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The Disintermediation Era

It must suck to be the middle-man today. Everywhere they turn, it's bad news. Democratization this. Circumventing that. There was a point not that long ago that the middle-man provided great value. The record companies brought music to the masses. The media created channels for the news to get through. The Blockbusters of the world housed thousands of movies for people to rent. Telephone companies laid the lines for us to connect with one another around the world.



Why Whuffie is Difficult to Grok for Large Companies

The advantage I've had while working for and with startups for most of my career is that the 'underdog' or 'the new kid on the block' gets a great deal of support and love from people all around. Somewhere deeply ingrained in the folklore of capitalism is the rags to riches story that almost everyone can celebrate. But when the riches come about...the story ends. And the loving nature of those around the company can suddenly turn to suspicion. We love to hate the successful. We help lift them to their success, then resent them for it. I might have found that odd at some point, but have grown to understand it mostly through reading social anthropologists such as Matt Ridley, Tor Norretranders and Lewis Hyde, all of whom talk about the gift economy and its historical role in keeping those in power. All the way back to Aristotle, the parable has been that those who grow all too powerful in any given economy need to be taken down a notch so that the rest of the community can thrive. In the analogy of the Tall Poppy, those that overgrow and overshadow cut off the sun from the rest. In order for the community to thrive, they must be cut down.

Thus, in the way that the tall poppies are to be cut down to size, we have a tendency to do the same for corporations or individuals that have gotten too large in our culture. Which brings me to why it is difficult to grok whuffie if you are a large company.

So why? With good cause, big companies are a little more paranoid than their scrappy, startup counterparts. Their poppies have grown above the others and there seem to be natural and politcal mechanisms put into place to cut them down to size. I was disgusted, but not surprised to hear of the number of people lurking around the corner, waiting for a successful firm to make the smallest mistake so that they can raise class action suits for ridiculous things like sending out an email without unsubscribe information or raising forward-looking information that doesn't happen. These opportunists aren't called out because what they do is shrouded in the purview of watching out for the public good.

Okay, so I get it. As I tweeted earlier tonight, I'm saddened that we create our own rat traps in success. Once we're 'there' we can no longer do the stuff that made us successful in the 1st place. All of this was brought up by Josh Kopelman's great post on the success of Paypal. And that success came from the fact that they had nothing to lose as compared to their rival eBay. As he wrote, "I believe that eBay understood everything that was needed to build a great payments product. They were just unable to do so given the risks involved." Paypal could break the rules all they wanted because, well, they could get away with it as a small, scrappy startup. eBay, having established itself as a big success, could not. You just can't behave that way when you get to be a certain size.

Or can you?

As I watched Tony Hsieh of on the SXSW stage last week, it gave me a great deal of hope. isn't small potatoes. They just broke over $1billion in revenue, have thousands of employees (I can't find the exact number, but I think there are 1400 in corporate and another 1400 in their Kentucky warehouse). Yet with these big numbers, Tony is committed to not being the type of company that is risk-averse. He encourages employees to tweet, listing their tweets out front and center. He's committed to service and bringing happiness and he isn't afraid to let any of his employees speak to any reporter, customer or blogger at any time. He trusts that he's instilled a positive enough culture at Zappos that he needn't censor or concern himself with the unique spin each employee has on the company. He encourages it.

Tony's former company became the kind of company he didn't want to work for. The one that couldn't grok whuffie. The one that wasn't fun or a little weird and wasn't focused on delivering WOW through customer service. So, from the beginning, he made sure he built Zappos to be the company that was. And guess what? There don't seem to be as many people lurking in the shadows wanting to take Zappos down a notch...even though it's poppy is soaring above the rest. I think it's because the tall poppy that is Zappos is deeply committed in giving back to the community that got it there. It's part of the gift economy. Zappos has the freedom to embrace the chaos because it didn't take out any other poppies on the way up.

So, although as companies get bigger, they tend to lose the zeal and scrappiness that got them there in the first place, it doesn't have to be the case. Can big companies who haven't taken the care that Zappos has build that culture retrospectively? I'd love to see - or be part of - that case study. Big companies CAN grok whuffie. It'll just take a little TLC.




[youtube] This is an awesome little movie. If you have 15 minutes, it's really worth watching end to end. It covers a topic that has been near and dear to my heart this year as I've spent the past 11 months now working on releasing the shackles of external validation.

How am I doing with that? Well, 11 months doesn't undo nearly 35 years of living for it...I still have a long way to go. And my participation online - blogging, tweeting, flickr-ing, etc. - makes for feeding the external validation junky in me. And really, it does feel good to get a nice comment or an email from someone saying that you've said something poignant to her or that you give him hope. It feels great...even when we brush it off with an 'aw shucks'. And, of course, the feedback helps let us know we are doing something right in the world and to keep it up or step it up. But there is a downside to it, too. When I started to rely too much on the external validation to shape the way I felt about myself and what I was doing, I became way to susceptible to the ebbs and flows as well as the negative feedback that came my way. My moods were controlled by external forces. Not a great thing.

It was also the downfall of many of my relationships. I got to the point that, if I wasn't getting the feedback I needed, I would demand it. Then, of course when I got the validation, it felt empty. I had asked for it. Was it real? I was a mess.

Not to be too poetic about it, but I really do think we'd all be happier if we relied less on external validation. The movie is feel good and cute, but there is an underlying message. Hugh, the main character, gives others the validation they need, and, in return, he gets validated with making them smile. When he encounters Victoria, who won't smile, it drastically affects him and his ability to function. Meanwhile, Victoria's ability to feel good is affected by another outside source. It's kind of a metaphor for the way we live in America and I see this all the time. People around me are constantly waiting for something or somebody outside themselves to change their moods. Much of it is consumed. It makes me happy for a couple of hours or even days when something remarkable happens or I get a compliment or I buy a lovely new Coach bag (my 'junk'), but then I go back to my set-point again.

All of this rambling, of course, reminds me of the idea of Happiness as Your Business Model, where three out of the four pillars to happiness rely at least somewhat on extrinsic signals: autonomy, competence and relatedness. Autonomy relies on the fact that outside forces aren't controlling you (if they are, you are miserable). Competence relies on whatever you are challenged with to be just the right level of challenging and do-able. And relatedness relies strongly on the presence of others. (the fourth being your set-point or natural level of self-esteem)

I think my ultimate goal in life is to achieve a level of autonomy from the external validation, itself. I'd love to get to that place where compliments are good signals that I'm going in a positive direction and critiques are just points to ponder for improving my performance, but neither have much of an affect on my disposition.

Either way, I wanted to share the movie and see if it provided food for thought on the cult of external validation that we are part of. People in this movie are, in a sense, buying it. Where do you buy it? Is it something you think about? Do you think people would be naturally happier without relying on it? Does this affect consumerism? Marketing? Food for thought...