Author: thejoshbjones

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Markets Both Benefit and Constrain

Years ago I was in a conversation with someone who was asking some curious, albeit weighted questions around the subject of using the Office365 product suite over GSuite. It was a decision made in this organization prior to my coming on-board, but honestly I felt it was a good decision and supported it. One train of questioning was about some feature set related to cloud first solutions and collaboration features. The unfortunate part of the conversation is that, unless there’s a genuine intellectual curiosity about the subject, going into all the ins and outs of cost analysis and directionality is generally useless since it won’t be heard well.

It didn’t matter that the year was 2016, Satya Nadella had just started 2 years prior, the consent agreement that constrained much of their product development had ended only 5 years previously, and they were consistently retooling towards a cloud first posture. It didn’t even matter that the O365 was, even then, a greater ROI in terms of cost/feature comparable to GSuite. The person did not understand the market situations that led up to that moment and were just trying to get through their job.

It makes sense. So many times i’m in the same boat and judge a tool harshly without knowing further context into the whys and hows.

Obviously, we’re in a different world now. Not saying Microsoft is THE way, that very much depends on individual use cases. It is A way, and their innovation chops have been proven over the past decade. Full disclosure on my cards, in terms of use i’m at a 50/50 split. There are 2 organizations I work in that use GSuite and 2 that use O365. There are specific reasons you would use one or the other but none of those reasons are that one is better than the other.

Here’s the big idea: judging a product maker without a further understanding of the market dynamics that drove their product in one direction or another doesn’t help you understand something in a nuanced way where you can capitalize on it for greater returns. At the end of the day, a hard stance on a product isn’t the job. Making good decisions and understanding the nuance of those decisions in order to produce value for an organization is.

I’m interested in who else has run into this problem. Is there a “succesful” tool (good TAM, SOM, SAM) you look at that you think is THE WORST that you might need to re-underwrite?

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Net Worth Isn’t Cash

Let’s talk about wealth for a minute. There has been talk about the rich paying their fair share. Someone made a comment to me the other day that anyone who is a billionaire should be able to pay some part of that into taxes. I had to explain why it’s not that simple. To be clear of my cards, i’m currently in an income level that places me in the top 20% but not the top 1% by any stretch. The place I sit is in the one that is the most taxed. So don’t get me wrong, that’s not exciting. Simultaneously, when you look at the percentages the highest percentages are in the top 20% by a long run. How asset values are discussed mostly involves a lot of financial magic that equates to pulling a rabit out of a hat, or in this case a rabit out of air.

Net Worth Calculations
Most of net worth, what we use to qualify someone as a millionaire or billionaire, is based on total assets. So companies are a portion of this issues. To bring it to a ground level, this means that your house is part of what qualifies your net worth. So, taxing on this at a federal level would be equivocal to having to to an appraisal of your house every year. (It’s arguable that this occurs already because of property taxes. So imagine that frustrating process occuring over and over again across everything you own.)

Valuations are problematic
The problem is less about your home value. That is a well trodden path. The problem is more in the private companies you own that are currently not taxable and figuring out the value of them. I was discussing an equity splitout of a potential business with some friends last week. To be clear, we’re discussing splitting equity of something that has $0 of value. Now, if someone wanted to buy that “company” right now at $10000 then the value would automatically go from $0 to $10000. You could tax that right? Sure, but all that means is the person who just bought it is having to pay taxes on $10000 of something that has earned literally $0. Valuations work similar to this. They aren’t based on the past performance of a business so much as an expected future reward.

There’s a reason that realization is encoded in our tax law.
To the previous section about the magic of valuations there’s a great MIT article called “If you’re so smart, why aren’t you rich?” and the truth of that article resounds here. No one has a great read on the pulse of this kind of thing and everyone can argue for a different number. Realization is a big deal because it’s the actual money made and from which someone might benefit. So that’s less about what you own and more about what you make.

Any move away from the foundational thoughts around realization, even with the constraints I’ve seen on proposals about how something like this would work, seem like something that would be extremely difficult to codify. This seems like a harder path than allowing for innovation that would increase our GDP.

What about you? Do you think this is more helpful than other levers we could pull?

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Simple Explanations Show Understanding

Something I’ve noticed in some conversations is when a person tells me something is complex and difficult to explain it has become a red flag for me. I try to go by the napkin rule. If I can’t draw it out on a diner napkin over lunch with someone then it’s possible I don’t really understand the first principles of the subject.

