Adam Smith

04/28/2017

Beyond the Fairy Tale Narrative

The standard narrative of the entrepreneurial career looks something like this:

Like all fairy tale narratives, this arc is an oversimplification. Here is a more accurate map:

It can be hard to think about the big picture while you’re in the midst of building a startup. After all, that first graphic is so much simpler than the second one. Startup life is also so tough that it’s difficult to reason beyond the horizon of a single startup, and most advice out there is based around the mechanics of building a single startup versus building entrepreneurial careers. But by understanding the realistic outcomes, you’re more likely to make better long-term decisions.

The idea that you can sell a startup and then “live happily ever after” post-acquisition, in particular, is a dangerous myth. Here’s why:

'Live happily ever after' encourages lower standards for your idea. If exits are the ultimate path to success, then it’s enough just to sell your startup, which is far easier than building a lasting, at-scale company. But careers are long, exits aren’t magical outcomes for happiness and building for the longer term will offer more return on your work. Let’s say that instead you take more time upfront to find an idea that you’re deeply passionate about. That passion will result in more drive to work on it over the long term, increasing the chances of success. You’ll be more fully engaged, and willing to put in the intense levels of energy to achieve product-market success.

When things do start working, because you’ve been focused on building a long term company you will have made solid foundational decisions that will let you build upwards for the decade to follow. (I’ll be writing a follow-up post on designing solid company foundations coming soon.)

Working for the acquirers will have its own set of challenges. The acquisition process is a honeymoon period. Everyone’s excited and making promises about how awesome it’s going to be. Sometimes it is. But sometimes you’re faced with a whole new set of problems. How do you merge disparate cultures, especially when you’re the smaller group of newcomers? What’s going to happen to the product and customers? You may not be able to move as quickly. It can definitely make sense to be acquired, and most successful exits today are acquisitions, but it’s important to be aware that selling your company will bring its own set of challenges.

After leaving your startup or an acquirer, you won’t be happy doing nothing forever. You should definitely take time off, and the first few weeks or months can be deeply relaxing. But believe it or not, you won’t want to sit on a beach all day for the rest of your life. As Paul Graham says, dessert is appetizing, but we’re not meant to live off sugar. Infinite vacation sounds awesome, but fundamentally humans are built to work.

Most people also underestimate how many non-financial benefits they get from having work in their lives, including growth, identity, confidence, purpose, structure, satisfaction and social contact. Like dessert, after a certain amount of vacation, you won’t want more.

But let's imagine you exited your startup. What do you do after you’re done sitting on a beach?

Typically founders choose from four options after leaving a startup adventure:

1. Join a larger company.
2. Become a VC.
3. Start another startup.
4. Retire forever.

We’ve already covered how #4 is likely not the right choice, at least until late in life. Let’s talk about the rest:

1A. Join a larger company as a top executive.

Sometimes these are hires into new organizations, and other times acquirers preserve an acquired company, leaving them operationally independent. For example, Zappos and Twitch are still autonomous, and these kinds of exits are becoming more common as acquirers realize the challenges of integrating startups into their corporate structures — as mentioned above. It’s also a good option for making the deal sweet enough for startups to agree to be acquired and keep key people on board.

Some exits also include the founder taking over parts of a larger established organization.Diane Greene would be an extreme example: after selling Bebop to Google for $380 million she’s now Google’s senior vice president of enterprise and is doing amazing work. Jeff Bonforte, the CEO we hired into Xobni in 2008, is now running a multi-thousand person organization at Yahoo.

These are still fairly rare, however, partly because there are so few senior executive roles at large companies in the valley, and partly because few startups reach scales sufficiently large enough for their founders to acquire the skill sets of a senior exec.

1B. Join a larger company as a middle manager or individual contributor.

This is fairly common amongst founders whose startups don’t achieve escape velocity. There are many companies who want to hire ex-founders because they’re often highly motivated and talented. They also bring a spirit of innovation and disruption which can be an antidote to larger companies’ inertia and bureaucracy. Founders joining larger companies get to bring their skills to a business which is already functioning, with revenue, customers, etc, which offers a lower pressure environment. Sometimes this is just a step towards preparing to start another startup, but perhaps more often it’s a permanent downshift.

This might be a good time to say: when making career decisions, there are no universally right or wrong answers. Each person should make the best decision for them based on their own personal values and what they want at any given point in life.

2. Become a VC.

Ben Horowitz is the go-to example of a founder-to-VC transition. After selling Opsware to Hewlett Packard for $1.2 billion and working at HP as an executive, he started Andreessen Horowitz. I imagine it’s a lot of fun to help the next generation of entrepreneurs succeed, largely by helping them avoid many of the hundreds of mistakes you made as an entrepreneur.

The big asterisk in this choice is that the day-to-day of an investor is quite different from that of a startup founder. While startup founders are operating, making a hundred decisions a day, VCs green-light one or two investments a year. It’s a different lifestyle; whether that’s good or bad depends on what you want at any given stage of your career.

3. Start another company.

...The truly crazy sometimes want to do it again. : )

For me starting Kite after Xobni was a chance to recycle all the lessons I learned the hard way, and to take another shot at building an at-scale company.

While I admire those who start company after company, I think the preferred outcome is that you build a lasting company early on, and operate there for quite a while. It’s more interesting having evolving types of challenges as you grow, instead of scaling 1->20 people over and over again. And with a larger company comes larger amounts of resources that you can use to leverage your skills and a long term vision.

More about designing for the long term in our next post!

Left with the above options, what do most entrepreneurs do? I’d love to see statistics around the popularity of each of these options. My guess would be one-third each.

I’ll repeat this again: there are no universally “best” answers on career paths. My hope is that by being aware of the big picture you can engage in longer term planning both for your career and your startup.

Conclusion

In summary, post-acquisition startup life is not at fairy tale ending; after resting you’ll still want work. Build your startups for the long term. Think broadly about your career and what you may want at various career stages.

This is the first post of a series I’m writing on the entrepreneurial career. As mentioned, our next post will be about designing your startup for the long term.

05/31/2015

Cryogenics That Work

Let's say you have a deadly illness, and a cure is on its way but not close enough.

The science fiction of the past would suggest a world where people freeze their bodies to near absolute zero, only to be restored when a cure is at hand.

There are many biological problems with cryogenic "life extension". For example, water expands when it freezes.

The much better solution to this problem is jumping on a spacecraft and accelerating to near the speed of light. Time will pass more slowly for you relative to planet Earth.

Of course this approach has been the subject of science fiction as well. The thing that recently dawned on me is that you don't necessarily need a plan to slow down and return to Earth.

If you assume that the cost of propulsion drops over time, as it has so far in human history, all you need to do is accelerate to go very fast, and over time it will become cheaper and cheaper for someone from Earth to catch up to you, give you the cure, and slow you down.

There are a few coefficients in this equation, but it seems conceivable if (a) the cure isn't too far away, (b) you'd be of reasonable value to save, and (c) propulsion becomes sufficiently inexpensive.

Pretty cool! This seems far away, but the future is long. I wonder if it will ever be used.

10/07/2013

Structured Thinking versus Going With The Flow

Life is full of new situations, and when faced with one, how do you respond?

Most engineers, myself included, have spent time learning mental models that can be used to explain, predict, and reason about these new situations. Every time you learn about a new psychological bias, for example, you're learning a new mental model that can help you reason.

This approach has been best described by Charlie Munger and Ray Dalio. It's no surprise that both of these gentlemen come from finance, a world dominated by structured thinking.

But there's also the "go with the flow" approach. This approach doesn't need pros/cons lists, thinking across multiple sittings, or lots of stress about everything.

Most people aren't good at both styles of decision making, mostly because they're just not paying close enough attention to what's going on both around them and inside their head. So I tried to understand both styles in more detail, and wanted to share what I've found.

