Apr 12 2024
Scaling individual impact: Insights from an AI engineering leader

Traditionally, moving up in an organization has meant leading increasingly large teams of people, with all the business and operational duties that entails. As a leader of large teams, your contributions can become less about your own work and more about your team’s output and impact. There’s another path, though. The rapidly evolving fields of artificial intelligence (AI) and machine learning (ML) have increased demand for engineering leaders who drive impact as individual contributors (ICs). An IC has more flexibility to move across different parts of the organization, solve problems that require expertise from different technical domains, and keep their skill set aligned with the latest developments (hopefully with the added benefit of fewer meetings).

In an executive IC role as a technical leader, I have a deep impact by looking at the intersections of systems across organizational boundaries, prioritize the problems that really need solving, then assemble stakeholders from across teams to create the best solutions.

Driving influence through expertise

People leaders typically have the benefit of an organization that scales with them. As an IC, you scale through the scope, complexity, and impact of the problems you help solve. The key to being effective is getting really good at identifying and structuring problems. You need to proactively identify the most impactful problems to solve—the ones that deliver the most value but that others aren’t focusing on—and structure them in a way that makes them easier to solve.

People skills are still important because building strong relationships with colleagues is fundamental. When consensus is clear, solving problems is straightforward, but when the solution challenges the status quo, it’s crucial to have established technical credibility and organizational influence.

And then there’s the fun part: getting your hands dirty. Choosing the IC path has allowed me to spend more time designing and building AI/ML systems than other management roles would—prototyping, experimenting with new tools and techniques, and thinking deeply about our most complex technical challenges.

A great example I’ve been fortunate to work on involved designing the structure of a new ML-driven platform. It required significant knowledge at the cutting edge and touched multiple other parts of the organization. The freedom to structure my time as an IC allowed me to dive deep in the domain, understand the technical needs of the problem space, and scope the approach. At the same time, I worked across multiple enterprise and line-of-business teams to align appropriate resources and define solutions that met the business needs of our partners. This allowed us to deliver a cutting-edge solution on a very short timescale to help the organization safely scale a new set of capabilities.

Being an IC lets you operate more like a surgeon than a general. You focus your efforts on precise, high-leverage interventions. Rapid, iterative problem-solving is what makes the role impactful and rewarding.

The keys to success as an IC executive

In an IC executive role, there are key skills that are essential. First is maintaining deep technical expertise. I usually have a couple of different lines of study going on at any given time, one that’s closely related to the problems I’m currently working on, and another that takes a long view on foundational knowledge that will help me in the future.

Second is the ability to proactively identify and structure high-impact problems. That means developing a strong intuition for where AI/ML can drive the most business value, and leveraging the problem in a way that achieves the highest business results.

Determining how the problem will be formulated means considering what specific problem you are trying to solve and what you are leaving off the table. This intentional approach aligns the right complexity level to the problem to meet the organization’s needs with the minimum level of effort. The next step is breaking down the problem into chunks that can be solved by the people or teams aligned to the effort.

Doing this well requires building a diverse network across the organization. Building and nurturing relationships in different functional areas is crucial to IC success, giving you the context to spot impactful problems and the influence to mobilize resources to address them.

Finally, you have to be an effective communicator who can translate between technical and business audiences. Executives need you to contextualize system design choices in terms of business outcomes and trade-offs. And engineers need you to provide crisp problem statements and solution sketches.

It’s a unique mix of skills, but if you can cultivate that combination of technical depth, organizational savvy, and business-conscious communication, ICs can drive powerful innovations. And you can do it while preserving the hands-on problem-solving abilities that likely drew you to engineering in the first place.

Empowering IC Career Paths

As the fields of AI/ML evolve, there’s a growing need for senior ICs who can provide technical leadership. Many organizations are realizing that they need people who can combine deep expertise with strategic thinking to ensure these technologies are being applied effectively.

However, many companies are still figuring out how to empower and support IC career paths. I’m fortunate that Capital One has invested heavily in creating a strong Distinguished Engineer community. We have mentorship, training, and knowledge-sharing structures in place to help senior ICs grow and drive innovation.

ICs have more freedom than most to craft their own job description around their own preferences and skill sets. Some ICs may choose to focus on hands-on coding, tackling deeply complex problems within an organization. Others may take a more holistic approach, examining how teams intersect and continually collaborating in different areas to advance projects. Either way, an IC needs to be able to see the organization from a broad perspective, and know how to spot the right places to focus their attention.

Effective ICs also need the space and resources to stay on the bleeding edge of their fields. In a domain like AI/ML that’s evolving so rapidly, continuous learning and exploration are essential. It’s not a nice-to-have feature, but a core part of the job, and since your time as an individual doesn’t scale, it requires dedication to time management.

Shaping the future

The role of an executive IC in engineering is all about combining deep technical expertise with a strategic mindset. That’s a key ingredient in the kind of transformational change that AI is driving, but realizing this potential will require a shift in the way many organizations think about leadership.

I’m excited to see more engineers pursue an IC path and bring their unique mix of skills to bear on the toughest challenges in AI/ML. With the right organizational support, I believe a new generation of IC leaders will emerge and help shape the future of the field. That’s the opportunity ahead of us, and I’m looking forward to leading by doing.

This content was produced by Capital One. It was not written by MIT Technology Review’s editorial staff.

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Apr 6 2024
Don’t Outsource Revenue, Says Hair Growth Founder

Faraz Kahn began losing his hair at age 21. Years later, when searching for startup business ideas, he focused on his own experience. The result is Fully Vital, a direct-to-consumer seller of hair loss serums and supplements that he launched in 2021.

He and I recently spoke. We addressed his launch of Fully Vital and lessons learned afterward. Relying on agencies and consultants for customer acquisition is among his biggest regrets. “Don’t outsource revenue,” he says.

The entire audio of our conversation is embedded below. The transcript is edited for clarity and length.

Eric Bandholz: Give us a rundown of what you do.

Faraz Khan: I founded an ecommerce business in 2021 called Fully Vital. We make and sell hair wellness products mainly targeted at women over 40. I’ve been losing my hair since I was 21. I tried pharmaceuticals such as finasteride for a decade.

For years, I worked as a web developer and marketer in Los Angeles. In 2019 I decided to change careers and consider opportunities in ecommerce. I focused my search on longevity and being youthful. I started a podcast and interviewed leaders in the longevity field, but I wasn’t making money. So I looked at my own hair loss for ideas.

I researched extensively. Many companies sell stuff. I wanted to offer unique products to a broad audience. I went to international conventions. I flew to Thailand for a conference of hair transplant surgeons and stem cell experts. I learned enough there to realize the key to hair growth is doing many things simultaneously.

Working with physicians and scientists, I developed a serum and supplements for hair growth and density. Then, recently, we launched products for delaying gray hairs. I enlisted my friend Dr. Sandra Kaufmann, who’s written two books on longevity. She designed the protocol for delaying and reversing gray hairs. We now have two product lines.

I was new to ecommerce and didn’t know what I was doing. I’ve made a hundred mistakes, but here we are, still improving. I’ve got friends in the longevity space who are gracious enough to have me on their podcasts. Every time I do an episode, my messaging has gotten better. We discuss the science, how we developed our solution, and our target markets.

Part of my challenge is translating that authenticity into direct response marketing and Facebook ads. Our field requires education because many women, particularly, have tried many things for hair loss. We have to be authentic.

