David's Notes : Recent Episodes
David Senra
I would see ideas in my dreams. My mind was bursting with ideas. In dreams, I would have visions of sushi.
Once you decide on an occupation you must immerse yourself in your work. You have to fall in love with your work. You must dedicate your life to mastering your skill. That is the key to success and to being regarded honorably.
Restaurant critic: I have eaten at every sushi place in Tokyo. Jiro’s was by far the best.
What eating at Jiro’s is like: It is comfortable for people who like to have sushi served at a fast pace. But for people who want to drink and eat slowly, it won’t be a comfortable eating experience.
All of the sushi is simple. It is completely minimal. Jiro’s in a nutshell: Ultimate simplicity leads to purity.
Reservations are mandatory. At least a month in advance. The price starts at 30,000 yen [roughly $300] No drinks. No appetizers. We only serve sushi.
For fast eaters, a meal might only last 15 minutes. In that sense, it is the most expensive restaurant in the world. People are convinced it is worth the price.
Jiro repeats the same routine every day. He wants to get back to work as soon as possible. It is unthinkable for normal people.
If it doesn’t taste good you can not serve it. That is why I always taste the food before serving it.
I have never seen a chef who is so hard on himself. He sets the standard for self-discipline. He is always looking ahead. He is never satisfied with his work. He is always trying to find ways to make his sushi better.
He is a better leader than a collaborator.
He just works relentlessly every day. That’s how shokunin [Japanese word for artisan or craftsman] are. The way of the shokunin is to repeat the same thing every day. They just want to work. They aren’t trying to be special.
Every vendor Jiro uses must specialize. The tuna vendor works exclusively with tuna. The shrimp vendor only works with shrimp. Each vendor is a specialist in their field. We are experts in sushi but each vendor is more knowledgable in their specialty. We have built a relationship of trust with them.
Critic: I have never had a disappointing experience there. That is nothing short of a miracle.
His son who also runs a sushi restaurant: My father’s skill is incomparable. He has been making sushi since before I was born. So there’s nothing I can do to top him. [This part reminded me of this quote from Steve Jobs: I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance. Steve is saying don’t quit. ]
His son again: When I left to open my own restaurant Jiro said there is no coming back. You have no home to come back to. Failure was not an option.
Jiro: When you open your own restaurant you need to be tough. I told him to leave and open this restaurant because I knew he could do it. But I told him there was no turning back. You must make your own way. When I say things like this people often disagree. But when I left home at the age of 9 that is what I was told. You have no home to come back to. That is why you must work hard. I was on my own. I didn’t want to sleep under a bridge, so I worked to survive. That has never let me. I worked even if the boss kicked and slapped me.
Nowadays parents tell their children You can return if it doesn’t work out. When parents say stupid things like that the children turn out to be failures.
My father was making good money taking people on boat rides. But his business failed and his life fell apart. All he did was drink. I lived with him until I was 7. I was on my own after that. I never heard from him again.
Jiro started out as an apprentice. Was paid almost nothing. When he got married he only had 10 yen [less than $1]. His sons would save up for months just to buy one can of Coca-Cola.
Jiro worked so much when the kids were little that one time he was oversleeping on a Sunday and his sons yelled that there was a stranger in the house. He left for work before they woke up and returned after they went to bed. “I wasn’t much of a father.”
Jiro: We came back to work after World War II. The masters said that the history of sushi is so long that nothing new could be invented. They may have mastered their craft but there is always room for improvement. I created sushi dishes that never existed back then. I would make sushi in my dreams. I would jump out of bed with ideas.
Shokunin try to get the highest quality fish and then apply their technique to it. We don’t care about money. All I want to do is make better sushi.
I don’t think I have achieved perfection. I love making sushi. I am 85. I don’t feel like retiring.
These days people want an easy job, lots of free time, lots of money. But they aren’t thinking of building their skills. When you work at a place like Jiro’s you are committing to a trade for life. Most people can’t keep up with the hard work and quit.
Without good taste, you can’t make good food.
When I am making the sushi I feel victorious.
Jiro was a troublemaker when he was young: Always doing what you are told doesn’t mean you will succeed in life.
I have been able to carry on with the same job for 75 years. It is hard to slow down.
Jiro’s son: Always strive to elevate your craft. That is what Jiro taught me.
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What does finding an edge mean? Finding an edge in the casino meant finding a system that won money from the casino instead of losing money to the casino. In the market finding an edge was finding a way to do better than the index fund return. [10:35]
I was able to find an edge with the first quantitative hedge fund. It ran for just under 19 years. It made twice as much as the index did and had 1/20 or 1/50 the risk. In 230 months it only had 3 down months. The index has 96 down months during that time. [11:53]
You can apply finding the edge thinking to other things—like your life. For example: not smoking. That gives you on average 7 years more of life and the years you have will be somewhat healthier. Same for exercise. A few more years of life and those years are better. It doesn’t require much. A little discipline. A clear view of what is likely to happen. [13:15]
Little things like this—if you pay attention to them—add up. They stack up in your favor. They pay off. [14:32]
I liked interdisciplinary activity. That was always part of my academic life. [26:18]
I wrote a book about Blackjack that generated a good amount of royalties. It was the first time in my life I had money. It was zero balances at the end of the month before that. I decided I needed to learn how to invest. I spent two summers studying anything I could about finance. I am a teach yourself kind of person because I had to be when I was growing up. My parents were always working. I was on my own much of the time. [26:38]
Best advice Ed has: I think one of the most important things is to learn to think for yourself on anything important. Do your own work. Think through things rather than following what “experts” say. You will make better decisions over the long run. [32:01]
Jim Simons —who built arguably the most successful hedge fund ever—spent about 20 years in the wilderness trying to figure out how to do all this. With all types of false starts, mistakes, upsets, and emotion. [45:38]
Full video here: Finding the Edge: The Work and Insights of Edward O. Thorp
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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PayPal went off the rails fairly often. We had three different CEOs in six months. We were burning $10 million a month with less than six weeks of cash left. [2:09]
We had a lot of enemies back then. Visa and Mastercard hated us. eBay hated us. Various states hated us. The state of Louisiana tried to shut us down right before our IPO. [2:41]
Stripe has an adage that every problem is a leadership problem. The right people doing the right things tends to produce solutions —with enough time horizon—as you wait your set of options gets incredibly reduced. The earlier you identify you have potential issues the number of options are substantially greater. [5:30]
Lessons Keith learned from Peter Thiel:
Focus on undiscovered talent. You must hire people who are undiscovered talents. You can not recruit people that are already proven because there are always larger incumbents that can outbid you for proven talent. [6:30]
Peter can be a pretty draconian manager. He can be very rational and very unemotional. He is extremely capable of assessing people around him, identifying their strengths and weaknesses and providing feedback. [8:35]
Peter believed his job was to make 3 or 4 decisions a year. That was it. He would enable and delegate to deputies he trusted to make every other decision. Peter was deciding who to promote, who to fire, and then about 3 very difficult decisions a year. [12:10]
Jeff Bezos believes you need to manage people by inputs, not outputs. If you judge people by outputs, nobody on your team will take on the more difficult tasks because they are worried about their professional progression and your assessment of them.[9:35]
I had a philosophy at Square that all I cared about was adding zeros to the dashboard. I didn’t want projects that would only add 10%. I would tell product and marketing I want zeros. [10:34]
Jack Dorsey at Square had a very different philosophy than most startups. He would say our users are not guinea pigs. You could not A/B test. You were not allowed to give a subpar experience to anybody. Everything should be perfect. Treat all of your customers as first-rate customers. [13:40]
I don’t believe you map or discover a market. I think you forge a market, or you create a market. You imagine a better future, go create it, and then you sell tickets. The best metaphor for creating a startup is like producing a movie. Someone has an idea or vision for what the movie could be. Then you write a script that details how this will play out. Then you cast the movie. You need the right people in the right roles. Then you need to finance it. Then you need to make a trailer and distribute it —which is basically a value proposition that is distinct and powerful and hopefully people buy the tickets. [17:42]
A mistake that companies/entrepreneurs make that is common: They tackle problems that are easier rather than harder. I think you want to go in the reverse order. What are the three most difficult things that can interfere with success? Take the harder one first. Then the second, then the third. A lot of founders like to defer that problem. I think you should take it on right away. [20:13]
The best book [High Output Management by Andy Grove] on how to run a startup was written in 1982. No one has written anything nearly as good since. [22:00]
Full podcast here: Starting Greatness: Keith Rabois: Key lessons from Peter Thiel, Reid Hoffman, and Jack Dorsey
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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If one company materially outperforms its peer group that is worthy of study. The 8 companies and CEOs profiled in the book each fit that pattern. [1:35]
All 8 were first time CEOs. As a group, if you were trying to describe them you would not use the traditional CEO’s adjectives of charismatic, strategic, and visionary. Instead, you’d use words like pragmatic, flexible, opportunistic, dispassionate, rational, analytical. [4:03]
Henry Singleton is an interesting case. He outperformed the S&P 500 by 12 fold during his 30-year career. [6:20]
Corporate America— as a group— is a completely ineffective repurchaser of its shares. They have a perfect record of buying high and selling low. [Henry Singleton was the exact opposite of this] [9:30]
There is this distinction that Warren Buffett has between something that is simple to understand versus easy to actually do. In late 2008-2009 it was a scary period. Corporate America generally focused on husbanding resources given the uncertainty. Buffett’s actions were entirely different than that pattern. He was aggressively deploying capital. That is easy to understand but requires a certain temperament to be able to actually implement it in really difficult times. [11:55]
These CEOs did not spend a lot of time on investor relations. They didn’t view that as a good use of their time. [20:45]
[The CEOs in the book] were iconoclastic. They possessed a strain of independence. They were comfortable doing things different than the peer group. They were rooted in deep analytically based convictions. They did their own analytical work. They did not rely on internal finance teams or external consultants. They were focused on optimizing value per-share. [26:52]
If I was asked to name an outsider CEO among the technology CEOs of the last 25 years Jeff Bezos would be my choice. I believe he is optimizing for per-share value 5 to 10 years out. He can afford that time frame because he owns a large percentage of the company himself. [29:45]
It is very interesting to hear how a CEO talks about their business and how they write about it in their annual report. [I agree. I have read every single shareholder letter written by Jeff Bezos and Warren Buffett.] [34:05]
[Outsider CEOs would optimize for the single metric they thought was most important] Example: We are running our business to optimize for one thing: recurring free cash flow per share. They moved to a single metric that was differentiated from what others in the industry were doing. [35:56]
Charlie Munger once referred to CBS as prosperity blinded indifference to cost. [You want to avoid this.] [39:10]
Full video here: William Thorndike: "The Outsiders" | Talks at Google
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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I had just started my business. I was making climbing gear. Blacksmithing. I was resentful of being drafted [into the military]. I tried everything to get out of the draft. I heard Japanese got out of their draft by drinking a whole lot of soy sauce. So I drank a whole bunch of soy sauce. I puked it all up. They sent me to Korea. [9:16]
How he started blacksmithing: I got myself a forge, an anvil, and a book on blacksmithing. I went down to the junkyard and got some steel. I made my first pitons. They worked great. [16:13]
I made them for myself. We were on the cutting edge of big wall climbing in those days. For the climbs we were doing you had to have these things. I could make two an hour and sell them for $3 a piece. [17:05]
I don’t like anybody telling me what to do, and I don’t like to tell anybody else what to do. [19:12]
I lead a very simple life. I don’t have a phone. [27:33]
My old man was a tradesman. He could build a whole house himself. [28:04]
I didn’t let school get in the way of my education. [58:00]
I’m not for this globalism business. I think we should hunker down and work locally. I have traveled all over the world and cultures are being lost everywhere. [58:40]
Nature loves diversity. Humans love control and centralization. [1:00:25]
Compromise never solves a problem. It leaves both sides feeling cheated. [1:01:13]
I learned early on to invent your own games. That way you can always be a winner. [Avoid games] that produce one winner and a bunch of losers. [1:25:37]
Life is a lot easier if you break the rules than if you try to conform to them. It is a lot more fun. That is the way I’ve always run my company. I never wanted to be a businessman. So I decided to do it on my own terms. I didn’t have to act like one of these greaseball businessmen that I did not respect. That led to a method of doing business that is different than anybody else. It works unbelievably well. [1:27:16]
One of my employees suggested that on Black Friday let’s give all of our revenue away. I said, “Ok, let’s do it.” The year before on Black Friday we did $2.5 million. We advertised it on social media. The word got out. We did over $10 million. 60% of the sales came from people who never bought from us before. In business, you can’t believe how difficult it is to get a new customer. You could spend $5 million for a Super Bowl ad and you wouldn’t get the new customers we got from this. We thought the sales would go down after Black Friday. The sales kept climbing and climbing and have been climbing ever since. [1:28:45]
The solution to depression is action. [1:41:10]
Full podcast here: The MeatEater Podcast Ep. 188: Yvon Chouinard on Belonging to Nature
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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Ben built a company around a strong simple service and a quirky brand that sees annual revenue of $600 million dollars – and he never raised a dollar of outside funding. [8:33]
My mother ran a hair salon in our kitchen, but the word "entrepreneur" wasn't being used. This was just a way of life. This was called "making money", "paying the bills”. The house was always full of customers. [8:47]
His first business was making flipbook animations with sticky notes: My marketplace was the school bus, and I would go on and I would show some kids and they just had to have it, and I would charge a dollar for each one. Highly unscalable business. [10:05]
I got a job as a banner ad designer actually, which was even more invigorating than web design, because it was so fast-paced and you got results fast. [11:05]
Ben decides to start a design company: My business partner and I went out, and we got clients by knocking on doors. We got paying projects. We got a $13,000 project and a $32,000 project before even getting a business license. . .We wanted to bootstrap it. We wanted to keep it simple and pragmatic. [12:01]
Where the idea for Mailchimp came from: We noticed every customer—big or small— asked for the same thing: email marketing, every one of them. [19:15]
For five years Mailchimp is just the side project running on its own. And the thing is the income we were getting from Mailchimp, we weren't watching it. [21:00]
My partner made an Excel spreadsheet for Mailchimp's revenue, and it was climbing up and to the right – and the consulting business was just flat and maybe even declining. He said, "That's it, have faith in the math. This is what we should focus on." [21:48]
Most investors pitched this idea like, "What you've done here is great, it's wonderful, it's cute. Let's invest and then we'll help you move to enterprise because that's where the real money is." I couldn't stand that. I thought about building something that would empower small businesses. [25:25]
We kind of fantasized about being able to eat at Fuddruckers, because they had these $8 hamburgers. We thought, “If Mailchimp could just make enough money every month to pay our lunch every day.” It sounds ridiculous now, but that was really all the expectation we had. [27:22]
Ben put a toll-free number on the Mailchimp website and asked customers to call in with their most-requested features: They started to call us and they gave us all the features that we lacked. [33:40]
Ben stumbled on a way of getting the word out to their most passionate users: Every time we launched a feature and I blogged about it and tweeted about it, we got retweets and comments and more sales. [34:32]
Ben: What are we going to do with marketing?