To be clear, there are some things that truly are complex. Any discrete structures and algorithms class will teach you that is true. Even so, that same subject can be broken down to foundational elements that can be explained.

W2 multiple is a great example of this. I’ve seen very odd calculations of this. Things where someone looked at all the time a person was putting that was billable and non-billable, etc. The measures i’ve seen this way and their use case made sense because the term was being used as a descriptor of how hard someone was working. The thing is, that is not a W2 multiple.

Simply put W2 multiple is how much revenue you get per W2 payout. e.g. if you earn $120,000 and you pay out $60,000 then your W2 multiple is 2 because $120,000/$60,000=2. If you use any other calculation and call it W2 multiple then you’re saying the wrong thing and there is a high potential that others are hearing the wrong thing.

I’m using W2 multiple as the example, but we can say the same thing about many areas like this. When you say EBITDA, don’t say “community adjusted EBITDA” because that’s not a thing <cough>WeWork</cough>. If you’re “full stack”, please understand hardware too. Containerization is needed but it’s not the full stack.

With industry standard terms it helps to use the industry standard definition. If you don’t know how to define some of those things then it’s possible you don’t know your job as well as you think you do. I’m still there many times. What’s the goal then? Not to not discuss, the goal is to be aware, curious, and questioning. As questions and approach as a learner not as a learned. For me this has to stay true. My current thing i’m learning is containerization so I can increase my BS meter when talking to devs. Let’s all stay curious.

What about you? Please comment, what are you learning?

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Free Markets Prove Better

Last year there was a proposal to set pricing limits on food. Here’s the thing, I don’t know if you’ve ever seen a grocery buyer negotiate pricing but it’s down to the 100th of a cent at times. Why? Scale. If you’r off on a purchase of a million+ watermellons that 100th of a cent can erode margins by a lot.

There is no evidence of price gouging
Putting aside my own problems with the grocery industry and simply addressing the market dynamics of this situation, groceries are a highly competitive market and there’s no key evidence of anything related to price gouging. Kraft, as an example, has lower profitability this year.

Free Markets Lower Prices
I was talking to my son yesterday about a plastic part of a trimmer that we purchased yesterday for $9. He thought it was expensive until I explained that it was produced by oil drilled out of the ground and refined into something that could cool and harden to hold shape, then someone created a design of a tool and a mold for the thing, produced it in a factory, shipped it to a store, and sold it. This is not including all the other work such as marketing, etc.
Like that situation, groceries are a highly competitive free market and the number one result in that is competing of prices down as close to $0 as possible. As an example, Strawberries are actually down in price to pre-covid levels.

Why does stuff cost more?
Yeah, about that. There’s a chart on the pic of this post. It shows the growth of all the cash in the system. Notice the jump at 2020? Went from 16 Trillion to almost 22 Trillion. Yeah, I know we’re tired of hearing about covid, still the results are continuing to work their way through the system.

Legally imposing a limitation on prices has never fixed a systemic issue.
In fact, it’s historically backfired and there’s no evidentiary reason to conclude that it will resolve the inflationary issues we’re seeing in the system at the moment. There is only one way to bring prices down and it’s not limiting inflation so much as innovation that is deflationary in nature. That type of innovation has not happened with any significant oversight that caused reduction in margins which would limit any kind of investment into R&D.

We need to stop the silly game of thinking someone else will rescue us instead of simply getting to work and solving the problems in front of us. Ok. Rant done.

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Best Time to Build a Business is Now

Had a conversation with a friend the other day who works for a municipality. There is a software that they use, basically every county uses it. There’s one vendor for everyone. It’s a monopoly. Support is bad (days for the initial response), product is bad (still requiring windows 10 and haven’t began testing for deployment in windows 11), and prices are high (no market competition = high prices). The issue is anytime a new company begins to disrupt they buy them.

To be clear, i’m not against monopolies if you got there through innovation. I’m not even against M&A as that is a solid strategy that fuels startup funding and what folks like Lina Khan are doing is showing how little some understand about the free markets and game theory. However, in this instance it’s a clear case of anti-competitive behavior and the reason it hasn’t become a case is because the acquisitions aren’t large enough to garner attention.

Back to the conversation with my friends, one was saying they didn’t know how to code this. My case to him was that it was unnecessary. He had the right knowledge.
1) problem set
2) deliverables and requirements
3) understanding of current constraints
4) industry experience and relationships

In this case, the issue would be the why to build. If the real core why is to disrupt by adding competition, there are risks there and they’re all surmountable. Just have to be clear enough on the why to not sell when the money is a high multiple and look for a better exit with good partners to keep the competition alive.

