If you really want to keep your finger on the pulse of the Seattle business scene, go get your shoes shined. That’s the advice Todd Dean gave me recently. Dean is president of Keiretsu Forum Seattle/Northwest, the local chapter of the world’s largest angel investor community. He took me to see a couple of the top shoeshiners in town. Even though I don’t really own shoes worthy of a shine, I hope to become a regular customer and soak up their wisdom. You might call them shoeshiners. I call them oracles.

Morgan Perkins runs the family shoeshine business at Nordstrom downtown. Their clientele includes lawyers, judges, investors, business people, and, that morning, the superintendent of Seattle public schools. Perkins has been a fixture at Nordstrom since 1974. Perkins, who is African-American, came up as a railroad porter from Salt Lake City in an era of Jim Crow laws, and he has seen it all. For the past 35 years, while he and his family have shined customers’ shoes, they’ve told him things—about business, jobs, the economy, whatever’s on their mind. (See this profile in the P-I for more on the Perkins family.)

“People want five minutes of peace, they want to relax,” said Morgan’s wife, Patricia, as she meticulously gave new life to my dress shoes.

I asked how their shoeshine business has been doing during the recession. Sunny, the Perkins’ daughter, was working next to us. She said business has actually improved. Instead of buying new shoes, people are keeping their old shoes longer, she said, and they need to be polished. Especially for all those job-seekers out there. (The familiar refrain of doing more with less, among techies and non-techies alike.) Her customer, sitting next to me, was a former Washington Mutual employee who just got a job running security for the Sound Transit light rail system in Seattle.

Mr. Perkins had some sage advice for entrepreneurs and startups. “What I’ve learned in my life is, people do things for people they like,” he said. “It doesn’t matter whether you’re selling cars, shining shoes, or you’re the head of this company. If your initial meeting with that person is not positive—it only takes the speed of light for me to figure out if I’m going to like you. And that’s the whole idea right there.”

As Perkins explains, it’s all about building a sincere relationship with customers. “When a person comes into contact with you, it is your duty to create a situation where that person’s going to like you. And that’s not really hard. We want to like other people,” he said. “When I stand here at the door, it’s a smile, ‘Hello sir, how are you doing today?’ And I got you. I’ve seen it happen so many times, a person comes with her husband, I’ll catch the eye of the wife, and he’s looking down. Wife will look down at his shoes, they look at each other, and here he comes. See what I’m saying?”

“You develop a relationship that way,” Perkins continued. “You have to always recognize another’s presence on the face of the earth, no matter what your station in life is. That’s what I’ve always …Next Page »

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Have you ever talked to someone who really knows technology, and really knows how to sell it? It’s a potent combination. I got that feeling from Luis Salazar, the chief marketing officer of Bellevue, WA-based GMI, an international market research firm. Salazar moonlights as an entrepreneur-in-residence (EIR) at Voyager Capital in Seattle, where he advises Voyager’s portfolio companies and helps evaluate new investments in terms of their go-to-market and monetization strategies. (He’s Voyager’s sole EIR.)

Salazar spent 11 years at Microsoft, starting in Venezuela in 1997 and progressing to become general manager for marketing in Redmond, WA, and co-founder of Microsoft Office Live. He left in October, and has been working with Voyager since last spring. As an advisor, he specializes in the consumer side of Internet companies, and one of his guiding themes is that online market research and online advertising are one and the same. For example, as an avid photographer, Salazar says companies like Canon need to put ads in front of him—but they also need to know his product preferences so they can develop a better camera. Marketing and advertising should help each other.

But the problem is how to get the right survey to the right sample of people. That’s where technology comes into play, and that’s where Salazar thinks Web 2.0 software—everything from user-generated content to targeted ads—will have its greatest impact. In particular, he sees Web 2.0 starting to reinvent health care, online market research, and energy management.

