why would you leave one box to travel in another box on wheels to then spend the day in a third box?

Wouldn’t it be easier just to stay in the first box and get on with work?

Clearly none of these questions have a right answer – the rules are made by the people who pay you and so you must follow them in order to be paid.

But what if you’re making the rules – how should you arrange things so that they are good?

If you watch a craftsperson at work – say a good joiner constructing a wardrobe – you’ll notice something about them.

They’re not on the phone chatting with their phones held between shoulder and ear, while marking off their gear or fitting a door.

They work in silence, perhaps with some music on in the background, but on the whole fixed on the task – taking care and watching to make sure edges line up and doors close smoothly.

Much of the work we do is craft – and craft nearly always benefits from periods of silence and focus.

The single biggest problem for anyone at work is being interrupted.

An interruption is like an explosion going off in the monastery of your mind.

It stops you doing whatever you’re doing and forces you to pay attention to something else.

If you’ve hired someone to do work for you the best thing you can do is get out of their way and let them do the work.

If they’re young or inexperienced you need to spend time teaching them – and then get out of the way while they practice.

In most organisations there are people who do the work that customers pay for – this is your talent and it creates revenue generating work.

You need to protect and nurture your talent and one way to do this is to think, as Joel Spolsky writes, in terms of abstraction layers.

An abstraction layer is everything you put around your talent to help them focus on the work they need to do.

In programming, for example, that means a comfortable space that they want to spend time in, good machines, and all the books and software tools they need.

Everything else – ordering stationery, sorting out the cleaning, fixing snags – all that sort of stuff needs other people to manage and solve.

Managers need to agree what needs doing with the talent then leave them alone.

That can be hard, because everyone wants to feel like they’re doing real work – but much of the time it’s as important to get the system around the real work working nicely for everything to work.

In your computer, for example, if the hard drive is down and the power supply is failing there’s no point in having a fabulous processor because it just won’t work.

The point is that in any system you need all the components to function – because the one that fails will bring down everything.

If the heating fails and the temperature falls to zero the talent can’t do its job – they need the people who enable them to work just as much as the other way around.

Now, if you work for yourself you’ll still want to think in terms of abstraction layers.

What is it you do that is revenue generating?

What else do you do that isn’t – and how can you get others to do it for you – in effect creating an abstraction layer around yourself?

The fact is that the abstraction layer is a cost – you need to pay to put it in place, just like insulation.

But like insulation it saves your energy.

So the question to ask is not whether you need it but how you can afford to put it in place.

How much do you need to earn to add someone to your staff to help you with certain things.

It’s easy to add talent – it pays for itself because it adds to revenue.

It’s less easy to add the support functions you also need just as much.

In the long run, however, that’s what makes it possible to keep talent.

Whether it’s talent you’re hiring or whether it’s your own talent you’re trying to develop.

Because when it comes down to it what you need is time to do real work without being interrupted.

Or having to wear a suit.


Karthik Suresh

What Is The Right Question To Ask In A Problem Situation?


Wednesday, 8.44pm

Sheffield, U.K.

The best things in life make you sweaty. – Edgar Allan Poe

Simon Sinek gave a very popular TED talk where he talked about his theory that great leaders “start with why.”

He talks about how people don’t buy what you do – they buy why you do it.

And he also links this theory to a biological model, perhaps a systems one – and it sounds a little like something called a viable systems model – which I still need to get my head around.

But first, I’m wondering if Simon’s model is one that makes sense.

And the reason for that is the examples he gives seem a little too neat and tidy and don’t seem to tie up with other sources or with first principles reasoning.

Take Apple, for example. It’s set up as a company that believes in making stuff that is beautifully designed and easy to use.

And, of course, Steve Jobs came up with that.

Except he didn’t.

Jobs had a personality, a view, an affection for Zen and simplicity.

But it was Johnny Ive, a British designer, who had the ideas and he, in turn, was influenced by the Bauhaus tradition and its focus on the essence of things.

