How to work asynchronously

The term ‘asynchronous’ is confusing. And when you add in the word ‘work’ – eyes glaze over.

In many ways – ‘working async’ is jargon from the remote work world. But ironically, even when people are in the same city, it’s still best to work asynchronously.

What – why?

Asynchronous maximizes deep work

The goal of asynchronous isn’t to make ‘remote work’ better. The goal is to maximize efficiency and deep work.

Recently, a professor from Georgetown University named Cal Newport wrote a great book called Deep Work.

The key message of the book was simple but profound. To solve any cognitively difficult problem, you have to spend long stretches of uninterrupted time thinking about the problem. He outlined a ‘law of productivity’:

Law of Productivity = Time Spent x Intensity of Work 

(Where work is defined as ‘uninterrupted work’ at full concentration)

Unfortunately – many of the typical synchronous work models don’t facilitate deep work. Individuals are constantly interrupted by meetings, brainstorm sessions that are hours long but only produce 5 mins of good work, constant IMs, constant emails, etc etc.

And as a result, the typical worker is not solving cognitively difficult problems – they are simply ‘busy’.

What is asynchronous work?

Dictionary.com defines asynchronous as ‘having each operation start only after the preceding operation is complete’.

With this definition – people commonly assume that team members are on their own islands and never meet or talk to eachother. This is definitely not the case.

How async really works is collaborative and parallel. The key, however, is that the team members work independently prior to engaging others. And this engagement is often through the work deliverable instead of a live meeting or discussion.

Often times – a team member will spend dedicated time (deep work) coming up with deep insights on a problem. They then capture those insights into a sharable deliverable that is handed off to other teammates to add their insights in parallel. This sequence enables all parties to contribute to the final product.

Collaboration still occurs – but team members contribute on their own time. Then, after everyone has contributed, a normal synchronous discussion may occur to finalize or make key decisions.

It’s as simple as that.

Here are 3 quick examples:

Example 1: Defining a product feature

Product owner spends 3 hours to write the detailed product spec on a Google Doc. The product owner then sends it out to rest of global team for feedback.

Everyone comments directly on document and the product owner incorporates the feedback. Then a meeting is held to make key decisions on the product spec and final version of document is sent out to all stakeholders.

Example 2: Metrics show decrease in sales win rate of quality leads

VP of Marketing spends 2 hours analyzing all of this quarter’s lost leads and SFDC notes. The VP of Marketing writes up a Deep Dive document with analysis, root cause and proposed fix. She posts the link in Confluence.

All of the SDRs/AEs review data and comment on their lost leads and rationale. They also comment on the suggested improvements and next steps to fix. The SVP of Sales & Marketing calls a 1 hour meeting with key Sales/Marketing execs to approve key decisions/changes. The VP of Marketing sends out final document and records 3 min video with key new actions.

Example 3: Communication of monthly goals by VP of Support to team

VP of Support writes monthly goals for the org into Confluence. The VP of Support records a 3 min video and posts onto the Microsoft Teams announcement channel. Support members read and comment in Teams.


What tools should I use to work async?

There are a lot of tools claiming that their software is the key to async work. Ignore them. You don’t need anything beyond what you likely already use today.

Mastering async is less about the tools and more about how you modify your internal processes to get work done.

The biggest internal process change is getting out of the mindset of ‘let’s have a meeting to discuss.’ Never do this. These unstructured meetings lack the deep work insights needed to make good decisions. Always require deep work prior to any meeting – much like Amazon’s 6 page paper format (LINK). You’ll be surprised at how many meetings are no longer needed when you have long-form written documents that can be commented on instead.

Below are some of ways we use common productivity tools to manage our async organization.

Knowledge management & goals: Confluence

Rationale: Organizations need to continually learn & improve. To do so – institutional knowledge must be captured in 1 location and continually iterated. We’ve tried using various Google Docs, Word Docs and others – but we found these get disorganized quickly and disappear as employees leave.

Instead, we use Confluence as our ‘brain’. We have a common data structure across every team to ensure we capture and disseminate the knowledge. Teams contribute to Confluence on a daily basis.

How to use for async: Confluence is our most important tool to collaborate asynchronously. All employees have read/write access but the input is structured and consistent. It includes the following:

  1. Company Handbook – overall documentation of values, processes, horizontal trainings, etc
  2. Playbooks – Company-wide & divisional playbooks that are continually iterated as we learn
  3. Goals – Annual, quarterly, monthly and weekly goals by company/division/manager/individual. All goals are transparent and visible to all employees. Goals are reviewed by the manager/individual 2x a week via check-in-chats.
    • Note: Many companies use specific goal tracking software – but we use Confluence to ensure that data is in 1 spot. Some divisions may use their own task manager (JIRA, Monday.com, Zendesk) – but the annual/quarterly/monthly/weekly goals themselves are in Confluence.
  4. Key insights & deep dives – key learnings from successes or failures – with appropriate long-form documentation on causes and fixes
  5. Org charts & hiring pipelines – 1 location for all org charts, contact info, structure of teams, key roles & hiring pipeline content/tests associated
  6. Onboarding & training – location for all onboarding & training information for both new hires & current team members
  7. Metrics – visible ‘scoreboard’ for all team members & divisions based on lead metrics

Cloud productivity apps: Microsoft 365 or GSuite

Rationale: Both Microsoft 365 and GSuite are our cloud productivity apps to get work done. We largely don’t care which provider – as long as the documents themselves can be worked on by various employees asynchronously and are the cloud versions (no local versions emailed).

How to use for async: All employees write long form documents (specs, strategy docs, deep dives, RCA, etc), develop online spreadsheets, online versions of presentations, etc. These documents are the core of ‘deep work’ and the outputs are then shared with various team members for review/comments. We use comments heavily – and expect our employees to offer deep insights and feedback.

The transition to writing long-form docs is a key behavior change that managers need to drive down the organization. But it’s a powerful management tool that demonstrates the quality of the employee’s insights.

