Help me help you

My favorite scene in the movie Jerry Maguire has Tom Cruise’s Jerry at the breaking point, berating Cuba Gooding Jr’s character to “help me help you!” Jerry is a former star sports agent on the brink of losing everything (including his mind), who is left with a one last client, a talented, chip-on-his-shoulder Wide Receiver (Tidwell) who is Jerry’s last hope at salvaging his career.

I learned today of a new phenomenon in the job market, what I’ll call the “preventative job search.” This is where a person who has a job but who has watched a few rounds of layoffs gets a jump on getting laid off by quietly searching for that next job while still employed.

Sensible, and it reinforced my feeling that the follow-through on job cuts is still to come, and that competition for jobs is fierce.

So before you send that next email asking for an informational interview, decide what it is you are looking for. Know what it is that you are best at. Point to your track record and explain how you hope to parlay that into success in your next role. “I’m interested in what you do and I’d like to talk to you” isn’t enough any more.

Help me help you.

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The other 690

Last week when speaking on the “Creating Private Capital Markets” Panel at the Harvard Social Enterprise Conference, I noted that one of the big opportunities for Acumen Fund and other organizations in our sector is to capitalize on a huge influx of talent.  Demand to work in our sector is at an all-time high, the result of the rising profile of social enterprise; the blowup in the financial sector (a lot of people with financial skills are rethinking their path); and, hopefully, because society as a whole (or at least the younger generation) is taking a momentary pause to reconsider our definitions of success.

Acumen Fund and other organizations in our sector are currently experiencing overwhelming levels of interest.  One data point that I mentioned on the panel: for the 10 summer internship positions Acumen Fund has open globally, we received 700 applications from an amazing group of candidates.  We’re going to do our best to find the 10 people who are the best fit for our needs this summer, but the bigger, harder question is, “What about the other 690?”

This question was salient enough that Jonathan Greenblatt, co-founder of Ethos Water, saw fit to repeat it in the lunchtime plenary panel where he spoke together with Bill Drayton, CEO of Ashoka; Clara Miller, CEO of the NonProfit Finance Fund; and lecturer and political analyst David Gergen.  This helped me realize that “the other 690” isn’t just a question for Acumen Fund, it’s a question for our sector.  With all of the creative destruction underway in the global economy, there’s a fundamental shift in how talent will be deployed.  For burgeoning sectors like ours, this creates a demand/supply imbalance for talent, and a collective opportunity if we want to take it.

A couple of ideas to chew on:

What if some of the economic stimulus money were used to create a new Global Peace Corps, one that takes some of the best and brightest people of all ages from around the world and gives them opportunities to work on projects (private and public) that are creating positive social change?

What if all of the 690 people who applied to Acumen Fund’s summer internship – plus their colleagues who are interested in working at Endeavor and Root Capital and the World Resources Institute and the International Aids Vaccine Initiative and the Gates Foundation and the Clinton Foundation and a hundred other fascinating places to work – created vibrant, online communities on Ning or Facebook or Twitter or through NetImpact to share their own entrepreneurial business ideas, and what if the best of these ideas were made available to early-stage investors and grantmakers and social venture competitions run by business schools around the world?

What else should we be doing?

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The bar is rising

The more people I talk to who have recently lost their jobs, the more I see how challenging it will be to find new, meaningful work in the current economy.  The good news is that this won’t last forever, and if you’ve always thought that you might make some sort of shift – whether into the non-profit sector or otherwise – this economic mess might just be enough to jump-start you move in another direction.

Now’s the time to lay the groundwork for that next move, even if it is three, six, or more months out.  If you can, volunteer, start that pet project you’d always meant to do, roll up your sleeves, meet people, make yourself stand out from all the other people who were swept up in this economic tsunami.

On the flip side, if you still have your job, don’t forget that the bar is rising.  Those hundreds of thousands of Wall Street types who are out of work?  (who I blogged about here)   They are hungry and skilled and aggressive and networked.  Now is a great time to raise your own game and be even more indispensable.

(OK, in truth, you should always be indispensable, and especially if you are in a mission-driven organization, why would you be there in the first place if you’re not passionate about what you do?)

