A platform is a business that connects people through technology, making an ecosystem that allows value to be created and exchanged. Platforms can host several different kinds of users, like how Amazon has both sellers and buyers, or they can have one primary type of user, like Facebook’s community of users who interact with each other socially. The significant thing in common is that they bring people and organizations together in one place where they can interact with one another. Platforms match users for financial or social transactions, which creates value.

Online Platforms: A Primer

Platforms are businesses that match users to each other in order to make financial or social transactions that create value. Value arises from the community the platform serves.Platforms multiply profit because they benefit from network effects, which can help the value of a network to grow exponentially. As individuals join, the potential number of connections between individuals skyrockets algorithmically, making the network more valuable.Network effects are the result of increasing value for those who are already on the platform, and they increase with the scale of the platform.

The Network Effect

Because platforms don’t own the resources that create value, they can grow much faster than pipeline businesses. Platforms also scale better. Growth isn’t tied to resources, so it can occur faster. Platforms bring new supplies to market because users are always coming up with new things.There are still plenty of pipeline companies still around today, but whenever they have to compete against a platform business, they lose.Platforms invert the firm, which is to say that many of the processes that take place inside pipeline companies are external in platform companies.

Better And Faster Scalability

Platforms typically enjoy two-sided network effects. The two sides required for interaction attract each other; for example, on a site with buyers and sellers, the presence of buyers attracts sellers, and the presence of sellers attracts buyers. Network effects can come from and affect both sides of a network.Platform businesses are the most efficient value creators, compared to other types of businesses, because they harness the power of network effects.

The Power of the Platform

Frictionless entry makes it possible for users to quickly and easily join a platform.Side-switching platforms allow users to switch roles. Beware of negative network effects. If there are lots of users, it can overwhelm the system.There are positive same-side effects, which are good effects that increase on one side. Negative same-side effects. For example, an increase in users can increase competition.Positive cross-side effects. When there are more vendors, consumers have greater choice.  Negative cross-side effects. Too much choice, too many ads, too much competition, etc.

Network Effects: The Good And The Bad

Deciding where to begin in platform design is difficult. Copying other companies doesn’t always work because platform businesses tend to be different from each other. Instead of trying to imitate another platform, the focus should be on the interaction. Platform design should always start with the core interaction. The core interaction has three components: participants, value unit and filter. After figuring out what the core interaction is to be, design the components in the above order.

Architecture: Principles for Designing a Successful Platform

Three of the most important functions of a platform are pull, facilitate and match. Pull attracts users to the platform. To facilitate transactions the platform provides tools and rules; this is the scaffolding of interactions. And platforms must match users to each other. The right consumers should find the right producers.

Functions Of A Platform

The more peripheral a feature is to the core mission, the more peripheral it should be on a platform. If only some users need it, then it shouldn’t be junking things up in a central location. This will make the system run more efficiently.Always leave room for organic and spontaneous change. Look at how users are behaving; see if they’re putting the system to unexpected uses. This can suggest new directions for the platform to take.

The End To End Principle

Platforms are places where buyers and sellers can come together and transact business. It isn’t a business model. Platforms have been around for ages. Platforms include traditional marketplaces where goods, like produce, are sold.Platforms eat pipelines.  The internet has largely replaced newspapers as the main source of news for many people. News organizations don’t have to pay for paper, printing, distribution and countless other expenses when they publish online. An efficient method of dispersing the news “ate” a less efficient pipeline.

Disruption: How Platforms Conquer and Transform Traditional Industries

The internet provides infrastructure and coordinates communication. Platforms make use of these features for transactions all over the planet. There are several reasons for this. <ul><li>The internet can reduce costs, as it did in the news industry. </li><li>Platforms find new sources of supply. They make it easier for producers to participate, it’s easier to get their products into the value chain.</li></ul>

Reducing Costs

Platforms enable new forms of consumer behavior. People will gladly jump into a stranger’s car when they use Uber. It wasn’t too long ago that such behavior would have been considered crazy dangerous. Platforms enable this because they have built-in mechanisms to engender trust between users.Platforms change quality control into user driven curation. Users gravitate towards higher quality goods, edging out the less desirable products.