So is Apple’s “Why” the root from which everything grows or is it one manifestation of a particular way of thinking.

Another example Simon gives is that of the Wright brothers – and that they were driven by a belief “that if they could figure out this flying machine, it’ll change the course of the world.”

But seriously, who thinks like that?

Who sits down and looks at a problem and sees what it’s going to do far into the future?

Of course, some people do, and they dream up possible futures – and some of them turn out to be right because one of those futures might actually happen.

For many of us, however, we’re working on a particular problem that happens to be interesting.

Flying, as Simon says, was the dot com of its day.

Lots of people were playing with mechanical machines just like lots of people are playing with code now.

The brothers were working on problems of torque, propeller length, differential drag and a host of other things that needed solving.

So, were they driven by a dream or by an interesting problem that they were hooked on?

Now, of course, everyone has different views but I wonder whether the Sinek Golden Circle – which starts with why, then asks how and then asks what – is a little overdone.

A different question I came across recently is to ask “to what end?”

Asking why tends to lead to fuzziness – to hopes and wants and wishes and dreams.

An end seems more tangible.

It seems like something people can aim for.

Steve Jobs, for example, wanted a Macintosh to be like a Cuisinart – all you needed to make everything you wanted.

That was what led to the Mac having a closed system – one it completely controlled and within which it was perfect.

But that’s also why the Intel and Windows world pulled ahead.

And these days it plays the same way, trying to make it very hard for anyone else to interoperate with its devices.

So, if you ask to what end did Apple build its devices, maybe a better answer is they built them to be closed systems – so that they could make them as perfect as possible.

We don’t know.

But if you were to do something now – start a new project or a business, say.

Do you think you would be better off starting with why – and listing your motives and purposes.

To be independent, rich, have time with your family… etc.

Are those whys any different from the whys of your mate next door?

Or would you be better off asking “to what end” are you starting that new project or business?

What’s the problem you’re solving, the need you’re meeting?

What actually happens in the end?

I feel I know which approach I’d prefer.


Karthik Suresh

What Is The Main Thing That Will Get People To Notice You?


Tuesday, 7.14pm

Sheffield, U.K.

The ball you need to keep your eye on here is the underlying principle that wealth is what people want. If you plan to get rich by creating wealth, you have to know what people want. – Paul Graham, YCombinator

I’ve been reading some of the older essays that Paul Graham, the co-founder of YCombinator, has penned over the years and one of them has answered a question that has bugged me for a while.

Why is it that companies that make no money are sold at such astonishing valuations?

Facebook, LinkedIn, Twitter, Google, Snapchat, Instagram are all examples of billion dollar companies that were making no money at one time.

I grew up reading the essays of Warren Buffett, which in turn pointed me to the work of Benjamin Graham, the father of value investing who pointed to even earlier works that defined value in terms of the present value of future cashflows.

If you wanted to buy a company, for example, that made a good, steady product and you figured that it would keep selling for the next ten years, you might buy that stream of money at a discount today.

As a rule of thumb, for example, you might pay between 6 and 10 times earnings for such a business.

What if you thought that business was likely to grow?

Well, if you were bullish on that, you might go up to 20 times earnings.

And to protect yourself, you might actually work that out on the average of the last three years of earnings.

But the ideal, in those days of Graham and the early work of Buffett, was to pick bargains – to go shopping for discounts.

So I tried that first, when I was trying my hand at investing, and my picks turned out to have a disappointing tendency to go to zero fast.

Companies like JKK and Aquarius Platinum and Herbert Brown pawnbrokers don’t hold good memories for me.

Fast forward a few years and Buffett started listening to Charlie Munger and talked about buying great companies at a good price.

That tied in with the ideas of Peter Lynch, who suggested buying what you knew.

The increases I experienced buying into Superdry and Drax at particular times when they were cheap but still were good are a better memory of those times.