Bandholz: You’re offering subscriptions.

Khan: Yes. We’ve worked on the subscription offer to make it enticing, which involves educating the shopper. Our products take about 90 days to see results because of the hair cycle. With education, subscriptions have increased — about 40% in the last six months. Our goal is to convert 20% of all buyers into subscriptions.

We’ve focused much of our efforts on serum versus supplements because the margins are better. We need good margins to make advertising profitable.

Bandholz: What would you do differently if you could start over?

Khan: My biggest mistake was not focusing on Facebook ads, the cash cow for most direct-to-consumer businesses. I didn’t know Facebook and thought I wasn’t good enough. I’m not creative. I relied on agencies and consultants—with no results for those efforts. Our cost per acquisition exceeded $200, meaning negative margins. Then I went to Affiliate Summit West in Las Vegas and met people profitably spending $10,000 per day on Facebook ads.

That led me to change my outlook. I got into Facebook, owned it, and began editing some of our ads. I learned when to change creative, how many hooks we need, and hurdles in the conversion path. I had to get in the weeds.

I’ve learned our strengths and differences from other sellers. Our messaging has improved. Facebook’s algorithm changes required us to double down on our messaging at every consumer touch point.

We tried TikTok Shop, but nothing moves the needle like Facebook. Now I spend most of my time there. Last fall, I retained an incredible creative strategist. She encouraged me to spend more on Facebook. It’s made a big difference for me to be involved in the details.

Don’t outsource revenue. That’s my advice to entrepreneurs.

Bandholz: Where can people buy your products?

Khan: Our website is FullyVital.com. I’m @FarazKhan1000 on X and @antiaginghacks on Instagram.

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Mar 29 2024
Charts: Retail Sporting Goods Trends Q1 2024

The global sporting goods industry will grow at a compound rate of 7% through 2027. That’s according to “Time to move: Sporting goods 2024,” a January 2024 report by McKinsey & Company.

The report foresees optimism by sporting goods industry leaders in 2024, coming off an uneven, inflationary 2023. McKinsey suggests caution, however, owing to shifting consumer preferences and sustainability concerns.

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The study addresses shifting consumer preferences from traditional organized sports to individual varieties such as pickleball (159% growth from 2019 to 2022) and off-course golf (57% growth during the same period).

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Challenges to the global supply chain continue. The McKinsey study included the results of its 2023 survey of worldwide supply chain leaders. Most are implementing renewed planning and resilience measures to counter supply uncertainties.

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Mar 23 2024
Commerce Drives Culture, Says Media CEO

Phillip Jackson launched Future Commerce in 2016. The company produces articles, newsletters, and podcasts focusing on coming trends and developments in business.

He believes commerce produces a gentler society, one that fosters culture and stability. Commerce is culture, he states.

He and I recently discussed his company’s mission, large versus small brands, the maturity of ecommerce, and more. The entire audio of our conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Who are you?

Phillip Jackson: I am the co-founder and CEO of Future Commerce, a small, bootstrapped business researching and producing media for ecommerce businesses. We work with large and small brands. We’re trying to predict the future of commerce, which was technology for the last 15 or 20 years, but now that every business is technology-enabled, we have to think about the next phase. We have four podcasts: Future Commerce, Infinite Shelf, Step by Step, and Decoded.

Ten years ago, big brands said, “We need to be online,” and “What does direct-to-consumer look like for us?” Let’s say you’re dealing with Mondelez (the food and beverage holding company) or some other conglomerate where you have individual brands with their own innovations teams, futures teams, and P&Ls within the business. They’re all resourced differently, have separate budgets, and are not talking to each other.

Some brands will find a way to achieve breakout success on the sly. You have little scrum teams or individual operating teams that don’t ask for permission—they ask for forgiveness and demonstrate success somewhere within the business. Some of the best innovations occur when they bring in entrepreneurs who understand how to get stuff done. They’re not just about theory, sitting in boardrooms, and figuring out spreadsheets. They’re good at rolling their sleeves up and getting things done.

Bandholz: You talk about an idea that commerce is culture. Can you explain?

Jackson: We’ve been at it with Future Commerce for about eight years. Over the last three or four years, ecommerce has mostly been solved. You can talk about all the tips, tricks, and tactics, but generally, it’s just buying a new piece of software.

The early exciting internet promise based on technology is gone. What has become exciting is going back to the fine arts. When I talk to folks in corporate roles, such as the head of commerce for YouTube or the head of innovation for Visa, they yearn for something deeper. Commerce is a human truth, and independent cultures have all created and found each other through trade routes. The world came together through this necessity of having something others need. Commerce is not just a value exchange — it’s a cultural connection.

We’ve learned that live-streaming isn’t the future of commerce, yet every analyst said it would be because that was happening in Asia. Maybe commerce is more cultural. Every independent culture has its own way of expressing itself, and maybe commerce is one of those. We’ve pared it down to “commerce is culture.” It is who we are at our core. It’s what we value.

A French philosopher believed that commerce makes people more amenable. When you have things you love, prize, and value, you don’t want to lose them. People who have nice things become better actors in society. As a nation becomes richer and attains wealth, it’s less prone to social upheavals. Commerce has a gentle effect on society and gives us the capitalist economy today.

Eric Bandholz: Where can people support you?

Jackson: Visit FutureCommerce.com. Find me on Twitter and LinkedIn.

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Mar 16 2024
From Bankrupt to Thriving Entrepreneur

Study a successful entrepreneur, and you’ll likely uncover resilience. Take Aaron Marino. Twenty years ago his first business, a fitness center, failed, leaving him with half a million dollars of debt. Fast-forward to 2024, and Marino is a YouTube celebrity and thriving serial entrepreneur, mainly with men’s grooming products.

He first appeared on the podcast in 2020. We recently caught up. I asked him about failure, success, helping others, and more.

The entire audio of our conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Tell us about yourself.

Aaron Marino: I’m an entrepreneur at my core. I started posting YouTube videos in 2008 about men’s styles, grooming, dating, and relationships. I called the channel Alpha M, and it took off. I wasn’t that great at it, but I kept doing it.

Over the years, it’s allowed me to start a few businesses and verticals. I have had 20 companies. Most didn’t work out, some worked out a little, and others have done reasonably well. A few years ago, I started a channel called Alpha Mpire, where I interview other entrepreneurs.

Failure was one of the best things for me. I had a fitness center. It was an epic failure. That was my dream from age 12 — to own a fitness center. I shut it down and had half a million dollars in debt. I then drove a beer cart at a country club just to put gas in my car. That was the scariest time of my life. I didn’t have a plan B. The failure forced me to try other things less scary. I was like, okay, what’s the worst thing that can happen? I’m driving a beer cart. I’m broke. I’m bankrupt, but I’m still alive.

Bandholz: How do you emotionally get through bankruptcy as an entrepreneur?

Marino: Stress and anxiety about money and inability to pay bills robbed me of joy like nothing else. I was making a hundred dollars every three weeks driving a beer cart. I was as broke as it got. My credit cards were all shut down. Declaring bankruptcy was a huge emotional relief. It was as if I got a new lease on life. I knew I would never make the same mistakes again. It shaped me in terms of how I think about money and debt. I became more responsible. I recovered and bought a $35,000 car within a year at 100% finance.

I believe there’s a time and a place for loans and debt. If you need it, you need it. A business has two ways to raise money: incur debt or sell equity. The choice depends on how much money and help you need.