Disadvantages of structured approach

• Weak on anything that requires "street smarts"
• Makes new experiences more difficult because it requires more thinking -> end up avoiding them (bad)
• Difficult for environments/contexts that change rapidly
• Similarly, makes it difficult to be opportunistic
• Paradox of choice and paralysis of analysis when the optimal decision is unclear
• Takes a lot more work, adds additional worry to life
• Cognitive dissonance when your models aren't accurate with the world / slower and more painful to adapt
• Tends to fail more catestrophically when you don't have all of the relevant information or have some misinformation re the situation
• Can sometimes take the fun out of things that otherwise would be fun
  • Work / thinking involved
  • Biases towards being critical of things
  • Pressure to get "the right" answer

Disadvantages of "go with the flow"

• Tends to be "greedy algorithm" / no second- and third-order thinking
• Tends to get wrong answers in complex settings
• Tends to be inferior for high-leverage decision making (e.g. ceo's of large companies)
• Tends to pick decisions that bias towards short term horizons, e.g. bad for career planning, etc

How does one get better at structured thinking?

• Learn mental models and how they combine / how to use them
• Lots of practice explaining/predicting/engineering results in complex settings
• Learn to look at things from a "clean slate" perspective vs. looking at the way things are already and going from there
• Slow down and make decisions more carefully / deliberately
• Important ingredient: don't get emotionally attached to your models of something. Be willing to change your mind quickly. Jeff Bezos and Steve Jobs are famous for saying this.

How does one get better at go-with-the-flow thinking?

• Look for situations where others got the right or better answer faster, i.e. they seemed to "shortcut" to the right answer
• Err towards saying "yes" to yes/no questions, i.e. take more risks, don't turn down new experiences that will call for street skills
• Make decisions more quickly, and take decisive action more quickly
• Identify decisions that don't matter much and don't spend time on them
• Be more okay with getting the wrong answers on things

When to use each

• Social or party situations: go-with-the-flow usually dominates because it's faster (more fun), less stressful (more fun), and decisions in these contexts tend to be easy / driven by first-order factors. For example, suppose you need to decide where to eat, or which movie to watch with some friends. In this case, getting a stress-free decision is usually more important than an optimal one.
• "Strategic" decisions (in biz or personal settings, like career planning / getting married / business strategy / investing): structured thinking
• Meeting people: use go-with-the-flow when possible, i.e. unless you really do need to judge/understand them. Meeting people in social settings tends to call for go with the flow, and business settings call for judging/understanding.
• Starting a company or being a CEO calls for a tricky combination of both approaches. (I'll write more about this later, but the short version is: you have very imperfect information and things are changing rapidly, so you have to update your reasoning often and be okay with having imperfect models.)

Some of my personal experiences

• I've always been a structured thinker by nature.

• I have noticed some situations where my structured approach has yielded better results compared to others' more "go with the flow" approaches. Common examples:

  • Building a great toolchain for managing my personal information
  • Being deliberate about picking the next startup idea
  • Generally thinking outside of the box to find better ways to solve common problems
  • Getting better outcomes from complex or multi-party social situations

• I have also noticed, though, that I was often adding stress to myself and those around me by over-thinking certain things. Common examples include:

  • Should I have negotiated harder to save $2?
  • How can I fight situation XYZ (e.g. taxi driver is doing something illegal that I don't like) versus focusing on adapting and moving forward?
  • I can't do XYZ (improve my interior design, learn how to cook, etc) because it will take too much work. (Whereas I should just jump in and "do it live".)

Final thoughts

• Most people tend towards going with the flow; engineers tend towards structured thinking
• Groups tend to work best when they have a mix of people
• Very few people are really skilled at both. But as I mentioned in the introduction, you can be one of them if you practice with new experiences, and reflect on when you over- vs under-think through decisions.

P.S. I've published my list of mental models here. I haven't been able to put any real work into the site yet, but may in the future.

05/10/2013

Alternative economies within Bitcoin

Imagine you wanted to run your own fork of Bitcoin, for example as part of a next-generation Bittorrent protocol that discouraged freeriding.

Is there any way to do this while taking advantage of the high hashrate (and thus security) of the Bitcoin network?

It seems so. Imagine you start your own sub-economy with 1 Bitcoin. Because transaction histories are a matter of public record, anyone could "follow" that Bitcoin as it or fractions of it flow around to other accounts. Only descendants of that special Bitcoin would be treated as part of your sub-economy/currency.

You'd have to have some rules to disentangle the mixing of Bitcoins representing your currency with other Bitcoins. For example, you'd have to handle the case of an account receiving Bitcoins that are from outside your sub-economy, though it's not too hard to imagine what these rules would look like.

The transactions in your sub-economy would be in low Bitcoin amounts, so in some cases transaction fees would have to be paid to get them included in the block chain. If an alternative economy has low transaction volume, with high value, the users would be willing to pay these fees out of pocket. Or the users of your alternative economy could mine Bitcoins to offset the cost of the transactions. [1]

This is a bit of a hack, but I think it could work. [2]

Notes

• [1] In the case of using this technique to power a Bittorrent fairness economy, you'd want to use distributed coin flips with a low probability of a "payment" happening to pair down the transaction volume.
• [2] One could also imagine future crypto-currencies that explicitly support this functionality.

03/02/2013

How To: Go to burning man

So you'd like to go to burning man? Awesome!

Burning man is one of my favorite things I've ever done. What follows is a take on what I would tell anyone coming with me to burning man for the first time.

There are many different ways to go to burning man. This is just how I do it.

Getting a ticket

It's best if you can get a ticket straight from Burning Man rather than through the secondary market. What it takes to get a ticket has been changing each year as they evolve their system.

If you don't get a ticket, buying one on the secondary market is, in my opinion, a good option. I've tracked the prices on the secondary market for the last two years. In short, once tickets sell out the price of a ticket on eBay spikes really high, and goes down over time, usually bottoming out one or two weeks before burning man. It's probably safe to assume you'll be able to get a ticket and delay buying one until you think the price has stabilized or you think market liquidity is drying up.

When to go

Burning man is a 7-8 day event. While I like to go for longer, I recommend for all first timers to leave San Francisco Wednesday morning, so you'll arrive Wednesday night, and to leave Burning Man Sunday at 6 or 7am, the morning after the man burns.

The RV

Burning man is in the desert, so it gets really hot during the day. The daytime is best for exploring, chilling with friends, and maybe some partying, but most partying happens at night. Typically everyone rolls out of camp to go adventuring around 10pm, and stays out until about 4:30 or 5. (There's so much to do and explore!)

So you get to sleep around 5. The sun comes up around 8. By 8:30 if you're in a tent it's 120 degrees in your tent. Thus the RV, and its main value proposition: air conditioning!

The next best alternative to an RV is a shade structure of some kind that is open so wind can blow through. Lots of people do this but at least for me I've found RV's to be best.

Typically our group has a few RV's. The most important thing about RV planning is it needs to be done early, as by the time July or August rolls around you're only going to find overpriced RV's that you have to pick up in Sacramento/elsewhere.

As a group we need to come up with better RV planning mechanisms, but because I try to get new people to come every year (so far), I try to manually coordinate one or two RV's each year.

Newbie action item: tell Adam you want a spot in an RV as early as possible!

Bikes

Burning man is a big place. You'll want to have a bike to get around. (And you'll need a lock as well.)

You can either bring your own bike (RV's are helpful for driving bikes back and forth), or you can rent one. If you bring your own bike, know that it will come back with dust all over it.

To rent a bike, go to Hammer and Cyclery, and pay $200. ($100 is a deposit that will be refunded when you return your bike.) I recommend you do this ASAP as they often sell out. The $100 price to rent a bike is a bit on the high side, but it means you don't have to worry about anything other than picking up your bike when you first arrive at burning man, and the money goes to support the camp's free bike repair service that runs during all of burning man, which they offer to anyone including people who brought their own bike. (A nice thing to remember if you ever get a busted tire/etc as the playa can be harsh on bikes.)

Food

Our tradition is that the RV stops at the Walmart in Reno, Nevada on the way up to burning man to pick up food and other last minute supplies. (Some RV's in our group may decide to do this the day before they depart so they can get to burning man faster once they head out.)

So basically all you need to know is you don't need to buy food beforehand, unless you have special dietary needs.

Burning man clothes / outfits

To understand how people dress at burning man, do a Google Image search for “burning man”, and peruse. You can buy costumes in advance online, but the best decor is a little more hippy than your stereotypical halloween outfits. I've found success (or I should probably say “my best” :) ) through a combination of halloween-esque costumes and buying random clothes from second-hand clothing store in San Francisco. If you're feeling especially yuppie, do a search on etsy for “burning man” a few months before the event.