But now’s the time to dig deeper, to over-promise and then over-deliver.  Now’s the time to make your co-workers’ lives easier, to roll up your sleeves, to burn the midnight oil.  Now’s the time to lead.

Laying low and hoping you’re not noticed is a horrible life strategy.  But right now, in particular, it might also be the best way to lose your job.

The psychology of real

Today I was talking about the economy with someone who I respect a lot.  She said that we still don’t know how much of what’s going on in the economy is real and how much is psychology.

I respectfully disagreed.  What strikes me most about this economic crisis is that what’s psychology is real.  There’s no distinction any more.  Sentiments drive markets as much or more than what’s “real.”  And 6 months worth of sentiments might create real, irreversible hardships.

Her broader point, my rebuttal notwithstanding, is that people have short memories, and if psychology does drive markets then things have the potential to get better very quickly.  A new President who has a successful first 100 days could set a good tone, and by the second quarter we could see the first glimpse of things no longer getting worse.

My worry is that enough real hardship will come from the psychology of fear we’ve lived through since October that a shift in mindset won’t be enough to avoid a protracted economic downturn.

Either way, it feels like we’re navigating between 2-3 years of things being bad and a Lost Decade a la Japan in the 90s.

So here’s the question if you’re in the nonprofit sector: is your current business plan, at a minimum, premised on things being bad for 24-36 months?  And what if things are bad for a lot longer than that?  Are you ready?  And if not, what can you do to make yourself ready?

And if yours is the kind of nonprofit organization where the best and the brightest don’t spend much (or any) time thinking about the revenues side of the equation, don’t you think now is the perfect time to change that?

Buddy, can you spare a Banker?

A friend in finance pointed out to me today that there are probably “more than 100,000” newly-unemployed bankers (including investment banks, hedge funds, private equity) in New York City right now, trying to figure out what comes next.

This is bad news for NY-based nonprofits, who are feeling the double-whammy of Wall St. donations drying up and the Bernie Madoff madness (plus huge cuts in local and state spending).  And I suspect that 2009 will be the year where we learn how bad things really are, not the year when we’re pleasantly surprised that things aren’t as bad as we thought they were.

Nevertheless, I for one pray it is the end of an era, and not just a pause between acts.  Not because of the greed (which has always been there and always will be); and not just because of the excess-piled-on-excess that had become the norm for pay on Wall Street (though it stinks).

The gravitational pull of Wall Street has gotten so strong that it pulled in many of our best mathematicians, lawyers, engineers, you name it.  It’s an imbalance that has pulled talent away from other sectors, and one that I hope gets restored.

So what’s the upside look like?  I wonder what those 100,000+ bankers – some of the smartest, most ambitious, out-of-work Type A personalities around – are going to end up doing.

Is it possible that there will be (slowly, quietly) a huge influx of talent into the government and our healthcare system and the education system and the social sector?

Wouldn’t that be great?

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And if you haven’t seen it, you must read Michael Lewis’ essay “The End” from  Michael gives the inside story that explains what all this subprime / CDO / securitization really means — how it happened, how truly ugly it was, and how everyone looked the other way because so many people were getting so rich.

What happened on Wall Street at the end of 2008 was the music stopping after 25 years of buildup.  If you want to understand how and why, take the 20 minutes to read Lewis’ article.  It’s fabulous.

Another data point: Merrill Lynch

If you’re curious about exactly how out-of-whack incentive pay (bonuses) got in recent years on Wall Street, check out this recent NYTimes article called, “The Reckoning: On Wall Street, Bonuses, Not Profits, Were Real”, especially this tidbit that gives an order of magnitude on bonuses:

Clawing back the 2006 bonuses at Merrill would not come close to making up for the company’s losses, which exceed all the profits that the firm earned over the previous 20 years.

The article is really worth a read because it gives some more detail on how far things have gone in recent years on Wall Street (in terms of the number of people raking in millions), and also points to the core of what got us into this mess: people responding as one would expect them to to incentives that offer the potential for unprecedented personal financial gains in the short-term.

When pay systems are set up such that some of the smartest, most ambitious people stand to make enormous amounts of money if they ratchet up risk, what do you expect will be the outcome?