Bandholz: You have several businesses now.

Marino: The largest is a men’s skincare company called Tiege Hanley. That was a partnership with two other guys. One of the founders put up $170,000. I generated marketing material through my YouTube channel. We had another founder who also brought equity and technical skills.

I started a hair product business called Pete & Pedro. I did that through white labeling. I started that whole business for $3,000. I went to a friend who was a stylist, and he told me to call people I knew, which began the process.

I started a sunglasses company called Enemy that’s no longer around. I funded it myself. I shut it down because the product was too expensive for what I was charging, leaving no margin for marketing.

I like putting up the money whenever possible. I don’t take substantial wild risks. I don’t need $100,000 to start a business. I can validate many of these businesses for much less.

Bandholz: Tell us about Alpha Mpire, the YouTube channel.

Marino: My original channel, Alpha M., focuses on men’s grooming. I launched it back in 2008. But I love talking about business. I started Alpha Mpire in 2021 to share my experiences and those of other entrepreneurs. I found a renewed passion. With this new channel, there were no expectations. I didn’t have to worry about sponsorships. I could talk about anything. It started to grow. It’s not the biggest channel — around 70,000 subscribers.

The internet has changed the game regarding entrepreneurship and business. It’s like taking a test with the book open. If you want to start a business, the information is out there. It’s never been more affordable.

Everybody has the same access and opportunities. Some people will take action. Most won’t. I tell new entrepreneurs to find somebody who’s done it before. Copy what they did, get their advice or somebody else’s, and then do it yourself. It’s not that hard. If I can do it, anybody can.

Bandholz: Where can people follow you?

Marino: Check out my mastermind community, TheWhiteLabelMpire.com, or my Alpha Mpire YouTube channel.

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Feb 26 2024
The era of cheap helium is over—and that’s already causing problems

MIT Technology Review is celebrating our 125th anniversary with an online series that draws lessons for the future from our past coverage of technology. 

In the nuclear magnetic resonance facility at Mississippi State University, three powerful magnets make it possible to see how atoms form bonds. Chemists there use the technology to design new polymers and study how bacteria bind to surfaces. To make it all work, they need an element that’s commonly found in grocery stores, but is also in perpetually short supply: helium. 

Every 12 weeks, the university pays $5,000 to $6,000 to replenish the liquid helium required to cool the superconducting wire coiled up inside the magnets down to -452 °F (-269 °C). 

“It’s by far the biggest expense we have,” says Nicholas Fitzkee, the facility’s director. “The price that drives our user fees is the purchase of liquid helium, and that has pretty much doubled over the past year or so.”

Helium is excellent at conducting heat. And at temperatures close to absolute zero, at which most other materials would freeze solid, helium remains a liquid. That makes it a perfect refrigerant for anything that must be kept very cold.

Liquid helium is therefore essential to any technology that uses superconducting magnets, including magnetic resonance imaging (MRI) scanners and some fusion reactors. Helium also cools particle accelerators, quantum computers, and the infrared detectors on the James Webb Space Telescope. As a gas, helium whisks heat away from silicon to prevent damage in semiconductor fabs. 

“It’s a critical element for the future,” says Richard Clarke, a UK-based helium resources consultant who co-edited a book about the element. Indeed, the European Union includes helium on its 2023 list of critical raw materials, and Canada put it on a critical minerals list too. 

Again and again throughout the history of technology development, helium has played a critical role while remaining in tight supply. As part of MIT Technology Review’s 125th anniversary series, we looked back at our coverage of how helium became such an important resource, and considered how demand might change in the future. 

Countries have at times taken extreme measures to secure a steady helium supply. In our June 1975 issue, which focused on critical materials, a Westinghouse engineer named H. Richard Howland wrote about a controversial US program that stockpiled helium for decades. 

Even today, helium is not always easy to get. The world’s supply depends primarily on just three countries—the US, Qatar, and Algeria—and fewer than 15 companies worldwide. 

With so few sources, the helium market is particularly sensitive to disruptions—if a plant goes offline, or war breaks out, the element may suddenly be in short supply. And as Fitzkee noted, the price of helium has climbed rapidly in recent years, putting hospitals and research groups in a pinch. 

The global helium market has experienced four shortages since 2006, says Phil Kornbluth, a helium consultant. And the price of helium has nearly doubled since 2020, from $7.57 per cubic meter to a historic high of $14 in 2023, according to the United States Geological Survey. 

Some research labs, including Fitzkee’s, are now installing recycling systems for helium, and MRI manufacturers are making next-generation scanners that require less of it. But many of the world’s highest-tech industries—including computing and aerospace—will likely need even more helium in the future. 

“At the end of the day, what’s happening is helium’s just getting more expensive,” says Ankesh Siddhantakar, a PhD student in industrial ecology at the University of Waterloo in Canada. “The era of cheap helium is probably gone.”

A high-tech need

Helium is the second element on the periodic table, which—as you may recall from high school chemistry class—means it has just two protons (and thus two electrons). 

Thanks to their simple structure, helium atoms are some of the smallest and lightest, second only to hydrogen. They’re extremely stable and don’t easily react with other stuff, which makes them easy to incorporate into industrial or chemical processes. 

One major use of liquid helium over the years has been to cool the magnets inside MRI scanners, which help doctors examine organs, muscles, and blood vessels. But the cost of helium has risen so much, and the supply has been so volatile, that hospitals are eager for other options. 

MRI manufacturers including Philips and GE HealthCare now sell scanners that require much less helium than previous generations. That should help, though it will take years to upgrade the roughly 50,000 MRI scanners already installed today. 

Other industries are finding ways around helium too. Welders have substituted argon or hydrogen on some jobs, while chemists have switched to hydrogen for gas chromatography, a process that allows them to separate mixtures. 

But there’s no good alternative to helium for most applications, and the element is much harder to recycle when it’s used as a gas. In semiconductor fabs, for example, helium gas removes heat from around the silicon to prevent damage and shields it from unwanted reactions. 

With rising demand for computing driven in part by AI, the US is investing heavily in building new fabs, which will likely drive more demand for helium. “There’s no question that chip manufacturing will be the biggest application within the coming years, if it isn’t already,” says Kornbluth. 

Overall, Kornbluth says, the helium industry expects to see growth in the low single digits over the next few years. 

Looking further out, Clarke predicts that most industries will eventually phase out nonessential uses of helium. Instead, they will use it primarily for cryogenic cooling or in cases where there’s no alternative. That includes quantum computers, rockets, fiber-optic cables, semiconductor fabs, particle accelerators, and certain fusion reactors. 

“It’s something that, for a cost reason, all these new technologies have got to take into account,” Clarke says. 

Given its importance to so many industries, Siddhantakar thinks helium should be a higher priority for those thinking about managing strategic resources. In a recent analysis, he found that the global supply chains for helium, lithium, and magnesium face similar risks. 

“It is a key enabler for critical applications, and that’s one of the pieces that I think need to be more understood and appreciated,” Siddhantakar says. 

A delicate balance

The helium we use today formed from the breakdown of radioactive materials millions of years ago and has been trapped in rocks below Earth’s surface ever since. 

Helium is usually extracted from these underground reservoirs along with natural gas, as John Mattill explained in an article from our January 1986 issue: “Helium can be readily separated from the gas before combustion, but the lower the helium concentration, the higher the cost of doing so.” 