Additionally – all meetings must have a detailed document that has been shared to attendees prior to the synchronous discussion.

Important docs are then captured into Confluence.

Business Messaging: Microsoft Teams or Slack

Rationale: Both Microsoft Teams and Slack have similar functionality. We prefer Teams over Slack due to the integrated cloud storage folder structure & integrated Teams video service. But more important than the tool selection is the usage of chat and channel posts. We are very intentional about our use of these tools – as well as shutting them down during deep work time.

We rely more heavily on Channel posts than IM chats. Posts enable async feedback that is nested under the post and persistent. Chats are often ‘noisy’ and quickly disappear due to the volume (and only relevant to those currently online). But in all scenarios – both posts and chat are our primary form of day-to-day communication (not email – more detail below).

How to use for async:

  1. Chat – usage should be minimized and used primarily in a 1:1 or 1:2 mode for quick questions. Due to the fact that chats do not maintain or spread knowledge well – these quick questions are intended to be day-to-day dialogue to run the business vs important insights. Any important insights should be transferred into Confluence. We also do not have the expectation that chats are immediate – since members of the team are working in various timezones.
  2. Channel posts – posts within channels are a bit more persistent and should be used for most team communications. Team members comment under posts and provide feedback. We structure our channels within the companies and the divisions into the following:
    1. General – this is the channel where most posts occur within the company/team
    2. Announcements – this channel is for company-wide or team-wide announcements
    3. Fun – this channel is for random fun facts, pictures or other cultural building posts
    4. Recognition – this channel is to recognize peers/subordinates/others
    5. Training – this channel is for links to training articles, key insights (that are also posted in Confluence), etc
    6. Project specific – when necessary – we create project specific channels for selected audiences

Email: Outlook or GMail

Rationale: Similar to the Teams vs Slack debate – Microsoft email vs Gmail have similar functionality. We largely don’t care which tool is used – but we are very intentional about our use of email – and try to minimize as much as possible.

Email is a very poor medium of internal communication. Going through emails is time consuming, non-persistent in their knowledge capture and poorly structured for collaboration (reply-all is terrible). Insights from emails are rarely captured into a location that can be referenced and iterated on later. As a result – we discourage ANY internal emails. Emails are only to be used for external communication (customers/partners/etc).

How to use for async:

  1. ONLY use email for external communication to customers/partners/others
  2. Forwarding any external communication to internal audience (but discussion occurs in chat/channels/docs)

Recorded video: Loom, CleanShot, Microsoft Stream

Rationale: If there is 1 tool that you may not use today – it’s a cloud video recording/sharing app. Quick 2-3 mins videos are essential tools for async management. Though long form written documents provide more insight – quick recorded videos can accelerate understanding. Using a recording app like Loom, CleanShot or Microsoft Steam is a simple way to record and send. These videos must never be longer than 3 mins and the recording person should never take more than 2 tries. Here is a LINK with more information on how to record 3 min async videos.

How to use for async:

  1. Check-in-chats for goals updates & blockers discussion
  2. Company announcements
  3. Misc project specific recordings to accelerate understanding
  4. Fun culture videos if traveling to customer, etc.

Summary

Working & managing asynchronously is a skill and must be practiced. It’s easy to revert back to synchronous – believing that is faster/better. But it’s not. Synchronous simply adds low value ‘shallow busy work’ that makes things appear as if they are faster. Deep insights come from the entire organization mastering deep asynchronous work.

For more articles on how to manage asynchronously:

How to use 3 min videos to better manage your remote team

Why managers hate remote work

Async communication blog by Doist

Audio quality comparison: AirPods vs embedded mic vs USB mic

Audio quality

“Sorry – John – I can’t hear you. Can you get closer to the mic? Nope – that didn’t fix it. Can you switch to a different microphone?”

Don’t be John.

Audio quality, believe it or not, is MORE important than video quality.

Think about it like this. If video quality is bad – the meeting continues. If the audio drops or is intermittent – the meeting ends.

3 common microphones used in video calls are Apple AirPods, microphones embedded in laptops (or desktops) and external USB microphones. Here is a quick video where you can hear the differences.

Quality ranking:

  1. MOVO USB Conference mic: LINK
  2. Embedded mic
  3. Apple AirPods

Conclusion

Audio quality is more important than video. So despite the numerous articles out there focusing on video quality – ensure your audio setup is great first.

USB microphones are a cheap and easy way to create podcast-like audio. Definitely recommend.

How to use 3 min videos to better manage your remote team

Congratulations. You’ve managed to (sorta) figure out this remote work thing. Your team is working from home, Zoom appears to be working and your company did not go down in flames.

But unfortunately – now you’re stuck in Zoom meeting hell. You’ve replaced your physical workspace for a non-stop video conference. Brutal.

It doesn’t have to be this way.

What is ‘asynchronous’ work?

You’ve seen the term before but largely ignored it. Why would you work differently – just because you’re not in the office?

Because of your Zoom hell – that’s why.

A key part of leveraging remote work is to enable folks to work on their own time. Their own schedules, their own locations, their own time zones. If you don’t do that – you force everyone to jump on unproductive Zooms together (and at odd times).

Instead – you need to adopt a culture where work can actually occur without you. Async.

How?

The standard method to get to async is long-form written documents. These written documents serve as the base – then others add to it, comment, etc. This document then provides the framework that leads to a set of actions the team delivers.

Though the long-form document has its place in async – sometimes you need a richer medium. And if a picture is worth a thousand words – a video is worth a million. 

With a quick video – you can better communicate verbal (and non-verbal) cues that are lacking from written documents. If done right – they are easy and highly effective.

We use quick async videos in a variety of ways. Sometimes they are from the managers to update their team on initiatives or overall priorities for the week, or sometimes they are from individuals to their managers for quick weekly goal updates, and sometimes they are between teammates to provide quick progress updates or ask questions. 