There’s this misplaced sense that some magical self-correcting mechanism would keep things from getting out of hand, but in retrospect it’s hard to understand why we thought the music wouldn’t stop at some point.

What strikes me is that all the watchdogs (the risk people in firms, Board compensation committees, the rating agencies, the SEC) have collectively failed in their oversight roles, and without significant change we won’t address the root of the problem.

(And while I’m no expert in executive pay, doesn’t it seem obvious that (much) less cash and (much) more restricted stock is the only way to go?  Why is this so hard to get right?)

Smile in the face of Madoff

It’s really struck me in a new way this week how serious this financial crisis is. Maybe it’s just the other shoe dropping on this new reality; or maybe it’s because, on top of everything , the former chairman of the NASDAQ, Bernard Madoff,  is accused of $50B out-and-out fraud in a Ponzi scheme of epic proportions. Despicable.

Where do we go from here? How about to some words of wisdom to start the weekend from Aristotle’s Nichomachean Ethics:

The Virtues we get by first performing single acts of working…men come to be builders, for instance, by building; harp-players, by playing on the harp: exactly so, by doing just actions we come to be just; by doing the actions of self-mastery we come to be perfected in self-mastery; and by doing brave actions brave.

Translation: we become virtuous by acting with virtue; kind by acting with kindness; generous through acts of generosity.  Not the other way around.

Or, to take another turn at the same thought, from Robert Pirsig’s Zen and the Art of Motorcycle Maintenance, “The place to improve the world is first in one’s own hear and head and hands, and then work outward from there.”

Right now the world needs a whole lot of improving, and things will likely get worse before they get better.  So the question is: what can you put out into the world to get us there a little more quickly?

How about some extra kindness, virtue, and generosity?

Really, now is a great time to surprise people you love and people you don’t even know with small acts of kindness.  People all over are hurting, and they’ll really appreciate it.

And you will heal yourself in the process.

Is Generosity a Luxury Good?

A “luxury” good is something you consume more of as you have more money (economists call them “superior” goods, a subset of “normal” goods).  For example, as people get wealthier, they spend proportionally more on Tiffany rings, Hermes scarves and nights at the Ritz Carlton, and less on Kay Jewelers, Wal-Mart, and Best Western.

I’ve been fascinated by the role that optimism and pessimism play in today’s financial markets, specifically because I’d prefer to think that, for the most part, the price of stocks and bonds and condos in Florida is determined by something objective (like cash flows of the underlying business).  Of course it’s really about supply and demand, and demand for assets is at historically low levels.

This means that financial markets are like the old joke: two guys hear a bear outside their tent in the woods.  The first guy starts lacing up his Nikes, and the second guy says, “What are you doing?  There’s no way you can outrun a bear.”  The first guy says, “I don’t have to run faster than the bear; I just have to run faster than you.”

That’s how financial markets work: when sentiments change, the rational thing to do (if you can) is to get out first.  This is how we got: Lehman Brothers’ bankruptcy → defaults in a money market fund ( “breaking the buck”) → the end of liquidity → global economic meltdown.

So what about generosity, and specifically about philanthropy?  Is it the first thing to fall off the list when people’s portfolios are hit?  Where does it fall in the hierarchy of luxury vs. “inferior” goods (things you buy MORE of when you have less money?).

Wouldn’t it be amazing if, in tough times, people were MORE  philanthropic (on a relative if not on an absolute basis?).  Wouldn’t that say something extremely powerful about our society?

My worry is that this is not the case.

What scares me is the idea that philanthropy might be a luxury good.  Without a doubt, giving will decrease in the next 12 months.  Foundation assets (whether the Harvard Endowment, the Gates Foundation, or family foundations) are down, and out of that smaller pool of assets, people will give less.  But if generosity is a luxury good, that means it could be near the top of the list of things that people cut.  So the $260 billion worth philanthropic giving in the U.S. (2005 data) is itself at risk.

From what I’ve seen so far, donors and foundations are taking their philanthropic commitments very seriously and doing what they can to step up and support the nonprofits they believe in.

And that’s a good thing. It’s tantamount to running TOWARDS the bear and scaring him away.