We didn’t get into all those details yet, but I asked Salazar to pull out his top lessons in marketing and product strategy from his career. He responded with three:

1. “The product is the go-to-market.” It sounds obvious, but companies often forget the most important thing is make a good product and retain customers. A big part of that is “getting marketing more involved in product engineering,” Salazar says. “Marketing and engineering are so entwined…You need to code in such a way as to engage ad networks.” As opposed to the common view (especially among engineers) that marketing is just promotion.

2. “Design does not equal user experience.” Don’t forget that the user experience is very subjective, he says. “It’s not how it looks, it’s how it works.” Sometimes just the wording of a phrase in the click-to-buy box, or the color, or where you put something on the page, can have a big effect on sales. The key is to find out what that effect is, and build it into the design.

3. But perhaps the best advice Salazar had is what he told his 11-year-old son, whom he helped start a bookmarks business to pay for a Nintendo Wii. (His son has already learned the ropes of Google ads, print ads, radio promotion, and price points, and now donates his proceeds to United Way.) “It doesn’t matter what you do in life as long as you do what you love. The money will come.”

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Think the super-rich don’t have problems? Try fending off friends and relatives who always want to borrow money, or raising spoiled brats who don’t take responsibility for their actions. Not to mention the more obvious financial questions of how to manage such hefty portfolios—especially in economic times like these. (Granted, some of this might be viewed as insensitive at a time when local food banks are running out of food.)

Enter Tiger 21, an exclusive network for the very wealthy that is opening in Seattle this month. Its goal is to provide a support group for people of high net worth to talk about their investments, portfolios, and problems. Local entrepreneur and investor Andy Sack of Founder’s Co-op will be chairing the Seattle chapter of the national group. Last month, I sat down with Sack and Lewis Haskell, the managing director who runs Tiger 21 west of the Mississippi. I’m a little under-qualified to speak on the problems of the wealthy, but Sack and Haskell filled me in nicely.

First, some background. Tiger 21 was founded in New York in 1999 by Michael Sonnenfeldt. Sonnenfeldt had recently sold his interest in Emmes & Company, a real estate holdings company, for tens of millions, and was looking to build a safe haven for people in similar circumstances to meet and talk. The confidential network has grown into a big business. Besides New York, Tiger 21 has existing chapters in some of the country’s wealthiest places—San Francisco, San Diego, Los Angeles, Dallas, and Miami. It has about 170 members who have an average net worth between $30 million and $50 million.

And that’s the catch: to join Tiger 21, you have to have at least $10 million, exclusive of houses, cars, and other properties (how they verify this, I’m not sure). And it costs $30,000 a year to be a member. All members sign confidentiality agreements.

Sack’s connection with the group is through its founder. Back at MIT around 15 years ago, Sonnenfeldt was Sack’s mentor at the Sloan School of Management, and the two have invested together. Seattle brings some unique challenges to the very wealthy, Sack says. They might be overexposed because the community is relatively small. “The network of support is not as high, or as sophisticated, in Seattle,” he adds.

With the likes of Bill Gates, Paul Allen, Nathan Myhrvold, Steve Ballmer, Jeff Bezos, Howard Schultz, Craig McCaw, and Jim Jannard (founder of Oakley eyewear) in the area, you’d think Washington state would have such a support network in place already. But what Tiger 21 provides that other wealthy social networks don’t is a focus on members sharing how they manage their financial lives, says Haskell.

As for its future Seattle members, Sack and Haskell have been recruiting for about 10 openings. I’m guessing they’re not taking unsolicited applications. Sack says members have to have an interest in learning, and be willing to be open with their peers. And, he added, “There’s a ‘no asshole’ rule.”

Stay tuned for what goes on behind Tiger 21’s closed doors in Part 2—Eds.

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A few weeks ago we ran a story called How to Handle the Downturn: Xconomy’s Top 9 List of Top 10 Lists. We’d been combing the Web looking for an even ten Top 10 advice lists—but came up one short.