My early adventures at stock picking were more about the learning than the result really and so when it came to more serious investments I went with passive index funds – which have never really caused the kind of anxiety and euphoria that came with the active picks I made.

But in all that time one thing remained constant – the companies I bought made money.

So, how do you value a company that is making no money?

The answer, when you read Graham, is astonishingly simple.

Simply crowdsource the question.

What does that mean?

It means letting people tell you who the winners are.

Graham says that investors, venture capitalists and potential acquirers really have little to no idea of how good your plan is or whether your technology is really light years ahead of the competition.

So they turn to the market and ask what users think of your business.

They figure that users must have the good sense to select services and products that work for them.

When you tried to set up your first email account, for example, you probably tried rocketmail, hotmail, msn among others.

Do you now use gmail?

And if millions of people are making the same choices all you have to do is meet all the providers of such services and ask them how many users they have.

The most successful service will be the one that has the most users.

That’s why google pulled ahead in search, despite starting after Yahoo.

Now there is a danger in looking at large startups for all the examples of a successful approach because that makes you think only software businesses need to think of this.

It’s really about systems.

The question to ask is which “system” is most favoured by users.

McDonalds, for example, is a system, just like Google is a system.

And your construction business is also a system, anyone looking at your business can work out how successful you are by how many users you have.

And that means you need to ask yourself what your business is doing to get more users.

That’s a different question from selling – how many sales you’re making.

If you’re selling a service, for example, the price is immaterial – you could sell it for free and lose nothing but your time.

If you can’t get users, even if you’re giving it away, then you have a real problem.

If they’re signing up in droves, you can make money later on – you’ll figure out a way to do that because you’re giving people what they want.

Think about this for a second – what is the one thing you need to have if you want to persuade someone to work with you?

You need examples of work you’ve done with previous clients.

No one wants to be the first to try you out – most people are conservative and will pay more for something that is proven.

And there is no better proof than existence and growth of other users of your service.

And so, focus on users, because having them is the thing that will get you noticed.

And you can only get users by giving them what they need and want.

Which is why the number of users you have seems to have become the investment valuation rule of thumb for the digital world.


Karthik Suresh

What Does A 20 Year Old Business Plan Look Like?


Monday, 9.23pm

Sheffield, U.K.

In preparing for battle I have always found that plans are useless, but planning is indispensable. – Dwight D. Eisenhower

In 1996 Sabeer Bhatia and Jack Smith had an idea – they wanted to access their email accounts through a web browser and Hotmail was born.

20 months later, in less than two years, Microsoft bought them for $400 million.

If you listen to what Bhatia says about that time a few things stand out.

The first is that he knows he was lucky, in the right place at the right time with a good idea.

The timing was right.

Looking back, he was also prescient about what might happen next – his other ventures have not seen the same kind of traction.

A second point is that it was hard work.

The team faced rejection from VCs, politics, competition and technology failures.

They found themselves fooled by legal trickery, double crossed by partners and didn’t make any money.

But they kept at it – and that seems to be another feature of successful entrepreneurs.

They keep going.

Then there is the paradigm that is a unique feature of the internet.

What matters is growth in users, not growth in revenue.

If you have people signing up to use your service quickly enough then that’s all that matters in the short term.

Because what matters is owning the user.

That’s something that people who use free services don’t always realise.

When you get something for free what’s happening is that you’re the product.

Or, actually, the asset.

Eventually, those assets can be sold to someone else who has the ability to monetise them.

Or you can figure out how to make money from them later.

The important thing for such a business is to own its customers.

But the sobering thing, looking back at examples of success like Hotmail, is that so much is impossible to predict at the start.

How do you know if you’ll get the timing right or create something viral?

How do you know if you’ll be able to keep going even when everything looks like its failing?

To some extent it’s pointless asking those questions before you have to.

The starting point, according to Bhatia, is to write a business plan.