In all scenarios – the videos are rich in content and help enhance teamwork within the organization. And unlike written docs – videos enhance the company culture by adding personalization and a ‘feeling’ of working closely together despite the miles of separation.

But to ensure you don’t swap your Zoom hell for video watching hell – here are 5 tips to do them right.

5 tips for better async video:

1. Use a simple recording app

Back in the day – recording and sharing videos was a huge pain. Often times you’d record on 1 device, transfer the file, encode it then attempt to send a huge file to someone. 

But nowadays – there are a variety of great software providers that have made this super simple. My favorites are CleanShotJumpShareLoom and Microsoft Stream for Teams users. 

All of these offer simple ways to hit 1 button, record and send. 

CleanShot X for Mac

2. Never longer than 3 minutes

If you think opening up your inbox in the morning and seeing 1000 new emails is brutal – try opening up a video and seeing that you’re being asked to watch 20 mins of a boring monologue. Literally – paint drying.

Despite the temptation to go longer – never EVER record these update videos for longer than 3 minutes. If you need more time than that – either breakup the video into multiple topics or simply provide the key points in the video and send additional written information.

Same deal with all the videos you get from your team. 3 mins max and enforce it.

3. Record once

Most people hate hearing & seeing themselves on video. So they continue to re-record the video over and over and over and over and over and over and over and over.

Don’t do that. 1 take only. Ship your MVP (minimally viable product).

Remember that this is an internal video and probably only watched once. So don’t waste a ton of time recording it.

Only exception to this rule is if you violate the 3 min rule. Then take a second take to shorten it.

4. Show your screen & your face

Most recording software has 3 choices – record the screen, record webcam, record both screen and webcam. Pick the ‘both’ option.

If you only record the screen – your audience misses your non-verbal cues and the video lacks personality. If you only record the webcam – your audience lacks valuable visual information. Additionally, your audience ‘fatigues’ at staring at you for the entire 3 min monologue. Since the typical 2 person live conversation averages 2 mins per person per turn, your audience expects to ‘speak’ and the video gets annoying (just like a person who talks too much in person).

When you record the screen as primary (larger) and the webcam as secondary (smaller) – this ends up as the right balance. The video has content to read while listening to you – but still shows your facial gestures and non-verbal cues.

5. Send the link – not the file

Unfortunately, after recording these 3 min videos, they end up as huge files. Sending this file over email is typically rejected by your mail server and is a poor practice.

Cloud to the rescue.

Recording software companies have solved the large file problem by automatically uploading the video to their cloud storage then creating sharable links. Simply send that link to your team. They click on it and watch from any device.

Some recording apps (like Jumpshare and Loom) are native SaaS apps – and automatically display the video in their cloud interface. These work great also. You end up creating a personal YouTube-like channel of your videos and can measure views, length of viewer watch time, etc. And if you no longer want the video available – you can simply unshare it.

Conclusion

Managing remote teams is hard. You have to rethink the way you manage or you end up in Zoom hell. Bringing in asynchronous work is the key – and quick videos are an important tool for you and your team to master.

For additional information on how to record great videos – see these pieces:

How a stack of books can make your video conferencing 10x better

5 steps for great video conferencing while traveling

5 steps for great video meetings while traveling

Imagine the day. Travel has opened back up and you’re dusting off that passport. Dormant airline miles are being used. You’re now loving your company’s newly minted remote work policy. You can’t wait to work from exotic locations around the world.

You’ve also mastered a great Zoom setup at home. But can you reproduce it in a hotel?

The answer is yes.

But it takes a bit of education & planning.

Here are 5 steps for great video meetings while traveling:

Step 1: Choose a ‘video optimized’ location

It goes without saying – but most rooms are setup for activities to occur within the room. Not for people on the other end of a video conference. So determining where to setup your temporary remote office is the first major decision you have to make.

The good news is that hotel rooms often have desks in them. But having your unmade bed in the video behind you isn’t professional. And if you’re like me – a couple of screaming kids in the background doesn’t help either.

I recommend asking your hotel if they have a Board room. Many hotels will often let you use it for free if it’s not in use.

Below is a Board room at a hotel I stayed at during spring break. The room is nice – but picking the right location within the room is key.

The natural inclination is to pick a chair in the middle of the table, place your laptop down and be on your way. But that would be a poor choice and not leverage the assets of the room.

Board room at Waldorf Hotel in Park City, UT

Another common mistake is to want the ‘pretty scene outside’ as the background and sit with the window behind you. As you can see from the picture below – the light coming from the window is too bright and your face will be dark/not visible in the camera.

Window is too bright for most cameras to focus on your face. Notice how dark the chair is.

Though counterintuitive – the best decision for this room is to pull the buffet table in front of the window and use that as your workspace. The natural light then shines on your face – and you get a great view during your meetings.

Pulling the buffet table in front of window was the optimized video configuration

Step 2: Arrange the right camera orientation

Nothing makes your video image look worse than the wrong camera angle.

Look at the picture below. On the left – you have a professional video setup (newscaster) and on the right, you have a guest with an amateur video conferencing setup.

Good Video Angle vs Bad Video Angle
Left image is the professional newscaster, Right image is the amateur

Though you’re unlikely to find a newsroom setup while you travel – you can easily recreate something close. The key is to ensure the camera on your laptop is at eye level and you sit far enough back to get most of your torso in the image. Here is a blog that dives into details about setting up the right camera orientation (How a stack of books can make your video conferencing 10x better).

To get your camera at eye level, you’ll often need to put the laptop on a stack of books or something else to raise it. For my hotel Board room above – I got lucky in that the buffet table was 7 inches taller than the Board room table. This brought the camera to near eye level (and a small adjustment of the chair height did the rest).