Pretty much anything goes. Have fun with it! : )

You'll probably want a couple of different changes of clothes, but I've had years where I e.g. wore the same pants out every night.

First timers almost always underestimate how cold the desert can be at night. Err on the side of having too many layers / too many warm clothing items.

Other supplies / what to bring

Other than food, there are lots of supplies you'll need at burning man. Although people will help you fill in holes where they can, you're expected to bring everything you're going to need.

To do that, I buy supplies from Amazon in one big order. If you forgot anything you can pick it up at the Walmart on the drive up (though sometimes they sell out of things, e.g. sleeping bags), and your last fallback is your campmates.

This isn't exactly true, but basically anything you take to burning man (aside from things like cameras and ipads) generally you shouldn't expect to ever use them again outside of burning man, because it will get dirty. For example, instead of taking your suitcase you should consider just using trash bags to hold your stuff.

(If you take your own bicycle, some bike shops in SF offer burning man cleaning after you get back for around $40 or so.)

You can Google search for “burning man packing list” to see others' lists, but here's my packing list that I've curated for myself over the years:

• burning man ticket (worst mistake is you leave this at home!)
• bike + bike lock
• Saline nasal spray (optional)
• Vinegar (for getting dust hands and feet, optional)
• Really warm clothes at night (e.g. leg warmers on legs and arms), more socks than you'd think
• Shoes (NOT sandles! sandles are only useful for walking around camp ime)
• Sunglasses
• goggles (for dust storms)
• dust mask(s) that are industrial grade, e.g. head straps that aren't cheap / won't snap (recommended: 3M 9211's, 1.5 per person per day)
• backpack and camelbak bladders (when you go out to explore this will carry any stuff you need PLUS water; if you're a couple one person can carry water and other vodka redbull)
• pack a baggy with clean clothes for the ride back (don't wear at bm)
• sun shower (optional)
• ear plugs (optional)
• a warm hat for evening (not at all optional)
• glow sticks, EL wire (for your body / bike at night; nothings worse than someone riding a bike at night not lit up; see “burning man” google image search for how people use lights at night for safety and decoration)
• optional: the small velcro finger lights / "rave hands" -- NOT the finger lights with elastic bands (don't order from Amazon; misleading listings)
• sandwich size plastic bags to keep electronics in when not in use
• duct tape (optional)
• Wet naps
• of course burning man clothes / costumes
• TONS of sunscreen (prefer the lotion kind v.s. spray on; can also buy this @ Walmart)
• headlamp (for night time light when needed, and/or one for bike)
• scissors (optional)
• power splitters (optional)
• hand lotion
• MRE's (optional; just another source of food)
• Briefs underwear (better than boxers ime for burning man)
• Bedding (sleeping bag / pillow / etc)
• Towel

Things to can buy at walmart on ride up (non-exhaustive):

• (a lot of this stuff is per-RV not per-person)
• dish soap
• microwave popcorn
• lawn chairs (if feeling ambitious)
• gas containers (two 6 gallons) and corresponding gas (extra gas for RV air conditioner)
• food that is reasonably healthy, does not need refrigeration (e.g. nuts, clif bars)
• chili, chips, steak, etc
• Odwalla Superfood, Gatorades, parents choice pediatric electrolyte drinks
• Red bull, vodka, etc
• a big, thick Sharpee
• 1.5 gallons of water per person per day (plus water for sun shower)
• trash bags
• wet ones / wet naps

Epilogue

This feels like a lot of work so I don't want to put it all out there without ending with a summary of my pitch for going to burning man.

As I mentioned, burning man is one of the top things I've ever done in life. Of all of the trips you can do: go to the beach, to vegas, to the woods, skiing, to a foreign country, or to burning man, burning man has been the most distinct and enriching by a large margin.

Questions?

I'm adam@adamsmith.cc!

07/21/2012

E-Readers Should Scroll Smoothly

I predict that e-book readers of the future will use smooth scrolling instead of page turning.

Page turning requires you to reach the end of a text area, decide you have to perform a UI gesture, perform that gesture, wait for the device to respond, and then find the beginning of the new text. Smooth scrolling uses a continuous interaction style that helps you keep your place on the page, and doesn't require you to move your eyes around as much. It encourages flow.

In fair disclosure, page turning allows the user to feel a sense of accomplishment and completion when turning the page. These advantages, however, are outweighed by the importance of flow for consuming large amounts of text. Consider reading articles on the web with smooth scrolling versus page up/page down, for example. Flow is really important.

The Kindle E-ink readers can't do smooth scrolling because their screens take a long time to update their contents, but normal display readers like Kindle PC, Kindle iPad, and iBook should all default to smooth scrolling.

I think Kindle on the PC and iPad mess this up because of legacy thinking from their earlier Kindle devices. Apple doesn't do this because they're taking skeuomorphism too far. But eventually e-book readers have to come around, and it can't be too soon.

04/27/2012

How to: Compete with Amazon S3 without Buying Hardware

You build a storage router.

Given a piece of customer data you want to store, replicate it 2x, and store half a copy's worth across four different raw storage providers. For example, Rackspace gets one half a copy, as does SoftLayer, GoGrid, and Storm on Demand. Keep in mind that you're buying raw storage from each of these guys, not redudant storage. Each provider is just selling you hard drives attached to the Internet.

Your customer's data will be available as long as two of the four raw storage providers are up.

(To be clear, you would use Reed-Solomon erasure codes. Thus, you could dial in any desired replication factor and any desired number of storage endpoints. [1] The blocks in the diagram below are intended to represent the sizes of the data pieces, not how they are encoded.)

This design could provide more independent failure modes than Amazon S3.

More importantly, this design would create a marketplace for people selling raw storage. Whenever someone comes in with a better price, you seamlessly move customer data from the most expensive of your providers to this newer, cheaper one. Of course you would maintain appropriate quality controls [2], monitor uptimes, backbone redundancy, etc. You're a storage router.

Amazon S3 enjoys high margins today

Amazon's storage offering has built up high margins. Up until two months ago, Amazon S3 hadn't dropped prices since its launch in 2006, despite the fact that hard drive costs fall 50% per year. [3]

In 2006 a 320 GB hard drive cost $120. Today (Thailand floods aside) that much money will snag you a 3 TB drive.

Those are real margins that Amazon has built up, and even after their recent price drop they're still leveraging a lot of pricing power. There's surprisingly little competition.

The Android strategy for the cloud storage market

Just as cell phone OEM's like Samsung and HTC didn't know how to compete with the iPhone, the guys left in the dust by Amazon (Rackspace, SoftLayer, and moreso the hundreds of small hosting companies out there) don't know how to compete.

What I'm proposing is the Android strategy because it gives them a way to compete, and they're competing on an axis that the new winner doesn't want to compete on: price.

And in this case, since you're running the service that routes customer data into and out of the right storage providers, you control the relationship with the customer, so you get the pricing power.

The challenges

There are a couple of reasons why I'm not pursuing this idea (in increasing order of importance):

• Selling storage requires a brand that people trust. That could be built, but is a very big friction point at the most inopportune moment - the beginning.
• It's a low margin business, and you'd probably need a sales team eventually. Both of those are unfortunate.
• Amazon Web Services has revenue from a number of complimentary services (most importantly EC2) that they could use to make storage a loss leader, sucking all of the oxygen out of the room. Amazon did this in 2010 to diapers.com. They know how to run and compete in low margin businesses. Amazon would also compete by giving deep discounts to large customers who suggest they might use this service instead. Amazon's dominance and ecosystem is the most important weakness of this idea.

Who then?

The world would be a better place with a service like this, possibly extending into a marketplace for compute as well. Someone like Rackspace or Softlayer could do it. Google could do it. A startup could do it. Or maybe OpenStack will adopt a model like this.

If this happens, though, I think it will be done by a startup.

What Rackspace, SoftLayer, and others should do now

The big hosting guys should launch a low priced "hard drive attached to the Internet" product. [4] Such a move would pave the way for one or more startups to build the storage router, bringing a new type of innovation to cloud computing.

Notes

[1] The replication doesn't need to be uniform, either. For example, if read performance is important maybe one storage provider has a full copy of the original data, and there's another 1.5 copies spread across three other providers for redundancy. The ideal setup depends on the customer's desired tradeoffs. This advanced level of control might also be a competitive advantage for some storage customers.