Neil: Well, what's working?
Ben: Well, we code and then we blog and then we tweet.
Neil: Well do that, do it again.
Ben: Everybody's sick of it by now.
Neil: No, they're not. Keep going until it stops working.
And that was the lesson he taught. Don't be afraid to beat a dead horse if it's working. Keep going and hire people to keep it going.
Any kind of channel that's new, you need to be there on the ground floor before everyone else crowds it up. [35:45]
Ben likes to keep analytics simple: How much money did we make this month? Is it growing? At what rate? That's all I really care about. I keep it pretty simple. [40:37]
Full podcast here: Ben Chestnut Co-founder and CEO, Mailchimp on Masters of Scale
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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We are very close to every adult on the planet being on the Internet. It took 25 years to get there. [2:35]
[Now that everyone is connected to the Internet] I think things will get very different. I think things will be much more positive. [3:42]
The Internet’s impact on culture is just beginning. A world in which culture is based on the Internet is just at the very start. That is actually happening now. [4:08]
An entrepreneur comes in to pitch an idea and you feel that you should draw a judgment if it is going to work or not. That is something I am leary of doing anymore. The reason for that is every successful technology that I am aware of has an incredible 25 or 50-year backstory to them. You have to go back and excavate because you haven’t heard a lot of the backstory because the previous efforts failed. But if you go back and look there is often a multigenerational run-up. [4:40]
Some of my favorite examples:
RadioShack had a smartphone in 1982.
Videoconferencing goes back to the mid-1960s.
The telegraph was invented in the 1870s and sat on the shelf for 100 years before the Japanese turned it into an industry.
Paris had an optical telegraph network under the city in the 1840s.
[5:22]
[After AI a lot of products just won’t be relevant anymore] There are lots of business apps where you type data into a form and then you run reports against the data. That has been the model of business apps for 50 years. What if that isn’t needed anymore? What if AI has access to all your business records and it just gives you the answer to whatever the question is. You don’t need to go through all the other steps. [9:10]
Google has the consumer version of this. Search has been blue links for 25 years now. Google thinks it should just be the answer. That is what they are trying to do with their voice UIs. That concept might generalize out and then everything gets built out. [9:50]
Voice may be the foundation for AR. You can keep Airpods in your ear all day. You can talk to it all day. Siri, Google Now, and Cortana are getting really good and really fast. It may be that we have this constant, ongoing dialogue with a machine just talking into our ear. [11:50]
Software today is massively inefficient. The old adage in tech in the 90s when Andy Grove was running Intel and Bill Gates was running software was: Andy giveth in the form of Moore’s law and Bill taketh away in the form of software bloat. [17:48]
[We see a lot of Uber for X / the following of trends] That is not how the great ideas arrive. They don’t look like that. They look like very specific theories. Not general theories. They tend to be very specific to the details of the market involved. [25:13]
One of the historical precedents for venture capital was how whaling expeditions were funded in the 1600s. You will have a ship that will try to bring back a whale. There was a high failure rate. Only 2/3rds of the ships would come back. They were financed by angel syndicates. Venture capital basically. The term carry —how we get paid—was the percentage of the whale that the ship carried. It was literally a physical carry. [27:44]
Any important company or product takes a decade or more to build. Everything important takes a long time. Long term orientation is absolutely necessary. Long term thinking is really easy if you know the thing is going to work. [30:44]
The best-run companies tend to run multiple experiments against their goals. [33:00]
There is a novel Kill Decision by Daniel Suarez that extrapolates [the advancement] of drones forward. It will keep you up at night. [40:15]
Full video here: Why You Should Be Optimistic About the Future
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
Subscribe at davidsnotes.substack.com
I’ve always wanted to make a robot smart. I thought it would be super cool to build an artificial human...It is fascinating to study intelligence from a constructive perspective when you build something. [5:53]
Computers are so insanely dumb that you have to give them rule for every contingency. Very unlike the way people learn [from data and experiences]. Computers are being instructed, and because it is so hard to get the instruction set right we pay software engineers $200,000 a year. [6:55]
The most recent innovation—which has been in the making for 30 or 40 years—is the idea that computers can find their own rules. They can learn from falling down and getting up like children can. That revolution has led to a capability that is completely unmatched. [7:12]
How do you choose what problems to try and solve? I have two desires in life. [1] To make the lives of others better. [2] And I want to learn. I don’t want to be in a job I am good at because if I am in a job I am good at the chance for me to learn something interesting is minimized. So I want to be in a job I am bad at. [9:44]
I have been focused on what is the maximum impact on society. Transportation is something that has transformed the 20th century more than any other invention. Yet we still have a sub-optimal transportation solution where we kill 1.2 million people every year in cars. We are extremely inefficient resource-wise. Just go to any city and look at the number of parked cars. We spend endless hours in traffic jams. A self-driving car or a flying car could completely change this. [10:34]
Maintain a continuous focus on improving the weakest part of the system. As long as you focus on improving the weakest part of the system you eventually build a really great system. [17:11]
As a professor, you empower other people. Your job is to make your students look great. That is all you do. [19:07]
The biggest skill I think that people should acquire is to put themselves into the position of the other person. To listen to what the other person has to say. They’d be shocked how similar the other person is to themselves. They would be shocked by how their owns actions don’t reflect their intentions. [21:08]
Read How to Win Friends & Influence People and apply it every day. [22:10]
What DARPA did was genius. They made a completely new funding model. They said let’s not fund effort [reserch papers] let’s fund outcomes. [24:58]
This new funding model drew in new people. These people are mostly crazy people. They had a car and a computer and wanted to make a million bucks [the prize money]. It was so awesome. [25:35]
On the Udacity self-driving car course: We should give everyone the skill to build a self-driving car. If we do this we would have 1,000 self-driving car startups. If 10% succeed that would mean there would be more self-driving cars and everyone would be safer. [43:36]
If you added up all the engineers that were acquihired in the self-driving space and do the math —as a lower bound I’d estimate that the value of each engineer was $10 million. Think about this. You get yourself a skill, you team up and build a company and your worth is now $10 million. That is cool. What other thing could you do in life to be worth $10 million within a year? [44:45]
Education should be a basic human right. It can not be locked up behind ivy tower walls. It can’t be only for rich people. It has to be opened up to everybody. [56:50]
Full Video Here: Sebastian Thrun: Flying Cars, Autonomous Vehicles, and Education | Artificial Intelligence Podcast
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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My grandfather was a fascinating man with amazing judgment. I had a special relationship with him because I spent all of my summers —from age 4 to 16—with him on his ranch. He would take me every summer because my mom had me when she was only 17 years old. She needed a break from me. My grandparents were an extra set of parents for me. [3:18]
One of the primary criticisms of the Strategic Defense Initiative at the time was that it was too technically ambitious. That is couldn’t be done. My grandfather would have just said, “Well then we better get started.” [6:48]
There are a lot of things at Amazon and Blue Origin that are grafted from my Grandfather and his points of view. [7:10]
The way you earn trust, the way you develop a reputation, is you do hard things well— over and over and over. [8:45]
My view is if Big Tech is going to turn their backs on the Department of Defense, this country is in trouble. That can’t happen. [12:46]
I know it is complicated but do you want a strong national defense or don’t you? I think you do. So we have to support that. [13:33]
How do you recruit great talent? At Amazon, we haven’t created a country club culture where you get free massages and all the perks of the moment. I have always had a bit of skepticism about those kinds of perks because I always worried people would stay at your company for the wrong reasons. You want people to stay at your company for the mission. You don’t want mercenaries at your company, you want missionaries. Missionaries care about the mission. [15:10]
You can drive great people away [from your organization] by making the speed of decision making really slow. Why would a great person stay in an organization where they can’t get things done? [16:25]
There are two types of decisions:
1) One-way doors. Decisions that are irreversible and highly consequential. They need to be made slowly and carefully. Most decisions are not like that.
2) Two-way doors. You can make the decision and if it turns out it was the wrong decision you back up. You can do it again. Most decisions are two-way doors [17:54]
In large organizations, all decisions end up using the heavyweight process that is really intended to be used only for irreversible, highly consequential decisions. [They are confusing one-way and two-way doors] And that is a disaster. [18:50]
If it is a one-way door let’s analyze it in five different ways. Let’s be careful because that is where slow is smooth, and smooth is fast. You do not want to make one-way door decisions quickly. [19:29]
Controversial decisions must be escalated quickly. You can’t let two junior people argue for a year and exhaust themselves. You have to teach your junior people to escalate and escalate fast. [20:57]
I disagree and commit all the time. I will debate something for an hour, a day, a week. Then I will say, “You know what, I really disagree with this but you have more ground truth than I do. We are going to do it your way. I promise I will never tell you I told you so.” This works great. It is very calming. [21:37]
The speed of movement is so important. [23:02]
The most important thing for doing well against competition is being both robust and nimble. Scale is an advantage because it gives you robustness. You can take a punch. But it is also good to dodge a punch—that is nimbleness. As you get bigger your robustness gets better but your nimbleness gets worse. [24:43]
Decision making speed is the most important piece of nimbleness. [25:30]
Full talk here: Conversation with Jeff Bezos Founder, Amazon, & Blue Origin.