Top image: Taller buffet table, Bottom Image: Shorter Board room table

Step 3: Add depth to the background

Many people use virtual backgrounds nowadays (most poorly – but that’s a topic for another day). If you look closely at those images – you’ll notice that they make you appear as if you’re sitting in a large room. This adds ‘depth’ to the background to make it more interesting.

In the hotel room above – I moved the chair so that I was sitting parallel to the long side of the board room table. This made the table directly behind me and created the balanced ‘depth’ in my background.

See the picture below for what it looks like on video (and my head covered the ugly door). Ironically – folks on my Zoom calls thought it was a fake background. Success.

View of background during video meeting

Step 4: Use a noise-cancelling microphone

Unlike doing video meetings at home – it’s hard to predict what random noises will come from the hotel hallway. And playing the mute/unmute game never works well.

So instead – use a noise-cancelling software like Krisp. There are a few software providers out there and they all work great to eliminate unwanted background noise while isolating your voice. I’ve even taken video meetings from noisy hotel lobbies – and participants in the video meeting couldn’t tell the difference.

Another benefit of using Krisp is that it removes the ‘large room’ echo. For big hotel rooms like the one above – this comes in handy.

Step 5: Bring a USB microphone

People often use AirPods or other bluetooth headsets with laptops. But the microphone audio quality of most of them are terrible (sorry Apple). For truly ‘podcast’ audio quality during meetings – I recommend a USB directional microphone for your laptop.

I use the Movo 1000 since it’s slim and fits into my laptop bag easily. It’s also USB powered so it doesn’t require a separate power cord to lose. And at $58 on Amazon – it’s an inexpensive way to have perfect audio.

Summary

It’s unclear exactly when travel will pickup again. But it is clear that a ton of folks will be working from random destinations when it does happen. And if you follow these simple 5 steps – you can work from any hotel room and still maintain a professional video setup.

Safe travels.

And if you’re looking for more advanced lessons – see this article.

If you have any questions – please feel free to DM me on Twitter at @andytryba.

How does remote work accelerate the BCorp movement?

Milton Friedman

The Nobel winning economist Milton Friedman famously stated “There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits.” 

But is that really true? 

Or is there a much larger responsibility that businesses have to society & to our kids? 

The invention of the ‘B Corp’ and the participation of 3500 corporations across 70 countries points to a differing point of view. 

What is a BCorp? 

Benefit Corporations, or shortened to BCorp, is a new type of corporation that was invented in 2007. BCorps balance purpose with profits. 

Here is a quick 2 min overview of BCorps:

The official definition comes from B Lab – the nonprofit behind B Corps: 

Certified B Corporations are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corps are accelerating a global culture shift to redefine success in business and build a more inclusive and sustainable economy.” 

BCorps go through a rigorous certification and agree to uphold a shared ‘Declaration of Interdependence’. 

A what? 

The BCorp Declaration of Interdependence?  

The Declaration of Interdependence is a ‘code’ that all BCorps agree to. The fundamentals of it agrees that businesses can be a force for good. 

The declaration has 4 main ‘beliefs’: 

  1. That we must be the change we seek in the world. 
  1. That all businesses out to be conducted if people and place mattered. 
  1. That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all. 
  1. To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations 

How does remote work relate to BCorps? 

People think of remote work as ‘no longer going to the office’. But the impact of remote work goes well beyond the physical office space. 

Remote work is, by definition, location-independent. Meaning – you no longer have to be in a specific location to perform the job. It’s now ‘in the cloud.’ And as a result, anyone with an internet connection and the right skills can perform the job.  

And when I say anyone – I mean ANYONE AROUND THE WORLD. 

So how is that relevant to BCorps?  Let’s relate this back to the Declaration: 

Be the change we seek in the world: 

The world is full of amazing, talented people literally spread across EVERY country. Unfortunately, though opportunity isn’t. 

Often times – due to circumstances outside of their control – talented people are never given the chance to live out their dream job. Without moving, many times to another country, they have to settle for whatever jobs are in their town. 

Remote work changes this. 

By shifting work to the cloud, talented individuals now have infinite opportunities delivered to them. Cloud jobs enable them to apply their skills, from where they’re at, and get paid. 

By decoupling location and opportunity – the world is a better place for those that are willing to work hard & be the best.

Business ought to be conducted as if people and place mattered: 

People matter – place doesn’t.  

For many jobs today – people are forced to move from their hometowns, countries, family and loved ones to find high paying jobs. This has a negative impact on the individuals and families. It also causes ‘brain drain’ from the countries these talented people left. 

Instead, with remote, the cloud enables the jobs to be delivered to the people in their hometown. This has a profound impact on global society.

As these high-skill remote workers make more – they spend more at their local businesses, reinvest in the community, invest in their kids’ education, improve local infrastructure, etc etc. The velocity of money takes over in a positive (mostly) virtuous cycle. The impact to the local community is well beyond the remote worker themselves. 

Business should aspire to do no harm & benefit all: 

Throughout history, capitalism and technology have proven to be amazing forces to advance society. They have resulted in innovations that help cure diseases, software that enable the delivery of global education, and jobs that lift people out of poverty.   

Remote companies are on the ‘bleeding edge’ of truly making the world flatter and delivering opportunities to talented people everywhere. This innovation results in a higher standard of living in that society.  

High paying remote jobs help accelerate economic opportunity throughout the world. 

 
We are each dependent upon another and responsible for each other and future generations: 

Interdependency is the definition of a society. In a global remote world interconnected via the cloud, boundaries between states and countries are imaginary and irrelevant. 

Future generations will look at their careers & job prospects through a computer terminal. They will simply click on their dream job and apply. They will work in the cloud yet live local. They will help pay their parent’s medical needs, invest in local entrepreneurs and so much more 

Summary 

There have always been corporations that focused on more than Milton Friedman’s profit definition. But the BCorp innovation is accelerating companies proactively looking at ‘shareholders’ in a much larger context. 

With the acceleration of remote work and cloud jobs – we will further expand the BCorp mission to include job creation around the world. 