Taking The Uber Ride

Separating assets from value. Ownership of assets like equipment should be separated from value. For example, pooling the use of a MRI machine means everyone can use it without having to buy their own.Re-intermediation. There are new kinds of middlemen. For example, executives in the music industry used to rely primarily on agents in order to find new talent. Now they’re just as likely to trawl YouTube in search of good acts.Market aggregation. Markets combine and become centralized. For example, Alibaba has created a single platform for wholesalers all over the world.

Three Different Kinds of Platform Disruption

<ul><li>Follow the rabbit. Set up a non-platform demonstration so people will know how cool your platform is.</li><li>Piggyback. Recruit users from other platforms.</li><li>Seeding. Create value that will appeal to at least some users.  </li><li>The marquee strategy. Identify key users. Bribe them; treat them well.</li><li>The single-side strategy. Create a business around products or services that benefit a single set of users.  </li><li>Producer evangelism.  </li><li>Big bang adoption. Use traditional push marketing to create a big splash that draws attention to the platform </li><li>The micro-market strategy. Target a tiny, existing market.</li></ul>

Eight Ways to Launch a Successful Platform

Viral growth is a pull process. Create an environment where users tell new people about the platform. Viral growth depends on the user to be the sender. The sender shares a value unit. Allow the value unit to spread to existing networks. Then there has to be an actual recipient to receive the value unit. Viral growth can accelerate the platform’s expansion at an extremely rapid rate. Facebook is an example of a platform where users draw in more users through viral growth.

Viral Growth

Charge a transaction fee. This way, people aren’t discouraged from joining the site to begin with.Charge for access. For example, on employment websites recruiters usually pay to list jobs.Charge for enhanced access. LinkedIn is free to users, but they can pay a fee to see complete listings of the people who have looked them up. Charge for enhanced curation. Offer high quality. People are more than happy to pay a premium to purchase the things they want if they can easily get exactly the thing they want.

Monetization: Capturing the Value Created by Network Effects

To be open means to have no restrictions on development, commercialization or use. In another definition, it can mean that any restrictions — like rules and fees — are reasonable and nondiscriminatory.Getting the right amount of openness is difficult, but important. Openness encourages innovation, but the more openness there is the harder it is to monetize and control a platform.

Openness: Defying What Platform Users and Partners Can and Cannot Do

In manager and sponsor participation, the sponsors control the platform architecture, the manager controls interactions. Often these two roles are played by the same entity.Developer participation has two different kinds of users. Core developers are usually employees. Extension developers add value to the platform, usually from outside the business. With user participation, any user might have the ability to freely add content. The problems with this kind of participation includes the possibility of lower value content. It’s useful to find some way to curate the content.

Three Kinds of Decisions About Openness

Governance is all about creating good rules. A platform is composed of a community of users. Like all healthy communities, there need to be rules protecting the members of the community. The wrong kind of rules, however, can alienate users. To avoid this, platforms should observe three fundamental laws of good governance. <ul><li>First, rules should always create value for the customer. </li><li>Second, those writing the rules shouldn’t use their power to change the rules in their favor. </li><li>And finally, platforms should never take more than a fair share of the wealth.</li></ul>

Governance: Policies to Increase Value and Enhance Growth

Tools for governance include laws, or platform rules, and norms, the desirable behavior within a community. Architecture, or programming code, can be used to reinforce desired behavior and make unwanted behavior difficult to perform. And finally, markets, including not just financial monies but also social currency. Orderly markets reduce risk for the participants.

The Tools For Governance

The way to understand what’s going on with a system is through metrics. By measuring the right things, needs, performance and other aspects of the system can be assessed.Platforms are a new business model that require new ways to keep track of what’s going on.Platforms must track and manage a different set of metrics than the old pipelines did.Platforms create value through network effects. Good metrics focus on positive network effects and the activities that can affect them.Rate of interaction success is important. A high rate of successful interactions draws users.