Given the state of tech today, it’s the easiest time to build a company with $0 in funding so long as you’re willing to put in the work. What about you? Feeling the itch to innovate? What’s stopping you from starting as an intrepreneur where you’re at? Whats stopping you from starting as an entrepreneur and launching out? Now that you know what’s stopping you, you’re a very powerful person so what’s the plan to remove those obstacles?

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The Journey So Far

Been talking about work and life. Wanted to present some stages for how this worked for me.

College -> Worked full time while schooling full time. Worked flexible jobs so I could do school. I felt busy (laughable now). Developed several skills for post college career. Helped start a non-profit during this time that I worked in alongside my career for the next 12 years. Got my first 8-5 job 3 days after graduation due to work I was already doing and relationships I had formed.

First 5 years -> Wanted a different career. Was paid low, worked long hours but was non-exempt with an unlimited overtime due to my role. Had to consistently be on-site and thought working remotely was what I wanted. Got next job because of a particular skill and someone I knew.

Next 6 years -> New job, first year I thought this was a stop gap. Turned out I loved the team and stayed for 6 years. Was empowered to help build teams. Was paid better because of the first 5 years pushing myself into expertise in key job functions. Started managing others and realized that leading, coaching, and building teams was a skillset I enjoyed. I also had to be in the office most days and was still learning to love what I was doing. Really enjoying my work kicked in the last few years here. Left here to go work in a global non-profit because of the non-profit work I mentioned back at college stage.

Next 3 years -> Worked at a non-profit overseeing global technology and some security functions around that. I was able to come and go. No requirement of office hours specifically. I realized I liked having an office to go to and also liked the flexibility of not having to go there. Most days I was there and found that was easier. I thought this was my dream job. Turns out getting your dream job in your early 30’s is a bad idea. 2 friends bought 2 businesses and asked me to help merge the thing together. I left to go do that.

Next 5 years -> Worked for some friends helping build out an MSP by integrating 2 together. Learned more skills on business functions and found I like working on the overall operations to make something healthy. Went through my first sell side transaction with a PE backed firm. Stayed on for a few years to help move towards integration and learned about negotiation in a larger org.

Last 2 years -> First job, that didn’t immediately form from a pre-existing relationship. Moved to another PE backed technology firm. Used lessons from the past 2 decades to help grow the firm. Began work to redesign our Professional Services Automation system. Helped with the integration efforts of 4 acquisitions in the first 6 months. Began to learn about building a true 24/7 operating team. Said yes to some things I regret saying yes to. Said no to some things I should have said yes to. Have learned much in the past year.

3 points:
1) Everything you do is training for the next thing you will do.
2) Relationships are key to your growth.
3) It’s a wild ride. Enjoy it.

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Work Life Integration

I’ve stopped thinking about how to balance work and life. In terms of work and life there is a transaction cost to what you want your life to look like. I think more of work life integration. Your work agreement with your employer can be viewed as a mix of compensation and incentives that help empower or detract from the life you want.

First principles:
The thought is that “I have problems to solve and people pay for my attention into solving those problems. Financial transaction enables other parts of my life.” Each job does this and in a free market, your compensation is commensurate with the difficulty of the problem you are solving. Some problems simply cost more time and energy.

Practical Outworking at Ground Level:
One example is teams that work on shift. I have a team like this. Part of the problem they’re solving is coverage of a service with a time bound function. So they don’t have the flexibility in the time they can be on or off work. To the point that we put hard boundaries around calling them outside of their shift hours. The other transaction mechanism is if they’re working overnight (11:30pm – 8:30am) that’s a harder problem to solve compared to someone working days(8:00am – 5:00pm). The overnight shift has a 10% stipend over their base salary. What each shift gets back out of the transaction is a very clear stop and start point to work. Some people want or need that in life for a myriad of reasons.

Transacting Back Incentives in Compensation:
That team is paid less than me and it’s a reasonable expectation given their job is limited in scope and clearly defined. I have a larger scope and I’m looking at problems with a longer reach and impact. I also, don’t generally get the same lines of off/on time. I work remotely from a laptop. So long as I do my job I have the ability to be mobile, I can work from where I want, and I can come and go as I please related to work. That IS a great benefit and that IS a double edged sword. If things are healthy I get to “leave on time”, if things aren’t healthy I get 10pm and 2am calls. My time back is part of my compensation, so i’m very incentivized to make things healthy.