The best tax code ever developed for small businesses

“Imagine owning stock in a company where the price appreciates greatly, you sell it, and pay NO tax on your profit.”  

This quote sounds like a late night informercial trying to sell you some get rich quick scheme. But would it surprise you that it’s the first line of an article written by the US Small Business Administration?  LINK 

What the SBA organization is referring to is ‘Qualified Small Business Stock’ or US Tax code 1202 – and it is the single best tax code for small businesses & small business investors. 

Background 

Section 1202 was actually enacted over 25 years ago as an incentive for taxpayers to start and invest in small businesses. But at the time of initial inception – the code had a graduated amount of gains you could exclude from your taxes – making it only marginally beneficial to taxpayers.  

But in 2010 – when the exclusion of gains went to 100% – the popularity of QSBS grew. And popularity skyrocketed when the capital gains rate went up in 2013.

This 100% exclusion was then made permanent by the Obama administration in the PATH Act in 2015. 

What are the benefits? 

In a nutshell – QSBS encourages investors to invest in small businesses under $50m in assets. After holding these qualified shares for 5 years – the gains from the shares are tax free (no capital gains, no AMT, no NIIT). 

The amount the taxpayer can exclude is the GREATER of $10m or 10x basis. Meaning – on a small business that shoots through the roof – the investor could theoretically book up to $450m in tax free gains. 

Wow. 

And for small business owners – the QSBS incentive adds several % to their IRR and encourages shareholders that have a long-term investment horizon. 

What do small business owners need to do? 

While the tax break is very generous – the definition to qualify has a bunch of restrictions: 

  • Must be a C Corp in the US  
  • Assets must be <$50m 
  • Must be an ‘active’ business (not a holding company) 
  • Must be in a business other than personal services, banking, insurance, financing, leasing, investing, farming, hotel/motel or restaurant 
  • Stock must be acquired in exchange for money, property or services 

Assuming your business qualifies – you do also have to consider the double taxation of a C Corp and ensure the QSBS tax exclusion is worth it. 

What do investors need to do? 

For investors – a few key elements need to be in place: 

  • Stock must be acquired by an individual (or a partnership) – but not a corporation 
  • Stock must be from the issuing company directly 
  • Stock must be held for at least 5 years 

Many times, however, the small business owner may not be aware of QSBS. So ensuring the owner is structured properly (C Corp, etc) is really important. Also – since dividends are not tax-free – you’ll need to determine if you want to receive them or if you simply want to keep that money in the business for the full 5 years. 

And if needed – there is also a ‘rollover’ clause (Section 1045) that enables you to move your QSBS gains under the 5-year mark into another QSBS within 60 days. 

Conclusion 

If the idea of ‘tax free gains’ is interesting to you – QSBS is an incredible opportunity – and arguably the most generous tax code of all time for small businesses & small business investors.  

But ironically – QSBS is still largely unknown by most small businesses and investors.  

The good news is that there are a lot of articles out there to spin up. But ensure you speak to your tax attorney to get all the details that are applicable to your situation.  Here are some good articles/papers: 

*Note – Ionic Partners does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. 

Has your company growth stalled? You may be in the 2nd Chasm.

2nd Chasm

You remember it like yesterday. Your company’s revenue had flatlined. Growth had stalled. Things that worked before just stopped. You were desperate.

Geoffrey Moore states that your company fell into ‘The Chasm’. In his iconic 1991 book ‘Crossing the Chasm’, he describes how the ‘smooth’ Technology Adoption Curve is a bit misleading.
 

The Technology Adoption Curve

technology adoption curve and company growth stalled as exit early majority

All companies & technologies ride the Rogers Technology Adoption curve. The curve describes the adoption of technology across different market segments. Some customers are willing to be on the ‘bleeding edge’ and others will only adopt a proven technology. This Technology Adoption Curve is broken up into 5 market segments. 

  1. Innovators – the first to adopt new technologies, they are a small but passionate set of leading-edge folks that love tech advancement. 
  2. Early Adopters – the second group is a slightly larger group that is also generally risk-oriented and highly adaptable to new tech. They embrace new products after the Innovators.
  3. Early Majority – the third group is a much larger group that is a bit more careful than the previous 2 groups. They are still willing to adopt new technologies – but only after the Early Adopter and Innovators have proven the technology to be effective.
  4. Late Majority – the fourth group is a conservative and risk-adverse group.  They need a bit of convincing before investing in something new.
  5. Laggards – the last group is an extremely frugal, very conservative and technology-averse. These folks still have rotary dial telephones.

The Chasm

Moore states that there is a ‘chasm’ between the Early Adopters and the Early Majority. This is due to the fact that the expectations of the first 2 groups are very different than the last 3.

crossing the chasm chart and growth stalled though in majority

To effectively ‘Cross the Chasm’ – companies need to ‘pivot’ their product offerings to address the mainstream market. A ‘whole product’ is required for a technology to cross the chasm into the mainstream of the market.

For those companies that do manage to get across the chasm – good days are typically in the cards. The company is now into the ‘Early Majority’ – which is a much larger part of the market. Often times, the company will double or triple in revenue with strong year-on-year growth.

Awesome…

But what happens after that?

When you relook at the Technology Adoption Curve – and zoom at the top of the curve – you notice something interesting. As you climb up the Early Majority, the slope of the curve starts to decline. It then eventually becomes flat! 

growth stalled at top of technology adoption curve

In business terms – this means the awesome revenue growth that you experienced after crossing the chasm starts to slow. It then completely stalls. This stall comes out of nowhere – since you’ve been experiencing great growth over the past several years. And as time goes on, unfortunately, revenue then starts to shrink.