Metrics: How Platform Managers Can Measure What Really Matters

Liquidity means that there are some producers and consumers, and there is a high percentage of interactions. You can track liquidity by measuring the percentage of listings that lead to interactions. It’s also important to look at illiquidity, which happens when transactions aren’t possible. For example, when Uber users want a ride but there are no cars available. People get frustrated by these kinds of things and can become so discouraged that they leave the platform.

Liquidity

Matching quality measures how well the search algorithms match users to make transactions. People want to find what they’re looking for. Search results shouldn’t bring up a bunch of noise that users must sift through. A good metric to measure this is the sales conversion rate — the percentage of searches leading to interactions.Trust is essential. No one will risk money to buy something if they can’t trust the site to provide them with high quality information about the product and the transaction. Trust is built through careful curation.

Quality and Trust

When users go to a number of different sites to do similar kinds of transactions, it’s known as multi-homing. It’s better for the platform if it can keep all those tasty transactions at home on the platform. One way to accomplish this is to limit platform access. Platforms should try to get exclusive access to essential assets so users won’t want to go to other platforms.It’s always a good strategy to foster innovation and capture its value. Keep a close watch on the apps that are developed for the platform. Absorb those apps that look like they might take off.

Strategy: How Platforms Change Competition

Regulations should be reevaluated everywhere because the whole game has been changed by platform businesses. Often enough, new economy businesses have just ignored existing regulations. This has brought a host of ethical problems.Dominant platforms might resist change and innovation- after all it’s the status quo that gives them the edge. This does not serve the public good. People won’t have access to the improved technology.

Policy: How Platforms Should (and Should Not) Be Regulated

There are many industries that will probably convert to platform industries in the coming years, these include information intensive industries, industries with non-scalable gatekeepers, highly fragmented industries and industries characterized by extreme information asymmetries.Industries that are resistant to platform transformation include industries with high regulatory control, industries with high failure costs and resource intensive industries.

Tomorrow: the Future of the Platform Revolution

Uber. Airbnb. Amazon. Apple. PayPal. All of these companies disrupted their markets when they launched. Today they are industry leaders. What’s the secret to their success? These cutting-edge businesses are built on platforms: two-sided markets that are revolutionizing the way we do business. 

A practical guide to the new economy that is transforming the way we live, work, and play.

Discover the world of business and economics.

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Economics

technologyandthefuture

Technology & The Future

business

Business

books

Books

Platform Revolution

Because B2B transactions tend to be larger and vendor relationships longer-lasting, B2B companies must rely more on relationships and partnerships to expand into new markets.Entire business models may be built on partnerships that allow companies to serve customers they otherwise couldn’t.

Expanding into Business-to-Business (B2B) takes more than just opening a new page on your website

Consumer decisions can be based on emotions, personal preferences, and peer influence. Decision-making in businesses is much more complex.More people have to weigh in, and there’s a strong emphasis on desired business results, such as reduced expenses and overall benefit to the client’s company.Emotion really has little to do with solar when it’s a business decision.

How Will You Appeal to Customers?

Both consumer- and business-facing companies have to pay attention to the fundamentals and realities of today’s environment. Meaning, technology is a critical factor. More specifically, a company’s digital marketing, web presence, social media, and SEO efforts must work together seamlessly to translate search <a href="https://www.boostability.com/seo-from-rankings-to-revenue-infographic">rankings into increased revenue</a>.It’s all about presence, traffic, lead generation, and converting a prospect into a customer—whether that customer is an individual consumer or a business.

What is Similar Between B2C and B2B?

Now is a great time for B2C companies to expand into the growing B2B marketplace, but success will depend on how well you understand the differences between these two market segments.

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Marketing & Sales

Here's How B2C Companies Can Break Into B2B Markets

“You can’t control time, but you can control your attention. We can all improve productivity if we can systemize the way we work. Instead of looking for the latest tips and tricks, we need to work on attention and workflow management to improve productivity. This involves a collection of behaviors, not done by an app or software.”