Update, Sept 2012: You could also consider using the new Amazon Glacier for end-of-line backup, in combination with hot copies hosted by others.

[2] There are many types of quality controls to build. Use a provable data possession protocol to ensure that each storage provider still has its data without having to retrieve the whole thing.

[3] This is strictly true for their first tier of storage customers. Over time they've published volume pricing for higher and higher volumes, though each tier's pricing never dropped. Amazon S3 pricing history: 2006, 2007, 2008, 2009, 2010.

[4] Such a product should be designed for the storage router use case, so it should include all of the API's the storage router will need, including provable data possession.

12/15/2011

Grit > Self Control > IQ

When I was at MIT all computer science majors were required to take a class called 6.001. I had a lot of college credit coming to MIT so I was able to place out of many other requirements, including chemistry, biology, and calculus. I also had a long history of programming experience, so I wanted to skip 6.001.

This was impossible, I was told. Nobody had ever done it.

In a saga that unfolded over the next two months, we negotiated a compromise agreement.

None of that would have been possible if I wasn’t willing to make a (polite) pain in the ass out of myself.

The world has a way of making room for those who just won’t give up.

This isn’t a new concept in startup land. Paul Graham, for example, talks constantly about determination.

So rather than turn this into another post about how entrepreneurs these days need more of X, I wanted to share some scientific research that studies determination, and brainstorm on how we can boost our determination.

Angela Duckworth, from UPenn, has published much about the topic. (Obligatory TED video here.)

She uses the word grit, which I like.

She defines grit as “perseverance and passion for long-term goals.” That sounds about right. She continues: “Grit entails working strenuously toward challenges, maintaining effort and interest over years despite failure, adversity, and plateaus in progress.”

Ok. How is grit different from self-control?

Grit is also distinct from […] self-control, in its specification of consistent goals and interests. An individual high in self-control but moderate in grit may, for example, effectively control his or her temper, stick to his or her diet, and resist the urge to surf the Internet at work—yet switch careers [frequently]. As Galton (1892) suggested, abiding commitment to a particular vocation [..] does not derive from overriding “hourly temptations.” –Grit: Perseverance and Passion for Long-Term Goals, page 1089

Ok, so self-control is about not eating the marshmallow right in front of you, and grit is about pushing towards the same goal for long periods of time, even if you don’t get short term results.

How do grit, self-control, and IQ predict success in various efforts? Dr. Duckworth has done several studies. Let’s look at the results of a spelling bee competition. That shouldn't differ too much from entrepreneurship!

According to this figure, if you could choose to be in the top quartile of participants for grit, self-control, or IQ, you would pick them in that order. Grit > self control > IQ.

That’s not really surprising to me as an entrepreneur, but it’s validating since the world seems to think that IQ points win spelling bees.

Why might most people think that IQ and self-control are more important than consistent, long term effort? There are many possible answers, but Duckworth’s research suggests an explanation I hadn’t thought of before: that it’s harder to observe long term focused efforts by others.

We speculate that individual differences in the intensity dimension of effort are salient and, therefore, described by many adjectives in the English language (e.g., energetic, conscientious, dutiful, responsible, lazy). Whereas the amount of energy one invests in a particular task at a given moment in time is readily apparent both to oneself and to others, the consistency of one’s long-term goals and the stamina with which one pursues those goals over years may be less obvious. Similarly, whereas the importance of working harder is easily apprehended, the importance of working longer without switching objectives may be less perceptible.

Ok, so how do we train ourselves to be grittier?

That’s not clear. Dr. Duckworth is doing research on this question now, so perhaps we’ll have a follow up post in a few years (follow me on twitter here!), but until then here are some thoughts:

• First, Duckworth cites a study that identified a strong interest in one’s particular field as an ingredient for high achievement. Steve Jobs pointed this out in his Stanford graduation speech where he notes that the only reason he recovered from his failures was his love for what he did. So find what you love, and grittiness will come more naturally.
• Second, I wonder if it’s possible to trade away some self-control to get more grit. That sounds like a good bargain.
  
  Some studies show that willpower is a limited resource; if you use willpower for task A then you’ll have less left over for task B. If this is true, maybe you should exert less self-control in some areas in order to have more willpower left over for commitment to your long term goals.
  
  I should note that this is highly speculative.
• In a related fashion, I think grit is diminished when you work too hard and burn yourself out. I’ve seen startups where everyone worked really hard, got early traction, and then sold their company too early because they ran out of energy for the marathon.
• Finally, like many other things in life, I’m guessing you can increase your grit by surrounding yourself with gritty people, especially those with matching long term interests. If that’s true, you should find gritty cofounders, invest in gritty companies, and surround yourself with gritty entrepreneurial friends.

What do you think? How can we increase our grittiness and bring it out in others?

(As a homework exercise, consider what you want to be gritty about. Steve Jobs suggested being gritty about finding work you love, doing great work, and finding a great spouse. That's a really good start!)

(Thanks to Zao Yang for turning me onto Dr. Duckworth's work!)

11/29/2011

Announcing: DesktopBootstrap

DesktopBootstrap is like Twitter Bootstrap, but for desktop apps.

It's the open source project I got to work on over Thanksgiving.

If you've ever written a desktop application before, you probably spent several weeks working on the auto update, installer, and logging mechanisms.  Hopefully this will make your next one that much easier!

02/10/2011

Towards Better Online Dating

It’s clear that the existing online dating sites are all broken.

I thought about working in this startup space for a few months last year, so I wanted to document my thoughts on the subject.

I ended up deciding against working in this space for now, but I still find it highly interesting and know that for the right kind of entrepreneur it could be a great place to dig in.

As you’ll see, the right kind of entrepreneur for this space is one who is willing to iterate and try lots of things, who understands human interactions and economics on a deep level, and who has the patience of a saint.

A few introductory thoughts to get us started:

1. Meeting friends-of-friends is the best way to find cool people, because liking is transitive AND because the low social distances force people to be on their best behavior.
2. Online dating is on the OTHER end of the spectrum. Social distances are incredibly high. 99% of the time your dating profile doesn’t reveal your real identity, or real friends, so there is no disincentive to behaving antisocially.
3. This ‘behaving antisocially’ manifests itself in multiple ways, namely spamming, hypergamy, and false advertising. Let’s talk about each of those.
4. Spamming is the act of sending messages to tons of people. The more messages you send the higher your chances of getting dates, but that also lowers the efficiency of the site. It’s a greedy individual behavior that hurts systematic efficiency.
5. Hypergamy is the act of pursuing people who are higher social value than oneself. Dorky Dillon wouldn’t have any shot at getting with Model Mary, but he won’t hesitate to lob a message over in high social distance situations where there’s no personal downside, risk of public rejection, etc. Again, this is an individual behavior that hurts the broader system.
6. Finally, false advertising is embodied in the “MySpace Pose,” the overly-witty profile, pictures of me on my BMX bike (ha!), etc.
7. It’s important to understand that you can’t blame the users for any of these things. The users are just responding to the incentives created by the modern online dating site.

My favorite approach to the online dating problem is to lower the social distances. But before we get into that, let’s talk about the other major challenge: network effects. Also known as the chicken and egg problem.

I’ll leave the network effect problem as an exercise to the reader, and refer you to this Chris Dixon blog post, specifically the part about irregular network topologies, and this slide deck RE getting lots of users.

Aside from the network effects encouraging incumbent laziness (a la eBay), there are three other reasons why the status quo in this space is quite poor:

1. The big players are making lots of money off of their self-destructive business model. We’ll talk more later about why their business model kills long term value, but suffice it to say that they’re not looking for ways to grow the market that involve cannibalizing their revenues.
2. Second, there are an astronomical number of new approaches a new entrepreneur could try. The search space is quite large so most people throw their hands up in the air and copy large chunks of broken DNA from existing approaches.
3. Finally, when new entrants do try new approaches, most of the time they aren’t well contemplated.

But there is still a ton of opportunity. In the words of my respected friend Zao Yang (FarmVille creator), “Online dating is like the mobile world before the iPhone.”

That quote hits the nail on the head, both in terms of the magnitude of the opportunity and in terms of how hard it is to do really great work in this space.

And to redefine the problem a little bit, I suspect there’s more value and fun in helping people meet new friends generically, and only incidentally maybe a significant other. I only talk about this problem in terms of ‘online dating’ because that’s the existing anchor in peoples’ minds.