According to ScaleVP – you can predict this growth decay. After analyzing thousands of SaaS companies – the ‘predictable decay’ of next year’s growth will be 85% of this year’s growth.  And for many software companies – growth under 20% per year results in only an 8% chance of surviving a few more years (SaaS sales benchmark)

Predictable revenue decay chart and growth stall at 85% of last year

But I thought this was supposed to be the good ole’ times?  You worked hard to cross Geoffrey Moore’s chasm – what’s going on here???

The 2nd Chasm

What’s happening here is actually an important missing part of Moore’s theory.

Believe it or not – there are actually 2 chasms!

Wait – what?

The first chasm gets startups to the mainstream market. For many software companies – revenues go from $0 to $3-5m a year. Getting to millions a year in revenue is incredibly challenging.

But as predicted by the adoption curve and predictable decay – revenue growth gets harder and harder every year. Deals that appear to be ‘just around the corner’ delay further.

The technical debt on your product expands while your next generation product just can’t seem to launch.

Your investor’s IPO dreams are being crushed. Your employees are starting to wonder if this rocket ship isn’t going to pay for their future yacht after all.

You’re now in the 2nd Chasm.

By definition – the 2nd Chasm is a bit further in a company’s life. Revenues have often grown to $8-$10m/year – but have been hovering at that level for several years.

And similar to the first chasm, companies require significant changes to get across this new chasm to regain growth. 

But unfortunately – this 2nd Chasm is much much harder to exit than the previous.

Why is it harder to cross the 2nd Chasm?

Companies that fall into the 2nd Chasm have often been in business for 8-10 years. They’ve done a great job getting across the first chasm and addressing a portion of the mainstream market. But crossing the 2nd Chasm is harder than the first due 3 primary reasons:

  1. Company processes are more established and rigid: Think of these companies as middle aged. Not quite as nimble or flexible as they were when they were a few years old. And as a result, the process and procedures that have been in place for a decade are now incredibly hard to change.
  2. Product development has been going on for years: You’d think that the more ‘mature’ product would be better equipped to handle change. But more often than not – since the product was originally built 8-10 years ago – it’s on a legacy tech stack that isn’t easy to change. Many of the original architects are now gone. The product has a ton of technical debt that was never worked off. The product also contains countless small features that have been incrementally added on over the years. All of this makes the product rigid and difficult to modify.
  3. Sources of funding have dried up: Young, sexy, fast growing companies have access to a variety of new funding avenues (VC, angels, etc). Mature companies, unfortunately, don’t have the same options. As a result, any ‘pivot’ has to be self-funded and incremental. This makes the major business & product shifts needed to cross the 2nd Chasm a significant challenge.

And due to all of this, unfortunately, many of these slow growth 2nd Chasm companies end up limping along with shrinking revenue – sometimes for another decade. Eventually, the company is displaced by a fast, hot new competitor on a modern tech stack.

There are thousands of ‘stuck’ software companies in the 2nd Chasm today…

Hot, sexy new competitor problem (oh, and they’re rich)

The good news for 2nd Chasm companies is that your aging customer base is generally satisfied. The product does what it originally intended to do. The company has gone through almost a decade of renewals with your customers and the users are generally content.

The bad news is that a bunch of VCs overfunded a set of new sexy startups in your space. These startups are attacking your customers with fancy words like ‘Artificial Intelligence’ and ‘Machine Learning’. And these VCs didn’t just fund them with a few nickels – they gave them hundreds of millions to come take your happy stagnating customers.

VC funding worldwide and rapid growth of investments

Initially – your problem isn’t your current customers. Your problem is that you stop winning ANY new customers. They are all choosing the hot new fully featured competitor.

You first assume it’s a sales manager problem – so you churn through 2-3 new VPs of Sales with no success.

You then invest in either a marketing agency or a VP of marketing that promises to sprinkle magic fairy dust SEO on your website. They use fancy words like LTV/CAC and guarantee they will bring you new customers if you invest in just a few more Google Ads.

And to pay for all this additional sales & marketing – you cut your product & dev team. You may even completely outsource the engineering to a $2/hr 3rd world body shop. 

All of this, of course, fails.

Meanwhile you are now even shorter on money.

And during this time – your ‘loyal’ customers all have one eye open to switching. If the product wasn’t deeply embedded into their business processes and pain to get rid of – they would have switched a while back. 

But it’s only a matter of time until you see these loyal customers slowly jump ship. The speed of innovation of the sexy competitor on the new tech stack is exponentially faster than yours. And as soon as the sexy competitor has a full-featured product suite and make it painless for your customers to switch (both technically & via pricing) – you start losing customers.

Quickly.

Your spot product is not longer competitive. You are now in a death spiral.

What can be done for 2nd Chasm companies?

2nd Chasm companies have 3 options:

  1. Accept the decline in business – and shrink until revenue goes to zero
  2. Spend all your money pivoting & overhaul the product/company 
  3. Merge with other 2nd Chasm companies to get across together

The first 2 options are the most common.

Option 1 is often chosen by aging entrepreneurs that are basically cruising until retirement. They are fine riding out the end of life of their company. Though not sexy – these companies can slowly decline for another 5-8 years until their final customer cancels. If the entrepreneur manages costs – they can maintain their modest salary. The company becomes a lifestyle business.

Option 2 is much more common since many of the companies at $8-$10m in revenue raised some money along the way. If they are a VC-backed firm – the VC firm is likely nearing the end of the fund life and looking to maximize cash. If it was largely angel funded – the angel has written off that investment or simply looking to get back their original $s. The company spends every last dime trying a hail mary to grow. And when it fails – they shutdown the company (or do a deeply discounted asset sale).

Option 3 is not used as often (but should be). As mentioned, most 2nd Chasm companies are good companies that have achieved partial product market fit. But most of them simply can’t afford to revamp their product to achieve true full product market fit. But by joining forces with 2-3 other firms that service the same customer base – they can scale up to $30m in revenue – and can now afford the right level of product management, engineering and other investments to jump across the chasm.

