with Auren Hoffman
Month of June, 2003

Summation Auren Hoffman's Summation for June, 2003 This issue: * Changing Demographics of Europe * The Entrepreneur vs. The Strategy Consultant * The Connector: Making People Remember You * Book Review: tuesdays with Morrie -- by Mitch Albom * Reader Responses: (Anthony DeToto, Paul Carroll, Brad Lipscomb, Steve Mushero, Anne Lise) * Friend of Auren: Stacey Abrams, Deputy City Attorney of the City of Atlanta * Summation Pick Links * Hoffman Reading List Note: There are currently over 11,000 people subscribed to Summation (Share Summation. Forward it to the smartest people you know.) -------------------------------- CHANGING DEMOGRAPHICS OF EUROPE The population of first world countries is getting much older. United States, Europe, and Japan are aging rapidly. By contrast, most third world countries are getting progressively younger -- 50% of people in Arab countries are under 20 years old! First world countries are augmenting their labor pool with immigrants -- and we should expect the immigration trend to increase rapidly in the near future. The United States gets most of its immigrants from Latin America and Asia and the demographics represent that. By 2020, 22% of the U.S. population will be Asian or Hispanic according to the U.S. Census Bureau. While the U.S. has strong ties to Asia and Latin America, Europe will be getting most of their immigrant labor pool from Arab countries -- especially places like Spain and Germany which don't have strong ties to many former colonies to pull from. Expect to see a massive changing in demographics and a stronger Muslim influence in European politics over the next 15 years. We may even see a big political upheaval. Unfortunately, we might first see a strong political backlash against immigrants. In France, promotion of larger families (i.e. targeting white families) is not just fodder for fringe politicians like Le Pen. Even "mainstream" politicians like Chirac have been aggressively promoting bonuses for having more children and using the bully pulpit to promote higher fertility (even though France has one of the highest birth rates of any Western European countries). -------------------------------- THE ENTREPRENEUR VS. THE STRATEGY CONSULTANT by Auren Hoffman The Entrepreneur is very different than the typical McKinsey-esque strategy consultant. Both are extremely smart, driven, persistent, creative, and determined. But I have found that there are some major differences. First, entrepreneurs tend to take more ownership of the job. My definition of an entrepreneur is someone who steals office supplies from HOME and brings them to WORK. Second, most entrepreneurs I know tend to be B students. The entrepreneur never got straight A's because either: (a) She didn't care a lot about her grades or (b) She was too busy doing other things to worry about her grades Now I say "she" in this example because most entrepreneurs are women. Far more than 50% of new businesses started in the U.S. are started by women. Entrepreneurs tend to be street-smarter than strategy consultants. Entrepreneurs are more practical, more focused on the bottom line, and more attune to real-world contingencies. A typical strategy consultant job interview might go something like this: "I toss a coin. Heads you win $10,000. Tails you lose $6,000. Do you play this game? Why?" And a typical answer would go something like this: 50% chance I win, 50% chance I lose. So my decision calculation goes something like: Winnings: (0.5) * $10,000 = $5,000 Loses: (0.5) * $6,000 = $3,000 ------ My net value of this game is $2,000 Therefore, even if I am very risk averse, I'll still play this game because I can afford to lose $6K because the payoff is so much higher. A typical entrepreneur would look at this game totally differently and would ask a series of questions: * How do I know the coin is fair? Maybe tails is much more likely to come up. Can I test the coin by flipping it 8,000 times to see if it is consistent? Do I really want to waste my time performing and recording 8,000 coin tosses? * How do taxes affect my wins and losses? Is Uncle Sam going to take a huge chunk of my winnings but not recognize my losses? Can I only apply my loss to gambling gains? How are state and city taxes affected? * Do I have to pay in cash if I lose and do I get cash if I win? If that is the case, are we going to show up at the location with all the money? Will I be secure? Can I pay by credit card to get frequent flyer miles? * How can I be sure I will collect from you? Are we going to hold the money in a third-party escrow? How much will that cost? As you see, the entrepreneur lives much more in the rough-and-tumble real world where spreadsheet models don't always happen. Let's take another interview question as an example - this one straight from Boston Consulting Group: "You're flying from London to New York and you are sitting in first class (because we only fly first class, of course). You happen to be sitting next to the CEO of the largest paper-clip company in Britain who is traveling to the U.S. to give a speech. He needs to know how many paper-clips are sold in the United States ever year. What is your answer?" The typical strategy consultant would use the basic plug-and-chug algorithm that every other smart interviewee would answer: "Well ... there are 280 million people in the U.S. and they each buy on average one box of paper clips per year ... and they each get six legal documents per year ... but now less paper is being used than last year because of electronic mail and all of us consultants saving paper by writing everything landscape ... and I still use paper clips to save my floppy disks when they get stuck in my ultra-thin laptop ... so therefore there are 2.79 gazillion paper clips sold each year ..." The entrepreneur responds much differently: * What about those plastic triangle clips? Binder clips? Do they count? * Mr. CEO -- can I ask you how many paper clips are sold in Britain? Why would Americans use more paper clips per capita than Brits? UK has about 60 million people, the U.S. has about 280 million - that means we are about 467% bigger than you. So take the number of paper clips sold in Britain and multiply it by 4.67 and voila!! * This guy is an idiot ... He's in the paper clip business and he doesn't even know the number of paper clips sold in the U.S.! Is he just playing golf all day? I hope he goes to the bathroom soon so I can call my broker and short this guy's stock. No time to waste ... (plus, he has bad teeth and he actually thinks Benny Hill is funny) (What are your thoughts about entrepreneur differences? Write auren@summation.net) -------------------------------- SUPPORT SUMMATION Be like Steve Mohebi. If you like what you read, give Summation a tip: https://www.paypal.com/xclick/business=push%40summation.net&item_name=Summation+Push&no_note=1&tax=0¤cy_code=USD -------------------------------- The Connector Tools for Increasing Your Network MAKING PEOPLE REMEMBER YOU Have a distinguishing physical characteristic: Some people have a physical characteristic that they can be remembered by. Maybe one is really fat, amazingly beautiful, utterly ugly, has a goatee, has blue hair, is really tall, is totally bald, etc. If you have something distinguishing about how you look, you are very lucky. People will tend to remember you much better. Think of Cindy Crawford -- the first thing most people think of is her imperfection (her mole right above her mouth). Dress differently: If you don't have a distinguishing physical characteristic, you might consider making one. Uber-networker Gregory Slayton (see July '02 profile at http://www.summation.net/friends.html) always wears a baseball cap. He hangs out with the President Bush and he still wears a baseball cap. I've met other people that wear bow ties. Some always wear sandals. Dale Fuller, CEO of Borland, always wears all black. Some always wear their company logo. Make yourself recognizable. Accent your name: People tend to remember odd names. I'm the only "Auren Hoffman" in the world, so people remember it. If your name is Michael Smith or Jenny Chang, you might have to find a way for people to remember. I've known some people who have gone so far as to adopt nicknames. Past musings on "The Connector" at http://www.summation.net/connector.html (What are your thoughts about connectors? Write auren@summation.net) -------------------------------- SUPPORT SUMMATION You tip the taxi driver, the hairdresser, the housekeeper, and everyone at the hotel. Please also tip Summation for making you think -- we'd be very grateful for a $5-$25 donation. Thank you. https://www.paypal.com/xclick/business=push%40summation.net&item_name=Summation+Push&no_note=1&tax=0¤cy_code=USD -------------------------------- Useless Fact: The only president to be head of a labor union was Ronald Reagan. -------------------------------- Book Review: tuesdays with Morrie by Mitch Albom While in Park City, Utah ... while recovering from skiing and watching movies at Sundance ... my friend Jon Staenberg of Staenberg Venture Partners whirled around and said to me: "you must read tuesdays with Morrie." Of course, I'd heard of the book ... I knew it had something about self-reflection ... but who has time to self-reflect, right? Well a few months later I'm in some random airport, ten minutes until boarding, in need of a book (I had exhausted my supply). I see, there on the shelf, the nice small book ... barely bigger than my PDA ... and I buy. Then I read. Then I read more. On the flight to San Francisco, I almost finish the entire book. This book really makes you think about life ... and about death. It is sad yet amazingly uplifting. Very recommended. [Buy this book now] (To see more book reviews, check out the Hoffman Reading List at http://www.summation.net/reading.html) (What are you reading? Write auren@summation.net) -------------------------------- The objective of Summation is to make you think. Pass it on to a friend. -------------------------------- READER RESPONSES AND OPINIONS Regarding last month's article on "Summation Visits Five Military Bases" (see http://www.summation.net/push0304.html) Anthony DeToto at Merrill Lynch, remarks: Your last point about the military exchanging mid career officers is alive and working- officers when returning to the advance course (normally 4 to 5 years in have an opportunity to teach, train, and switch lines of service). Additionally, a number of my West Point classmates have gone through the Naval Post Graduate School- there is good cross training and idea sharing. Your points on the procurement process are valid- the old boys network is in place and the get me that in triplicate yesterday is in place. Inertia is a difficult thing to overcome; with that said, there are many technology organizations that are moving the mountains to make the process more efficient. ... and Paul Carroll of Ploughshares Fund, adds: While the "nuclear fuel" may only last as useable fuel for the ship for 25 years, it is critical to remember that the spent nuclear fuel left over upon refueling lasts forever (ok, 240,000 years or so as highly radioactive waste). People who live in Washington State near Hanford are the recipients of this naval