So let’s say you’re crazy enough to take a shot at this unicorn. How should you think about winning this market?

I think of dating sites as the sum of three components: the business model, the back end, and the front end.

The status quo sites like Match and eHarmony have all three components wrong, I believe.

Let’s talk about the business model first.

Business models

The most profitable sites charge users for the ability to send messages to other people. While this scheme generates $350M in annual revenue for Match, it kills long term retention, word of mouth, and the overall user experience.

The average user lifetime on Match is abysmally low. I can’t remember the exact number I heard from industry insiders, but it was about six months, and maybe shorter.

Imagine if Facebook had a user lifetime of six months!!!!!!!!

(I realize that once there’s a successful match the couple leaves the site, which is another reason such a site would be better positioned as a way to meet new people in general. But I’d wager that most people leave because they didn't find a significant other via Match.)

Anyway, here’s how it unfolds. I sign up on the site, and buy a subscription. I find six or seven girls I like, and send them highly personalized messages. About 15% of people on Match are premium members, and therefore only one of those girls can even reply to my message. I get one reply, at most.

So then I start spamming, because I have to, and I'm incentivized to.

…It gets worse.

It’s also in Match’s best interest for me to send spam to a bunch of non-paying members, because Match builds revenue when new users convert because they’ve received a message they can't reply to! It’s for that reason that Match doesn’t tell you who’s a premium member and who’s not.

This broken business model works for big sites that have the network effect lock in, and niche sites that serve particularly affluent markets, like Jdate.

Yet I predict those sites will all die when someone really figures out the online dating puzzle in the next decade. And it won’t just be an innovation in business model; it will come from changes in all three components of how dating sites work.

OkCupid wrote about this business model problem extensively on their blog, and I learned most of this from talking to those guys. (Update: since I originally wrote this OkCupid got bought by Match and took down the blog post I wanted to link to. It’s called Why You Should Never Pay For Online Dating, and Google Cache has a copy here.)

The Backend

The backend to me is everything that calculates matches, who can see who, etc.

The backend is the only of the three components that I could nail if I were working on online dating. It’s right up a data engineer’s alley.

It’s no surprise that 18 year-old Match takes a simplistic approach to everything. As far as I can tell, every user can see every other user, there’s no opaque throttling down of a spammers’ message delivery, and so on.

These sites also don’t build real signal into people’s dating profiles. A girl can learn more in five seconds of "real life" interaction than from reading a guy's OkCupid profile.

A bad backend?

…No…a horrible backend.

Here’s the principled way to approach this problem: close the loop and get real data about what kind of matches work and which don’t. eHarmony claims to do this but they seem to employ PhD’s in “love science” rather than statisticians. Call me cynical but I’ll take the statisticians, thanks.

(This situation reminds me of speech recognition. Decades ago at the dawn of speech recognition it was the linguists that people looked to for guidance. Guess what? All of their techniques failed. This led to Frederick Jelinek's famous quote, "Every time I fire a linguist, the performance of the speech recognizer goes up".)

So you run a speed dating event with random people. Get them to submit a copy of their Facebook profiles. Run computer vision algorithms on their Facebook photos to see how much skin they show in photos, how often they’re smiling, how many people they’re in pictures with, and so on. Generally extract as much signal as possible from sources of ground truth.

Then watch which people are interested in each other after the speed dating event, and use off the shelf algorithms to build a classifier that will, given two Facebook profiles, predict the probability that any two people would enjoy four minutes of real life interaction.

Then only allow people to access others they are likely to match against.

You should also watch this talk by Joel Spolsky about the sociology that goes into Stack Overflow, if only as an example of the flavor of thinking you need to do.

OkCupid seems to be at the forefront in this space. They get people in India to rate the attractiveness of new members and use that to limit your access to people significantly more attractive than you are. That’s not a principled approach but a step in the right direction compared to other incumbents.

You could really spend years optimizing the crap out of this. And it would be worthwhile.

The Frontend

This one is the most nuanced. Most of it has to do with behavioral psychology and how people interact with technology.

The front end is everything that makes up the product that isn’t the backend or the business model. It’s the positioning, the user flows, and so on.

First, I’m not convinced that positioning oneself as a dating site is optimal. I like to think of the problem as Helping People Meet Cool People. Not only does this make a difference in positioning/stigma, it feels more wholesome, more valuable, and more practical.

Secondly, everyone knows that dating profiles suck to create and suck to consume, as mentioned above. Not only do they lack real signal, they also make for a horrible onboarding experience. You want me to fill eight huge text areas with witty banter, and check or uncheck 250 radio buttons?

Geesh.

Overall I’m not bullish on the trinity of people profiles, messaging, and people searches. I know that’s how all sites are built today, but if I were in this space I’d keep an open mind on redefining the primitives.

For example, what about a site that just schedules weekly group dinners with new people? Every Wednesday night you’re set up for dinner with five other people we think you’ll enjoy. Not only would this get you past the high social distance problem, it moves the online posturing-and-judging step into the real world where it probably belongs.

That particular idea might not work, but I stand by its disruptive nature.

(Since originally writing this I’ve learned about Grubwith.us. Their product has paradox of choice all over the place, though. Even more recently Grouper has done the Grubwithus model but with a more focused value proposition and without the paradox of choice.)

I would also be excited about anything that approaches the problem circuitously. Imagine if you had a mobile product which helped friends hang out with their existing friends. And then you added the ability to meet new people you might like. And so on.

At the end of the day, whoever figures this out is more likely to stumble into the solution rather than foreseeing the right ecosystem in a monolithic, Genesis 1:1 fashion.

Overall, the world will be a better place once this space is revamped. Meeting people is a huge part of life. Today it's just too O(n). Motive, and opportunity.

(Update, 1 year later: One year later, many new ideas have been tried, with limited success so far. One of the prodomenant themes is connecting users to people closer to you on the social graph, for example with Facebook integration. This kind of targeting is akin to what I discussed in the 'Backend' section, and is a step forward. It's largely enabled by broader social acceptance of online dating displacing the need for pseudonym-based online dating. But the larger, harder questions -- how to overcome adverse selection bias, and the bootstrapping problem -- remain insoluble by all of the approaches I've heard about lately. For example, at the present day, if your user onboarding process begins with "go to xyz.com," I think you've already generated a lot of selection bias; you'll be missing out on a whole segment of the population that would otherwise add a lot of value to your ecosystem. I also haven't seen any significant advances in solving the bootstrapping problem.

One of the more interesting approaches I saw was at the Startup School office hours session in 2011 where one of the companies was proposing building better tools for matchmakers. If you ONLY target the matchmakers as users of your website you might be able to avoid the selection bias and bootstrapping problems. I think it remains to be seen whether that approach has other problems, for example whether matchmakers are incentivized enough to risk their energy and social capital to try to make things happen.)

(Update 2: I think there might be a business in building backend matching software and data sets, and selling it to every dating site. There are so many folks building products that are intended to match people, and they all lack any measure of sophistication in how they do it. Their innovations are usually in the front end; they could certainly use help with their matching backends. You could achieve network effects by accumulating training data from a variety of sites, by requiring that they send you feedback data regarding how any given match turned out.)

(Update 3: Tinder has recently gotten broad adoption, but the more I've gotten perspective on this market the more I think it's just not worth going after unless you have a breakthrough business model. Match.com, for being the leader in this space, doesn't generate a ton of revenue. OkCupid got bought for relatively little compared to the work put into it and how much traction they got, etc. It just turns out that some ideas have great business models, like web search, and others have terrible business models, like online dating. Most ideas are in-between these two in the elegance and productivity of the business model; it's clear that online dating is at or near the bottom.)

01/06/2011

Idea: Y Combinator for Startup Recruiting

Recruiting more college students into startups is a constant topic of discussion.  Just today Fred Wilson mentioned it as one of the critical ingredients for the NYC community.

It always strikes me that more undergraduate hackers go to Wall Street than the startup community.

Maybe we can do something about it, and that's what I want to explore in this blog post...

Y Combinator is a great hack on the world.  It drives $billions of value creation by investing super small amounts.  It’s the ultimate in leverage.  Could college recruiting for startups be similarly hackable?