The reason you do this is to “crystallize your thoughts to communicate with someone else.”

The point of the plan is not just for you to read or to send off to someone else.

It’s a way for you to talk to others and persuade them to work with you or invest in your business.

What you’re trying to do is answer the questions they will have and the very natural fears they have about whether you can do what you say.

And those questions, if you look at the picture above, haven’t changed since Bhatia first answered them.

They probably haven’t changed in a century or so actually.

And the point is you have no idea what will happen in the fullness of time.

But you can put in the thinking needed to get a good start right now.


Karthik Suresh

What Is It You Want From Or For Your Customer?


Sunday, 8.38pm

Sheffield, U.K.

People don’t care how much you know until they know how much you care – Theodore Roosevelt

I’ve been reading Seth Godin’s This Is Marketing and he has a very nice lime just hidden away on page 75.

It reads: “… what people want is to be understood and to be served, not merely to witness whatever you feel like doing in a given moment.”

I think that line is useful enough to stop and reflect on it for a minute.

Use it to think about how you execute your marketing strategy, for example.

If you’re putting out content is it because what you want is for your customers to give you their undivided attention?

In your head are the flows of attention coming from your customers to you?

I suppose if you run a successful YouTube channel that’s exactly what’s happening.

Or if you’re a celebrity that already has attention flowing in then it’s a logical enough approach.

If you’re not, however, if you sell electrical services or drainage or carpet cleaning does that make any sense?

Or are you better off focusing your attention on the customer and working with partners to meet the customer’s needs more effectively?

You’ve already worked this out but in the picture above Y is for you, C is for customer and P is for partner.

I think this simple model can actually go a long way towards helping us plan modern marketing, especially since everything is so focused on content.

How much of your content is about you – about your history, your products and your skills?

And how much of your content is about helping the customer with what they need.

After all, before you can help them you need to understand what they need in the first place.

And to do that you need to study them.

And I’m not sure it’s as simple as using segmentation and words ending in graphics – like demographics, psychographics and infographics.

And I’m not sure it’s just about personas either like smart susan and joker joe, which are thin stereotypes – carboard masks stuck onto cartoon personalities – that completely miss the real people they try to represent.

When it comes down to it understanding is about going deeper than that, doing research that is in-depth and thoughtful.

Because here’s the thing – the end result, the holy grail for marketers is having empathy with the customer.

And empathy comes from understanding.

Now, you can shortcut your way to empathy if you are the customer – after all, you would hope you understand yourself.

But it’s not really that easy to understand someone else – not for those of us with a technical background and fewer social skills anyway.

For us, we need to work at it.

Two papers from my collection that might help if you’re interested in doing this are How to study an organisation and Studying Organisations Using Soft Systems Methodology.

Both of these papers are about methods to have deep conversations with customers – and figure out what would make their lives better.

Because once you know that you can build a business around serving them.

And that’s probably a better strategy than waiting for them to realise how magnificent you are and follow you in droves.


Karthik Suresh

Where Do The Big Profits Come From In Your Business?


Thursday, 7.55pm

Sheffield, U.K.

There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else. – Sam Walton

It’s hard to appreciate customers.

If you’re like most people, there’s something you’re good at doing – good enough so you’re better than others – and good enough to do it as your job.

It could be anything really.

Glenn Adamson, in his book Fewer Better Things: The Hidden Wisdom Of Objects, talks about how his grandfather designed jet engines and later took up woodworking – and put both skills down proudly on a single business card.

The thing is that we can all get so heads-down in whatever we do that it’s hard to make the time to look around.

And it’s even harder when your environment is designed so you never see a customer.

Increasingly we work in fields where we are separated from customers by technology and distance.

If you’re a programmer, for instance, you’re unlikely to meet a real user of the things you make, unless they happen to be your friends.

In other professions, however, that’s not the case – usually because what you offer is a service and that involves dealing with a customer.