Since that time, the advice has continued to flow. One list of particular note, from Glenn Kelman, CEO of Seattle-based online real estate startup Redfin, ran on Sunday in TechCrunch. Called The First-Time CEO’s Recession Survival Guide, it was by far the best of several advice lists we have seen since our original article came out. But there were a few other good ones as well, prompting us to expand our own list, adding Kelman’s survival guide and two other items we like.

You can find our first nine Top 10 Lists here.

Here are our three new lists (note: we are a bit loose in our definition of what constitutes a “list,” and generally look for anything that involves laying out good advice in whatever form):

10). The First-Time CEO’s Recession Survival Guide (Glenn Kelman, CEO of Redfin, writing in TechCrunch)

Favorite item: Compete With Your Successor (Excerpt: “I often think about what my replacement will do after I’m fired… Worst of all, she’ll get credit for turning Redfin into a successful, thriving business. I think, “I hate her! I hate her!” And then I try to be her.)

11). ‘Your Performance Has Come Up Short’ (Matt Villano, New York Times)

Favorite question (This article takes the form of a Q&A advice column): For the first time in your career, your boss has given you a negative performance review. How should you react?

12). 5 Tips For Vetting a Business Partner—Online (Aruni Gunasegaram Found/Read)
Favorite item: They must be smarter than you are in their respective area of expertise.

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Last week Wade offered some fantastic tips on how to recruit employees in the midst of what’s shaping up to be a major staffing crunch at local information-technology firms. And it got me thinking about something that Xconomist Bill Aulet told me a few weeks ago during a power lunch at Aceituna, over near the Genzyme HQ. We were discussing Xconomy’s own plans for a couple new hires, and Bill chimed in with some telling insights on what firms, especially startups where each new employee is critical, should look for—and avoid.

Bill spoke to some truths we all know—and he was quick to note that these weren’t just his, but “came from working with others and thinking about this here at MIT.” But he had a nice way of framing things that beautifully put in perspective the challenge of figuring out if a candidate is the right fit for a company. He grabbed a napkin and sketched out a rectangle divided into four quadrants, with “values” (meaning how well the candidate’s values align with the company’s) on the X axis and “contribution” (essentially, how productive the person is) on the Y axis. Like this:

Now, a couple things are obvious. A home run is an employee in the upper right—the high contributor whose values align perfectly with those of the company. Just as clear is the lower left—you don’t want that person. If you make a mistake and a new hire falls in this category, it’s an easy workforce-reduction decision. But what was really interesting to me was Bill’s take on the remaining two quadrants.

Let’s start with the lower right, the low contributor who believes in the company and shares its values. I was expecting a tough, cut-bait attitude on this—but Bill explained that such employees can indeed be valuable, if they don’t cost too much and if you can take the effort to channel them into productive work at which they can do well. His essential message: don’t give up on them right away.

Now to the upper left. A talented, high-contributing person who might well be in it mainly for themselves and in any case whose values are not the company’s values. Bill’s message here was adamant—don’t hire them, and if you do, get rid of them and fast. “This person is like poison,” he said, or words to that effect.

Here’s the dilemma, though, says Bill. This brand of high contributor can seem great. “People are closing sales and doing all kinds of things,” he says. The problem is, they have a bad attitude. They might cut corners the company doesn’t want to cut. They might not be forthright. Maybe they undermine company decisions. Whatever the specifics, it means big trouble. As Bill puts it, “That is the most dangerous person, because you think you need them—they have a stranglehold.”

You have to move quickly to shed this type of person, he says. “The deeper they grow roots in the organization, the more disruptive, the more devastating, to take them out. And if they’re there for a while people tend to think their values are the values of the organization—and everything else atrophies.”

All in all, Bill says, it’s the sort of decision that can make or break a company. “The moment you cut corners on values at the top is the day they become meaningless and you have lost your potential ethical compass. Your chances of being a high-performance organization are nil.”