The merger option also forces each of the companies to rethink their long-standing processes and procedures. Often times, ‘best known methods’ are consolidated to make the combined company stronger. Additionally, the merged company can choose the best talent from within each of the companies to serve as the new leadership.

Their combined offering to the customer base drives up retention and gives a fighting chance to compete against the sexy new competitor.

Not easy – but higher likelihood of success than the first 2…

Platform for 2nd Chasm companies?

At Ionic Partners – we believe there is a great future of many of these 2nd Chasm companies. We are building out a horizontal platform where ‘sets’ of 2nd Chasm companies can be successfully merged together. By reducing the frictions to bring together these companies – we can jump across the 2nd Chasm together and unleash a new wave of entrepreneurship and innovation.

If you are a CEO in the 2nd Chasm – let us setup a virtual coffee to discuss options to merge with other similar firms in your space. There are thousands of other companies in a similar situation – and it’s by joining forces that we are all stronger.

It’s never easy to get out of a chasm – but with a few additional hands & additional scale – we can build bridges together.

How 10 marbles became my key remote productivity tool

10 marbles? Huh?

Let me explain.

Like many of you – I’m now sitting at home (attempting to work) next to my 2 ‘remote school’ kids, my wife with her honey-do-list and every other distraction known to man. 

And also like many of you – my workload hasn’t changed. If anything – it’s gone up due to the overall economic chaos. 

Importance of Deep Work

In Jan’16 – a professor from Georgetown University named Cal Newport wrote a great book called Deep Work. In this book – he tells a story about an aspiring author that spent $4k to take a same day flight to/from the US-Tokyo to be completely removed from distraction and finish writing a book. Wow – sounds awesome right now.

The overall lesson of Newport’s book is to solve any cognitively difficult problem – you have to spend long stretches of uninterrupted time thinking about the problem. He outlined a great new ‘law of productivity’:

Law of Productivity = Time Spent x Intensity of Work 

(Where work is defined as ‘uninterrupted work’ at full concentration)

And since a flight to/from Tokyo isn’t an option for most of us – I needed another way to keep focused – while making it fun.

Pomodoro Technique

The Pomodoro technique was invented by Francesco Cirillo in the ‘80s. The technique basically uses a 25 min timer to ‘deep work’ then take short breaks. Each interval is known as a pomodoro, from the Italian word for ‘tomato‘, after the tomato-shaped kitchen timer that Cirillo used as a university student.

This technique is great – but I found that it needed a bit of updating. It needed some gamification/competition and a larger focus on goals. Also – no disrespect – but nobody really wants a tomato timer on their desk.

Marble Method

The Marble Method is my spin on the Pomodoro technique and involves 10 marbles, 2 containers, and a countdown timer.

The way that it works is super simple. 

First, you set the countdown timer to 30 minutes and start working.

During these 30 mins – you do only 1 task.

Let me repeat – only ONE TASK.

You SHUTDOWN email, IM, notification, social media, etc. You move your phone just out of reach. You don’t get up. You don’t go to the bathroom. You don’t go get a drink of water. You don’t do anything that isn’t that 1 task you’ve set to do for the 30 mins. Your only job is to get from 30 mins to 0 mins without losing focus or being disturbed. 1 task only – period.

And believe it or not – I also recommend you don’t even use the internet during these 30 mins. You want to be doing content creation – not research.

You also have the timer clearly visible for anyone passing by so they know not to disturb you (or you just point to it if they forget). They can see the countdown – and know you’ll be taking the short break after – so they’ll wait.

Simple right? Wrong…

It’s crazy hard to stay cognitively focused for the entire 30 mins. When your body comes upon a difficult moment in your task – it looks for an easy escape. It’s super tempting to glance at your inbox, glance at the stock market, or worse yet – pick up your phone (which the average American does 96 times a day).

But the countdown timer helps to visually see where you’re at and motivate you to keep going.

And when you complete that 30 minutes (congrats!) – you celebrate by moving 1 marble from one container to the other. Then take a break, check your phone, grab some water or do whatever. Then figure out when you want to schedule your next marble attempt.

And despite our human intelligence – there is still an amazing Pavlov’s dog response when you achieve a marble. The marbles really motivate you – much like points in a game. You’ll find that you may even get a bit mad if you find that you broke concentration and missed the marble. Just a bit of gamification to make concentration more interesting.

It’s funny now – if I’m a few minutes away from getting a marble – the house literally has to be burning down for me not to finish (even then – I’d probably make a judgment call on the amount of smoke vs time left). My wife and kids now know they better be bleeding if they want to disturb me.

Manager vs Maker Schedule

Now – some of you are saying ‘sure – this works if you’re an individual contributor – but not for managers’.

Not true.

I’m currently the CEO for 14 companies – and I can tell you with certainty – that deep work is critical to guide teams or companies in the right direction. The ‘manager schedule’ isn’t just a series of meetings and endless emails. Your company needs you to produce deep insights on where to take your teams, strategy, changes, etc – not shallow work. Make time for marbles.

I use Workflowy or a simple Word doc for a lot of my marble attempts – and think deeply about specific topics for that entire 30 mins. Perhaps it’s how to make my Customer Success team better, or the next generation of the product roadmap, or budgets, staffing, etc. 

When you start this method – you’ll start thinking about your calendar differently. Rather than stare at the meetings – you’ll start noticing the gaps between. You’ll start calculating how many marble attempts you have today and what tasks you want to do in those attempts.

For my ‘manager schedule’ – which unfortunately does have a lot of meetings – I find that a good day is 5-6 marbles and a poor day is 2 marbles. 

I still hope to achieve all 10 marbles at work someday – but honestly – I’ve never been able to do it during weekdays (I’ve only reached 10 on weekends – perhaps not healthy work/life balance – I know).

For most of the individual contributors or ‘makers schedules’ – I’ve seen that 10 marbles is a great day and 5 marbles is a poor day. Obviously depends on the person and the role – but I’ve found that team members feel more ‘accomplished’ after a day of achieving 10 vs 5.