In some situations people are clearly taught that they need to act in a certain way.

There’s a supermarket where some staff members have an angry resting face – where they look unhappy or cross even though they probably aren’t.

Now, if you’re at a checkout, and someone switches off their resting face and replaces it with a forced grin while saying scripted words of goodbye, that’s more creepy than friendly.

Personally, I’d rather they stayed with the normal version of them.

Now all of this is a roundabout way of saying customers matter.

Which you knew, of course. That’s why you’re always trying to get more of them.

Except, those aren’t the ones you should focus on.

The customers that you should be obsessed with are the ones that have already bought from you.

If you haven’t come across The Open Library before it’s an amazing place where you can borrow books for free to read online – and that means finding some books that you just wouldn’t stumble across in print.

So, wandering about, I came across The Upstart guide to owning and managing a mail order business which had the following line.

“The big profits in mail order comes from building up a satisfied customer base that continues to purchase from you year after year. The first time a person buys from you they are only trying you out. The second time they buy is the most important.”

This is the same thing Jay Abraham talks about all the time – You may lose money or only break even on the first sale, but it’s what happens after that that matters – it’s the other sales that are going to make you successful.

Now many people completely miss the implications of that insight – including me.

What it means is that you’ve got to make it easy for someone to make that first purchase.

You can’t talk about how good you are and what you do and why you should be trusted and expect a customer to just believe you.

You’ve got to earn that trust by first doing something small well.

Something that means they can try you out and see what happens without losing lots of money if you fail to deliver.

That first thing is all about getting the customer to place the next order – and that means making sure your marketing is aimed at existing customers as much as it is at new ones.

You need to ask yourself how easy and risk free it is to do the first piece of business with you, whether it’s getting something for free or paying a ridiculously low price for a large bundle of benefits.

And if you do that, do you have a pipeline of products or services that you can then offer once you’ve shown you do a good job and can be trusted?

Because the thing to remember is the value of a customer is not what you make on the first sale but what you make over the lifetime of their relationship with you.

That’s where big profits come from.


Karthik Suresh

Why Having To Pay Your Debts Is A Bad Thing


Tuesday, 9.25pm

Sheffield, U.K.

Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery. – Charles Dickens, David Copperfield

What story comes to mind when you’re asked how money was invented?

Do you think of smiling traders in a market trying to exchange a goat for a bag of cotton?

Can you imagine the discussions, the debate over how many bags of cotton were equivalent to one goat?

And how someone then came up with the idea of money so that you could figure out the value of goats and the value of bags of cotton using money and exchange coins for whichever one you wanted more.

But is that really how it all happened?

For an alternative view you might want to look at David Graeber’s book Debt: The First 5000 Years.

Graeber argues that we might have the order in which things emerged all wrong.

Bartering and the use of money, the kinds of things we think of as the earliest types of exchange, are perhaps later inventions.

What came first was debt.

I suppose this makes sense if you imagine that you’re living a few thousand years ago, before the invention of money.

If you wanted some milk and your neighbour had a cow, you might borrow some.

If your neighbour liked you, they might give you some, and at some later date you’d reciprocate, perhaps by giving them some eggs.

This idea of giving people something and getting something in return later seems more natural than the idea that there is an exchange taking place in real time.

After all, people rarely wander about carrying eggs, hoping to exchange them for milk.

So, everything probably started by small transactions based on debt between people who knew each other.

Bartering must have been created later to solve the problem of trading with people you didn’t know, where you exchanged things of equivalent value.

And later, when money came along, you could buy anything for sale as long as you had enough money.

Graeber’s point about debt is that it’s something that’s created between people who trust each other – where there is a relationship and so an expectation that the debt will be repaid.

The obligation is on the lender to ensure that the borrower is capable of repayment, and one way to do that is to lend money to people you know.

The problem starts when you want to lend money to people you don’t know.

At that point, you want to make sure that you can force people to pay you back.

