Building on Hoffman’s Recommendations Re: Stimulus 2.0

Last week, LinkedIn Chairman/CEO Reid Hoffman wrote up his recommendations on ways to address the current economic crisis with pro-startup policies.  His article, Stimulus 2.0: It’s The Startups, Stupid., is worth a read. 

His recommendations are a strong start.  I’d like to see more thinking on this front, as I think there is good value in pushing several elements of startup and high tech sectors in the US economy into the broader economy.  Here are a few additional recommendations that I’d make, FWIW:

Enact the “Shrimp v. Weenies” act on all companies taking government money.  An eon ago (in 1993), Microsoft’s head of HR, Mike Murray, penned the infamous “Shrimp & Weenies Memo.”  It extolled the virtues of frugality (weenies) and the need to not let Microsoft’s success in the marketplace drive folks to start spending on needless stuff (shrimp).  Note this, from the memo:

we address each other on a first name basis; we have an informal dresscode; we fly coach class; we stay in reasonably priced hotels; we don’t ride in limos; we don’t have executive dining rooms; our office furniture is of good quality, but reasonably priced; when dining at company expense, we order weenies not shrimp.

It’s important that our administrative assistants, event planners, and managers see it, hear it and get it:

Given the choice, we prefer weenies over shrimp. (Lest we throw the baby out with the bath water, there are legitimate times for shrimp, but these are the exception, not the rule).

This is good advice for all companies, of course, but now reconsider the source and the time and reflect on where we are today.  This was written by a Microsoft executive in 1993(!), at the literal heyday of that company.  At most, a handful of companies before or since have achieved the profitability and growth Microsoft achieved, and yet here’s Mike saying spend less.  I don’t see memos like this coming from GM.

Now let’s think about today’s crisis companies—banks and autos.  They –- and anyone else asking for a bailout—should be on a strict Shrimp v. Weenies plan.  I want GM, AIG, Fannie/Freddie, etc., etc. to do the following:

  • Everyone flies coach.  NO EXCEPTIONS
  • Economy hotels—Motel 6s are perfectly fine; so are Red Roof Inns
  • No exec dining rooms
  • I’m sure there are a host of additional perks that execs at places like GM get that I couldn’t even fathom.  (I heard once that based on level, some get carpet in their office; while others don’t—??)

This won’t get companies out of the mess they are in, but it drives an important mentality into the company at all levels—namely, every dollar counts. 

This is a no-brainer, I’m surprised that the US Government hasn’t been more hardcore on this.  It’s simple to do and it’s the right thing for American business. 

Unions need to shift comp towards greater stock-based incentives.  Unions drive a higher cash cost burden into American manufacturing companies.  Health care reform is going to be needed in order to tackle one key element of this.  The other is around shifting the cash comp towards more of an equity based approach.  This conserves cash, and it can lead to greater upside to the worker.  This approach has has fueled technology companies, and its a straightforward compensation philosophy—get stakeholders aligned.  While this is a more controversial proposal in this market, it makes sense.  My argument is that if union leadership truly believes that these companies can compete in the marketplace, then they should support a greater equity based component to employee compensation.  If union leadership is unwilling to take on more equity, especially for younger workers, then why should we as taxpayers bail them out—it’s an admission by them of failuer.

Introduce personal finance courses into Junior High School curriculum.   The events of the last 18 months in the housing market have shown that a shocking number of grown, home-owning adults have little concept of the financial implications of decisions they’ve made.  As a  nation, we have an interest in more people knowing this stuff.  Many entrpreneurs and businesspeople I know from Silicon Valley and Microsoft have been interested in business from a young age.  Warren Buffett talks about how he started investing in stocks at I think age 6.  This early start is great for the small minority of people who have the bug or have parents who teach them this stuff, but we should broaden this access.  Kids at all income levels—especially those less fortunate—should get a sense early on of what it means to budget.  They should get a sense of the lifetime value of achieving different educational degrees (an undergrad engineering degree, an MBA, JD, or MD).  This information is useful and impactful to kids, and I fundamentally believe that kids are savvy enough to understand that when money’s involved, it’s worth paying attention.  I’d love to see the public school education system inject a personal finance course into the curriculum at grade 7.  Help kids setup businesses, run mock stock market simulations, etc.  If this helps kids get a sense of money, that’s great.  It will assure that they make better educational choices later in life, and it will help them potentially ask a few more questions when they take on purchases.

 

Those are the three that I’d add. 

Advertisements

Leave a comment

Filed under education, politics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s