Well, why do so many students go to Google and Wall Street rather than startups?  It's a complex issue and there are lots of reasons, but here are some of the top ones:

• College students are irrationally risk averse. Instead of paying annual salaries and bonuses, startup upside is captured in option grants that are riskier.  Many of the best college students at MIT are risk averse and think short term. These dispositions are highly cultural.
• Prestige. Startups are missing brand value for parents, relatives, and friends.  This is also highly cultural.
• Too Many Startups / Choice Paradox. Students have no idea how to pick the right startups.  Even if they did, there are an overwhelming number of choices.  This is classic paradox of choice.
• Mismatched Timelines. Startups are often too short-sighted to do college recruiting well, since it takes a long term investment strategy.

Frankly there’s a lot of content and blogs out there about how to start your own company.  And Y Combinator has come around.  That is all very awesome.

But there’s so little content out there about what it’s like to join a startup, or how to join a startup right out of college, etc.

We’re not marketing to our customers very well.

And more broadly there are no concerted efforts to work on this problem.  What could we be doing together to move the needle for the whole community?

We wouldn't need the entire valley to cooperate here; you could do some interesting things just with just a few startups or as a single VC fund.  Here’s what you would do:

1. Start by focusing on getting great interns for startups, and move to full time recruiting later as you learn and iterate.  (Successful internships lead to full time hires anyway.)
   
   
2. Set up an open door application that any student can apply to, much like Y Combinator.  Also like Y Combinator and Startup School, the application should ask high signal, aggressive questions.  Resumes are required but of secondary importance.
   
   
3. Find the applications that you think are promising.  The startups involved will get to browse through the remaining applications to decide who they’re interested in.
   
   
4. Select a very particular breed of startups to participate – specifically startups with meaty internship projects where the company has some momentum and has already shipped their first product.  (The students are the customers here, not the companies.  The long term health of the program will depend mostly on quality of the students’ experiences.)
   
   
5. Try to give students a list of three startups that are interested in them.
   
   
6. If there’s only one startup interested in a student, it probably means you didn’t filter applications heavily enough before having the startups look at them.
   
   
7. If more than three startups want a student I would call that student and coach them through deciding which three startups are most interesting to them.
   
   
8. Fly the student out to meet and interview with each of the three startups.  At this point the student and the startup will already know a lot about each other, so the interviews will be two-way and probably more focused on evaluating culture fit.  Give the students some ideas on how to identify the best startup for them.
   
   
9. While we’re at it, throw in Y Combinator style weekly dinners for the interns, with speakers from the startup ecosystem.

Word of mouth would be hugely important to the long term success of such a program.  Corollaries:

• It'd be helpful to have a brand to leverage from the beginning.  Y Combinator could do it.  Sequoia could do it.  If someone without a brand were to do this they could try to partner with one of these guys.
  
  
• Start with a medium push.  Initial momentum will be important, but so will your long term endurance.
  
  
• Build an alumni network of the students who have been through the program.  They will help each other for years to come.
  
  
• Leverage your alumni network to build awareness at top CS colleges.
  
  
• Make sure the students are blown away every step along the way.  Customer service baby!
  
  
• Be picky about who you accept when it comes to students AND startups.  Pairing a desperate company with a desperate applicant would dilute your brand and wouldn't be worth your time anyway.

So why is this important?

Startups deserve to win the battle for top CS graduates.  These hackers are young; they should be taking risks early in their career.  Their talent would be more leveraged at startups.  They would learn less about bureaucracy and more about creating products and value.

But wait!  It gets better!  …working at a startup can also prepare people for starting their own companies down the road, if they so choose.

Case in point: a few years ago at Xobni we recruited a killer engineer for an internship.  He came to work at Xobni as a full time employee a year later.  After doing some more fantastic work at Xobni, he is now starting his own company, and I think that’s a wonderful cycle to feed.

01/03/2011

Adam's Life Hacks Part Two: The Lean Paper Filing System

“A filing system is absolutely essential.”

–Randy Pausch, Time Management

Unfortunately everyone has to deal with some number of physical papers, CDs, and so on. Enter the personal filing system.

Most filing systems fail out of the gate because they don’t optimize for insert time. Since starting my filing system two years ago I’ve organized 112 documents, and in those two years I’ve probably only retrieved a document five or ten times.

So here’s what I would suggest:

1. Grab a box, a bunch of document-sized baggies, and a sharpie pen.
2. Whenever you want to add a document, put it in a new baggy, write an autoincremented number on the front with the sharpie, and throw it in the box. That’s it.
3. If you like you can keep an index of the documents on your personal wiki. Keep a table with three columns: document number, date added, and a text field description of what’s in the baggie.

For me this method beats the crap out of the traditional filing system with the filing folders, little pieces of plastic, and perforated sheets of labels.

Here’s a sample list of things in my filing system, pasted from the descriptions in my index.

• Zeo / personal sleep handouts / paper / sleep tracking forms
• Lenovo x61 recovery DVDs
• Stock certificate
• Friend’s memorial service handout (this one for sentimental value)
• Heavily used pocket/folded maps of Stockholm and Hamburg. (again for sentimental value)
• 2009 Income Tax binder, federal and state
• Christmas cards, 2009
• Etc

Ok, that’s it for now. Please share your own document organization tips in the comments! Thanks!

12/22/2010

Adam's Life Hacks Part One: Personal Wiki Time!

Warning: personal wikis are much less useful today because we all use smartphones, and editing Mediawiki pages through the mobile web is too difficult. I now use my personal wiki to reference older content, and regretfully use Evernote for everything else. Evernote leaves so much to be desired!

---

I would start with a story about how bad my memory is, except for the small fact that I can’t remember any such stories. Suffice it to say that any significant other of mine can always pull a trump card over me by invoking the “You don’t remember when we XYZ?” But now I'm venting. : )

I use a mixture of methods to keep track of things in my life.

At any given time I have todo items in my email, a Christmas card list scribbled on a piece of paper blotted with chicken tikka marsala sauce, and some note in my head that it’s time to take the car in for an oil change.

And somehow that oil change never happens. (With apologies to my whip.)

Long term personal storage was always tough, though.

Email isn’t good for long term storage because it’s cluttered with lots of other data, and it’s not editable. Paper notes aren’t scalable enough. And so on.

Enter the personal wiki.

I inaugurated my personal wiki two and a half years ago. Since then I’ve created 480 pages and made 4,046 revisions which works out to over four edits per day. I’ve found it to be incredibly useful.

Now lots of other people have written about personal wikis, so I’m going to just assume that you understand the basic idea, and talk about my tips on how to effectively use one.

1. Use MediaWiki. At least as of 2008 it was by far the best.
2. Turn rich text editing off. Use the text-only markup editing mode.
3. The only markup you need to know is: ===A section title===, [[Page Link]], [http://cnn.com HTTP Link], __NOTOC__ to disable a table of contents, start lines with a “* “ to get bullets, and use two blank lines to get a blank skip line.
4. Split your Main Page into two columns, like so,
   
   
   
   
   
5. Avoid hierarchy of pages. Especially if you’re an engineer. Your Main Page should be the only page that is just a bunch of links to other pages.
6. You must have the following pages:
   
   
   • People to see in different cities
   • Meeting Notes
   • Archive (where you keep links to pages that are now unused)
   • Logins (where you keep airline mileage account numbers, special passwords, etc)
     
     
7. The following pages are recommended but not required:
   
   
   • Startup Ideas
   • Potential Future Investors
   • Potential Future Hires
   • Grocery Shopping List
   • Mentors
   • Local Businesses
   • Useful Software
   • Places to travel to
   • People I met while traveling
     
     
8. Hosting: set up SSL and make your site https only.
9. Security: disable account creation, and disallow anonymous browsing.
10. Register a domain name that is dedicated to your wiki, that only you use.
11. Run the wiki on a fast server. I started on shared hosting and found that my page load times were multiple seconds. I now run my wiki on an old desktop machine, but an Amazon EC2 micro instance does just fine!

That is it for us today, I’m Adam Smith. Thanks again for reading. We’ll leave you with Sting, and a cut off his new album*. Take it away.

* Rather than Sting, I’ll actually leave you with a censored list of pages I keep on my wiki, or at least the first few alphabetically. Take it away.

