2008-10-15

ceteris paribus and the basted egg heuristic

Years ago, I had a job working as a short-order cook in a reasonably nice restaurant. One thing you learn quickly in that kind of work is what you can cook simply, reliably, while handling N other orders at the same time. Perhaps this falls into the general category of load-balancing or speculative execution, but some orders work better than others.

An example of a simple order is a "basted egg". One egg, some water and some oil in a small covered pan, burner set low, for a few minutes. I happen to like eating those for breakfast. Even though they almost never appear on a breakfast menu, it's one of the simplest things that a short-order cook can be asked to make -- aside from toast.

When I'm checking out a new little cafe for a quick breakfast, oftentimes I'll ask for a basted egg. That alone provides amazing insights to the structure and vitality of the restaurant... I've found that most wait staff and short-order cooks who are any good at preparing breakfast will jump at the chance to earn 3x food cost + their 20% tip by serving the simplest thing possible. (assuming that wait staff splits tips with cooks, which they should). Generally they do quite well, I enjoy breakfast, and pay more than 20% tip. Done.

However, using this metric, I've found an heuristic: restaurants on the brink of failure -- and there are many, almost always, given the nature of the business -- tend to fumble on something even as simple as a basted egg. I've found that almost every restaurant which told me "Sorry, no basted eggs here" has closed within the following 2 months. In fact, I've got a running calculation for a binomial confidence interval on that heuristic test converging near 1.0 as a best point estimate. Which is to say, pretty damn certain. Generally, I'd attribute that kind of failure to lack of insight or communication by the restaurant management, or simply that they'd hired untrained wait staff and kitchen staff. Generally the former condition is more opaque, and thus more likely as a risk to the restaurant.

Years ago -- and not nearly as many years ago as the cooking gigs, but close -- I started working in the technology industry. My first full-time job in Silicon Valley was in 1983... though I'd been mentored about the industry by my uncle (who was deep in it) going back to the late 1960s. In other words, I've been learning about what works and what doesn't in the tech industry for approximately 40 years, with the past 25 years of it hands-on. (Yikes, I'm that old now?!)

During that time, I've developed and tuned a robust heuristic for measuring the vitality of tech organizations -- not so different from my basted egg test in restaurants. Simply put, when I walk into a meeting, I ask myself three questions about everyone in the room. I won't disclose those questions here, but they are listed on my resume, which is public. I'll leave that research as an exercise for the interested reader. Anywhoo, every participant in the meeting gets scored on a scale of 0-3 points, whether they like it or not. Here's how I evaluate scores on an individual level:

3. great to work with, nurture a long-term relationship
2. short-term only, watch carefully for cracks in the foundation
1. limit dialogue to what is required
0. migrate in opposite direction!

Okay, I'll be the first to say that may sound trite, but hey it works. Even when you're encountering people who may not be the sharpest minds in the industry, if they score highly, consistently on that scale then ceteris paribus they'll likely do well in the industry.

I recall -- vividly -- one restaurant in central Austin, where I asked for a basted egg... the manager came out, and, without asking, placed his arm around my shoulders while explaning to me, "Son, there's no such thing as a basted egg." As one might imagine, I got up and left rather suddenly, and more adroitly put, there was no such thing as that idiot's employment 4 weeks later.

On the organizational level, based on the past few decades of experience watching tech companies struggle to be viable -- struggle on par with that found in the restaurant biz -- on one hand, if a tech firm has plenty of people who score 3's consistently, they've got my attention and quite likely could get my commitment too. On the other hand, if they've got people who score 1's or 0's consistently then, just like that ill-fated breakfast nook in Austin with the smarmy manager, get up and leave quickly!

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