May 29, 2020

Building the Team: Nine Lessons We Learned From Andy Taylor

Building the Team

Hiring, firing, and training in a new era.

Last week, I wrote about why we set out to visit with Andrew C. Taylor, chairman and chief executive of Enterprise Holdings (“Maybe Someone Else Has Already Figured This Out“). In this post, I want to highlight what we learned during that half-day session in St. Louis in 2011.

Take time to teach

The time that Mr. Taylor, who is now executive chairman of Enterprise, spent with the H.Bloom team was not anomalous. The day before we were there, he had met with senior executives from one of the world’s largest banks. Every day, the team at Enterprise takes the time to teach new employees at Enterprise. Because their leaders do this at a world-class level, business people at other organizations want to learn from them as well. When people in an organization see the organization’s leaders taking the time to teach, they understand that it is important and they learn to do it themselves. This culture of teaching starts at the top.

Develop senior leadership that’s passionate

The senior executives that we met along with Mr. Taylor – Dave Deibert, Aaron Toombs, Tina Diehl, Steven McCarty and Pam Webster – were all passionate about Enterprise as a company. Each one had been with Enterprise for many years, some for decades, and they had moved from place to place as they climbed the ranks. Mr. Taylor talked about the importance of this dynamic: “Develop a small group of senior leaders who are in love with the business and are thinking about it all of the time.” It was clear that this group loved Enterprise, were proud of the talent development programs they had developed and were eager to share what they had learned with us. This type of enthusiasm is nothing but contagious. If you can get your senior leaders excited, they will ignite the passions of their direct reports, and so on.

You can be a nice person and tough

In the three hours that we spent with Mr. Taylor, he came across as a genuinely nice person. But, it was clear that he was no-nonsense about his business. “Do not compromise on talent,” he said. “Provide great training and extraordinary opportunity. But be honest about the hard work. The Management Training Program at Enterprise isn’t for everyone. Even if folks don’t make it to the end, they will have learned a lot that they can take with them to another company.”

You want only to promote the best

At Enterprise, management trainees are in the program for six to 12 months. Then, they have a written skills-evaluation test. After that, they participate in something called “The Grill,” which is an oral test conducted by an area or district manager. If a trainee passes this test, she is ready to interview for a management position when the next one becomes available. This is the first position that is eligible to receive incentive compensation from branch profits.

It’s not about the Ping Pong

There is always a lot of talk about company culture. Often, the talk is focused on the perks a company might offer: onsite dry cleaning, unlimited soda and snacks, a table tennis table. At Enterprise, it is clear that the company’s culture is built on the people. “We promote from within,” Mr. Taylor said. “We provide a career path. People move around to move up; we average 8,700 internal transfers per year. And we celebrate success.” This is sustainable culture. The reason the executives I listed above have been at Enterprise for so long is because they love the company and believe in its mission; it’s not because of a superficial perk.

Building the team is building the business

“Take care of your employees and customers first,” Mr. Taylor said. “Growth and profits will follow.” He knew that as Enterprise grew, he couldn’t be everywhere all of the time. The key to growth would be to train and then empower his employees. Moreover, if he could provide them with a well-defined career path, they would have the incentive to perform in their current roles and the chance to be promoted into a position of greater responsibility and compensation. At Enterprise, the career path looks like this (though at the branch manager level, many additional opportunities open up within the company as well):

  1. Management trainee
  2. Management assistant
  3. Assistant manager
  4. Branch manager
  5. Area manager
  6. Group rental manager
  7. Regional vice president
  8. General manager

Keep base salaries low but pay for performance

At Enterprise, income is tied to profit performance. Employees know base salaries remain low, but they have the ability to earn more and more money as they move up in the organization. As an example, while general managers may have the same base salary as management trainees, their overall compensation is far greater, which provides the incentive to work hard and rise through the ranks.

Leaders and managers are different

Mr. Taylor talked about how his company worked hard to separate leaders from managers. “Anybody can count the money,” he said. “We need true leaders to run our markets.”

Measure everything and share the results

Enterprise has dashboards to measure performance. Each market has a scorecard that evaluates performance in four areas: growth, profits, customer service and employee development and retention. Each market is then ranked on its overall performance, and everyone sees the results.

Bryan Burkhart is a founder of H.Bloom. You can follow him on Twitter.

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A Dream of Glowing Trees Is Assailed for Gene-Tinkering

The project, which will use a sophisticated form of genetic engineering called synthetic biology, is attracting attention not only for its audacious goal, but for how it is being carried out.