Alert the press!! Weingart Foundation breaks new ground

If I were writing for the NY Observer or some other similarly sensationalist newspaper, I’d write a headline that says:

“Nation Stunned: LA-based Weingart Foundation Places Trust in Nonprofit Grantees”

This is absolutely, positively not meant to be a dig on the Weingart Foundation.  To the contrary, they deserve praise.  As the LA Business Journal reports, the Weingart Foundation has announced that it will “offer unusual ‘core support’ to underwrite administrative costs for social service agencies that provide necessities such as food, shelter and health care to the region’s poor, unemployed and sick.”

This is contrary to normal practice, wherein “Most philanthropic foundations traditionally give large grants that pay the costs of specific programs but do not underwrite non-profits’ operating costs, such as staff salaries and rent. Many non-profits get their operating cash typically from their own fund raisers or from direct donations.”

My point is: the fact that this is newsworthy is a reflection of how far (too far) things have swung in terms of foundation grantmaking to nonprofits.  There’s a serious power imbalance here, one that has to change if we are going to increase the impact and efficiency of the nonprofit sector.

There’s a longer history here, one that I will be exploring over time on this blog, but as a starting point imagine the following in the for-profit sector:  Blackstone or some other private equity fund investing three million dollars in a portfolio company, but restricts the funding to the purchase of an Oracle database, with 10% for “overhead.”   Guess what?  That never happens, because it doesn’t make a lick of sense.

So why have we ended up at this perverse equilibrium in the nonprofit sector?  The list of reasons might include:

1. A desire for funding to go “to the beneficiaries”

2. Concern that nonprofits are not efficient enough, and that limiting grants in this way will lead to increased efficiencies

3. Because there’s a serious power imbalance between people who hold the money (the foundations) and the people who use the money (the nonprofits), so the people with the purse strings get to write the rules. (something I talk about more here)

4. Because the donors have their own philanthropic agenda, and fitting unrestricted funding into a specific agenda is difficult

5. The fear that on the part of the foundation program officer that one of their grantees will end up as front page news because of exorbitant salaries paid to their top executives or CEO

The result of all of this is that we end up with scores of nonprofits twisting themselves into knots to manage a series of too-small, too-specific “program” grants, with individual donors asked to pick up the difference between what’s funded and what’s needed to deliver on the non-profit’s mission (weren’t the foundation supposed to be the trailblazers in this equation?).

Worse, the nonprofits get tied into a cycle of yearly make-the-numbers funding, and they end up perpetuating the myth that you can neatly separate a non-profit into “program” and “everything-else-that-really-isn’t-that-worthwhile-but-we-have-to-do-some-of-it-even-though-we’d-rather-not.”

Lots more to talk about here, but here’s a starting point:  Do you think you’re going to get the best people to do a job that you (foundation program officer; non-profit grant-writer) have proclaimed is in the “not terribly worthwhile” bucket?

(Hat tip to Sean Stannard-Stockton at the Tactical Philanthropy blog for pointing out the LA Business Journal article.)

What’s the right career move in the midst of an economic meltdown?

Take a chance.

Really, things are bad in the economy anyway.  It’s a hard time to get a job.  Why not take a stab at that wild idea you’re hoping to get to…someday?

Not long ago I was invited to speak to a career panel for college seniors and recent grads.  I find it tough to give out career advice – it feels like it devolves into “let me tell you what I did in my career” as if that’s a blueprint for anyone but me.

The backdrop for the panel was the blowup on Wall Street, which has only gotten worse in recent weeks (today’s 10.88% rise in the Dow notwithstanding).  I do think we’re in for a protracted period (a few years) of slow economic growth.  This means job losses, wage stagnation, the works.  So now is tricky time to be an eager recent college graduate with limited work experience who is looking for a job.  You’re likely competing with all the folks who have just been laid off (or are about to be laid off), interviewing with companies with very tight budgets who have people lining up outside their doors.

And my best guess is that this will be a record year of applicants to MBA programs, law schools and the likes.

Which is why I think now is a great time to take a risk.  Do you have an entrepreneurial idea?  Pursue it now.

For most everyone, the next couple of years are going to be tough going.  Why not take a risk and try that idea that’s been on the shelf just waiting for the right moment?  You have less to lose now than you did before, and since the foundation for “overnight success” takes years to build, you may as well start laying that foundation today.