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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We’re thinking, “Oh my God, the revolution could happen without us.” And so that’s when Paul pleads that I should drop out [of Harvard] and we should get out there and become the software suppliers to this kit first personal computer. . .That’s where Microsoft gets started. We’re watching the chip revolution and it finally delivers a microprocessor that is beyond a mini-computer. [4:51]
When you do get there three months earlier and get more people and get the better customers, the mythology is like, “Oh my God, nobody ever thought of that. Nobody ever did anything like that.” Well, it’s b**t. Actually, probably, some guy did it years before you did, but he just didn’t get all these pieces right. [6:10]
Paul was totally critical to there being a Microsoft at all. Paul read about hardware. I didn’t like hardware. He drew me into that. He got me to read about that...Even when I go to Harvard, he takes a job back in Boston, he’d tell me all the time, “We’ve got to get going.” [10:30]
Paul wanted us to actually build a personal computer. I said, “No, no. We’re just going to do software.” [11:05]
[The insight that allowed Microsoft to scale]: If our BASIC was on every machine – a library of BASIC programs – various applications, games to business applications, would be written in our BASIC, which had unique and proprietary aspects to it. Then anybody doing a new computer would want Microsoft BASIC. [14:45]
When IBM first comes to us, they viewed this as an experiment. So we jumped on that opportunity. We saw it as a chance to get from 8-bit computers to 16-bit computers. We put so much energy into this thing. Then they introduced the PC. It becomes kind of the model [19:25]
And they were really good at quality, particularly IBM Japan was so picky about quality. At first, we were like, “Who are these guys? They’re crazy.” But then we realized, “Actually, they’re not that crazy. They’re just disciplined and oh God, we’re going to have to learn how to do that.” So having IBM Japan as a customer was incredibly helpful for us. [21:07]
If you can pick these toughest customers and meet their needs, then you can sit back and wait. You’re going to be fine. [21:53]
[Why Bill needed a partner like Steve Ballmer] Because I’m innovation–engineering-oriented, I needed a partner who thought about comm structure, organizational structure, and could go out and have lunch with 50 people. Just because of time allocation and lack of skill or whatever – I’m going to be a little more daft about that stuff. [23:48]
It was the virtuous cycle: The cheaper the PC was, the more volume there was for PCs, the more software for our platform there was, the more people would want to buy those PCs. [25:30]
We decided you had to do first-party applications [and not just operating systems]. So that business model really gets its full proof in the late ’90s as Windows 95 ships and we do Office software around it. [29:00]
He [a competitor] said, “Bill is wrong. But he works so hard, he probably will succeed even though he’s wrong in this case.” And I viewed that as quite a compliment, that my hardcore-ness could bend even the outcome of what was the right approach. [30:00]
[The biggest mistakes of Microsoft] The fact that Google got so far ahead in search, we didn’t do the right things to catch up. The fact that we didn’t get the phone or tablet stuff right. Economically, the phone one is the most egregious thing in the whole history of the company. The tablet one actually bothers me the most for a lot of reasons in terms of mistakes I shouldn’t have made. [37:23]
Full podcast here: Bill Gates on Masters of Scale
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Peter: By my count, there are only two companies that have been started since The Cold War, that are (1) focused on national security, and (2) have reached a billion-dollar valuation: SpaceX and Palantir. [4:00]
Peter: A lot of innovation gets driven by smaller companies. This is absolutely critical. When not many people are doing it— if you are one of the few who do it— there is a lot of opportunity. [4:25]
Josh: Strength comes in part from technological dominance. Technological dominance comes from brilliant engineers that are inventing cutting edge technologies. [6:20]
Josh: Palmer Luckey, Trae Stephens, and Brian Schimpf [founders of Anduril Industries] are authentic engineers that are obsessed with technology.
They are constantly thinking about:
What does the warfighter need? Where is the white space? Where is the gap? What is China developing? What is Russia developing?How can we put them [US warfighters] with the most cutting edge technologies out there?[6:35]
[You can read my past notes on Palmer Luckey here.]
Josh: Many of these people [those inventing new technology] were inspired by Science Fiction. They are literally going back— 20 years into the annals of comic books and sci-fi movies— and saying it would be amazing if we had that. [7:00]
Peter: If you can’t create a business that is worth a billion or more the venture capital model does not work that well. If you start a company that is worth $30 or $100 million that can be quite successful for the person who started that company. For a venture fund if that is the best we did we would be out of business. [9:40]
Have Palantir and SpaceX created a template for other startups to follow with the defense space? [Peter]: Well there is certainly proof that it can be done. In both cases, it took a wickedly long time. Close to a decade to start getting significant contracts from the US Military. In some ways, they were not conventionally venture fundable. [10:20]
Josh: It helps to reduce market risk. You will have a lot of venture capitalists that say you are focused on the defense industry. The stereotypes of the defense industry are that the defense industry is slow-moving, bureaucratic, very political, they might not pick the best technology, they might instead give the contract the company they have been working with for the past 20 years, etc…So whatever you can do to eliminate that risk [is good]. [If not] It is like we are fighting with ourselves by not equipping the warfighters with the absolute best technology that is coming from some of these early companies. [14:30]
Josh: The origins of Silicon Valley were in electronic warfare and defense. There is an aversion for people to want to work on defense-related things. That is a zeitgeist that is growing. [21:30]
Josh: I think there is a job society can do —and that is the retelling of a narrative that can galvanize some of the best and brightest to work on American defense. [23:10]
Peter: There is always this danger for a tech company to become overly bureaucratized. [29:49]
Josh: The one real edge you can have as an investor is a behavioral advantage. For us [at Lux Capital] that means having a longer time horizon than the average investor. We call this time arbitrage. If the average investor is looking for a signal of success in a year or two— and we are looking at something that might not give us a signal for 4 or 5 years —then by definition there will be fewer investors looking to fund what we are funding.
The valuations will be lower— and if we are right —the returns for us and our investors will be higher. So we like to look at things that are further out which means they are riskier and more improbable to work. But when they do they work in a really big way. [30:46]
Peter: When I started PayPal years ago I was always asked, “Why can’t a big bank do this?” I never had a good answer because in theory, the banks had the scale, more capital, longer time horizons. I think the answer is the internal politics are unbelievably bad. This is true not only in government but also true of large corporations. They become incredibly politicized in ways that are not good for innovation. [39:45]
Full video here: Harnessing and Securing American Innovation: How Venture Capital Impacts Defense
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On the day I became a billionaire the clouds did not part. The trumpets did not play. Nothing is different. I never set out to be rich. I have very cheap hobbies. As long as I have a gaming PC and a good laptop to do my work on that is all I need. [0:39]
What is different about the way you think that allows you to build world-class product? I don’t know if I do anything terribly different from what most people do...I follow my interests fairly wide. I find businesses super interesting. I find finance interesting. I just have questions about the world. And I like exploring those questions.[3:21]
In the case of Shopify, it required building a company. Initially, I built a snowboard store and wondered why is it so damn hard to build an internet company? Didn’t we invent the Internet so everyone could do their own thing on it? [3:53]
Building a business is one of the most pure forms of self-expression. [4:16]
For the past 15 years, I have been completely obsessed with how to build software that makes it easier for people who aren’t technical to start Internet companies. It has been all-consuming. [6:26]
Shopify is a collaborative inquiry into “What would the world look like if entrepreneurship would be easy and common?” My hypothesis is that it would be a cooler version of the world than exists right now. [6:48]
I really believe in the self-expression of starting a business. It is very pure and it is very important. [7:14]
The question Tobi asks himself on a daily basis: What sucks about starting an online business? The answer to that is the next thing we should be working on. If you are not working on that you probably didn’t get the prioritization right [9:25]
By default, most people think things happen linearly. The world doesn’t work at all like that. The world works in systems. The good news is we know this in engineering but most of the world doesn’t know this in company building yet. [13:20]
What is a business? This is such an interesting question. We talk about this like “Apple did this” and “Google did this”. There is no such thing. There is no monolithic Google. Google doesn’t make decisions. There are 150,000 people at Google. [When Tobi said this my mind went to this interview with Steve Jobs from 1985. When asked how Apple planned to sell to businesses instead of consumers he said, “Our approach is to think of them not as businesses but as collections of people.”] [15:30]
There is 5,000 people at Shopify. So how does Shopify get better? We have to. The Shopify of 2012 could not solve the challenges of Shopify of 2020. So how does a company get better? It is not just by getting more people. That wouldn’t lead to exponential growth. That would lead to linear growth. The existing people at Shopify have to get better. You have to requalify for your job every year. How do you do that? A lot of this is culture. A lot of this is systems. [16:06]
We have a fairly sizable coaching staff in the organization. It is called Talent Acceleration. This is my point. What is a company? A company is a collection of people. If you want to become better as a company [you need to]help your people have their breakthroughs. [17:12]
[The results of Talent Acceleration] It is not just that they [the people in your company] made this one choice better—that person will make every choice they encounter better. How many billions of choices happen at a company in a calendar year? [17:56]
Really good feedback Tobi received in the early days of Shopify: Everyone I am meeting in this company is some version of you. You really have to figure out how to hire people that are different than you. That was really good feedback. [23:27]
Why would you build a company that is exactly like the other ones? What you should do is build one that is different. As different as possible. To do this you need to figure out your own set of things that you think matter. [31:09]
We have a developer acceleration team. It makes way more sense to invest in developer efficiency because you get massive leverage when compared to giving people inefficient tools and then having more people. It makes perfect sense from an investment perspective. [39:36]
I would absolutely self identify as the kind of person who had to start their own company. Therefore I did. There is a certain percentage of people who are the kind of people who really, really have to start their own companies. I don’t think this is as rare as we make it out to be. [42:38]
New company formation is trending downwards. The opportunities for new business formation has actually been reduced. The Internet is just one big village. There is a Walmart in the Internet space and it wants to own all retail. I’m talking about Amazon. They want an empire. Shopify exists to arm the rebels. We want lots of people to go and compete with Amazon. I think that is really good for the Internet.[49:04]
When I start to feel comfortable, when I think I got a handle on what Shopify needs from me, that is when I get really suspicious. That means I need to go back and look broader, to read some far-field books, to try and get some ideas to figure out where my next growth comes from. Ideally, I need to get twice as good by next year to stay in my job. To requalify. [53:04]
Full podcast: The Future of Retail “Arming the Rebels!” - Tobi Lütke, Founder of Shopify - Escape Velocity Ep. 16
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Felix: What is Akash Systems? We make gear for the satellite communications industry. The world today is going through a revolution and transformation in communications. There is a large number of people who are not connected to the Internet. Around here we get 4G and LTE. Most people in the world are using 2G. The gap between what we could have and where we are today is huge. Satellites are aiming to close that information gap. Akash is enabling the solution for that gap. [0:30]
Delian: [How Delian of Founders Fund analyzes Space startups and why he invested in Akash]:1. Is there a real commercial market that already exists? 2. Are you just developing a commoditized product or a highly differentiated product? Akash has developed a material science innovation that is very unique and has massive business implications to their customers. It is a highly differentiated and defensible product. 3. What is the total addressable market? This is an industry where people are willing to spend a lot of money to get online. The current satellite radio business is already a couple billion a year. There will be tons and tons of people buying radios and we will have the best one. There is a risk that one day people won’t be using radios to communicate with satellites but we have been using radios to communicate for a long time. [3:05]
Delian: There is an incredible book The Case for Space: How the Revolution in Spaceflight Opens Up a Future of Limitless Possibility. It is the same author that wrote the book that inspired Elon Musk to want to go to Mars. The Case for Mars: The Plan to Settle the Red Planet and Why We Must . [10:25]
Delian: The most difficult part of space exploration is the rocket equation. The heavier something is that you need to launch, the exponential amount of fuel you need. The ideal end-state for humanity is not bringing any heavy things up and down from Earth. It is having the heavy things built outside of Earth. The only things coming up and down from the surface are people. [12:58]
Felix: There is a wave of opportunity coming. I don’t think we have seen the winners in Space. That company may have not been born yet. Google was search engine number 16. They came at a time when Yahoo was already declared the winner. It is still very much early days. [16:57]
Felix: Space is not a far fetched idea. There are very real ideas being pushed right now. An example: Recently an NGO asked us to provide satellites to them to help them collect data from fishermen around the world. To make sure they aren’t catching endangered species. There an infinite number of applications. [21:03]
Delian: Akash is a company that can start making real revenues in a year. Not in five or ten years. In a year they could start selling radios to commercial operators like Elon and Bezos. They could sell to anyone who needs to communicate with their satellites. That is basically everyone in the Space industry. [31:10]
Felix: There are a lot fewer companies making hardware than software. Probably by a factor of 10. Within hardware, there are even fewer [companies] making [hardware] for Space. [32:43]
Delian: SpaceX really helped shift the curve. The government used to go to ULA and say we need to launch this satellite. Tell us how much it cost you and we will pay you 20% above that. ULA is incentivized to make the launch cost a billion dollars. When SpaceX comes in and says we can launch it for 100 million the government is obligated to take a serious look. SpaceX has gone through many lawsuits to get to this point. [38:21]
Felix: There is an extraordinary, backbreaking demand for data that wasn’t there before. I think that is the justification for so much push into space. That is what is pulling so many companies to make things in space. [42:55]
Delian: Space is one of the few places where there is literally uncapped upside. How do you not pay attention to space? [44:23]
Full podcast here: Venture Stories: Investing in Space with Delian Asparouhov and Felix Ejeckam
If you want to learn more about investing in Space I recommend reading The Space Barons: Elon Musk, Jeff Bezos, and the Quest to Colonize the Cosmos by Christian Davenport
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
If you are looking for something to read check out this list of every book featured on Founders podcast.