Rather than being the work of a corporation or an academic laboratory, it will be done by a small group of hobbyist scientists in one of the growing number of communal laboratories springing up around the nation as biotechnology becomes cheap enough to give rise to a do-it-yourself movement.

The project is also being financed in a D.I.Y. sort of way: It has attracted more than $250,000 in pledges from about 4,500 donors in about two weeks on the Web site Kickstarter.

The effort is not the first of its kind. A university group created a glowing tobacco plant a few years ago by implanting genes from a marine bacterium that emits light. But the light was so dim that it could be perceived only if one observed the plant for at least five minutes in a dark room.

The new project’s goals, at least initially, are similarly modest. “We hope to have a plant which you can visibly see in the dark (like glow-in-the-dark paint), but don’t expect to replace your light bulbs with version 1.0,” the project’s Kickstarter page says.

But part of the goal is more controversial: to publicize do-it-yourself synthetic biology and to “inspire others to create new living things.” As promising as that might seem to some, critics are alarmed at the idea of tinkerers creating living things in their garages. They fear that malicious organisms may be created, either intentionally or by accident.

Two environmental organizations, Friends of the Earth and the ETC Group, have written to Kickstarter and to the Agriculture Department, which regulates genetically modified crops, in an effort to shut down the glowing plant effort.

The project “will likely result in widespread, random and uncontrolled release of bioengineered seeds and plants produced through the controversial and risky techniques of synthetic biology,” the two groups said in their letter demanding that Kickstarter remove the project from its Web site.

They note that the project has pledged to deliver seeds to many of its 4,000 contributors, making it perhaps the “first-ever intentional environmental release of an avowedly ‘synthetic biology’ organism anywhere in the world.” Kickstarter told the critics to take up their concerns with the project’s organizers. The Agriculture Department has not yet replied.

Antony Evans, the manager of the glowing plant project, said in an interview that the activity would be safe.

“What we are doing is very identical to what has been done in research laboratories and big institutions for 20 years,” he said. Still, he added, “We are very cognizant of the precedent we are setting” with the do-it-yourself project and that some of the money raised would be used to explore public policy issues.

Synthetic biology is a nebulous term and it is difficult to say how, if at all, it differs from genetic engineering.

In its simplest form, genetic engineering involves snipping a gene out of one organism and pasting it into the DNA of another. Synthetic biology typically involves synthesizing the DNA to be inserted, providing the flexibility to go beyond the genes found in nature.

The glowing plant project is the brainchild of Mr. Evans, a technology entrepreneur in San Francisco, and Omri Amirav-Drory, a biochemist. They met at Singularity University, a program that introduces entrepreneurs to futuristic technology.

Dr. Amirav-Drory runs a company called Genome Compiler, which makes a program that can be used to design DNA sequences. When the sequence is done, it is transmitted to a mail-order foundry that synthesizes the DNA.

Kyle Taylor, who received his doctorate in molecular and cell biology at Stanford last year, will be in charge of putting the synthetic DNA into the plant. The research will be done, at least initially, at BioCurious, a communal laboratory in Silicon Valley that describes itself as a “hackerspace for biotech.”

The first plant the group is modifying is Arabidopsis thaliana, part of the mustard family and the laboratory rat of the plant world. The organizers hope to move next to a glowing rose.

Scientists have long made glowing creatures for research purposes, using including one or more monkeys, cats, pigs, dogs and worms. Glowing zebra fish have been sold in some aquarium shops for years.

These creatures typically have the gene for a green fluorescent protein, derived from a jellyfish, spliced into their DNA. But they glow only when ultraviolet light is shined on them.

Others going back to the 1980s have transplanted the gene for luciferase, an enzyme used by fireflies, into plants. But luciferase will not work without another chemical called luciferin. So the plants did not glow unless luciferin was constantly fed to them. In 2010, researchers at Stony Brook University reported in the journal Plos One that they had created a tobacco plant that glowed entirely on its own, however dimly. They spliced into the plant all six genes from a marine bacterium necessary to produce both luciferase and luciferin.

Alexander Krichevsky, who led that research, has started a company, BioGlow, to commercialize glowing plants, starting with ornamental ones, since it is still impractical to replace light bulbs.

“Wouldn’t you like your beautiful flowers to glow in the dark?” he said, invoking the glowing foliage in the movie “Avatar.”

Dr. Krichevsky declined to provide more about the products, timetables or the investors backing his company, which is based in St. Louis.

Whether it will ever be possible to replace light bulbs remains to be seen and depends to some extent on how much of the plant’s energy can be devoted to light production while still allowing the plant to grow. Mr. Evans said his group calculated, albeit with many assumptions, that a tree that covers a ground area of 10 meters (nearly 33 feet) by 10 meters might be able to cast as much light as a street lamp.