Generally speaking, helium concentrations must be at least 0.3% for gas companies to bother with it. Such levels can be found in only a handful of countries including the US, Qatar, Algeria, Canada, and South Africa. 

Helium shortages are not caused by a lack of helium, then, but the inability of producers in those few countries to deliver it to customers everywhere in a timely manner. That can happen for any number of reasons. 

“It is a very global business, and any time a war breaks out somewhere, or anything like that, it tends to impact the helium business,” says Kornbluth. 

Another challenge is that helium atoms are so light Earth’s gravity can’t hold onto them. They tend to just, well, float away, even escaping specially designed tanks. Up to 50% of helium we extract is lost before it can be used, according to a new analysis presented by Siddhantakar last week at the International Round Table on Materials Criticality. 

Given all this, countries that need a lot of helium—Canada, China, Brazil, Germany, France, Japan, Mexico, South Korea, and the UK are among the top importers—must constantly work to ensure a reliable supply. The US is one of the largest consumers of helium, but it’s also a leading producer.

For decades, the global helium market was closely tied to the US government, which began stockpiling helium in Texas in 1961 for military purposes. As Howland wrote in 1975, “The original justification of the federal helium conservation program was to store helium until a later time when it would be more essential and less available.” 

But the US has slowly sold off much of its stockpile and is now auctioning off the remainder, with a final sale pending in the next few months. The consequences are not yet clear, though it seems likely that agencies such as NASA will have to pay more for helium in the future. As Christopher Thomas Freeburn wrote in a 1997 article titled “Save the Helium,” “By eliminating the reserve, the federal government … has placed itself at the mercies of the market.”

Customers everywhere are still overwhelmingly dependent on the US and Qatar, which together produce more than 75% of all helium the world uses. But the US has produced and exported significantly less in the past decade, while demand from US consumers rose by 40%, according to the USGS’s Robert Goodin. 

Eager to fill the void, new countries are now starting to produce helium, and a flurry of companies are exploring potential projects around the world. Four helium plants opened last year in Canada, and one started up in South Africa. 

Russia is set to open a massive new plant that will soon supply helium to China, thereby edging out Algeria as the world’s third-largest producer. 

“Russia is going to become the number-three producer as early as 2025, and they’ll end up accounting for a quarter of the world’s supply within the next five years,” says Kornbluth. 

Qatargas in Qatar is opening a fourth plant, which—together with Russia’s new facility—should expand global helium supply by about 50% in the next few years, he adds. 

Some companies are now considering sites where they could extract helium without treating it as a by-product of natural gas. Helium One is exploring several such sources in Tanzania.  

Will it be enough? 

Back in 1975, Howland described the helium market as “an example of the false starts, inefficiencies, and economic pitfalls we must avoid to wisely preserve our exhaustible resources.”

He also predicted the US would use up much of its known helium reserves by the turn of the century. But the US still has enough helium in natural-gas reservoirs to last 150 more years, according to a recent USGS analysis. 

“As with a lot of other things, it’s going to be about the sustainable management of this resource,” says Siddhantakar. 

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Feb 24 2024
Painful Decisions Greet First-time CEO

Bryant Jaquez picked a heck of a time to become a CEO. A longtime CMO for direct-to-consumer brands, Jaquez accepted the CEO job early this year for BuddyLove, a Dallas-based women’s apparel company coming off a pandemic-fueled boom and a dismal 2023.

“The overhead and debt service caught up with them,” he told me. “Thus far my job has been a lot of restructuring, evaluating expenses, and making deep cuts — some were painful, such as layoffs.”

He and I recently discussed his journey — from chief marketer to chief executive — including decision-making, stress, compensation, equity stakes, and more.

Our entire audio conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Give our listeners a recap of who you are.

Bryant Jaquez: I’m a serial CMO turned CEO of BuddyLove, a women’s apparel company based in Dallas, Texas. My background is in direct-to-consumer ecommerce. I’ve worked in the industry for 10 years. Until about seven weeks ago, I led marketing teams. I joined BuddyLove, my first CEO role, in early January.

A CEO at a DTC company must also be an entrepreneur. And I’ve always been entrepreneurial. You have to be obsessed with your work and love it. You must also be ready to take on all the stress and responsibility of running an entire company.

BuddyLove was started in 2010 by a husband-wife team, Buddy and Grayson DeFonso. Grayson designs all of our clothes. Buddy was running the operations but grew tired of it. He approached me and asked if I would be interested in joining the team.

I was ready for a change. There are limitations on how much a CMO can grow professionally. You’re either working towards an exit or trying to increase revenue. I realized that I needed to launch a business myself or run one. So it was good timing.

Bandholz: Is the job what you expected two months in?

Jaquez: BuddyLove hit $14 million in revenue last year — quite a bit smaller than the brands I came from but big enough to have money for fast growth.

BuddyLove is in a similar position to many DTC brands post-pandemic, post-low-interest rates. The company took on a lot of debt. They made some big bets with inventory and cash flow. It worked so long as sales doubled year over year.

Then they had a much slower year in 2023. The overhead and debt service caught up with them. So now we’re cleaning the balance sheet. Our focus is profits and scaling back to a lean company. Thus far my job has involved a lot of restructuring, evaluating expenses, and making deep cuts — some were painful, such as layoffs.

I thought I was good at handling pressure. I jumped on board and started digging into the numbers. I realized we needed to restructure. It took me a couple of weeks to catch my breath.

I’m happy to report that it’s working. We’re rebuilding the brand from the inside out. We’re keeping the soul intact — Grayson’s designs aren’t changing — but we are reimagining how things are run.

Bandholz: How do you earn the team’s trust as the new boss who lays off staff?

Jaquez: The day we did layoffs was one of the hardest of my career. I believe in honesty. I’m a high-care, high-honest communicator. After spending a few days digging into the books, I called the entire team together. I told everybody about the situation. I said, “This is where we’re at. This is the path ahead of us. It’s going to be painful. We have to make cuts. We have to get profitable. We have to spend less than we bring in.”

I tried to lay people off in the manner I would want if the roles were reversed. That included trying to help them find opportunities as quickly as possible. So on that day I posted on X, “These are the positions we let go. Does anybody need these roles?” Within 24 hours, I had opportunities for everyone who wanted them. A few didn’t respond to my attempts to connect them.

We were around 40 employees. Now we’re at about 24.

Bandholz: Many founders want to hire a CEO to grow the company. What does a CEO candidate look for?

Jaquez: For me it’s equity, skin in the game. I took inspiration from Elon Musk’s story of creating out-of-the-money outcomes and structuring an equity agreement to hit them. That’s what we did at BuddyLove. Every time we hit a milestone, it unlocks more equity for me. Right off the bat, I was in a better position than the one I left. So, the simple answer for an entrepreneur is to find out the compensation of the person you’re trying to recruit and make your offer much better.

That’s enough to pique their interest. Then you have to ensure you’re aligned on an exit plan and long-term goals. What kind of a company do you want? What do you sell? Hiring a CEO is one of the riskiest things you can do.

The CEO of a rapidly growing DTC brand likely earns multiple six figures annually plus equity. But here’s what founders need to hear about equity. I had an equity option at my previous employer, apparel brand Caden Lane, that would execute only at the point of a liquidation event. However, the founder was the sole shareholder and controlled when, if ever, that event would occur.