• "Bookmarks"
• 10 Years of Software
• 2008 Q2 Review
• 2008 Q3 Planning
• 2008 Q4 Planning
• 2008 Review
• 2009 Q1 Planning
• 2009 Q2 Goals
• 2009 Q3 Goals
• 2009 Q4 Goals
• 2010 Birthday Invite List
• Academic papers read at the beginning of Xobni
• Acronis Easy Migrate says "Error: partition configuration changed" on Lenovo
• Acting There Will Be Blood
• Addresses to change when moving
• Apartment hunting 2008
• Apartment Party Post Mortem
• Apartment Recurring Tasks
• Apartment Setup
• Apartment Warming Party 2008
• Archive
• Art I Like
• Attending a Concert, How To
• Audiophile
• Beijing Trip Thoughts
• Better Focus
• Birthday Dinner Planning 2009
• Biz School
• Blackberry: Curve 8900 or Bold
• Blog posts to write
• Blog Todo
• Board Meeting, Oct 2008
• Books That Have Shaped How I Think, Tim O'Reilly
• Books to Read
• Budget Sept 2008
• Budget thru end of June
• Budgeting
• Burning Man
• Burning Man 2008
• Burning Man 2010
• Call with [XYZ], 29-apr-09

...okay you get the idea.

Please leave any tips of your own or other thoughts in the comments!

09/23/2010

Seeing Death

I used to think I would live forever.

When you're young, not only is it emotionally comfortable to ignore death, it's also helpful. It makes you plan for the long term. For example, you should get good grades, get a good education, and build good character habits because those things are going to be especially important if you're going to live forever.

This bias continues into adult life. The infinite life abstraction is a good counterbalance to the cognitive bias of going for short term rewards.

But it breaks down and can lead you astray in a few places.

First, let's put this into perspective. Here's a picture of your life. Every square represents one month in the average American lifespan.

Seriously, think about where you are in checking off those boxes, and think about how quickly you're punching through them. And then think about the things you still want to do in life.

It's very sobering.

How do we react to this?

If you're only going to remember one thing, remember to apply the "short life" perspective broadly, deliberately, and on a regular basis.

Broadly because mortality effects everything, deliberately because it's easy to forget in day-to-day life, and regularly because life unfolds over time.

Now, for the rest of this blog post I'm going to take the discussion in a direction that is mostly about startups and careers. So be forewarned!

First up, make sure you're having fun.

Realize that life is a journey to be enjoyed, not a destination.

Thus, you've really got to do what you love. It's okay to drudge through some shit for the short term, but make sure you're working in the right direction.

In particular, if you're working in an industry or company you don't believe in, try to tack towards a new direction. Don't settle for boring or irrelevant.

Second, I believe that understanding death can lead you to the right kind of ambition.

Sure, be ambitious, because life is too short to be broadly risk averse. We might as well be bold, and try to do something great.

But most young entrepreneurs don't need to be told to be bold. Sometimes we have a problem with over-ambition, and I want to talk about that for a bit because sometimes it is fueled by a mistaken perception of immortality.

Someone who's overly ambitious wakes up on any given day, and forgets that they're going to die. They're going to live forever AND kick ass!

And fuck it; if you're immortal you can reach eliminate the effects of luck over time. You're going to end up a mogul! How can you not?!?

...except, you're not. You're going to die. Ouch.

You only get one childhood, for example. No do-overs.

And your window to make a huge impact is very, very small. 99.99% of people don't hit that window. Really, it's the exception.

So be humbled, and check your youthful infinite ambition at the door. There's actually very little time for bullshit.

For example, if you're going to get anywhere, you need a great team. You can't do it on your own, mortal Molly.

You'll need to do everything necessary to make your team successful. That includes making sure the needs of your team members are met, even when they're in conflict with your own ego.

It's telling that Steve Jobs, the ultimate icon of a badass, brings his team members onto the stage at his keynotes to show everyone their great work. And he negotiated for his executive team at Apple to get fresh option grants in 2001 before he said anything about his own compensation.

Well, it was a tough situation, you know. It wasn't so much about the money, because a very small percentage of my net worth is from Apple. But everybody likes to be recognized by their peers, and the closest that I've got, or any CEO has, is their Board of Directors. And as we've seen in the discussions of the past hour, I spent a lot of time trying to take care of people at Apple and to, you know, surprise and delight them with what a career at Apple could be -- could mean to them and their families. And I felt that the board wasn't really doing the same with me.

(..) So I wanted them to do something and so we talked about it.

- Steve Jobs deposition, page 89

So, teamwork matters at least because you can't live forever. We basically derived from first principles that you can't do it all on your own, and explained why people with overgrown egos might approach company building from the wrong angle.

And, finally, it's okay if you fail.

It's even okay if you don't go for a huge impact.

Most people are net contributors to society, economically and spiritually, and that takes us all a very long way.

You've just got to do your own thing, whatever that is, and push things in a positive direction. Life is too short to be driven by extrinsic motivation.

...ok, that corniness high note is my cue to wind this down for now. Can you tell that I've been thinking about company building? : )

To conclude for today, you're going to die so try to be rational about it. It's hard to remember on a daily basis that you're going to die, but try to regularly ask yourself if you should be doing anything differently given that life is short.

Put a monthly recurring appointment on your calendar if you have to.

And remember to apply it broadly. Forgive, for example. Be open and honest. This one has wide implications.

More on this topic:

• Regrets of the Dying
• Regret Minimization Framework
• Steve Jobs Graduation Speech, especially the third story

If you have any other thoughts or links on this topic, please share them in the comments! Thanks!

09/23/2010

I Love MIT!

God MIT is a great place.

Last week I got to speak at a new MIT class, The Founder's Journey. There were 100+ students. Pizza was had. There was a buzz of energy and ideas.

We had a lot of fun, and I'm excited that my friend Drew Houston will be speaking there tonight.

After the class last week some students invited me back to their dorm, Burton Conner. Beers were had. And a jolly time ensued.

Included in this picture but not immediately obvious: a homebrew video game arcade with CRT monitor, and a huge tank with live turtles.

Hackers are alive!

Reason #2 why I love this place: earlier this year at MIT I learned why in about 40 years we'll all be flying in vertical takeoff airplanes. : )

And a final Reason #3, updated from the year 2012: Peter Reinhardt and Erika Reinhardt are now married! They are the two sitting on the right hand side of the photo above. : )

09/12/2010

Crazy Idea Sunday

"I tell you something that is not right out apparent, but it's getting a huge amount of focus within the company - and it is apparel. We are having a lot of sales growth in apparel. (...) Historically clothing has always been a number one mail order category even pre-internet. And we make it really easy for people to try stuff on - by making it easy to return."

Jeff Bezos, Charlie Rose Interview, July 2010

Ok, time for crazy idea Sundays! This will probably never work, but it's fun.

People are going to be buying more and more apparel online. According to the Bezos quote above, Amazon is working on this category.

Call me crazy, but here's what you do.

Take the millimeter wave scanners the DHS is trying to get into airport security lines, and set up a couple in each major city. Get people to go by one of these scanners and get their body 3D scanned.

Then you get a 3D representation of everything in your store, and some idea of how the clothing behaves under various conditions (lighting, stretching, wind, etc).

Then when someone wants to shop you perform some solid-body physics simulations on your server, and render images and video of what the person would look like in any given set of clothes.

...

Well, at least you'd have more success than the DHS with those things...

09/10/2010

The More Important Reason Electronic Books Will Be Great

Call me an optimist, but I think we're about to see a change in how books are written and consumed.

There's a ton of data exhaust coming out of electronic book readers describing, most importantly, how much of each book actually gets read.

Imagine looking at a book on Amazon and seeing "We predict that you personally will read 5 pages of this book." Or, on the flip side, "You will read 98% of this book."

Holy shit! So much better than average star ratings.

But wait! It gets better!

Publishers are finally going to be incentivized to make books as short as optimal. I don't know much about the publishing industry, but from what Dharmesh told me nonfiction books are too long today because people actually buy on length. That might finally change!

08/25/2010

Thoughts After Y Combinator Demo Day

There's lots of motion in the ocean in the early stage investing world. TechCrunch has a write-up on the companies that presented at Y Combinator's demo day yesterday. I had several of my own thoughts.

Quality

• The average company quality is up. A much greater fraction of these companies will be singles or doubles compared to years prior. I'm not sure if there will be more % homeruns or not.
• There are also more companies. Xobni's class of 2006 had 15 companies; yesterday's graduating class had 36!
• So there's more early stage investing opportunity at YC than before.