Gamification within your team or family

The beauty of the Marble Method is that you can make it a competition – both at home and at work.

I’ve given several of my team members ‘kits’ (which make great gifts, btw) and we now have various team members competing against each other and various teams competing against other teams. I couldn’t be more excited about folks competing on who can be most productive. Judo anyone?  :)…

And most surprisingly – my kids have taken to the Marble Method. I find that 30 minutes is just the right amount of time for them to maintain concentration (they’re 11 and 9) on a task. If they can learn the theory of ‘deep work’ at this age – I feel like we’re winning…

Marble Method ‘Kit’

Obviously – you don’t really need to purchase any of this stuff below to do the Marble Method (and I don’t get any commission from Amazon, unfortunately). But for anyone interested – here are the links to what I use:

  • Marbles – $14:  LINK
  • Timer – $20:  LINK
  • Wood Tray – $50:  LINK 

I’ve also seen folks use coins instead of marbles, phone timer instead of a standalone timer, cups instead of a tray, etc. Anything that can create the same ‘marble accomplishment’ effect is 100% fine.

Conclusion

In this crazy time – where many of us are now working from home with distractions everywhere – finding little methods to maintain your concentration can go a long way. 

Hope this little Marble Method can help you and your family…

Other pieces from ‘How to’ remote work content series

How a stack of books can make your video conferencing 10x better

Look at this image below. 

On the left – you have a professional video setup (newscaster) and on the right, you have a guest with an amateur video conferencing setup.

Good Video Angle vs Bad Video Angle

The two images are obviously dramatically different in quality. The newscaster comes across as professional while the amateur on the right comes across as visually awkward, less professional and less trustworthy.

And this amateur isn’t just any joe-schmo – he’s the CEO of a large multinational corporation.

Now – you’re probably thinking that I’m being unfair to compare the million-dollar professional newscaster setup to a person working from home. And you’re right – the home setup won’t ever be as good. 

But would you be surprised if it could be darn close with just a simple stack of books?

Common Video Conferencing Mistakes

The CEO above – and I’m guessing most of you – is using a laptop at home for work. And it’s set up something like this.

This makes perfect sense of course – this is how you typically use your laptop to type, surf, etc.

But when you jump on a video conference – 3 problems emerge:

  1. The top of the laptop screen (where your video camera is) is several inches below your face. The result is the video camera is ‘looking up’ from below.
  2. The laptop screen is at ~45 degrees so the camera angle is actually looking into your nostrils.
  3. Since the laptop is positioned for typing – the keyboard is relatively close to you (~12 inches from your body). As a result – the video camera is also very close and creates a ‘zoomed in’ image when video conferencing.

Unfortunately – these 3 problems created the terrible CEO video image you saw above. And this is occurring in your images too.

I don’t know about you – but I’ve never met anyone that looked good zoomed-in from below staring up their nostrils.

Easy Solution

Believe it or not – the solution is super super easy. All you need is a stack of books.

3 Simple Steps

Step 1: Grab a stack of books and place your laptop on top. The goal is to raise the laptop CAMERA TO BE AT EYE LEVEL. This added height enables you to look straight into the camera – a key to the professional configuration. The amount of books depends on your height – but for me – this is a stack of books ~7 inches tall.

Using A Stack of Books for a Better Angle

Step 2: Reposition the laptop screen to be at or near 90 degrees. This removes the upward angle of the video image. Ideally – you want the screen to be perpendicular to your body.

Step 3: Push the entire setup further away from your body than you would while typing. The screen is ideally 24 inches away from your body. This distance then gets the right amount of your torso in the frame – another key to the professional look.

Using a Stack of Books for a Better Angle

And that’s it. Your setup is now nearly as good as the million-dollar newscaster’s setup.

Conclusion

With all of us spending more and more time on video – it’s time to master the basics. It’s amazing how a simple stack of books with a bit of spacing can dramatically improve your video conferencing quality.

And if you’ve done the book trick – and are now looking for 5 more advanced lessons – see this article.

If you have any questions – please feel free to contact me at @andytryba.

Why managers hate remote work

It’s true – most managers hate remote work. 

Yes, they trust their employees.

Yes, they want a culture of flexibility & openness.

Yes, they believe that results matter more than hours logged.

But no – they still hate remote work.

Why?

It’s not that managers don’t like the theory of remote work.

Who doesn’t want to believe that everyone is more productive in their pajamas, banging away at home in an asynchronous manner, only being interrupted from their deep work by their Amazon delivery person? 

It’s just that it’s not a world most managers live in today. 

Most managers are not trying to solve the problem – ‘how I can get John to work more efficiently’.

They’re trying to solve the problem – ‘how I can get John, Kevin, and Sara to all collaborate together to immediately solve this urgent customer issue’.

Remote work makes this more difficult. 

Particularly if the company isn’t a remote-first culture and has always relied on ‘in-person collaboration’. Most Fortune 500 companies are this way today – and many have recently spent MILLIONS to redesign their offices to the ‘open office’ concept to promote more impromptu collaboration.

So what should these managers that were forced to quickly go remote work do?

One easy solution is for managers to set up a virtual office like Sococo.

A virtual office is basically a pseudomorphic depiction of their physical office. It looks just like their physical office – but it’s online instead. Simple as that – no more, no less.

The manager can set up the virtual floor to have individual offices, cubes, meeting rooms, kitchen areas – or whatever else they want to recreate in the space.

The most important part for managers, however, is that their entire team is there and available.

When each team member starts work in the morning – they are automatically placed into their office. The manager can ‘see’ her team, go have impromptu chats, see the various team members collaborating, call a meeting with everyone, etc, etc. 

Just like a physical office – simply online instead.

Sometimes – just simplifying and getting the team back to par is a decent first step…

If you have any questions – please feel free to contact me at @andytryba.