In 2021, she turned down an offer to sell for $100 million. My equity was essentially monopoly money because it didn’t mean anything unless we sold, and I had no control over whether or not we’d sell.

So, founders and CEOs should be aligned on when and how an equity stake can be monetized.

Bandholz: Where can people follow you and buy your clothes?

Jaquez: Shop for women’s apparel at BuddyLove.com. Follow me on X, @BryantJaquez.

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Feb 22 2024
Data at the center of business

With more than 5,000 branches across 48 states and 80 million customers, each with its own unique requirements to satisfy its customers’ financial needs, a clear data strategy is key for JPMorgan Chase. According to Mark Birkhead, firm-wide chief data officer at JPMorgan Chase, data analytics is the oxygen that breathes life into the firm to deliver growth and improve the customer experience.

Providing first-class business in a first-class way for clients and customers applies to every part of the firm, including its heavy investments in data analytics, machine learning, and AI. Using these advanced technologies, JPMorgan Chase can gain a deeper understanding of the breadth and specificity of the needs of the customers and communities it serves.

“It means using our data to drive positive outcomes for our customers and our clients and our business partners. And it means using this to actually help our customers and clients manage their daily lives in a better, simpler way,” says Birkhead.

At their best, a strong data strategy along with AI and machine learning adoption can free employees from tedious tasks to focus on high-value work. Reaching this extended intelligence — humans and machines working better together — means having the right deployment strategy. It’s key to understand both the potential and the limitations of these tools to make sure your enterprise is investing wisely in the areas where technologies like AI and machine learning can offer the greatest value.

“At the end of the day, what we’re trying to do is build an analytic factory that can deliver AI/ML at scale,” says Birkhead. “And that type of a factory requires a really sound strategy, efficient platforms and compute, solid governance and controls, and incredible talent.”

Adopting this vision at scale is a long-term investment that requires strong conviction, adherence to governance and controls, and operationalizing data. One of the most challenging aspects of this, Birkhead says, is defining your data priorities.

“Everyone talks about data every minute of every day. However, data has been oftentimes, I think, thought of as exhaust from some product, from some process, from some application, from a feature, from an app, and enough time has not been spent actually ensuring that that data is considered an asset, that that data is of high quality, that it’s fully understood by humans and machines.”

This episode of Business Lab is produced in association with JPMorgan Chase.

Full Transcript

Laurel Ruma: From MIT Technology Review, I’m Laurel Ruma and this is Business Lab, the show that helps business leaders make sense of new technologies coming out of the lab and into the marketplace.

Our topic is data and analytics. Building a global data strategy requires a strong understanding of governance, regulations, and customer experience for both internal and external customers. As technologies like AI emerge, the opportunity expands for real-time learnings and making better decisions.

Two words for you: data strategy.

My guest is Mark Birkhead, who is the firmwide chief data officer at JPMorgan Chase.

This podcast is produced in association with JPMorgan Chase.

Welcome, Mark.

Mark Birkhead: Thank you for having me, Laurel. It’s great to be here.

Laurel: Let’s start here. You were recently appointed to firmwide chief data officer for JPMorgan Chase. Previously you were the chief data and analytics officer at Chase and JPMorgan Wealth Management. Can you give us some insight into how your new role factors into the firm’s data strategy?

Mark: Absolutely. My new role as the firmwide chief data officer will be focused primarily on driving this strategy and solutions, that maximize the impact that data can have on our clients and customers across the globe and doing it in a highly governed and controlled ways. Data plays a huge part in our firmwide strategy. It’s been described by several of our senior leaders as the oxygen that powers the firm. And I truly believe that. Data analytics has propelled so many of our businesses, including our consumer bank and business bank, our commercial bank, our wealth management businesses, and our payments business globally. And its impact continues to grow in more meaningful ways every single day and month.

Strong data analytics capabilities really do provide the foundational underpinnings for our core business activities, but it’s actually fueling the growth of our businesses in meaningful ways. This addition is driving productivity, delivering insights that help our customers grow their businesses, and enabling our bankers and advisors to deliver elevated customer experiences.

Laurel: Thank you Mark for giving that context. As a global firm, you talk about delivering first-class business in a first-class way for clients and customers. Could you tell us how data and analytics, AI and machine learning are used to improve outcomes for your customers?

Mark: Absolutely. When we talk about first-class business in a first-class way, it really applies to every part of our firm and we’re investing heavily in data analytics, machine learning, and AI. But this is not new to us. We’ve been utilizing AI and ML for many, many years in many different ways. The Chase Analytics team actually will celebrate a sixth anniversary next March with the same mission and objective. Again, this is not new to us, but when we think about applying first-class business in a first-class way to the new set of AI capabilities, the new set of LLMs [large language models], the new set of generative AI, it means to us really honoring our customers’ expectations when it comes to privacy. It means using our data to drive positive outcomes for our customers and our clients and our business partners. And it means using this to actually help our customers and clients manage their daily lives in a better, simpler way.

I’m going to actually spend most of my time talking about my former role as the chief analytics officer for Chase and JPMorgan Wealth Management, but really our AI efforts across the globe are very similar to what has been happening at Chase and JPMorgan Wealth Management. It’s really been focused on improving the financial health for our customers and our clients. Today, JPMorgan Chase serves over 80 million customers in the US and we use advanced analytics to deliver best-in-class experiences and to respond to the needs of our customers. And our customers have all kinds of situations at any given moment in time. And at one moment we’re planning for college and other times we’re dealing with some difficult times in a family situation. And being able to have the right tools for our bankers, for advisors, for our call center agents to utilize is really important to us.

And I mentioned the breadth of data analytics as being the oxygen of the firm, and that really is reflected in the Chase business. And one of the hardest parts of the CDAO [chief data and analytics officer] job is to determine what investments to make and where to focus our attention when it comes to solving data problems and also determining where we have to lead with AI/ML and when we actually don’t. For us, there’s a couple of things that we always have to lead in given the nature of our business. We have a branch network of 5,000 branches. It covers all over 48 states. And we’ve got to lead with geospatial analytics and that heavily utilizes AI and ML to determine the optimal placement of our branches, of our network, of our community centers, and for the staffing within those branches. We also have over 60 million digitally active customers.

We have to lead in product analytics, experimentation, understand the customer experience in a journey, and how they interact with our products across multiple channels. It might start in a branch, end up in a mobile app, and end up in a call center, but all that has to be stitched together. We also have to lead when it comes to preventing fraud, and it has really become a difficult task given what’s going on across the world. But protecting our customers, from these types of acts, is incredibly important to us.

And we also need to make sure that within our branches, within our customers, they get the best experience possible, which means really using data analytics, machine learning, AI to understand our customers and communities in deeper ways. And in fact, for our 5,000 branches, there’s not a lot of similarities. And we actually have to prepare playbooks for these branches to make sure our employees are trained on these types of situations, the needs of their customers and clients so they can actually produce the best possible service. The only way to deliver all that at our scale is through leveraging data analytics, machine learning, and AI.

Laurel: Touching on that, at its best artificial intelligence, machine learning, and a robust data strategy can automate those tedious tasks to free people up to focus on high-value work. How do you think about that as an ongoing effort?