<ul><li>Reactive and Distracted: This state is superficial. Your attention is divided and you may be trying to multitask. </li><li>Daydreaming: This state is when you are choosing not to focus on anything in particular. </li><li>Focused and Mindful: This state is where you’re fully present and deliberately avoiding distraction. </li><li>Flow: If you’re lucky, your brain can tip from focused and mindful into flow. This is a state and not a behavior. It’s when you’re laser-focused and fully absorbed in a task. You are disengaged from your sense of self and work is effortless. </li></ul>

4 brain states and how they impact your productivity

The ultimate goal of attention management is to recognize which brain state you’re in and then shift to the one that will help you produce your best results in that moment. Each of the four brain states has a related amount of attention and effort or control.For example, if you are in a reactive and distracted state while you’re trying to work on a project, you won’t be able to get traction. This state is not conducive to focused work. But if you can recognize that’s where you are, you can take steps to move into a focused or mindful state, says Thomas.

Using the 4 states

“Attention management skills are critical to taking back control. They allow you to refocus your day on your priorities, so you can make progress on meaningful work instead of reacting to every incoming [demand] on your attention.”

Instead of using traditional time management techniques, we need to manage our attention and workflow.


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Productivity

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Time Management

How to tap into your brain’s 4 attention states to get more done

<ul><li>Even the technology that is mechanical, was built by a problem solver. The only thing that changes is the tools these problem-solvers use. </li><li>For developers, writing code can become muscle memory, like speaking in your native language, simply writing code is not where we problem solve.  Solutions designed by programmers are creative. </li><li>As you progress in your career as a developer, you will probably write less code and solve complex problems at a high level without worrying about the low-level details. So the really useful skill is being able to problem-solve with the resources that are available.</li></ul>

Developers are problem solvers

In a sea of options available to learn computer science, Learnly might be the right fit for you. 

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Career

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Problem Solving

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Computer Science

You Cannot Learn Coding without Problem-Solving Skills

When it comes to executive compenation, including bonus plans, there is no one-size-fits-all solution.

There's research done on how cash bonuses work. Bonus plans have a significat impact on the executive's incentives to boost corporate performance.  The research found that bonus plans ultimately facilitates better cooperation across top management teams because it holds senior executives collectively responsible for key performance measures and promote "mutual monitoring" and other collaborative behavior among team members.

Cash Bonuses Work

Bonus plans are pretty ubiquitous and many executive bonus structures don't use a bottom-line net income to gauge performance but instead they use figures higher up on the income statement like EBITDA (earnings before interest, taxes, depreciation, and amorization).  Trying bonus-related performance to non-bottom-line financials largely help address issues related to timing. Timing mismatch causes the boards to disregard costs of certain investments.  Moreover, CEOs hired from outside businesses are likely to be shielded by the board through bonus-plan structures.

Bonuses and Cost-Shielding

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Personal Development

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Leadership & Management

Executive Bonuses Might Work Better Than You Think

This is a balancing act. A low price isn’t always ideal, as the product might see a healthy stream of sales without turning any profit. Similarly, when a product has a high price, a retailer may see fewer sales and “price out” more budget-conscious customers, losing market positioning.Ultimately, every small business will have to do its homework. Retailers have to consider factors like cost of production, consumer trends, revenue goals, and competitor pricing. Even then, setting a price for a product isn’t just pure math (numbers behave in a logical way; humans, not so much).

Setting the right prices for your products 

<ul><li>Understand costs. If you order products, you have a straightforward answer of how much each unit costs you, which is your cost of goods sold. If you create products yourself, you’ll need to determine the costs of your raw materials.</li><li>Define commercial objective. Think about your commercial objective as your company’s pricing guide.</li><li>Identify your customers. Consider the disposable income your customers have.</li><li>Find your value proposition. What makes your business genuinely different? To stand out amongst your competitors, you’ll want to find a pricing strategy that reflects your values.</li></ul>

How to choose a pricing strategy

<ul>
<li>Cost-plus pricing: You make the product, add a fixed percentage on top of the costs, and sell it for the total.</li>
<li>Competitive pricing: It refers to using competitors’ pricing data as a benchmark and consciously pricing your products below theirs.</li>
<li>Value-based pricing: Value-based pricing refers to setting a price based on how much the customer believes a product or service is worth. It’s an outward approach that takes your target market’s wants and needs into play.</li>
</ul>