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If the customer doesn’t scream, you don’t have product-market fit. [7:20]
Don Valentine of Sequoia Capital used to say: I am looking to invest in companies that can screw everything up and still succeed because the customer pulls the product out of their hands. [9:15]
First, you have to prove a value hypothesis. Only once you have proven the value hypothesis should you test a growth hypothesis. [10:03]
The value hypothesis is the what, the who, and the how. What are you going to build? For whom is it relevant? And how is the business model? [10:15]
People kid themselves into thinking they have product-market fit because they bought it. The only way to know that you have product-market fit is if you have word-of-mouth. The only way you can get exponential, organic growth is through word-of-mouth. [10:49]
All of my best ideas have come from other people. I am just curating. [13:06]
Why do you think Crossing The Chasm: Marketing and Selling Disruptive Products to Mainstream Customers should be read by more folks? The fundamental idea expressed in Crossing The Chasm is there is a natural rate of adoption of every product. That hasn’t changed. The basic premise is there are different people who are willing to adopt at different rates. [16:53]
The biggest mistake I see people [entreprenuers] make is trying to start with [sell to] pragmatists because it is the biggest market. They do this because every book or podcast tells them to go after a big market because the ultimate size of market addressed is the single greatest determinate of outcome. That is true but you won’t capture that market if you try to start with that market. This lesson will last forever. [18:53]
An example of how Google crossed the chasm: As a business, it exactly followed the Crossing The Chasm philosophy. When they first started monetizing they used text ads. At the time Yahoo offered display ads. Yahoo sold these ads through a salesforce. The minimum was a $10,000 a month contract. Google came to the market with a six-word text ad. You could buy an ad for as little as $1. It was self-serve. The only people who bought these ads were startups [who couldn’t afford the Yahoo ads]. Startups were the desperate. Once Google proved the efficacy of text ads they crossed the chasm into the early majority. They started with startups. They didn’t start with traditional advertising. [21:33]
Netflix started as DVD rental by mail. You’d pay $6 every time you rented. It failed miserably. Reed Hastings ran a successful company called Pure Software. One thing that made Pure successful was he changed the business model from a perpetual license to a subscription license. This was controversial in the 90s. He said why don’t we do the same thing at Netflix? Little did he know that was the ideal antidote to the late fees that Blockbuster charged that drove everyone crazy. [24:46]
The only way to make outsized returns as an investor or an entrepreneur is to be right and non-consensus. [30:02]
Human beings are conditioned to like, or not like, things. [Which means you can change people’s opinions about your product.] [31:22]
One of the best parts of teaching is how much you get to learn. [32:10]
The President of Wealthfront has a great saying: The definition of a good experiment is one from which you learn not one that succeeded. If there were no surprises you didn’t learn anything. [34:49]
Don’t project your own tastes onto other people. This is an enormous mistake my MBA students make. They say, “Well I wouldn’t use that product therefore it is not a good company.” That is irrelevant. [35:29]
Full podcast here: The Tim Ferriss Show #397: Two Questions Every Entrepreneur Should Answer
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The question for the United States is what is the best strategy? Is it to go big? To go with a global scale? This has been a thread throughout US history for at least the last 100 years. There was a sense that the US should always operate on an even bigger scale. [21:17]
In some sense, this [to lean into the bigness of the country and go even bigger] was a very good strategy for the US. But I think there are ways we need to update this in the world of 2019. It [the reason] is shaped by the rivalry with China. [22:16]
When you have a rival that is also big, simple bigness is not necessarily the right strategy. [22:47]
The four vectors of globalization: 1) Movement of goods. 2) Movement of people. 3) Movement of capital.4) Movement of ideas.[In the past] It made sense for the US to lean into all four because we would get outside returns due to scale. Today the US has a powerful advantage in two of these. Finance and the Internet. [22:50]
In the 1950s the CEO of General Motors could still say what is good for GM is good for America. It would be inconceivable today for the CEO of Goldman Sachs or Google to say the same. [23:50]
It is striking how much better China is at moving goods and people than we are. China has had the greatest internal migration of any country in the last 30 years. Shenzhen had 60,000 people in 1980. It has 12 million today. [24:55]
The US can scale finance and tech. We are really bad at scaling people. [25:29]
There is an urgent need to rethink all of these scale questions. To think about where we can be good and where it will be much more challenging. [25:54]
I would say that perhaps we have to switch from quantity to quality. This means back to innovation. Back to intensive growth. Not just doing more of the same. [28:00]
The United States needs to settle for greatness. [31:20]
Full video here: Peter Thiel delivers the 2019 Wriston Lecture: The End of the Computer Age
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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What is your advice for founders who don’t have an idea yet: I don’t like that kind of founder. As a general matter, I like people who have a very specific idea that they want to pursue. An idea that keeps them up at night. An idea they can’t stop proselytizing etc. [2:18]
The general filter I use [for startups] is the more ambitious the better. [4:56]
I want half of my VC friends to laugh at the investments I make. If half do not laugh it means I am not taking enough risk. [5:38]
As your value proposition becomes more succinct and more powerful sales velocity increases. Long sales cycles are a function of a poor value proposition. [12:46]
I am not the “sober analysis founder” type. I am more of the “the world should be different and I am going to will it into existence” type. I don’t like X. I am going to go fix X. [17:23]
To me, a startup is a movie. You write the script. You cast the actors. You produce [finance] it. Then you make the trailer. That is how you market it. And then you sell tickets. [20:13]
Ultimately —with very few exceptions — there is one real founder who is the driving CEO [even if there are other cofounders]. Someone needs to assume the mantle of responsibility. [27:39]
Peter Thiel on the idea for OpenDoor: The idea had to be differentiated enough that it would immediately cut through the clutter. It shouldn’t be boring. It should be so different that you have a shot at making it work. [33:10]
I have been trying to find companies to fund in homeschooling. Homeschooling has been under the radar for the last 30 years. Roughly 10% of Americans are homeschooled these days. The evidence of their performance —both academically and socially—is much better than anything else they can do. But it is real friction for the parents. So we can build products that make things easier. No one has done it yet. [44:55]
People who are experts tend to know what you can’t do very well. They have mastered the rules. They typically don’t ask enough “why” questions. Why can’t this be done this way? So I like people who kind of don’t know what they are tackling but are fast learners. [Henry Ford had a similar thought. This is a quote from Henry Ford’s biography: “That is the way with wise people--they are so wise and practical that they always know to a dot just why something cannot be done; they always know the limitations. That is why I never employ an expert in full bloom. If ever I wanted to kill opposition by unfair means I would endow the opposition with experts. They would have so much good advice that I could be sure they would do little work.”] [48:13]
If you find an extraordinary founder, with a big market opportunity, don’t ask any questions because you will make a mistake. Give them a term sheet. [52:00]
The fundamental book about how to build a company is The Score Takes Care of Itself by Bill Walsh. [1:19:00]
Full podcast here: Keith Rabois on How He Invests, Forming a Founding Team, and Funding “Ridiculous” Ideas
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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There was something that always fascinated me about something that went fast. I have been very lucky to spend my life around both of them [cars and planes] doing what I want to do. [2:00]
I tried business in 5 or 6 different facets. I never found anything that was fast enough for me. I ran a ready mix concrete plant. I ran a bunch of trucks. I tried a lot of things. I tried chicken farming. [8:51]
Never B.S. yourself with how things happened. [15:56]
I had the ambition to build my own car. What I did was spend a lot of time around the factories that I drove for. I spent one whole summer with Dino Ferrari. I was lucky to get to spend three months with him. He was a fine young man. In my opinion, if he would have lived Ferrari would have been a better company than it became under the old man [Enzo Ferrari]. [16:26]
I had to move to California to build my car. I couldn’t build it anywhere else because of the hotrodders [talent]. [22:22]
Why Lee Iacocca agreed to give Shelby $25k to build a prototype to beat the Corvette: At the time prototypes were costing Ford $200,000 or $300,000. How are you going to build two for $25,000? [28:29]
When you are dealing with the people in Detroit you were dealing with a bunch of slippery, slimy people. In Detroit, 20% of the people did 80% of the work. You were always getting shivs in your back. Detriot was full of a lot of bitter and jealous people when you came in with an exciting project and they weren't a part of it. [29:28]
In the beginning, all I wanted to do was build 100 cars. I never even thought past 100 cars because it was so much work. So many things had to happen to just to get to 100 that it was beyond my comprehension [at that time] to think about anything else. After that, we realized there was a much bigger market out there than just 100 cars. [35:34]
There were always political problems at Ford [and every other large company]. Unless you take money out of your own pocket and use it you are going to have political problems. [38:25]
Shelby American went from two employees to 1,000 in two years. [40:13]
Henry Ford II hires Shelby to beat Ferrari at Le Mans in 1966. They ask Henry Ford II what their budget is for this project. Ford says: “Just what it says on that sign. We win Le Man in 66.” That was the beginning of the darndest racing program that has ever been. [58:20]
We had a wonderful person [at Ford] named Homer Perry. He was apolitical. He moved everything out of the way. He was one of those rare individuals. We wouldn’t have won Le Man without Homer Perry. He was one of these people who could stay focused and didn’t let anything get in his way. So seldom do you see people like that. [1:06:23]
I’d had enough of it and I went to Africa. I lost all interest in 1968. I dropped out for 12 years. I might have been kind of childish. I didn’t have [protection from Ford] when I wanted to do something. I picked up my marbles and went to Africa. [1:10:16]
I always loved Africa and wanted to see it before it disappeared. I traveled around Africa for 12 years. I saw it. I’ve never been sorry for it. I didn’t miss anything in the automobile industry. [1:11:54]
You see what the cars were in the 1970s. You can see how far the American industry went. The Japanese were making inroads with their little economy cars. Detroit said it would never happen. You can see how many horrible decisions were made in Detroit by everybody in the 70s. I thought I was pretty lucky to be in Africa. [1:13:25]
If you build the right thing when it is unpopular that is the right time to build. [1:15:40]
I wake up every morning with 10 new ideas. [1:23:07]
A wonderful part of having a little company is you can make decisions like that [snaps fingers]. [1:35:11]
How would you like to be remembered? I’ve got enough sense to know that nobody is remembered very long. I am interested in living my life today. [1:36:47]
If you want to learn more about Carroll Shelby listen to Founders #99 Carroll Shelby and read Carroll Shelby: The Authorized Biography by Rinsey Mills.