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Editor’s note: Three weeks ago, John Abele, a co-founder of Boston Scientific, wrote Getting Disruptive Ideas to Market, one of our most popular posts so far. One point he made was that:

“marketing and funding folk will be pushing hard for you to get some big name scientific and other advisors on the masthead for credibility purposes. Yes, a few may be valuable, but remember, these are people who are already famous. They have nothing to gain…Finding the unknown younger scientist, engineer, or physician who has the capabilities and desire is much more important.”

A number of readers asked for the checklist of physician’s attributes John mentioned that Boston Scientific used to pick its advisors, who would then help the company test and improve its devices. One reader even asked if the list applied to other industries. We pinged John to follow-up. Here’s his response:

Here’s the list, and a little bit more. And of course they apply to different industries, although the specific criteria may change to varying degrees. The most important principle is what makes an individual credible to various audiences.

I used to give this list to people we were considering and ask them to rate themselves on each parameter…on a scale of 1 to 5. It had a powerful influence on the dynamic of our discussions. We want people who tell us the good and the bad, and the implications of both.

Editor again: John sent along a PowerPoint containing the list, and “a little bit more.” You can find it here.

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Boston University recently announced plans to enhance its technology transfer efforts. I have worked constructively with BU’s Office of Technology Development on a number of start-ups, including Afferent Corporation, a medical device company based in Providence, RI, and applaud the plans for expansion. As BU and other universities ramp up their efforts to commercialize technology, I have a couple suggestions to offer.

First, it is critical for universities to reach out to experienced entrepreneurs, who can act as advisors, teachers, and management leaders in new startups. While novel technology typically serves as the catalyst for a new venture, it is usually not the most important element of the venture (even though founding scientists, like myself, would like to think otherwise). The management team is the most critical element for a new start-up, and we academic scientists typically do not have the skills, experience, time, or focus to serve in such a capacity.

Universities need to find ways to get entrepreneurs involved with their academic communities. This could be through advisory committees, adjunct faculty positions, and entrepreneur-in-residence programs. These interactions would enhance the educational experiences of science, engineering, and business students, and substantially enhance technology-transfer efforts.

Additionally, universities should consider evaluating their IP portfolios as collective opportunities, and not simply as isolated cases arising from faculty laboratories. Too often university start-ups are one-trick ponies based on a new technology coming out of a professor’s lab. Academia encourages research independence, which leads to silos.

Tech transfer offices need to break out of this mold, and consider how different technologies can be combined to create strong, exciting new companies. Professor egos will need to be massaged, and the founding scientists will need to divvy up the founders’ equity, but in many instances these integrated efforts could enhance chances for success.

Along similar lines, universities should look to other universities, and consider creative ways in which their technologies could be combined in start-ups or existing, young companies. We need to establish new mechanisms that can facilitate these types of interactions and relationships.

Jim Collins is a University Professor, Professor of Biomedical Engineering, and Co-Director of the Center for BioDynamics at Boston University. A 2003 MacArthur fellow, he is a scientific co-founder and chair of the scientific advisory board of both Cellicon Biotechnologies and Afferent.

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I’m interested in how one takes inventions to scale. Obviously, that is what Boston Scientific was all about. How do you get a disruptive idea, in particular, into the marketplace? In my opinion, people frequently take the wrong approach.

Disruptive ideas are very threatening to the establishment, or whoever owned that marketspace before. They may be products or technology like the iPOD (catheter surgery in the case of BSC), or they can be processes or services like Amazon or eBay. Or they can be social ideas like a bike path into the city. They can lead to dramatic changes in the field to which the idea applies. That can mean different people will use and control it. And it will be used differently with a different infrastructure and in different locations. There will be economic implications with winners and losers. And the idea will influence many others indirectly.

So how do you overcome the resistance of the establishment (surgeons in the case of BSC, but it could be academia, professional societies, big companies, the government, etc.)? Hire PR? Most of the PR and advertising guys are great if the idea is accepted, lousy if the idea is not accepted. Your goal is to get it accepted. And that to me is the fun part of business. New ideas grow best with viral approaches and that’s all about relationships and reputation.