Mark: We think about this a lot and innovation has cycles, and that includes my field as well. But those cycle times are really changing and becoming more compressed, and that’s drawn a lot of attention and scrutiny particularly to the field of AI. At the end of the day, with the emergence of LLMs and generative AI, there’s just more opportunities to enhance the work of our employees day-to-day. Sandy Pentland, who helped form your MIT Media Lab, really described a few years back to our employees, this interaction is extended intelligence, humans and machines working better together. And this is actually one of our highest priorities at JPMorgan Chase, leveraging machines to help our employees do their jobs better for our customers and for our clients. And today we’re exploring experimenting with LLMs in a number of capacities. But it’s really important to understand what these tools can do well and what they can’t, and then making sure that we’re actually organizing ourselves against them and making the right investments in people and resources in those areas where these actual tools can help us to the greatest extent.

It’s also important that we focus on the governance and controls around this. And all that comes into play when it comes to figuring out what we do with these tools and how we apply them. I was meeting with our global marketers a couple of weeks ago, and every time I do this and talk about our plans for generative AI across the firm or at Chase, talk about the impact it can have on JPMorgan Chase, I get two types of questions. One is, “What does this mean for me and my employees?” And I think the answer is, with any type of technology, it’s not exactly going to take your job, but people who do use this technology will. And that’s the same thing with AI. And the only caveat to all of this is I think when it comes to this type of technology and capability, particularly with generative AI, those that understand what this does well and what it doesn’t, will actually have a leg up and be better positioned to actually succeed.

The second question I always get is, “If we’re always using the same tool for every company, the same model, aren’t we all going to sound the same?” And that’s where I think the relationship of the business and our models and data scientists has to evolve. Every time we build a model or an AI solution, we always engage with the business. But I think given what’s going on now with LLMs and generative AI, it’s really important to mature that model. The thinking around design and analytics needs to change to ensure that we incorporate the brand voice, the marketers’ voice into these solutions to make sure that the content that we deliver using these tools reflects the brands that the customers have come to know is really important. And this entire operating model has to evolve. And I think it presents really exciting opportunities to go deeper with customers in meaningful ways, but it requires the model to change.

Laurel: Speaking of having a leg up, successfully deploying AI and machine learning has become a competitive differentiator for large enterprises. What are the challenges of deploying AI and machine learning at scale? And then a second big question is, as regulations for AI and machine learning evolve, how does the firm manage government regulations?

Mark: That’s a great question. And first, I would say across JPMorgan Chase, we do view this as an investment. And every time I talk to a senior leader about the work we do, I never speak of expenses. It is always investment. And I do firmly believe that. At the end of the day, what we’re trying to do is build an analytic factory that can deliver AI/ML at scale. And that type of a factory requires a really sound strategy, efficient platforms and compute, solid governance and controls, and incredible talent. And for an organization of any scale, this is a long-term investment, and it’s not for the faint of heart. You really have to have conviction to do this and to do this well. Deploying this at scale can be really, really challenging. And it’s important to ensure that as we’re thinking about AI/ML, it’s done with controls and governance in place.

We’re a bank. We have a responsibility to protect our customers and clients. We have a lot of financial data and we have an obligation to the countries that we serve in terms of ensuring that the financial health of this firm remains in place. And at JPMorgan Chase, we’re always thinking about that first and foremost, and about what we actually invest in and what we don’t, the types of things we want to do and the things that we won’t do. But at the end of the day, we have to ensure that we understand what’s going on with these technologies and tools and the explainability to our regulators and to ourselves is really, really high. And that really is the bar for us. Do we truly understand what’s behind the logic, what’s behind the decision-ing, and are we comfortable with that? And if we don’t have that comfort, then we don’t move forward.

We never release a solution until we know it’s sound, it’s good, and we understand what’s going on. In terms of government relations, we have a large focus on this, and we have a large footprint across the globe. And at JPMorgan Chase, we really are focused on engaging with policymakers to understand their concerns as well as to share our concerns. And I think largely we’re united in the fact that we think this technology can be harnessed for good. We want it to work for good. We want to make sure it stays in the hands of good actors, and it doesn’t get used for harm for our clients or our customers or anything else. And it’s a place where I think business and policymakers need to come together and really have one solid voice in terms of the path forward because I think we’re highly, highly aligned.

Laurel: You did touch on this a bit, but enterprises are relying on data to do so many things like improving decision-making and optimizing operations as well as driving business growth. But what does it mean to operationalize data and what opportunities could enterprises find through this process?

Mark: I mentioned earlier that one of the hardest parts of the CDAO job is actually understanding and trying to determine what the priorities should be, what types of activities to go after, what types of data problems, big or small or otherwise. I would say with that, equally as difficult, is trying to operationalize this. And I think one of the biggest things that have been overlooked for so long is that data itself, it’s always been critical. It’s in our models. We all know about it. Everyone talks about data every minute of every day. However, data has been oftentimes, I think, thought of as exhaust from some product, from some process, from some application, from a feature, from an app, and enough time has not been spent actually ensuring that that data is considered an asset, that that data is of high quality, that it’s fully understood by humans and machines.

And I think it’s just now becoming even more clear that as you get into a world of generative AI, where you have machines trying to do more and more, it’s really critical that it understands the data. And if our humans have a difficult time making it through our data estate, what do you think a machine is going to do? And we have a big focus on our data strategy and ensuring that data strategy means that humans and machines can equally understand our data. And because of that, operationalizing our data has become a big focus, not only of JPMorgan Chase, but certainly in the Chase business itself.

We’ve been on this multi-year journey to actually improve the health of our data, make sure our users have the right types of tools and technologies, and to do it in a safe and highly governed way. And a lot of focus on data modernization, which means transforming the way we publish and consume data. The ontologies behind that are really important. Cloud migration, making sure that our users are in the public cloud, that they have the right compute with the right types of tools and capabilities. And then real-time streaming, enabling streaming, and real-time decision-ing is a really critical factor for us and requires the data ecosystem to shift in significant ways. And making that investment in the data allows us to unlock the power of real-time and streaming.

Laurel: And speaking of data modernization, many organizations have turned to cloud-based architectures, tools, and processes in that data modernization and digital transformation journey. What has JPMorgan Chase’s road to cloud migration for data and analytics looked like, and what best practices would you recommend to large enterprises undergoing cloud transformations?

Mark: We’ve been on this journey for quite some time across JPMorgan Chase and globally. And we have a really solid relationship with our technology partners, with our cloud providers, and we really have ensured that as we move up to the cloud, we do it safely and thoughtfully with a sound strategy and governance and controls. And that’s been the first and foremost piece I would say with regard to a business like Chase and JPMorgan Wealth Management, which into itself is incredibly large and we’ve talked about this publicly many, many times. It is something that requires conviction and a sound data strategy, but at the end of the day, we are not just moving to the public cloud. We’re going to do that with modernized data, but we’re also going to improve governance and controls while improving the user experience.

And to do all of that, it’s a massive undertaking. And to ensure that our data is discoverable and easily usable where our analysts require us to make informed decisions when it comes to these investments, as well as these different types of choices and staging of the work product. And as we think about this, and my advice to others would be to do the same. If you look at the user experience when it comes to your data scientists and your modelers and how they spend their time, what their challenges are, what your analytic priorities are, all those have to be brought together before you actually start building out a data strategy. Otherwise, you’ll be building things that you may not need. And this is already hard enough, why not make it easier by understanding what you’re trying to build, what user population is looking for and then building to that specifically and then staging out in the right appropriate ways?