Full video here: Carroll Shelby - The Lost Interview | Ford v Ferrari | Le Mans | GT40 | Complete Life History
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Kevin: We had a great run. We created something that a lot of people love in the world. Over 1 billion people use it every month. We had over 1,000 team members. To be 33 and 35 years old and pressing the reset button is this awesome, but harrowing adventure of becoming a beginner again. [3:30]
Kevin: We only spent $65,000 to launch Instagram. [11:00]
Kevin: Now we are in a place where —for zero marginal costs—you too can have these things [open-source software] at your fingertips. Then it becomes not about access to super tools, but about the knowledge of how to use these super tools. [12:00]
Mike: We had a phrase that we used religiously at Instagram: Do the simple things first. [12:26]
Mike: Don’t get so enamored by building something super scalable. Just have a deep understanding of the problem you are solving. [14:16]
Kevin: Every major change [to the product] that came with a ton of pain was either (A) the best decision we ever made or (B) the worst decision we ever made. [37:31]
Kevin: Time spent per user is how we measured it [the growth of the product]. So how many minutes per day [each user used Instagram]. [39:28]
Kevin: The person that starts off searching for a great startup idea never finds one. [It is better if] The person starts off with, “Hey, I have this itch. I want to scratch it. I think other people have this problem too. I am going to create something really awesome that solves this thing for me.” [47:06]
Mike: I don’t think enough teams think about the opportunity cost of being super pie-in-the-sky. Obviously it is important to have R&D teams in some companies developing technology. Folks often lose sight of problems that could be solved today. [51:11]
Kevin: One lesson we learned from our time at Facebook is do not pat yourself on the back ever. We got hit in the face so hard, multiple times, launching products that didn’t work. [1:01:10]
Kevin: People will forget your failures. They will remember your successes. [1:01:30]
Kevin: I read Getting Things Done by David Allen. One thing I took away from it was you should always have a list [a someday/maybe list] of things that you think are really interesting but you don’t have the time to do right now. [1:20:57]
Kevin: I think people who leave their companies get a little dull. They get a little slow. They are not as sharp because they are not managing something every day. [He learned how to fly to avoid this.] [1:21:30]
Mike: Never self select out of things because you feel you don’t know them yet.[1:26:39]
Mike: Have the open-mindedness to say, “I don’t know that yet. Not knowing that is standing in the way of solving some problem. Then take that learning mentality [and solve it]. That was us over and over again.” [1:27:30]
Kevin: Stay super curious. Stay a learner. I think people —if they are lucky—will get through college and they stop learning. And then they stop trying. [1:29:05]
Full podcast here: Kevin Systrom and Mike Krieger – How to Build a Great Product – [Invest Like the Best, EP. 148
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What is InVision?: If you are a digital product designer you need a place to design. To create the actual screens that make your product beautiful. That is InVision. InVision is the place where that design comes to life in a collaborative sense. [2:05]
Design is no longer a job-to-be-done. It is an organizational discipline in a world where the screen has become one of the most important places in the world. [2:38]
[InVision was an internal tool at Clark’s agency] That tool evolved over time. Someone said, “Hey what if we took designs out of Photoshop, connected them together, and turned them into a high fidelity simulation?” [5:45]
At what point did you switch to being a fully remote company? I never had the vision to be a remote company. I didn’t think it was the future. I didn’t think it was for everyone. It was a necessity. Every person we tried to hire was also talking to Google, Yahoo, Facebook, etc. They were destroying us for talent. So we asked ourselves: What if we just hired people we worked with in the past as contractors when we had an agency? And what if we just did this at scale? What if we figured out how to make collaboration work where everyone was remote? The next week we shut down the office. [8:04]
The percentage of intellectual focus/deep work that happens in your business is a significant driver— or limiter— of your success. The more creative your work the more focus you need. I think real creative work is done alone. [15:20]
One thing that is unique about Invision is that everyone is on east coast office hours. I do believe you need a certain amount of hours of overlap. There should be about a 3-hour overlap between most of the teams. [22:47]
People assume I am a remote zealot. I am not. I am not religious about the topic. You have to be getting something out of being remote. I just want to hire the best people wherever they are. [24:44]
Full podcast here: Distributed #14: InVision CEO Clark Valberg on Distributed Design
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If we ask, “Are we headed towards a future where an AI will be able to outthink us in every way?” The answer is unequivocal yes. [3:48]
I think there is a lack of investment in AI safety. In my view, there should be a government agency that oversees anything related to AI to confirm that it does not represent a public safety risk. Just as there is the FDA for food safety, NHTSA for automotive safety, FAA for aircraft safety. We have generally come to the conclusion that it is important to have a referee that is serving the public interest and insuring things are safe. [6:59]
I would argue that AI is something that has the potential to be dangerous to the public. [7:40]
How Elon describes the human brain: We’ve got like a monkey brain with a computer stuck on it. That is the human brain. A lot of our impulses are driven by our monkey brain. The computer—the cortex—is constantly trying to make the monkey brain happy. It is not the cortex that is steering the monkey brain. The monkey brain is steering the cortex. [14:26]
The cortex is what we call human intelligence. That is like an advanced computer relative to other creatures. It seems like the really smart thing should control the really dumb thing, but actually the dumb thing controls the smart thing. [15:00]
Why Elon is optimistic about adding digital superintelligence to humans in the future: There is room for optimism given that the cortex [which is very intelligent] and the limbic system [which is not intelligent] work together well. Perhaps there can be a tertiary layer where digital superintelligence —which would be vastly more intelligent than the cortex—could coexist in a benign manner with the cortex and the limbic system. [21:01]
A car that is autonomous is a four-wheeled robot. An autonomous car will be an eye-opener to people about robotics. Most people have never seen a robot. It won’t be long before there are a million Tesla’s that have autonomous capability. [25:41]
The probability of an injury or impact is much lower for Autopilot than it is for a person. [28:14]
People get trapped in their squabbles with other humans. They don’t look at the big picture. They take civilization —and our continued existence— for granted. They shouldn’t do that. Look at the history of civilizations. They rise and they fall. Things don’t always go up. That should be an important lesson of history. [31:37]
The universe appears to be 13.8 billion years old. Earth is 4.8 billion years old. In another half billion years or so the Sun will expand and evaporate the Oceans, making life impossible on Earth. This means if it had taken consciousness 10% longer to evolve it would have never evolved at all. I wonder how many dead one planet civilizations there are out there in the cosmos. The ones that never made it to another planet and were ultimately destroyed. [33:00]
Full video here: Elon Musk: Neuralink, AI, Autopilot, and the Pale Blue Dot | Artificial Intelligence (AI) Podcast
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It is so hard for people to comprehend what exponential growth looks like. It is hard to see around corners. To know what issues you will run into when your business is 3 times the size it is today. It was one of the most important management lessons I’ve learned. I realized I had to think differently on how I build my company based on how fast we were growing [3:23]
If we are going to keep trying to grow by billions of dollars a year we need a culture of experimentation. A culture where taking risks - with a lot of failures - is ok. You have to do that if you want to experience that kind of growth. [4:13]
The combination of globalization, digitalization, and automation creates an extreme polarization in business. The big get a lot bigger and niches are now large enough to be viable. The middle gets evaporated. You need to go for a profitable niche or go for scale. [Daniel is echoing this Jeff Bezos quote: On the Internet, companies are scale businesses, characterized by high fixed costs and relatively low variable costs. You can be two sizes: You can be big, or you can be small. It's very hard to be medium.] [5:45]
At Spotify, we don’t think the job-to-be-done is different at all between podcasts and music. It is all audio. Everyone else in the space thinks podcasting is something different. [9:12]
We believe the market we are going after is audio. There are going to be 2 or 3 billion people that want to consume audio content on a daily or weekly basis. [15:12]
If we are going to win that market we would need at least a third of that market. So we probably have to grow 10 to 15x from where we are today. We are still in the very early days of our journey. [15:22]
Star vs Constellation: Should you break up your app into multiple apps or keep everything in one main app? There was excitement about breaking things up into multiple apps. The reality is we have seen very few examples where that has worked. We debated it a lot at Spotify. You want to break it up when the job-to-be-done is materially different. [29:47]
In music, we do not believe being our own label is a viable strategy. It is not for the reason most people think which is we would be competing with our suppliers. The primary reason we are not doing it is that it doesn’t make sense for the artists. The vast majority of a music artist’s income is from touring. If that is your business then what you want to do is spread your music as wide as possible. [Being exclusive to Spotify wouldn’t make sense] [37:00]
In podcasting, it does make sense. The value of having it exclusive to our platform may attract new customers to the platform and we are able to put more marketing behind the show to make it bigger. For the creators of audio content, this is their business. This is what they are doing. They are happy to give up some reach to maximize the monetization so they can live off of their art. [38:17]
The key thing I am trying to convey is to think very clearly about who it is you are addressing. Don’t go too big too early. Be completely focused on who your customer is. It served us incredibly well. [47:34]
I feel the journey of your company needs to be on the verge of uncomfortable because otherwise you are probably not pushing yourself hard enough. [51:06]
Full podcast here. Invest Like The Best #147 Daniel Ek on The Future of Audio
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I try to always employ graduates [young people] because they have no fear. They have no experience. I don’t want experience. I want people who haven’t done something before and who want to find a new and better way of doing it. [6:29]
I want people who have no fear of failure. Failure is so important. You learn from it. If you always succeed you are learning nothing. [6:45]
Managers always want to employ someone with experience. It is laziness. They think the experienced person won’t need to be trained. But it is the reverse. You have to knock their experience out in order to get them back to thinking originally. [7:12]
There are very few jobs in life where you know the answer before you do it. You have to work it out. So why don’t we teach people at school to have failures and learn from the experience? [9:10]
We can’t go on producing me-too products. Products like everyone else. We have to produce products that have far better technology and that everyone wants to buy. [10:14]
Anger is a great motivator. [16:31]
Bringing out new products is a risk. A huge risk. But it is exciting. It is fun. If you don’t do it, it is very dull. If you don’t do it people will catch up, so it is absolutely essential to do it. [21:00]
There are businesses that make their money by copying people and there are businesses that try to make a living by creating things. I know which camp I’d like to be in. [21:20]
I’m so focused on what I am doing I don’t really look around at what other people are doing. [22:35]
There is only one word I ban from my company and that is the word brand. I don’t believe in it at all. You are only as good as the product you are making. People buy a product, they don’t buy a brand. They don’t buy a company. They buy a product. [23:07]
Full interview here.
I highly recommend reading James Dyson’s autobiography.
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When I went to school, it was right after the Sixties and before this general wave of practical purposefulness had set in. Now students aren’t even thinking in idealistic terms, or at least nowhere near as much. Most of the people I know who are my age have that ingrained in them forever.
We’re living in the wake of the petrochemical revolution of 100 years ago. The petrochemical revolution gave us free energy—free mechanical energy, in this case. It changed the texture of society in most ways. This revolution, the information revolution, is a revolution of free energy as well, but of another kind: free intellectual energy. This revolution will dwarf the petrochemical revolution. We’re on the forefront.
A computer is the most incredible tool we’ve ever seen. It can be a writing tool, a communications center, a supercalculator, a planner, a filer and an artistic instrument all in one, just by being given new instructions, or software, to work from. There are no other tools that have the power and versatility of a computer. We have no idea how far it’s going to go.
The hard part of what we’re up against now is that people ask you about specifics and you can’t tell them. A hundred years ago, if somebody had asked Alexander Graham Bell, “What are you going to be able to do with a telephone?” he wouldn’t have been able to tell him the ways the telephone would affect the world. He didn’t know that people would use the telephone to call up and find out what movies were playing that night or to order some groceries or call a relative on the other side of the globe. That is what Macintosh is all about. It’s the first “telephone” of our industry.
I don’t think I’ve ever worked so hard on something, but working on Macintosh was the neatest experience of my life.
Ad campaigns are necessary for competition; IBM’s ads are everywhere. But good PR educates people; that’s all it is. You can’t con people in this business. The products speak for themselves.
Does it take insane people to make insanely great things? Making an insanely great product has a lot to do with the process of making the product, how you learn things and adopt new ideas and throw out old ideas. But, yeah, the people who made Mac are sort of on the edge.
We didn’t build Mac for anybody else. We built it for ourselves. We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research. We just wanted to build the best thing we could build. When you’re a carpenter making a beautiful chest of drawers, you’re not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You’ll know it’s there, so you’re going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through.
Are you saying that the people who made the PCjr don’t have that kind of pride in the product? If they did, they wouldn’t have turned out the PCjr. It seems clear to me that they were designing that on the basis of market research for a specific market segment, for a specific demographic type of customer, and they hoped that if they built this, lots of people would buy them and they’d make lots of money. Those are different motivations. The people in the Mac group wanted to build the greatest computer that has ever been seen.