6 common pricing strategies for small businesses (part 1)

<ul>
<li>Price skimming: It refers to when an e-commerce business charges the highest initial price that customers will pay, then lowers it over time.</li>
<li>Penetration pricing and discount pricing: It’s no secret that shoppers love sales, coupons, rebates, seasonal pricing, and other related markdowns.</li>
<li>Keystone pricing: It’s when a retailer determines a retail price by simply doubling the wholesale cost they paid for a product to set a healthy profit margin.</li>
</ul>

6 common pricing strategies for small businesses (part 2)

Finding the best pricing strategy for your products is a balancing act. Here are 14 formulas to help you pick the perfect price for your products.

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Money & Investments

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Product & Design

The Price Is Right: Strategies for Finding the Ideal Price for Your Products

There's no recipe or guarantee to make it big on any platform. But lessons from personal experience and research can help you save time. Focus plus time leads to growth. Growth leads to opportunities. And opportunities can change your life. If you want to grow your Footprint on a platform or another one, you need to look at the five "be's" of platform growth.

Medium is not alone.

It pays to be early to a new platform. New community and content platforms are being created almost every month. As platforms get more and more users (like medium today), it becomes harder and harder for Holeshot. If you’re a newcomer, you’ll be able to find a personal account or a publication with less than 50,000 followers. If you’re still around, you’d be hard pressed to find either a personal account or a publication with less than 50,000

1. Be early.

In short, do your best work. People like to read things that are just good. Being good means being skilled, knowledgeable, and passionate about improving your craft. Being early is a helpful strategy to get out in front of your niche on a platform, but if you aren’t skilled, you’ll fall behind. Mediocrity is forgettable. Unfollows come from errors.

2. Be good.

Differentiation is fundamental in any economy with competition: In order for any new endeavor to succeed, it must be remarkably different. So when you enter a new community like Medium or another platform, your work has to stand out. Pick your niche (the one you love and have expertise in), and stay focused on it.

3. Be different.

<a href="https://medium.com/u/7c10a61aa346?source=post_page-----ed5f204d8f60-----------------------------------">Nicolas Cole</a> <a href="https://artplusmarketing.com/the-1-thing-nobody-understands-about-content-creation-1b2d2cf93c9d">wrote</a> that the number one key to success as a writer is volume. How will people read your work if you’re not writing it? Output (a.k.a. hard work) is the key to staying atop feeds with time-decay algorithms. Increasing your output is a way to improve the odds that your work will get in front of the right people at the right time. Be consistent, be seen, get noticed, grow a following, and maybe… get lucky (i.e., Medium picks your piece for a featured story).

4. Be consistent.

This “vulnerability” is what makes a reader relate and a story stick. It’s how writers build an empathetic connection with readers. It’s human. And it can’t be faked.If you write in a voice that is not your own, it begins to plant a question in the reader’s mind that, with time, widens from a crack to a chasm.The reader starts to wonder: Where is this coming from? I’ve seen this before — are you copying someone else? What’s the real reason you wrote this?Do this instead: Honesty, articulated crisply by a self-aware person, is always interesting to read, watch, or listen to.

5. Be real.

And I continue to witness it zig-zag as it seeks to accomplish its mission to rid the publishing industry of ads. Medium has come a long way, but it still has a long way to go (if Ev doesn’t settle…

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Reading & Writing

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Society, Arts & Culture

5 Evergreen Lessons Medium Taught Me About Growing an Online Audience

Some companies find their PM fit faster than others. The T2D3 framework shows what it takes to grow your revenue from $1M — $2M to around $100M Arr in 6–7 years. The vast majority of Saas startups will never reach this level of growth and that’s completely fine. If you talk to “traditional” Saas Vcs, they’ll probably ask themselves: “does this company have the potential to T2D3?””

1- Revenue growth: the T2D3 framework

High Churn and lack of account expansion can kill even the fastest growing companies.This is where the SaaS Quick Ratio comes in handy.SaaS Quick Ratio = (New MRR + Expansion MRR) / (Churned MRR + Contraction MRR) A Saas quick ratio superior to 4 will excite Vcs, between 2 and 4 a bit less but still OK.