And that’s been our journey. And we have these milestones. We have goals and everything else. We have OKRs [objectives and key results], we have product teams, we have data engineers. Everyone is aligned and doing this, and we’re focused on doing this in the right way. We’re also focused on ensuring that we can do this in many cloud platforms, not just one. And that requires modern pipelines. It requires us to organize our data differently and inventory it in a certain way and describe it in ways that are easily understandable. This is really difficult work, but it’s well worth the investment. Even if you have to go slow and make little bits of progress year over year, this will absolutely pay off.

Laurel: Speaking of that payoff, working across the company is crucial to meet goals. What is your talent and skills strategy to mobilize cross-functional teams to ensure a data literate workforce that uses both domain and technical knowledge like data science?

Mark: Absolutely. And I’m really proud of our focus on talent, not only across JPMorgan Chase, but at Chase specifically. It has been really difficult to find great talent in this space. And once you have them, you want them to stay, you want them to grow, you want them to feel supported, and you want them to feel challenged, and you want them to be able to experiment and to work and design solutions that are elegant, that meet the needs of customers and that are advanced. And as we think about all of this, there’s a number of buckets that we’re really focused on.

First, in terms of attracting talent, we do have a very robust campus program. We have a very robust internship program, and we have a very robust rotational program that actually spans the firm. And in Chase, this rotational program has existed for many, many, many years. And it really gives data scientists and aspiring data scientists a chance to spend a couple of years with us, move across the bank and the firm, and to really understand what it’s like to work in various different types of settings and before they land in a job or land in a function or a field.

And that’s one piece. It’s really understanding the community, the new talent coming in at campuses, out of graduate programs, out of Ph.D. programs, and making sure that we have the right types of programs that meet their needs. And that’s one piece. We’re also really focused on our existing talent and our existing talent is absolutely incredible. And they come to us because they want to continue to grow. They want to continue to learn. And we’re heavily investing in training to make sure that learning development opportunities are available to our existing employees and design for the different types of data users and the different types of career goals that they have. And that’s a great thing about our field today. There are so many avenues with which you can go.

And it’s really exciting to actually be able to pick in adventure, pick a career with a firm like ours, at JPMorgan Chase. And then as I mentioned before, we are really focused on our communities and giving back. And in addition to our campus programs, we also try and invest in talent that may not actually come to work for us ever. And we do have hackathons. We bring in hundreds of college students twice a year for our campuses. We pay for everything. And they go through a twenty-four-hour hackathon where they work with other teams, meet other students, work with JPMorgan Chase volunteers, and really try to solve problems for a local nonprofit. And those hackathons really are investment in the next generation of analytic talent, but it also gives them an opportunity to work with real data, with real problems, and to learn a little bit and to help build the community.

And then lastly, we have programs around Data for Good, and our employees absolutely love this. We partner with over 30 nonprofits over the past two years to help them solve their needs. And nonprofits are amazing at serving their communities and finding needs. They’re not always great at bringing tech stacks or digital solutions or using data or analytics to help their nonprofits. And we have great partnership with them. All of this encompasses our talent strategy. It’s focused on engaging students early on in the process, experienced hires, developing our core talent, and giving them opportunities to do things beyond their core job, like giving back to their communities.

Laurel: Mark, thank you so much for joining us today on the Business Lab.

Mark: Laurel, thank you so much for having me. It was great to be here.

Laurel: That was Mark Birkhead, firmwide chief data officer at JPMorgan Chase, who I spoke with from Cambridge, Massachusetts, the home of MIT and MIT Technology Review.

That’s it for this episode of Business Lab. I’m your host, Laurel Ruma. I’m the global director of Insights, the custom publishing division of MIT Technology Review. We were founded in 1899 at the Massachusetts Institute of Technology, and you can find us in print, on the web, and at events each year around the world. For more information about us and the show, please check out our website at technologyreview.com.

This show is available wherever you get your podcasts. If you enjoyed this episode, we hope you’ll take a moment to rate and review us. Business Lab is a production of MIT Technology Review. This episode was produced by Giro Studios. Thanks for listening.

This content was produced by Insights, the custom content arm of MIT Technology Review. It was not written by MIT Technology Review’s editorial staff.

This podcast is for informational purposes only and it is not intended as legal, tax, financial, investment, accounting or regulatory advice. Opinions expressed herein are the personal views of the individual(s) and do not represent the views of JPMorgan Chase & Co. The accuracy of any statements, linked resources, reported findings or quotations are not the responsibility of JPMorgan Chase & Co.

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Feb 17 2024
Grow or Die, Says Momentum Shake Founder

Mike Tecku first appeared on this podcast in 2019 as an Amazon marketplace seller. Shortly afterward, he sold that business, a maker of floormats. He retired, became bored, and in 2022 launched Momentum, a direct-to-consumer nutritional shake producer. He and I discussed that venture last year in his second appearance.

He’s back. Momentum Shake is flourishing, as is Tecku. He’s evolved from the nuts and bolts of making money to achieving a purpose, building a team, and self-improvement. “If I’m not growing, I’m dying,” he told me.

Our entire audio conversation is embedded below. The transcript is edited for length and clarity.

Eric Bandholz: Your entrepreneurial journey is impressive.

Mike Tecku: Growth gives me meaning and a sense of being alive. If I’m not growing, I’m dying. The American dream of not having to do anything runs counter to human nature. When I retired, I got good at golf. I read many books but could not shake the urge to solve problems. I’d be in a store and think, “This is an interesting product. I wonder if I could make this.”

I got depressed when I wasn’t working on anything. I could feel myself shrinking. About a year into that, I decided I needed to re-embrace being an entrepreneur. That’s just who I am. Those are my gifts. I wanted to use my gifts and strengths, and now I had the privilege of using them in a way that I wanted, not just to survive or make money.

The world is constantly changing. To make something perfect is impossible, but you can pursue it by continually adjusting. The farther you get along, the more precise the destination is, and the more attuned you are to your goal. You gain knowledge and make better decisions. When you’re really into something, you’re continually growing and perfecting your art.

Bandholz: How does a company strive for perfection?

Tecku: You must develop trust with your customers so they know you have their best interest at heart. If we change the flavoring of our shakes, customers worry we’re making it cheaper when the reality is the opposite. You must be transparent with customers and communicate that you want to add more value without increasing their costs. It’s essential to zoom out beyond supply and demand. What advantage can you bring to the market besides making more money?

I want to produce a product 10 times better than everybody for the same price. Most businesses are just media and marketing platforms. They don’t touch the product. If they’re doing anything at all, they’re selling commodities. I want to make something that is a masterpiece and stacks much value into it.

That wasn’t happening with our outsourced manufacturer. I love those people, but they can’t innovate at the speed I want. I can cut costs by 30% when I take over manufacturing. I can shrink cash flow, increase quantity, reduce costs, and improve quality. The only way to do that is through owning the manufacturing process.

Bandholz: What are the pitfalls of in-house manufacturing?

Tecku: The first step is believing it’s doable. I spent 10 years thinking manufacturing was complicated and beyond my expertise. But I had to start questioning myself. Why can’t I assemble a team of intelligent, hardworking individuals? Why can’t I solve those problems?

The goal is to make manufacturing easy. If I can build something simple and scalable, it will be more secure and reliable. I like to forecast five to seven years down the road. What are my goals? I want to scale to a hundred million dollars. What does that look like in the number of units I need to make a day and the machines capable of that?