Your thoughts construct patterns like scaffolding in your mind. In most cases, people get stuck in those patterns, just like grooves in a record, and they never get out of them. It’s a rare person who etches grooves that are other than a specific way of looking at things, a specific way of questioning things.
Companies, as they grow to become multibillion-dollar entities, somehow lose their vision. They insert lots of layers of middle management between the people running the company and the people doing the work. They no longer have an inherent feel or a passion about the products.
Apple is built on refugees from other companies. These are the extremely bright individual contributors who were troublemakers at other companies.
Dr. Edwin Land was a troublemaker. He dropped out of Harvard and founded Polaroid. Not only was he one of the great inventors of our time but, more important, he saw the intersection of art and science and business and built an organization to reflect that. Polaroid did that for some years, but eventually Dr. Land, one of those brilliant troublemakers, was asked to leave his own company—which is one of the dumbest things I’ve ever heard of. So Land, at 75, went off to spend the remainder of his life doing pure science, trying to crack the code of color vision. The man is a national treasure. I don’t understand why people like that can’t be held up as models.
The business market has several sectors. Rather than just thinking of the Fortune 500, which is where IBM is strongest, I like to think of the Fortune 5,000,000 or 14,000,000. There are 14,000,000 small businesses in this country. I think that the vast group of people who need to be computerized includes that large number of medium and small businesses. We’re going to try to be able to bring some meaningful solutions to them in 1985.
How? Our approach is to think of them not as businesses but as collections of people.
We think that computers are the most remarkable tools that humankind has ever come up with, and we think that people are basically tool users. So if we can just get lots of computers to lots of people, it will make some qualitative difference in the world. That’s why we came up with the Macintosh.
I wasn’t completely in any one world for too long. There was so much else going on. Between my sophomore and junior years, I got stoned for the first time; I discovered Shakespeare, Dylan Thomas, and all that classic stuff. I read Moby Dick and went back as a junior taking creative-writing classes. By the time I was a senior, I’d gotten permission to spend about half my time at Stanford, taking classes.
The Apple I was for hobbyists? Completely. We sold only about 150 of them, ever. It wasn’t that big a deal, but we made about $95,000 and I started to see it as a business besides something to do.
We did about $200,000 when our business was in the, garage, in 1976. In 1977, about $7,000,000 in business. I mean, it was phenomenal! And in 1978, we did $17,000,000. In 1979, we did $47,000,000. That’s when we all really sensed that this was just going through the rafters. In 1980, we did $117,000,000. In 1981, we did $335,000,000. In 1982, we did $583,000,000. In 1983, we did $985,000,000, I think. This year, it will be a billion and a half.
I used to think about selling 1,000,000 computers a year, but it was just a thought. When it actually happens, it’s a totally different thing. So it was, “Holy s**t, it’s actually coming true!” But what’s hard to explain is that this does not feel like overnight. Next year will be my tenth year. I had never done anything longer than a year in my life. Six months, for me, was a long time when we started Apple. So this has been my life since I’ve been sort of a free-willed adult. Each year has been so robust with problems and successes and learning experiences and human experiences that a year is a lifetime at Apple. So this has been ten lifetimes.
Do you know what you want to do with the rest of this lifetime? I’m not sure. I’ll always stay connected with Apple. I hope that throughout my life I’ll sort of have the thread of my life and the thread of Apple weave in and out of each other, like a tapestry. There may be a few years when I’m not there, but I’ll always come back.
Playboy Interview: Steve Jobs
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You can have any habits, any patterns of behavior that you wish. It is simply a question of which you decide. Ben Graham looked around at the people he admired and Ben Franklin did this before him. Ben Graham looked around at the people he admired and he said, "I want to be admired, so why don't I behave like them?" And he found out that there was nothing impossible about behaving like them. [9:30]
Time is the friend of the wonderful business; it is the enemy of the lousy business. If you are in a lousy business for a long time, you will get a lousy result even if you buy it cheaply. If you are in a wonderful business for a long time, even if you pay a little bit too much going in you will get a wonderful result if you stay in a long time. [12:20]
The whole LTCM is really fascinating. If you take the 16 of them, they have about as high an IQ as any 16 people working together in one business in the country, including Microsoft. An incredible amount of intellect in one room. Now you combine that with the fact that those people had extensive experience in the field they were operating in. These were not a bunch of guys who had made their money selling men’s clothing and all of a sudden went into the securities business. They had in aggregate 300 or 400 years of experience doing exactly what they were doing. Then you throw in the third factor that most of them had most of their very substantial net worths in the business. Hundreds and hundreds of millions of their own money at risk. Essentially they went broke. That to me is absolutely fascinating. If I ever write a book it will be called, Why Smart People Do Dumb Things. My partner says it should be autobiographical. But this might be an interesting illustration. [15:05]
To make money they didn’t have and didn’t need, they risked what they did have and what they did need. That is just plain foolish. It doesn’t matter what your IQ is. If you risk something that is important to you for something that is unimportant to you it just doesn’t make sense. If you hand me a gun with a million chambers with one bullet in a chamber and put it up to my temple and I am paid to pull the trigger, it doesn’t matter how much I would be paid. I would not pull the trigger. You can name any sum you want, but it doesn’t do anything for me on the upside and I think the downside is fairly clear. Yet people do it financially very much without thinking. [17:30]
If you have $100 million at the beginning of the year and you will make 10% if you are unleveraged and 20% if you are leveraged, what difference if, at the end of the year, you have $110 million or $120 million? It makes no difference. If you die at the end of the year, the guy who makes up the story [obituary] may make a typo, he may have said 110 even though you had a 120. You have gained nothing at all. It makes absolutely no difference. It makes no difference to your family or anybody else. The downside, especially if you are managing other people’s money, is not only losing all your money, but it is disgrace, humiliation and facing friends whose money you have lost. [18:35]
It is like Henry Kauffman said, “The ones who are going broke in this situation are of two types, the ones who know nothing and the ones who know everything.” [20:22]
I get to work in a job that I love. I urge you to work in jobs that you love. I think you are out of your mind if you keep taking jobs that you don’t like because you think it will look good on your resume. [22:07]
I was with a fellow at Harvard the other day who was taking me over to talk. He was 28 and he was telling me all that he had done in life, which was terrific. And then I said, “What will you do next?” “Well,” he said, “Maybe after I get my MBA I will go to work for a consulting firm because it will look good on my resume.” I said, “Look, you are 28 and you have been doing all these things, you have a resume 10 times better than anybody I have ever seen. Isn’t that a little like saving up sex for your old age? There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. [22:50]
You really should take a job that if you were independently wealthy that would be the job you would take. You will learn something, you will be excited, and you will jump out of bed. You can’t miss. You may try something else later on, but you will get way more out of it and I don’t care what the starting salary is. If you think you will be happier getting 2x instead of 1x, you are probably making a mistake. [23:47]
[On the type of companies he likes] I want a business with a moat around it. I want a very valuable castle in the middle and then I want the Duke who is in charge of that castle to be very honest and hardworking and able. Then I want to widen the moat around that castle. [25:38]
Our managers of the businesses we run, I have one message to them, and we want to widen the moat. [28:05]
[Think of mind share not just market share] Everyone has something in their mind about Disney. When I say Universal Pictures or 20th Century Fox, you don’t have anything special in your mind. Now if I say Disney, you have something special in your mind. . . So is a mother going to walk in and pick out a Universal Pictures video in preference to Disney? It is not going to happen. . . That is what you want to have in a business. That is the moat. You want that moat to widen. [36:10]
Define your circle of competence. Everybody has got a different circle of competence. The important thing is not how big the circle is, the important thing is staying inside the circle. [40:26]
[How Warren would study an industry] I would the “Scuttlebutt Approach.” I would go out and talk to customers, suppliers, employees, and maybe ex-employees in some cases. Everybody. Every time I was interested in an industry, say it was coal, I would go around and see every coal company. I would ask every CEO, “If you could only buy stock in one coal company that was not your own, which one would it be and why?” You piece those things together, you learn about the business after a while. [41:00]
You get very similar answers as long as you ask about competitors. If you had a silver bullet and you could put it through the head of one competitor, which competitor and why? You will find who the best guy is in the industry. [41:25]
[When buying a business] I have to decide what the price is. That is either yes or no. I don’t fool a lot around with negotiations. If they name a price that makes sense to me, I buy it. If they don’t, I was happy the day before, so I will be happy the day after without owning it. [42:30]
Coca-Cola went public in 1919; the stock sold for $40 per share. One year later it is selling for $19 per share. It had gone down 50% in one year. You might think it is some kind of disaster and you might think sugar prices increased and the bottlers were rebellious. And a whole bunch of things. You can always find reasons that weren't the ideal moment to buy it. Years later you would have seen the Great Depression, WWII, sugar rationing and thermonuclear weapons and the whole thing—there is always a reason. But in the end if you had bought one share at $40 per share and reinvested the dividends, it would be worth $5 million now ($40 compounding at 14.63% for 86 years!). That factor so overrides anything else. If you are right about the business you will make a lot of money. [47:05]
[If you make a mistake] In an area you know nothing about, you should learn something from that which is to stay with what you can figure out yourself. You really want your decision making to be by looking in the mirror. [In other words, keep improving your judgement until you can trust it.] [52:53]
What is the benefit of being an out-of-towner as opposed to being on Wall Street? The best way to think about investments is to be in a room with no one else and just think. And if that doesn’t work, nothing else is going to work. [55:15]
The disadvantage of being in any type of market environment like Wall Street is that you get over-stimulated. You think you have to do something every day. The Chandler family paid $2,000 for this company (Coke). You don’t have to do much else if you pick one of those. And the trick then is not to do anything else. So what you are looking for is to get one good idea. And then ride it to its full potential. [55:40]
The way to look at a business is this going to keep producing more and more money over time? And if the answer to that is yes, you don’t need to ask any more questions. [1:02:09]
[If you aren’t working on your best idea you are doing it wrong.] Once you are in the businesses of evaluating businesses and you decide that you are going to bring the effort and intensity and time involved to get that job done, then I think diversification is a terrible mistake to any degree. Very few people have gotten rich on their seventh best idea. But a lot of people have gotten rich with their best idea. [1:06:15]
[Advice on living a happier life] The way to do it is to do something you enjoy all your life and be associated with people you like. [1:27:16]
Full video here: Warren Buffett speaks at Florida University
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I have always been extremely curious. I had a great teacher in high school that sparked my curiosity in writing. The reason I thought writing was important is because there are things in stories that can help me be a better basketball player. Be a better teammate. Be a better leader. Things that help me understand emotions better. [5:45]
I had a purpose. I wanted to be one of the best basketball players to ever play. Anything else that was outside of that lane I didn’t have time for. I made that deal with myself at 13 years old. [6:25]
Where did your inspiration come from? The challenge. I would watch Magic Johnson and Michael Jordan play. I would see them do unbelievable things. And I’d ask myself, “Can I get to that level?” I don’t know. But I want to find out. I had curiosity to see where I could push this thing. [6:42]
Do you think you had an edge over everybody else because your focus was on one thing? I do. Basketball was the most important thing. Everything I saw, books I read, people I talked to—everything was done to try to learn how to become a better basketball player. When you have that point of view then the world becomes your library to help you become better at your craft. [8:35]
It was easy to size other players up in the NBA. I found that a lot of guys played for financial stability. Once they got that financial stability the passion, the work ethic, and the obsessiveness was gone. Once I saw that I thought, “This is going to be like taking candy from a baby. No wonder Michael Jordan wins all these f*g championships.” [12:00]
I see other players take vacations just to take a vacation. Or hang out just to hang out. I never did that. I didn’t do that because when I retire I didn’t want to say, “I wish I had done more.” [13:51]
Were there other players who you thought were as crazy as you were? I went to GOAT mountain. I talked to Magic Johnson, Michael Jordan, Larry Bird, Hakeem Olajuwon, Oscar Robinson, Jerry West, Bill Russell. I would ask them: What did you do? What were your experiences? What was that process like? I went to them to understand the ins and outs of the game. To figure out their level of detail and obsessiveness. That’s what I did. [14:30]
[How Kobe fixed weaknesses in his game]: When I shot five airballs in the playoffs and I asked, “Why did those airballs happen?” The year before I was in high school. We only played thirty-five games. In the NBA you play back, to back, to back. I didn’t have the legs. I have to get stronger. I have to train differently. I need to tailor my weight training to an 82 game season. I looked at it with rational. I shot airballs because my legs weren’t there. Next year they will be there. That was it. [20:24]
[How Kobe decides which businesses to get involved with]: Do you understand the business? Is it a business you can help in some way? Are the leaders people you believe in? Are they obsessives? [30:51]
When it was time to play I’d switch my mode into something else. It was the equivalent of Maximus Decimus Meridius in Gladiator picking up the dirt and smelling it. It is go time. That was my mental switch. It was like an actor getting ready for a film. You put yourself in that cage. When you are in that cage you are that character. Then when you leave there you can be something completely different. [51:30]
I would play the Halloween Theme Song over and over again in my headphones before the game. It was important because Michael Meyers was devoid of emotion. No pressure. No hype. Just a stone-cold killer. [52:30]