While the Agriculture Department regulates genetically modified plants, it does so under a law covering plant pests.

BioGlow has already obtained a letter from the department saying that it will not need approval to release its glowing plants because they are not plant pests, and are not made using plant pests. The hobbyist project hopes to get the same exemption.

Todd Kuiken, senior research associate at the Woodrow Wilson Center in Washington, who has been studying the governance of both synthetic biology and the do-it-yourself movement, said the glowing plant project was an ideal test case.

“It exposes the gaps and holes in the regulatory structure, while it is, I would argue, a safe product in the grand scheme of things,” Dr. Kuiken said. “A serious look needs to be taken at the regulatory system to see if it can handle the questions synthetic biology is going to raise.”

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Top 1% of Mobile Users Use Half of World’s Wireless Bandwidth

The world’s congested mobile airwaves are being divided in a lopsided manner, with 1 percent of consumers generating half of all traffic. The top 10 percent of users, meanwhile, are consuming 90 percent of wireless bandwidth.

Arieso, a company in Newbury, England, that advises mobile operators in Europe, the United States and Africa, documented the statistical gap when it tracked 1.1 million customers of a European mobile operator during a 24-hour period in November.

The gap between extreme users and the rest of the population is widening, according to Arieso. In 2009, the top 3 percent of heavy users generated 40 percent of network traffic. Now, Arieso said, these users pump out 70 percent of the traffic.

Michael Flanagan, the chief technology officer at Arieso, said the study did not produce a more precise profile of extreme users. But the group, he said, was probably diverse, with a mix of business users gaining access to the Internet over a 3G network while traveling, and individuals with generous or unlimited mobile data packages watching videos, the main cause of the excess traffic.

“Some people may draw the parallel to Occupy Wall Street, and I’ve already heard comments about ‘Occupy the Downlink,’ ” Mr. Flanagan said. “But the situations are very different, and the mobile situation doesn’t break down along socioeconomic lines.”

The Arieso survey found that 64 percent of extreme users were using a laptop, a third were using a smartphone and 3 percent had an iPad.

The imbalance in mobile phone consumption is another example of a relatively small group of individuals dominating the consumption of a particular resource. The United States, with less than 5 percent of the world’s population, consumes about 23 percent of the world’s daily oil production, according to American government figures. Japan, Germany and Italy, whose populations together make up less than 4 percent of the world’s total, accounted for 31 percent of global natural gas imports in 2010, according to the International Energy Agency.

Pal Zarandy, an analyst at Rewheel, a research firm in Helsinki, Finland, that advises operators on data packages and pricing strategies, said the disparity in bandwidth use was not surprising because most mobile phone users globally used a 2G telephone for calls and texts only.

Just 13.2 percent of the world’s 6.1 billion cellphones are smartphones, according to Ericsson, the leading maker of mobile network equipment, but the rate exceeds 30 percent in larger markets like the United States, Germany and Britain.

The more powerful phones are rapidly replacing the simpler, less voracious devices in many countries, raising traffic levels and pressure on operators to keep pace. In countries like Sweden and Finland, smartphones now account for more than half of all mobile phones, Mr. Zarandy said. About 35 percent of Finns also use mobile laptop modems and dongles, or modems in a USB stick; one operator, Elisa, offers unlimited data plans for as little as 5 euros, or $6.40, a month.

As a result, Finns consume on average 1 gigabyte of wireless data a month over an operator’s network, almost 10 times the European average. As more consumers buy smartphones, the level of mobile data consumption and congestion will rise in other countries.

“This of course is bad news for operators because it means that more traffic is coming and they need to invest to stay ahead of the curve,” Mr. Zarandy said.

Mr. Flanagan at Arieso said one European operator, which he declined to identify, last year installed 250 miniature base stations, called microcells, to handle the traffic of extreme users. The operator, he said, did not wish to publicize the work because it did not want to draw attention to the strains that its network was experiencing.

Patrik Cerwall, the head of strategic marketing and intelligence at Ericsson, which is based in Stockholm, Sweden, said most operators were beginning to look for ways to make their networks more efficient, whether by dumping data quickly into a fixed-line network, imposing volume limits on customers or installing miniature base stations at congestion points.

Ericsson expects the volume of global mobile data to rise tenfold from 2011 to 2016.

The rate is likely to accelerate as more consumers integrate the mobile Web into their daily lives. Last year, for example, 40 percent of smartphone owners in an Ericsson survey used their devices to gain access to mobile broadband connections even before getting out of bed.