waste, as are some in Idaho. ... and Brad Lipscomb at Sun Microsystems opines: This is a good idea ["mid-level officers in the military have an opportunity to join another branch so we can cross-pollinate"] that may be occurring now. But, realize it's a tough one to carry out. Most of the officer training is very specialized depending on both service and community within your service. For instance, I trained for 2 to 3 years to be in charge of a Navy nuclear submarine where my counterpart in the Air Force spent something like 2 to 3 years to earn his wings. We'd have a difficult time just stepping into each other's shoes. However, in the senior ranks of the military, you do see more "joint tours". This occurs as the senior officer begins to distance himself/herself from the tactical (how to fight a sub, plane, artillery, etc.) to more battlefield strategy issues (coordinating a battlegroup, Marine Expeditionary Units, etc). The first, and most important synergies to focus on is communications: equipment, and procedures. Things like all communities purchase the same decoding machines (crypto gear). Next comes operational synergies. You do see more and more joint exercises, not only across services but across nations. ... and Steve Mushero, Managing Director of GlobalTech, remarks on the military use of Powerpoint: Yeah, some generals (like Tom Franks) now ban Powerpoint as too persuasive and driving style over substance. ... and Anne Lise chimes in: As a proud Army brat, your newsletter this month certainly piqued A LOT of my emotions and opinions on the subject of the military. You mentioned how the military loves their acronyms... As a military outsider, it's difficult to pick up on the culture intricacies of an enclave. Most people would probably think acronyms are another form of bureaucratic babbling. From a sociological point of view, acronyms are used in the military language partly for efficiency but most subtly to distinguish those within the system, those outside the circle and to determine relative rank. If you ask what the letters stand for, mispronounce it, use it improperly - you're obviously inexperienced, an outsider or possibly a security risk. The longer you've been a part of the community, the more fluently you speak the accepted language. I see similar behavior with acronyms in Silicon Valley, perhaps as a result of defense technologies being introduced into the commercial sector with the acronyms. Take the term "ping" for example: if someone says P-I-N-G, this person is not in technology. If the person pronounces and uses it appropriately, the person has some sort of technical familiarity. And well, if you know how to ping or that the term stands for Packet InterNet Groper, then you're a geek. Like the military, you have to learn to speak the language of acronyms and build your technical understanding in order to have credibility in the technical community. (Write Auren your thoughts: auren@summation.net) -------------------------------- SUPPORT SUMMATION If you like what you read, give us a tip: https://www.paypal.com/xclick/business=push%40summation.net&item_name=Summation+Push&no_note=1&tax=0¤cy_code=USD -------------------------------- FRIEND OF AUREN (FOA) [This section updates you an interesting person that is a member of Auren, Inc.] Stacey Abrams Deputy City Attorney of the City of Atlanta I met Stacey in February, 2002, at Renaissance Weekend. She's an accomplished lawyer, author, and thinker. She is Yale Law 1999, Spellman College 1995, and a former Truman scholar. Stacey has transformed a very successful academic experience into a promising professional career. She seems like someone that has been underestimated most of her life -- so do not be surprised if you see Stacey as mayor of Atlanta one day. One the side, she already authored three best-selling spy romance novels under the pen name of "Selena Montgomery": Rules of Engagement (May 2001), The Art of Desire (January 2002) and The Laws of Love (November 2002). See past profiled Friends of Auren at: http://www.summation.net/friends.html -------------------------------- ...Forward Summation to a colleague.... -------------------------------- THIS WEEK'S SUMMATION PICK LINKS TO MAKE YOU THINK: * Global Degree (http://www.gdegree.com) -- this is a very interesting magazine that discusses globalization issues. Edited by my friend Mel Ochoa. * brian terminal (http://www.brain-terminal.com) -- anti-anti-war site. The site protests the protestors with humor and wit. Forwarded to me by Damien McCune. * Calpers private equity returns (http://www.calpers.ca.gov/invest/aim/aim.asp) - Calpers reveals returns-to-date from all its private equity investments. Forwarded by Alex Slusky of Vector Capital. * RSVP for the Party of the Decade (http://evite.citysearch.com/ggparty@eudoramail.com/2011Party) -- taking place on Nov 11, 2011. * Auren on How to sell via e-mail (from the book "21st Century Selling"): http://www.summation.net/emailselling.html * What am I reading? (http://www.summation.net/reading.html) -- The Auren Hoffman Reading List. * Send a tip to Summation (https://www.paypal.com/xclick/business=push%40summation.net&item_name=Summation+Push&no_note=1&tax=0¤cy_code=USD) NOTE: Auren Hoffman works for Stonebrick Group but the opinions expressed herein are solely those of Mr. Hoffman. NOTE: You may reprint in full or in part (for free) with permission from author. Auren Hoffman's bio can be found at: http://www.summation.net/hoffman.html ------------------------------------ Subscribe? Unsubscribe? Comments: E-mail: auren@summation.net

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