Everybody told me that I’d get depressed when I retire. I’m fine. My competitiveness kicked in. I am going to do something in the next 20 years that is better than these last 20. You might not understand it but I am doing that. [56:45]
I am not writing every word of the novel. I am not animating the films. What I have to do now is to make sure the obsessives we bring in are challenging themselves to do the best job that they can do. [57:12]
If we have a project and you think you can do it — that is not the project we want. The projects that make you say I don’t know if I can do that. I don’t know how to do that. Those are the things we want because through that curiosity you will reach a level that you didn’t think was possible. [57:45]
[Traits Kobe wants in the people he works with]: They have to be obsessives. They have to have a historical knowledge base. I love people who understand the history of their industry. [1:00:13]
Full video here: Kobe Bryant Untold Stories with Patrick Bet-David
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We have always focused on the market. The size of the market. The dynamics of the market. The nature of the competition. Our objective was always to build big companies. If you don’t attack a big market it is highly unlikely you will ever build a big company. [4:30]
We don't spend a lot of time wondering where people went to school. We are interested in their idea about the market they are after. The magnitude of the problem they are solving. [5:00]
We don't choose people. We choose markets. We rarely invest in an area where there is only one product. If you think of the Apple computer as a system - we knew we'd need to finance one or more memory companies. [6:45]
We have gone into business with some people who had no business credentials. We organized the companies in ways so people who ran them could do so based on the limited experience they had. We taught them outsourcing. We taught them that you only had to do a few things well. [15:10]
We were not interested in creating markets. It's too expensive. We were interested in exploiting markets early. [16:15]
The right people to invest in are technologists. People who have a dream to solve a problem. Most were not interested in becoming wealthy. That was an accident. They were interested in solving technology problems and creating new products. [17:00]
We don't wait for you to knock on our door. At Sequoia, we knock on your door. [21:00]
The art of storytelling is critically important. Most of the entrepreneurs who come talk to us can't tell a story. Learning to tell a story is incredibly important because that's how the money works. The money flows as a function of the stories. [22:45]
There is only one metric that matters in our world. It's cashflow. We hire people that are wizards at cashflow. [32:45]
Full video here: Don Valentine, Sequoia Capital: Target Big Markets
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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Why hire a head of marketing? We’ve never done any traditional marketing. We just turned 20. I felt it was time to do a few different things. Let’s get more intentional about how people find us. I found that we were just crossing our fingers and hoping people found us. We shouldn’t leave that to chance anymore. We want someone to own this work. To focus on it all the time. [1:35]
We got over 1,000 applications. The majority of people we talked to were professional marketing people. They all had a marketing title. [2:35]
As we were going through this process, certain things came into focus. We still wanted someone with marketing experience. When we got down to the four final candidates we gave them a project. Marketing is different than code or design. It is very hard to look at marketing. It is hard to connect the dots. [4:00]
So we did a marketing project exercise. We gave everyone the same project. What does your gut tell you we should do as a company? You have a week to do it and we paid them $1500. [5:30]
The work was interesting because it showed some contrast. I was attracted to the projects that were things we could do ourselves. That didn’t rely on a lot of outside help. [6:13]
I wanted to see where their gut went. Most went to big, broad projects with a lot of complexity. I couldn’t wrap my head around how we are going to accomplish that. [7:34]
We ended up with someone who is quite different than the other 3 finalists. The other 3 finalists were very good professional marketers. The person we ended up going with never held a marketing position. They were an entrepreneur. An entrepreneur has been doing marketing their whole life. That is what they do. He was practically minded. Scrappy, because he had to be. Had done a whole lot with a little. Had made a lot of sound from a small stage. Had put together some really interesting projects over the years. [8:40]
The person we went with —Andy—has been running The Detroit Bus Company. Detroit went bankrupt. Bus schedules were not running on time. They were not available. He thought that was crazy. He bought a bus, painted it fun, and started a bus line. If you buy a ride you are buying a ride for a kid to get to an after school program too. He did this because he cared about the problem. [11:20]
I was intrigued by his ability to go from nothing—just an idea. And then just figured out how to do it—with no experience in the thing itself. [12:20]
I thought his tactical ideas were interesting. He was the only person out of 1,000 to say this: It is not hard to get a list of new LLCs. They are small businesses. Let’s get to them before anyone else does. Let’s talk to them. We understand the struggles they are going through. Let’s get that list and work off of it. There was real specificity that he brought to every discussion. [14:05]
[As a company grows] There is a lot to lose. If we get a lot of things wrong we have a long way to fall. Companies tend to switch to a preservation mode. They take less risks. And smaller risks. It can lull you into this sense of being afraid. I think we have fallen into that in the last few years and now we are working our way out of that. [17:20]
Full podcast here: The Rework Podcast: In The Market for a Marketer
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
Subscribe at davidsnotes.substack.com
I am bad at marketing so it is good if the name of the company [Less Annoying CRM] describes the whole value proposition. [0:52]
[Courtland, the host]: The CRM space is not new. It is not unique. There are tons of companies working on various types of CRMs. Yet you have managed to do very well for yourselves. You have bootstrapped to 22,000 paying customers at $10 a month. You’ve done something well in a well trodden area - a lot of people think you can’t get started unless you have a totally unique idea. [1:28]
There is a risk you take by going into an industry that has a lot of competition. That risk is you can’t build a better mousetrap. But there is a different type of risk if you go into something brand new— and that is no one even wants it. [2:48]
If I have to pick between those two risks— I trust myself to build a better mousetrap more than I do to create a market that never existed before. [2:56]
One of the great things about the CRM industry is it is not a winner take all market. [3:45]
[What he learned from working at a failed startup that raised venture capital, grew fast and fired 90% of the employees]: If I ever start my own business I am bootstrapping. [8:01]
How do you evaluate an idea to know if it is a good one? It really helps to have constraints. If you have the whole world of options available it is almost impossible to pick something. One of my constraints was bootstrapping. There are a lot of businesses that can’t work bootstrapping. [10:32]
Know your weaknesses. I know I can’t do sales. This is why we go after small businesses instead of enterprise. [12:48]
In my personal experience the best way to come up with an idea is get a job at a company that is dysfunctional and one where software could make it more functional. See it, experience it in person, and fix it. That is what happened for me. I had that experience with a CRM from my previous job. . .At my previous job they put me in charge of setting up Salesforce. I spent a month on it. I have a degree in Computer Science. I got nowhere. This made me think: What does a company do that doesn’t have me? There are a lot of companies with no computer scientists. What do they do? [15:31]
At the end of the day it is a CRUD app. It is a spreadsheet with a slightly better user interface on top of it. No one wakes up dreaming of using their CRM. They don’t use it for fun. I think the business world took too much marketing from the social media and video game world. Products that people enjoy using. We don’t. This is a tool. It is going to do what the tool is supposed to do and then get out of your way. [22:22]
How long did it take before you could fully support yourself from Less Annoying CRM’s revenue and you could quit your jobs? Two years after launch we were making $5,000 in monthly recurring revenue. Instead of quitting our jobs we hired someone to work on the business full time. [27:00]
[Why do this?] We tried to figure out what moves the product ahead the fastest. We decided having a full time customer service person would free up more of my time for product. [This, is turn, would move the product ahead the fastest] [28:00]
We had a 2 year stretch where our growth just tanked. We didn’t shrink but growth stopped. We just weathered the storm and got back on track later. . .This year our growth has not been great. We were shooting for 30% growth. We are only going to grow 20%. That is still $500,000 in new annual recurring revenue. I’m not mad about that. [33:00]
I think of every marketing channel as planting seeds. Then the seeds grow into a network of people through word of mouth. Our main way to plant seeds was Adwords. Word of mouth has always been our main channel beyond that. [38:45]
One lesson I have learned is no marketing channel scales. Even a marketing channel that is working will stop working eventually. [39:10]
The one thing that is not temporary is word of mouth. Not only is it not temporary but it scales with the size of your customer base. Whereas everything else doesn’t. [40:00]
Courtland: One idea that stuck out from reading Zero to One. As a business you really don’t like competition. That doesn’t mean don’t enter a crowded market. It means you really need to differentiate yourself from other businesses. You need something where no-one else can really compete with you. [54:10]
I try to imagine if a private equity firm bought my company and wanted to turn it into a cash cow—what would they do? All the things they would do is our competitive advantage. They’d lay off most of the customer service people, they’d raise prices, they’d stop offering phone support. All these things—which no other company is willing to do—is our advantage. Let’s keep doing those. [55:55]
Patience is something we have that no one else has. If you have word of mouth growth all you have to do is wait. If you have investors you can’t wait. I love this job. I am making plenty of money personally so if it takes the rest of my career to get where we want to be then so be it. [57:20]
If anyone is interested in this [building businesses] the only thing you can do is do something. Then you will realize how dumb you were and you will do it better next time. Sitting around and waiting is never the right answer. [1:09:15]
Full podcast here: The Indie Hackers Podcast #128 Finding 22,000 Paying Customers Despite Stiff Competition with Tyler King of Less Annoying CRM
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
Subscribe at davidsnotes.substack.com
What happens if we don’t know history ? In the world of the blind, the one-eyed man is king. If you are the 1 out of 100 that studies history and you learn context from it —does that give you a leg up in your life? [11:15]
[The best way to build an audience] On the podcast I talk about what I like to talk about. What interests me. If you do that you will eventually self select your audience. They will be people who like what you like too. [12:15]
[One benefit of new media] Instead of having to appeal to everyone out there you can target a teeny, narrow demographic. Example: If you are really into Harry Potter, what are the networks giving you? [Nothing] But there are a bunch of podcasts about Harry Potter. [13:00]
It might be a small audience that is interested in that —but they are passionate about it. It is one thing to say I watch this TV show that everybody else likes and I like it too. It is another thing to have somebody speaking right to your soul, in a way that you can relate to, about something you love. [13:30]
When you go into a bookstore you will see books about historical figures and history. These are from authors, not historians. [Why?] Because they are great storytellers. They know how to tell that story in a way that relates to a nonspecialist. [15:45]
The modern world opens up the possibilities for anyone who has a storyteller gene. Some of you are great storytellers. It is almost an innate quality. Doesn’t mean you can’t improve it, but it is an innate quality. The new media has no gatekeepers. We have gone away from the whole idea that someone can prevent you from telling your stories. You don’t have to please a gatekeeper before you can see if an audience likes what you do. For storytellers this is a golden age. [18:11]
There is a long game going on here that old media doesn’t deal with. If we do a show today, how many people will have heard that show 100 years from now? Old media does what is the next ratings period? Is this show going to be around next year? In other words, people are creating history everyday now. [21:13]
If you looked at all the top podcasts and ask them, “How do you make money?” They all have different models. It is tied to what you do and the kind of production you have. [33:26]
I get out 2.5 shows a year. I won’t do more than one ad per show. If I had to live off of advertising it would not be viable. [33:42]
But if you do three shows per week —like Joe Rogan—and you do a few ads per show that is a viable solution. [34:00]
My approach is to sell the old shows. Take them off the free feed and sell them. These shows are evergreen. They are as good years from now as they were when we released them. [34:08]
We are literally at the very start of this. We are at the very beginning of the beginning. [35:00]
The feeling of satisfaction —if people like it—there is not much that compares to that. [44:00]
Full video here: Dan Carlin: "The New Golden Age of Oral Historical Storytelling" | Talks at Google
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
Subscribe at davidsnotes.substack.com
Big corporations commit suicide eventually. The survival of a large corporation in the S&P 500 used to be something like 60 years. And today it is around 10 years. [11:00]
You want institutions to reset. Otherwise, you end up with metastatic bureaucracies. [12:00]
At no point in history have you had as many people taking risks that kill others, harm others, bankrupt others, milk others —without themselves being subjected to the same risks if not higher. [A core tenet in his book Skin In The Game: Hidden Asymmetries in Daily Life.] [13:05]
A lesson from The Green Lumber Fallacy: What you need to know in a profession isn’t what people from the outside, or people from the top think. It is a bottom up thing. [17:45]
Any profession where you are judged by your peers — and not the end users — will eventually rot. You will eventually go bust. [21:49]
Survival is the only metric you can not game. [23:08]
We need people to start a business. That is what we don’t have. We have very few risk takers and a lot of actors. Practically in every field. [28:13]
The idea of Skin In The Game is I really don’t care what you think. I care what you do. [Revealed preference] [30:30]
Cheap talkers want to be intermediaries between me and Seneca. . . I want them out of the way. I want to directly read the text and get the message. I don’t need intermediaries. I don’t want a broker. [32:38]
Things change with scale. A large town is not like a village. Risk taking for my own sake is different from risk taking for the collective. [Or why we need more entrepreneurs and less bureaucrats.] [38:02]
Goldman Sachs is 150 years old. Why? Because they have a rule: We don’t want a small tail risk. We want zero tail risk. A tail risk is the risk of ruin. [43:26]
Ingrained in every trader: Take all the risk you want but avoid ruin. [44:00]
They want you to believe paranoia is irrational. We have survived 300 million years thanks to paranoia. Paranoia is built into nature and all sorts of animals. [44:41]
All these economic models are completely flawed but academics keep using them because they don’t have skin in the game. When you have skin in the game you know survival is what comes first. [46:33]
I had Skin In The Game reviewed by exactly zero people in the media and it opened #2 on the best seller list. Explain to me why I need the media? [1:01:41]
Full podcast here.