Very practical schedule:
I hold to a schedule. It keeps me productive and consistent for my team. I usually end up starting a little before 8am, and working until around 6pm. Then I drop out and jump back online for another hour sometime that evening to wrap up a few things. (The time I get back on is reducing as the kids get older.) Because of my role with FaithTech I sometimes need to work from another city. So I leave early (depending on the city as early as 4:30am) and start work from a cafe somewhere in that city at 8am. I’ve worked from my travel trailer a few times and many times someone asked me to lunch or afternoon coffee or beer around 3pm. I’ve had the ability to say yes and have done so.

What about you? Like if you’ve nailed the work/life integration and comment to share how or ask for help.

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Engineer Your Path from the End First.

I took some time off this past week. What basically added up to a long weekend, but it was needed. Made me think about work/life balance. I hear many people talking about the freedom they want with work. I don’t really think that’s the point though.

If you’re expectation is that you can gain now, what you want your life to look like in the future without any understanding of the journey and cost required to get there, then you might have set yourself up for failure, disappointment, or both. I’ve become more and more convinced that money is simply a tool to allow for transaction back in terms of personal time use. If you don’t have a real need for more money, do what you want. Everyone else, is beholden to a rule of constraints.

If you’re just starting out from school at whatever level, don’t try to gain the job you want to have in 20 years and for which the requirement to add value in that position will be 20 years of setting your hands to a task. You either, don’t add enough value back to the business for that transaction to make sense on the other side or you’ll be overpaid and the first to be released during the bad days.

“Well, I’ll just start my own business.” is the other response I think I’m going to hear. I hope you do, also that’s not just sunshine and rainbows. If you’re starting that for the right reason, which is to truly solve a problem, then it’s still a 20 year journey to build a business.

Even if you get that dream job in your early 20’s, it’s not your dream job. Been there. Landed my dream job after a decade of work and was out 3 years later because it wasn’t that after all. Your life is more than work and work is a significant part of your life. Learn to enjoy the journey of that more than an end that you’ll never catch.

That does not mean, don’t think about what you want your life to look like in 20 years. Start with the end in mind and engineer your path accordingly.

Interested what the rest of you think. Like if you agree, comment if you differ in thought. Will post more about work/life integration and how that might work. In the meantime, here’s a pic of a sunset from this weekend.

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Identity, Calling, Assignment

Clarifying what you want in life and why you do the things you do is difficult. There’s a lot more to unpack on this subject about how you get there. For now, here’s some language i’ve found helpful to clarify this for others.

Everyone needs clarity around three things to make sense of their life and work.

Identity -> Who am I that doesn’t ever change.
-Example is that I am a father, I am a son, I am a brother, I am a friend, i am a husband to Jessica, I am loved and accepted regardless of what I do and don’t do.
-Depending on the person this might be an easy or difficult process to get to.

Calling -> Looking over my life, what has been the consistent function regardless of specific role?
-Example is that my calling is to “help organizations become healthy so that others can thrive.” Part of it is posted in my linked in headline. It’s not just a statement as much as a lense for making decisions on the next part.
-This can take significantly more time to work through. The statement above grew and was clarified over several years.

Assignment -> What is my role in this season where I apply my calling?
-Example is that I’m fulfilling my calling in The Purple Guys and NTiva by working with my Centralized Services team to help address operational issues that add balance back to our team. Because the team I work with has a pre-emptive function, this work also allows me to impact 100’s of other organizations by helping make our client environments healthier from a technical perspective.
-This is usually the place where people are the clearest about what they’re doing. The problem shows up when people lose their assignment. It’s difficult enough to navigate something like that if you know your calling and identity and usually people are so geared down on the assignment that they haven’t worked down to understand the foundation and navigate something like that well so they get thrown into a tailspin.

Would love to hear feedback on these thoughts and where others are at on this subject. Like if you agree. Comment with your calling statement if you have one.

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Money and Other Stuff

Last week I mentioned some conversations I had last week. One of them was a situation where a friend had a decision to make about two separate positions at different companies. In terms of comp package they were the same. My response?

“Well now that money isn’t the issue you have to decide why you would want to do one or the other.” Many aren’t as fortunate as my friend to be thrown into turmoil because suddenly the decision isn’t about income. If you ever have a moment like that, it’s odd in it’s ability to cause turmoil rather than peace. That’s usually because most of us aren’t clear on why we’re working beyond the paycheck. It’s healthy to have that level of clarity though. It’s actually what will produce your best work.

What is your why and how did you get clarity about that?