2- Revenue Growth efficiency: SaaS Quick Ratio

Ltv stands for lifetime value and Cac stands for the customer acquisition cost. VCs expect that a customer generates at least 3 times what it cost you to acquire him (it’s a minimum).This ratio mixes many aspects from sales and marketing efficiency to your ability to keep users (linked to product quality and customer support). As a consequence, there are many ways to optimize this ratio and just looking at the “raw result” won’t give you many insights.

3- The LTV / CAC ratio

Churn is one of the most coveted and analyzed SaaS metrics on the internet so I won’t go into details here but just share this table by Tomasz Tunguz: You can probably be even more demanding for the Enterprise segment and expect a 0–0.5% monthly customer churn (and you generally measure Enterprise churn on a yearly basis rather than monthly).

4- Churn Benchmark

The 40% rule is that your growth rate + your profit should add up to 40%. So, if you are growing at 20%, you should be generating a profit of 20%. If you are growing at 40%, you should be generating a 0% profit. If you are growing at 50%, you can lose 10%. If you are doing better than the 40% rule, that’s awesome.

5- The 40% Rule

What's a Good or Bad North Star? • Bad: Mostly measuring price paid as opposed to value delivered • MRR, paid seats • Good: Measures value delivered in bulk • MAU, DAU, messages sent • Better: Unquestionably indicates Product-Market fit has been reached with the customer • Number of users with L28>=16 • Messages sent w/in 30 days of signup.

North Star

The majority of SaaS Investors uses the same metric frameworks and benchmarks to quickly assess the fundamentals of a SaaS company. This is why it can be interesting to know and understand them…

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Startups

6 SaaS Metric Frameworks & Benchmarks To Know Before Fundraising

Marketers use A/B tests to set different call-to-action messages against another or find which of two messages will cause the most sales on an e-commerce site. Managers can also use A/B tests for other things, such as designing the best way to motivate employees. A single A/B test can provide a significant amount of information about how employees will respond to several incentive strategies.

Using A/B testing for employee incentives

Organisations use a wide range of incentive schemes to motivate their employees: Some schemes are basic such as a base salary and a bonus if specific targets are reached. Other schemes are more complex. All involve critical decisions with critical trade-offs.  One of the only ways for managers to know if there are better incentive schemes for their particular organisation is by altering the existing scheme for a limited time and see what happens to performance.

The right incentives

Researchers found that using previously published productivity data can predict how employees perform under another entirely different incentive scheme. Researchers also used actual productivity data to test their model's ability to design a better contract. They found that using data from any two contracts could enable employers to create a third contract that reaches over two-thirds of the gains of an optimal contract.

The accuracy of the A/B test model

The data from an A/B test to create an incentive scheme is close to optimal. The A/B testing framework doesn't require the employer to understand in advance anything about their employees' preferences, such as a dislike for working at a faster pace. They also don't need to understand the effort that goes into being more productive. Employers only need to observe and react.

Benefits of A/B testing

Keeping people motivated can be tough. New research shows that a simple experiment can lead to big productivity gains.

corporateculture

Corporate Culture

To Find the Best Incentives for Employees, Start with a Simple A/B Test

<ol>
<li>Agree on what a "good workday" is. This will vary from person to person, as everyone's situation is different, but you need to set an individual track for employees that embraces quality and sustainability over quantity and busyness. Communication is the key to this, but what to communicate can be tricky.</li>
<li>Vacation time for everyone. Set a number of days, at least 20, for each employee, encouraging maximum flexibility. In addition, designate a week during the year when the business will close and employees will get paid time off without needing to use vacation days.</li>
<li>Lead by example. Having positive policies on paper means nothing if people aren't taking advantage of them, and most employees will always be cautious about getting too comfortable until they see no one is judging them for it.</li>
</ol>

Platform Revolution

Here's How B2C Companies Can Break Into B2B Markets

How to tap into your brain’s 4 attention states to get more done

You Cannot Learn Coding without Problem-Solving Skills

Executive Bonuses Might Work Better Than You Think

Charles Nichols