The heaviest users of mobile data, according to Ericsson, watched videos 40 percent of the time, surfed the Web an additional 20 percent, and used up the rest of their online time in e-mails, social networking, file sharing and software downloads.

Advances in smartphones and applications technology are also driving up use.

Arieso researchers, in their latest survey, found that users of Apple’s iPhone 4S downloaded 276 percent more data from an operator’s network than did people with the Apple 3G, which has been on the market since June 2008.

Part of the reason for the increase in download volumes may be Apple’s Siri voice feature on the iPhone 4S, Mr. Flanagan said. Siri allows consumers to dictate to the phone and enter more text and data into the network in an easier way. The growth of cloud computing-based applications like iTunes and other cloud services, which use the mobile network to connect consumers with remote computers, may also be a factor, he said.

In uploaded data volumes and the total number of calls to the network, two Google Android handsets made by HTC, the Taiwanese manufacturer, topped the list.

People using the HTC Desire S uploaded 323 percent more data than those with the iPhone 3G, and those with an HTC Google Nexus One phone made 221 percent more calls to the network. Calls to the network include the voice and data calls started by the user, as well as the automatic communication between the device and the network to update its applications or transmit its location.

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Small Group Rode LinkedIn to Big Payday

With the hours ticking down to his company’s stock market debut, Mr. Hoffman dialed into a conference call from San Francisco’s Ritz-Carlton hotel as his chief executive, Jeff Weiner, and a team of bankers raced up from Silicon Valley in a black S.U.V. to meet with potential investors.

Demand for shares was intense, and they decided to raise the offering price by $10, to around $45.

When trading began on May 19, LinkedIn did not open at $45. Or $55. Or $65. Instead, the first shares were snapped up for $83 each and soon soared past $100, showering a string of players with riches and signaling a gold rush that has not been seen since the giddy days of the tech frenzy a decade ago.

Now there are signs that a new technology bubble is inflating, this time centered on the narrow niche of social networking. Other tech offerings, like that of the Internet radio service Pandora last week, have struggled, and analysts have warned that overly optimistic investors could once again suffer huge losses.

That enthusiasm was on full display in the blockbuster debut of LinkedIn, which provides a window into how a small group — bankers and lawyers, employees who get in on the ground floor, early investors — is taking a hefty cut at each twist in the road from Silicon Valley start-up to Wall Street success story.

“The LinkedIn I.P.O. will be used very powerfully over the next year as these companies go public and bankers deal with Silicon Valley,” said Peter Thiel, the president of Clarium Capital in San Francisco and an early investor in PayPal, LinkedIn and Facebook. “It sets things up for the other big deals.”

The sharp run-up after the initial public offering set off a fierce debate among observers about whether the bankers had mispriced it and left billions on the table for their clients to pocket. But the pent-up demand for what was perceived as a hot technology stock set the stage for easy money to be made almost regardless of the offering price.

Naturally, Wall Street is enjoying a windfall. Technology I.P.O.’s have generated nearly $330 million this year in fees for the biggest banks and brokerages, nearly 10 times the haul for the same period last year, and the most since 2000.

Besides the $28.4 million in fees for LinkedIn’s underwriting team, which was led by Morgan Stanley, Bank of America and JPMorgan Chase, there were also a few slices reserved for specialists like lawyers and accountants. Wilson Sonsini, the most powerful law firm in Silicon Valley, collected $1.5 million, while the accounting firm Deloitte Touche earned $1.35 million.

Mr. Hoffman founded LinkedIn in March 2003 after making a fortune as an executive at PayPal, the online payments service, but even as LinkedIn grew and other employees and private backers got stakes, Mr. Hoffman retained 21.2 percent, giving him more than 19 million shares when it went public. He has kept nearly of all them, so for now his $858 million fortune — it was $667 million before the last-minute price hike — remains mostly on paper.

Mr. Weiner arrived more recently, in late 2008, after working at Yahoo and as an adviser to venture capital firms, but his welcome package included the right to buy 3.5 million shares at just $2.32. And they are not the only big winners who secured shares at levels far below the I.P.O. price.

For example, when LinkedIn raised cash in mid-2008, venture capital firms including Bessemer Venture Partners and Sequoia Capital, scooped up 6.6 million shares at $11.47 each in return for early financing. They have held on to the stock, but Goldman Sachs, which got 871,840 shares at $11.47, sold all of it for a one-day gain of nearly $30 million.

Scores of fortunate individuals also managed to profit.

Stephen Beitzel, a software engineer, worked at LinkedIn from its founding until March 2004, but kept his stock when he left. His shares are now worth $17 million, and he sold $1.3 million worth in the offering.

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