I’m buying machines to simplify and reduce the chance of error. We can’t eliminate mistakes, but we can streamline processes, steps, and inputs. The machines I’m buying should be able to make a thousand bags an hour with one employee. That’s a scalable system.

Bandholz: You have a single SKU earning thousands of dollars monthly. You’re not touching it. There’s beauty in that.

Tecku: It is beautiful because it frees me for growth and improvement. Recall the old phrase, “Work on your business, not in it.” That can’t change. You have to be on top looking at the pieces. My job is decision-making. I want two hours of hyper-focused thinking every day.

Constantly executing is not the best use of my skills. Some people are way better at it. I consider all components of the business to be assets. The manufacturing facility I’ve been building for the last six months is an asset. I want it to run perfectly without me. That involves the machines, the space, the team — every decision.

Bandholz: I struggle with shifting from the execution role into strategy and decision-making.

Tecku: I try to check with my team to see if they need something from me. I have to remind myself this is what they’re good at and that they appreciate my trust in them. If you want to create independent people who think for themselves, you have to let them fail. My job is to determine the next step. There’s no right path. It requires a lot of walking around, reading books, talking to folks, and paying attention.

Bandholz: Where can folks follow you?

Tecku: Our site is MomentumShake.com. I’m on LinkedIn.

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Feb 15 2024
How the internet pushed China’s New Year red packet tradition to the extreme

This story first appeared in China Report, MIT Technology Review’s newsletter about technology in China. Sign up to receive it in your inbox every Tuesday.

If you ask any child in China what’s the most exciting thing about welcoming another year, they are likely to answer: the red packets. It’s a festive tradition: During the holidays, people give out red envelopes full of cold hard cash to young members of the family. You can reliably get cash gifts every year until you graduate from school and start working full-time.

So this week is a great opportunity to talk about how the tradition of giving red packets, which has been around for hundreds of years, has evolved in the digital age. Even though I’m not in China now, I still managed to send two red packets to my nephew and niece, through mobile payments on WeChat.

In fact, red packets have not merely turned from a physical activity to a digital one. They’ve become a way for Chinese tech companies to make a stack of money each year and attract new users and traffic. In return, users have to follow increasingly complicated rules to get a few bucks.

The digitization of red-packet giving started in the early 2010s, when super apps like Alipay and WeChat made it convenient for everyone to send and receive money on their phones. They also introduced mechanisms that breathed new life into the tradition, like a randomization allotment system, where people put one giant red packet in a group chat, and everyone opening it will get a random share of the total amount. 

The promise of variable rewards increases the feeling of excitement when you get a big share. It also prompted those who didn’t get much to ask for another chance, which has really made it a centerpiece of the new red packet culture.

And it didn’t take long until tech companies became the ones giving out the money.

In 2015, WeChat decided to give out over $80 million in red packets during the Spring Festival Gala, a yearly tradition in China that gathers the family around the TV. To get a share of WeChat’s red packets, people had to shake their phones at a certain time of the show. According to data provided by WeChat, throughout Lunar New Year’s Eve, people shook their phones 11 billion times. At the peak, people shook their phones 800 million times in just one minute. 

This immense success inspired every other tech company in China to join the game and spend millions of dollars. Today, every major app offers a version of that promotion during the new year. But what users need to do in return has become much more complicated.

1For example, to participate in one of the red packet events this year on Douyin, the Chinese version of TikTok, users have to complete a series of tasks: log in every day, invite new users to the platform, upload an avatar, follow certain accounts, set up a group chat, post a gif in the group chat, make a video call, upload a video, watch videos for a minimum amount of time, and download other apps. The more time you are willing to spend on these tasks, the more you will get back from the app.

The 2010s saw immense growth in China’s mobile internet sector, and one of the lasting outcomes is that apps have gotten very sophisticated at gamifying their gimmicks to attract users and traffic. The new year’s red packet promotions are essentially the pinnacle of these promotion gimmicks. 

As the rules get increasingly convoluted, most people don’t have the time to follow up with every single mini-game. I stopped participating in these red packet promotions years ago because the payout is always abysmal compared to the efforts required. (Am I willing to message five of my college friends whom I haven’t spoken to for years in order to get this $5 cash gift? No.)

But there are still people who treat it seriously. As Chinese publications have reported, some people, particularly those who are less well off, would study the rules of these red packet games thoroughly, hoping to make a fortune with them. Since the games reward social interactions, some people actually pay others with their own money to join in the efforts. New apps have even emerged that connect people who are gaming the system.

This is a side of the Chinese tech world that the outside doesn’t often get to see. The Chinese mobile internet industry is saturated with mini-games or incentives that are designed to chase infinite growth. 

Thanks to Temu, the Chinese ultra-fast e-commerce app that’s spending millions of dollars on Super Bowl ads, users outside China can also get a taste of these gimmicks. The spinning wheel of coupons, the never-ending request to invite new friends to join the app, and the farming mini-game to keep you hooked—these are the tactics that Chinese users are all too familiar with. 

From what I have heard, most people still see it as a nuisance. But as the longevity of red packet promotions in China shows, once companies find the right audience and the right profitability model, these stunts could become a fact of online life for all of us. 

Did you get any digital red packets this year? Let me know your experience at zeyi@technologyreview.com.

Catch up with China

1. Sam Altman’s plan for a $7 trillion-worth semiconductor empire includes building dozens of chip fabrication plants with money from Middle East investors, then having the Taiwanese chipmaker TSMC run them. (Wall Street Journal $)

2. A former TikTok executive is suing the company for unlawfully firing her due to what they called a lack of “docility and meekness.” (Financial Times $)

3. If he’s reelected, Donald Trump is promising a 60% tariff on all Chinese imports. If that actually happens (big if), it would almost wipe out all imports from China by 2030. (Bloomberg $)

  • For the first time in 22 years, Mexico has surpassed China to be the United States’ largest import source. (ABC News)

4. Members of the European Union have had a falling out because of their different positions on China and how to handle trade across economic sectors. (South China Morning Post $)

5. A new report found more than 100 websites disguised as local news outlets in Europe, Asia, and Latin America are actually part of an influence campaign linked to a Beijing public relations firm. (Reuters $)

6. How Hefei, a city in central China, rose up to become a leader in electric-vehicle production by investing government money in fledgling startups. (New York Times $)

Lost in translation

While we are on the topic of digital red packets, people are selling AI-generated artwork as red packet designs this year, according to the Chinese publication Guokr. After WeChat allowed users to customize what their red packet looks like on the app in 2019, a new business has emerged to let people spend a few bucks and get a new look for their digital gifts every year. Successful artists can make a decent bit of money with it. 

However, the industry is now unsurprisingly being disrupted by image-making AIs like Midjourney. There’s even a burgeoning entrepreneurial scene where people repackage these AI services to tailor them to design red packets, simplifying the process. On social media, some people are promising that you can earn quick cash by generating AI red packets, attracting others to cash in on the trend. But in reality, there are still many obstacles to fine-tuning the designs and gaining traction among potential buyers. 

One more thing

You might not be able to get an Apple Vision Pro yet, but you can hop on a Hainan Airlines flight, where all passengers are given a pair of augmented reality goggles made by a Chinese company for free in-flight entertainment. They look so much lighter than Apple’s headset. I want to try them out!

Passengers making their way from Shenzhen to Xi'an aboard Hainan Airlines flight HU7874 on February 7th were treated to an immersive entertainment experience with Rokid AR Entertainment Kits.

ROKID
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