Which leads inevitably to the use of violence – and the kinds of institutions and practices that have been seen over the years in country after country – debtors prisons, and slavery in various forms.

Now you say, surely there should be a moral obligation to repay your debts.

Yes, perhaps, if you are able to.

But if you can’t – then whose fault is it?

Is it your fault if you borrowed money to plant crops on your smallholding and then a bad winter destroyed everything you had?

Or is it your fault if you live in a country where a dictator borrowed money from various countries and then was deposed – do you as a citizen still need to pay back that debt?

The international community thinks so. It must otherwise it has a problem.

For example, Haiti – the world’s first independent Black republic – was forced to pay the equivalent of $21 billion from when it gained independence in 1804 from France all the way to 1947, effectively at gunpoint as an independence debt.

Debt then, when used well, is founded on relationships – on a promise to one another.

When used badly it is founded on violence.

Graeber argues that the way in which governments have dealt with this is to remove the more abusive aspects of debt based violence while keeping the obligations to repay in place.

A more human approach, he suggests, is to remove the obligation to pay debts.

And instead ask lenders to make better choices about who they lend to and why.

And for those too poor to do anything other than borrow – they need help from society, not a lifetime of debt.

The ideas in this book are not familiar – not intuitive – about things that are fundamental to our lives.

It’s a point of view still worth thinking about.


Karthik Suresh

What Have Computers Ever Done For You?


Monday, 9.01pm

Sheffield, U.K.

…if it were printed in normal book form, an interstellar hitchhiker would require several inconveniently large buildings to carry it around in – Douglas Adams, The Hitch Hiker’s Guide to the Galaxy

If you had to give a talk about how computers have changed your life, what would you say?

First of all, have they changed it much at all?

For example, what difference is there between writing in copperplate in an exercise book and typing out words on a keyboard?

Socrates didn’t like the idea of writing at all – he worried that once words were written down they kept telling you the same things forever.

The thing is that as people we don’t take the same meaning from the same words – we construct meaning around what we read.

Now, since I’m not sure what the answer to my question happens to be it makes sense to start with a diagram.

If you haven’t come across the idea of thinking maps – they are a set of graphical organisers used in school to help students explore ideas and concepts.

One of them happens to be a circle map – something used in a manner akin to brainstorming and shown in the picture above.

When I think of computers I remember the ways in which I use them.

The easiest memory is using them for computing – doing sums with large numbers, calculating stuff and creating programs to repeat or control things.

I suppose that would fall under the general heading of automation.

The other memory that comes to almost everyone is using them, or watching someone use them, for gaming.

For amusement and these years to share material and entertain others. For a social purpose.

Then there are tools that help us visualise and draw and simulate things – from magazine design to 3-D models used by architects.

All that is creative work.

And then, going round the circle, there is the way in which computers help us store much more data, link between them and expand what we can look at beyond the confines of a single page or book.

It liberates us from systems like index cards and sets of encyclopedias.

Then again, do we find that we are actually automating more things, getting better at socialising, being more creative and find ourselves liberated from the drudgery of day to day work.

Or has society evolved, turning us from hunters to farmers and now to the pinnacle of existence – as clerks.

As someone said – whose quote I cannot find.

Ironic, given the links and search engines we have today.

The point about change, I suppose, is this.

Are you doing the same thing differently?

Or are you doing things you couldn’t do before.

For example, writing hasn’t changed. Nor has reading. Neither has communication, it’s perhaps become faster but although we talk more, maybe we say less.

But there are things that truly expand our capabilities.

In each of the four areas that have emerged from the circle map you’ll find examples where you are doing things you couldn’t do without computers.

Maybe that’s why there is a belated realisation that digital literacy matters.

You can do the same things faster and become obsolete or do new things and stay relevant.

The next evolutionary step, in that case, is to move from being a clerk to being a programmer.

Hunter, farmer, clerk, programmer.


Karthik Suresh