The Index Fund Strategy

• Ron Conway and Keith Rabois invested in a number of these new YC startups.
• Some folks call this strategy the 'index fund' approach. Let's define it as investing in more than five out of the thirty six companies.
• The 'index fund' approach might produce better returns (and/or risk-adjusted returns [1]) than cherry picking the best one or two companies from each Y Combinator batch. I'm not sure.
• The index funds have three main advantages. First, if you assume everyone's throwing darts then they are more likely to invest in the homeruns. Second, they can collect returns from the longer tail of singles and doubles without breaking a sweat. Third, they can make investment decisions faster.
• Interestingly, VC's still try to cherry pick.
• As are some of the new super angels.
• Anyone in the comments want to take a hack at the index fund versus cherry picking strategies, e.g. in environments with different levels of froth?

The World is Flat

• VentureHack's Angel List and YC's Demo Day have made the fundraising landscape more flat. It's easier to see a wide variety of deals as an angel without doing heavy networking.
• This creates more competition.
• In particular is removes a competitive advantage for heavily networked angels like Ron Conway.
• Networks and experience still matter a shit ton for providing value to portfolio companies, though.
• For example, a new investor from Hollywood could come in and start making lots of investments very quickly.
• But when shit hits the fan or you need backchannels to an acquiring company the movie star won't be able to help. (Unless the acquirer is Roc-A-Wear and your investor is Jay-Z, in which case I'm pretty jealous.)

Investor Credentials

• Looking at a VC's investment list is very useful. Did they get into the hot deals? Were their companies successful? What do their founders say when you call for a reference check?
• Angels advertise their investment histories as well, but the informational value of those lists will go down as the world gets more and more flat, AND as the index fund strategy becomes more popular.
• Being an angel investor in Google back in the day meant you were connected. It meant you were friends with the founders. It meant you know some of the behind-the-scenes details of the company.
• But angels are investing in more companies, and companies are raising money from more investors. So again the informational value goes down.
• What's the new credential?
• Probably references. Founders of an angel's companies can tell you the real stories behind how an angel hurt, noop'ed, or helped their company.
• Do we need a TheFunded for angel investors?

Multiple Valuations: Early Bird Gets The Worm

• Another factor: different valuations for different angels. As Paul Graham recently pointed out, a startup can issue convertible notes at different caps to different investors.
• This degree of freedom could be used in a number of ways.
• Some companies are trying to use this to give different valuations to different investors as a function of the order that they invest.
• The idea is that the first investor to commit is taking the most risk, so they should be rewarded for that.
• This can only go so far.
• If a company needs a minimum of $X to get to the next step, once a company has raised $X a valuation premium doesn't make sense.
• $X for a YC startup is probably around $200k.
• I'll stop there on this topic. There are lots of dynamics at play, and it will vary company by company, but in summary I don't think early bird valuation discounts will become super prevalent.

Multiple Valuations: Value Add

• But as the angel investing world gets more flat the average investor will become more vanilla, and investors like Ron Conway will become more differentiated by their savvy, connections, and in some cases the time they can devote to helping the company.
• I predict that it will become more common to reward value added investors with valuation discounts.
• ESPECIALLY if these value add investors commit earlier.
• And often the big value add investors will commit earlier because they understand the space and get really excited about it.
• For example, one YC company yesterday had already raised money from a big time executive in their industry who can help them with intros/advising/etc. Those situations can call for valuation boosts.
• Valuation boosts, while rare, were previously done by issuing extra common stock (sometimes specifically called "advisor shares") to the value-add investor. But that approach was a little too heavyweight if the angel wasn't going to be heavily involved.
• So I think valuation cap differences will become more common for compensating value added investors, especially when they are the first money in.
• Secondary effect 1: non-value-add investors will be paying more for their equity, at least in theory, since entrepreneurs can now price discriminate.
• Secondary effect 2: more angel investors will try to be value add. (?) Especially super angels who have more resources and more companies to amortize fixed cost value adds across.

...good times. : )

[1] thanks to Will Stockwell for reminding me that, of course, maximizing return/risk ratio is more important than maximizing returns. More on this topic in the context of VC over at Fred Wilson's MBA Mondays.

07/23/2010

Six Months Later: Seven Major Websites that Send Passwords Unprotected

It's been six months since I first wrote that 7 out of the 36 most popular websites sent login passwords in the clear, without SSL encryption. This basic weakness means your password can be read by anyone who can see your Internet traffic, for example anyone using the same wireless access point as you.

I mentioned that I wanted to bring those seven sites around to having secure logins. This is our six month progress report.

I also want to expand our ambitions to tackling the next 1,000 most popular sites that are insecure. We're going to need a new strategy to do that. More on that later, after the results..

Drum roll please...

Three out of the seven top websites added secure logins. As far as I can tell, in each case the change was due to this blog's original post and the follow up efforts of myself and our readership.

That – ladies and gentlemen – is awesome!!!!!

Bit.ly stats aren't working for me right now but I know the blog post was retweeted 200~300 times in many languages. This all happened when everyone was talking about China's internet attacks, so frankly I don't expect to get as much attention on this follow up post, but I do think we can nevertheless maintain the same pace of progress in the next six months.

More on the next six months below. For now I want to highlight the status of each of the seven websites, and offer thanks where thanks is due!!

The following websites now have secure login forms:

• Photobucket (thanks to Sachin Rekhi, Luke Swanson, and Normal Liang!)
• GameSpot (thanks to AirGuitarist87 and Jody Robinson!)
• Taobao.com (I'm not sure who to thank here)

The following sites still have insecure login forms:

• Slide
• hi5
• Tudou

Wikipedia is also technically in the "still unsecure" list, but I decided to put less emphasis on them since (a) they provide a prominent link to a secure login form next to the login box, and (b) most of their users don't use logins.

I was able to contact someone at Slide, hi5, and Tudou but I wasn't able to get direct results from those conversations. (See update below.)

Broader goals, and a new approach

There are many other websites in the top 1,000 that send passwords in the clear. Some of these include digg, reddit, tumblr, and plentyoffish, but there are many others.

My original ambitions were only for the top 36 ranked sites, but it's worth going after the more ambitious goal of securing the top thousand if we can do it, and I think we can.

My emailing these company directly is not a scalable approach here.

My favorite new approach is to propose a patch to Firefox that will gently tell the user after their password is sent in the clear, and suggest they contact the website to ask that they secure their login form.

I created a post on the Firefox dev mailing list and a good discussion ensued around the usability and technical issues. Overall support was moderate to strong.

...changing the world is possible!...

Do you know someone who might be able to help make this happen, or do you have any ideas for how to get this done?

Please let me know if you do. You can contact me on Twitter or via email.

Thanks!

(Update: an engineer from hi5 has told me that they are working on it for their site!)

07/22/2010

The Upcoming Generation of Lossless Data Compression, Part 2

My last post about the future of lossless compression algorithms was about cross-file content-aware dedupe. (Hint: this is different from what most people think of as just 'dedupe'.)

Part 2 is about lossless compression algorithms and systems that support incremental addition and removal operations.

For example, in NTFS, probably the most popular file system in the world, if I turn compression on and store the same file twice each file will be compressed and stored individually, leaving additional compression opportunities on the table.

Another example: MySQL doesn't support compression for BLOBs of data. The first step towards this would be compressing each BLOB field individually. The second step would be to look for redundancies across BLOB objects.

PostgreSQL, another popular database package, does the first part but not the second.

In many cases this second step will be hugely important. For example, FriendFeed circa 2009 stored lots of 300 byte JSON blobs. In this case the difference between compressing two million 300-byte blocks of text individually versus together could be huge. (More background on FriendFeed's use of MySQL here.)

Of course this feature is fairly obvious when you're looking at something like a file system or database where adds and deletes are natural, but it's hard to pull off in practice due to the risk of inconsistencies.

(This is precisely the reason it should be done at the database engine layer, rather than the application layer.)

But just because it's hard doesn't mean it won't be pervasive in MySQL deployments in 10 years or so.

Final thought -- I'm sure there are technologies out there that do this already. The real shift/disruption will come when it becomes part of a non-proprietary standard, just as with 7zip/LZMA, and/or integrated into popular database engines.