Don’t go after the biggest idea first.
A disruptive technology can have many applications. If you get funding for it, the funders will want to go after the biggest application first in order to justify the investment. That’s a dumb thing to do, because new ideas and technologies evolve. They grow like a plant as more and more is learned. And there will be lots of problems early on. If you go for the biggest application first, you will create unmeetable expectations which will arm the establishment with more arguments to destroy you. And even mini-failures will be hard to recover from. Pick an application that is smaller and you can more easily find, or create, champions who will become disciples. Their expectations will be more modest. They will be more forgiving when things don’t go right. Over time they will become your unpaid sales force and your R&D department. You won’t just be creating a product and customers, you will be creating a movement.

And you’ve got to be patient. It took us (BSC) over 20 years to help get the Less Invasive Surgery business going. The ATM for banks took well over a decade to catch on. You can not only be too early for the market because your technology isn’t finished, but too early for the market because customers aren’t ready for it—which means the establishment is going to pull every trick in the book to dismiss you.

At BSC, we took our disruptive catheter technologies and went for smaller niche markets. These smaller markets (for example pediatric cardiology) allowed us to experiment. Our customers developed new applications. They suggested modifications. They came up with great accessories to extend the use and improve the results of the procedures for which the products were designed. I used to even make “care packages” for some inventor docs that would contain special wires, tubing, molds, heat guns, shrink tubing, etc, so they could make prototypes themselves. They loved it. We had friends for life, and gained a few good product ideas as well.

There are lots of other examples of technologies that have enormous applications, where it was, or is, important to debug them first. By doing so, you will not only be learning more about the technology, but also the marketing and communication strategies that you may want to follow if in fact it does become super big. By going after smaller markets first, you can evolve, define, and develop more IP. You can do an awful lot of things that will increase the likelihood of a successful attack on the big market when you get there.

Build in-depth knowledge and trust it in hard times.
If it really is a new idea, you will not only be developing the product(s), you will be developing the language and the science behind it—the ontology and taxonomy for talking about it. It’s hard, but when you get there you will have created that market—and you will own it.

The marketing and funding folk will be pushing hard for you to get some big name scientific and other advisors on the masthead for credibility purposes. Yes, a few may be valuable, but remember, these are people who are already famous. They have nothing to gain (except money, of course, and that can sometimes be a bad motivator) and everything to lose. Finding the unknown younger scientist, engineer, or physician who has the capabilities and desire is much more important. They have everything to gain and nothing to lose. I’ll put my bet on the motivated entrepreneurial type every time. I have a checklist of attributes that we used to pick physicians. Ask me if you’re interested. [Editor's note: John was getting so many requests for the list that we posted it here.]

Focus.
Traditional business experts will always say you’ve got to focus in order to apply your limited resources effectively. But if you’re dealing with a truly new idea, that may be the wrong thing to do because you don’t yet know where the best spot to focus is. You’ve got to be able to say, ‘It doesn’t look like it from the outside, but in fact we are focusing. We are taking little pieces of many markets and leveraging the daylights out of it, in order to create a new market.’ If your customers are your partners, and they should be, they can help you make the right decisions.

Always build your credibility and reputation.
Who do you trust more; someone who is selling you something which you’ve never heard of before, or someone who is selling something familiar from a well-known company? Everything else being equal, with most people, the affiliation with the well-known brand and organization is a reputational asset. So it’s critical to earn the respect and trust of both your customers and the community members, including competitors, of the field you will be working with.

General Georges Doriot, founder of American Research and Development and considered one of the fathers of venture capital, was a charmer and had an enormous Rolodex. He told me that it was his most valuable asset. He was a generous person, a mentor to many and always doing favors for people. But that generosity had an enlightened self-interest to it. The Rolodex represented his relationships and the personal credibility and reputation that went along with it. That was his most important investment.

I think people sometimes get so caught up in the competition of financial results that they forget that the thing that’s going to give them the best likelihood of success in the future is the relationship metrics.

This is all common sense, of course, and pretty obvious. But it’s amazing how often we forget the obvious.

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