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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Part 1
Why did you write this book [A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market]? The way I think about things is somewhat different than almost everybody that I meet. And that has been very helpful to me. Maybe I can get that across in this book. That motivated me to tell my story and hopefully do some good for other people. [2:00]
I was born in Chicago during The Great Depression. As a kid I went to a bad school. I was interested in science, math, physics, astronomy, electronics and so on. So I started teaching myself. [3:45]
When did you know that you were smarter than other people? I don’t think of myself or other people that way. Everybody is good at something. Any person knows something some other person doesn’t know. I don’t think in those terms. [5:40]
You perfected counting cards in blackjack. It is now very common because you wrote the best selling book: Beat the Dealer: A Winning Strategy for the Game of Twenty-One. Why? Mathematicians had spent a couple hundred years developing probability theory. With the theory they showed almost no gambling game could possibly be beaten. I thought it was a math problem worth telling people the answer to. That is how I got into it. [11:42]
When I was doing most of my playing, Las Vegas was mobbed up. People were being beat up, kicked out, cheated, drinks drugged. I had my drink drugged. They rigged the brakes of my car. I couldn’t stop the car with the brakes. I put on the emergency brake, shifted down, and turned off the key. I got the message. [15:50]
How did you go from Las Vegas to Wall Street? For the first time in my life I had some savings. I made some investments. They did terribly. I was an idiot. I had to think about this if I didn’t want to lose money. So I started educating myself about investing.[18:11]
I realized the lessons from gambling was a better training ground for understanding how to be a good investor. That seems surprising since investing is supposedly so complicated. You learn discipline. You learn money management. You learn to compute with numbers and probabilities. [19:00]
Paul Wilmot [a quant and author of the book The Money Formula: Dodgy Finance, Pseudo Science, and How Mathematicians Took Over the Markets] said it best. What happened was once the quantitative revolution got started on Wall Street a lot of people with mathematical training, but not a lot of street smart sense, began using models and formulas the didn’t have good thinking behind them. Example: Collateralized Mortgage Obligations. [20:33]
Full video: A Man for All Markets Part 1
Part 2
[While Ed was teaching at UC Irvine] Ralph Girard —the dean of the graduate school — was in investor in Buffett Partners Limited. Buffett Partners Limited was shutting down in 1968. Girard wanted another place to put his money. He invited me to dinner with Warren Buffett. We hit it off. Buffett asked me a bunch of questions and I answered. Girard decided to invest with me. [2:20]
Is Buffett a really bright guy? Yes. He is very smart. Much smarter than you would imagine. He talks a mile a minute. He is clever. He has good math skills. He is very comfortable with numbers. He can do a lot of computing in his head. [3:31]
What was your encounter with Bernie Madoff? Back in 1991 I was asked by a big international consulting firm to look at their portfolio. They had money with Madoff. When I saw it I said: What this guy is doing should only produce returns that are about like the stock market. When the market is up he should be up. When the market is down he should be down. But he’s never down. [4:30]
I noticed that there was a strange trade that would occur when the market should have taken him down. So he is making a profit every single month. For years. I said he is either a genius or a fraud. Odds are he is a fraud. [5:35]
I looked at his confirmation slips and went to see if the trades actually happened. Half of them never happened. These are fake confirmation slips. I tried going to Bernie Madoff Investments and they said the would not let me in the front door. [6:26]
Did you ever think I should go to the authorities with this? Bernie Madoff had been a chairman of NASDAQ. He was the biggest 3rd market trader in the US. He was on all types of committees. He was the establishment. The SEC checked him and gave him a rubber stamp of authenticity. This happened year after year after year. [7:30]
Investing is kind of like the Super Bowl. If you want a good Super Bowl team you need a good offense and a good defense. And a good defense keeps other people from taking your money. [8:41]
I started the first quantitatively based market neutral hedge fund [Princeton/Newport Partners] back in 1969. We only lost money in 3 months out of 230 months. . . Rudy Giuliani wanted my partner to give him dirt on Goldman Sachs and Michael Milken. My parter wouldn’t cooperate. So Giuliani raided our office. The trial dragged on for years at a great expense. The government ended up dropping prosecution of most people on most counts. [9:18]
How rich are you? [His fund returned almost 20% for 20 years] That is a question I don’t answer. Best to stay mute. [16:40]
You are 84 years old. You are amazingly fit. Do you have a secret to that to? I try to stay aerobically fit. I try to keep good muscular strength. I get frequent checkups at the doctor. I try to eat fairly well. I weigh myself every morning and I write it down. That automatically changes my behavior. Awareness leads to change. If my weight starts creeping up I find myself eating less without even thinking about it. [18:31]
You end your book [A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market] with things that anybody can grasp. You are saying marry well and be surrounded by friends and family. What do you have to say about that? What really matters in life isn’t how much money you make or the things you have. It is who you spend your time with and who you are close to. Family, spouse, good friends. Life is really about spending time well. [20:05]
Full video A Man for All Markets Part 2
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Benefits of Mr Beast’s company being in North Carolina: Less taxes, less rent, less cost of employees. If my warehouse [where he shoots his videos] was in LA it would be 8x the cost. It wouldn’t be feasible. [3:00]
In North Carolina a 7 room office is $1800 a month. The office they are recording this podcast is in L.A. The rent is $3000 a month for 2 rooms. [4:19]
The more we talk the more you’ll realize I do YouTube and that is about it. I like to delegate everything else to other people so I can focus on it. [4:40]
You asked me about my shirt. I didn’t buy this. I had someone shop for me. I suck at fashion. I suck at anything that is not YouTube. [4:43]
You outsource everything that is not video making? At the moment - since we are blowing up - it is optimal to spend the time doing that. [5:03]
Two years ago I didn’t have a single employee. [5:26]
If you are a YouTuber it is about opportunity cost. If you can pay someone a few hundred dollars to free up time to put towards a video that is getting millions of views— that is a no brainer. [6:18]
I edited my first 800 videos. I remember thinking no one will ever to able to match my style. All that other crap everyone else says. Then you get an editor and it is like I was stupid. You could put that time into making your next video. [7:00]
From 12 years old until now all I did was YouTube. My friends make movie references I don’t get. I only grew up on YouTube. [10:33]
I was grinding everyday for years. Not getting anywhere. There was so many times when I went to bed wondering if I was wasting my time. [11:00]
I think most people have more time. They just convince themselves they don’t. Anyone listening to this probably spends an hour plus a day on Instagram and Twitter. If you cut that out your life would be no worse off and you would have a free hour to do whatever you want. [16:30]
I love when people grind for a year or 2 and then give up and say it’s impossible. Those are rookie numbers. [17:15]
People over complicate the Youtube algorithm. If people click on your video and watch your video- what the f**k else does YouTube want? They don’t care about comments or likes. None of that matters. They just want you to click and watch. [21:38]
Full video here: Mr Beast on H3H3 Podcast.
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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Peter on his essay The Straussian Moment: Instead of violent wars there could be violent video games. Instead of heroic feats there could be thrilling amusement park rides. Instead of serious thought there could be intrigues of all sorts as if in a soap opera. It is a world where people spend their lives amusing themselves to death. [6:44]
Advice Peter would give to the 18 year old version of himself: Think a lot harder about the future. Don’t think of education as a substitute for the future. Try to think concretely about what you want to do. There is something about the tracked educational system - it gets packaged as a form of thought. But it’s a substitute for thought. It’s a substitute for the future. [44:10]
You probably don’t want to do the things that are hyper-competitive that everyone is doing. [44:44]
[A good question to ask yourself] What’s a good career that other people aren’t pursuing? The politically incorrect career is petroleum engineering. It’s super lucrative. For ideological reasons not enough people go into it. [45:21]
At this stage of your life what are you trying to accomplish? It sounds too ambitious and grandiose but I would like our society to get back to the future. To get back to a society that is progressing in all these important dimensions. [46:11]
The future arrives. It will be different from the present. If we don’t think about it, it is much less likely to be a good future than if we worked to craft it. [46:50]
Full video here.
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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I developed this area of science called complexity theory. I decided to start a company that will build the tools that I want for myself. These tools are useful to lots of other people in the world. [3:28]
We started the company in Champaign, Illinois. That is probably not people’s first choice as to where to start a technology company. [3:46]
We got off to a very quick start. I was injecting ideas into the company at a very high rate. I was getting more and more frustrated that these things weren’t getting done. Just a few years ago we completed our 1991 to do list. [4:11]
I decided to step back and spend most of my time doing basic science. I was the main person to start working off site [This is when he starts working remotely]. [5:05]
Did you raise venture capital? No outside money. . .Not having venture capital is great. I don’t have a boss. I recommend it. [6:07]
I think of myself as pretty average at business. [6:50]
We’ve been profitable every year for 31 years now. That is achieved by a very simple process: spend less than you make. [11:32]
To me the focus is can you be productive? Where you live is your independent business. [13:47]
Tips for remote collaboration: We never use video conferencing. It’s always screen sharing and voice. [16:37]
Stephen’s blog post: Seeking the Productive Life: Some Details of My Personal Infrastructure. It is a very comprehensive view of Stephen’s entire personal operating system. [18:00]
Stephen live streams his internal meetings: I started live streaming the meetings because I thought they were fascinating. It is a shame for them to just go off into the ether. [18:33]
Some of the cracks that are happening in the technology industry come from a lack of alignment. Who are the actual customers? The actual customers are the advertisers, not the people. [21:45]
I see a large part of my role [in the company] as matching the talented people we have with the projects we want to do. [27:10]
Unique way to ask for a job: I’ve been reporting bugs in your software for 6 or 7 years now. I want to come and help fix them. [37:57]
Traits that make people successful: Independence of mind. Keep your thinking apparatus engaged at all time. Don’t b**t. [38:08]
Full podcast here: Distributed with Matt Mullenweg: Stephen Wolfram on 28 Years of Remote Work
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
Subscribe at davidsnotes.substack.com
The trick is finding what you love to do. We talk about hard work all the time. If you gotta get up every morning and remind yourself how hard you have to work you probably need to choose a different profession. That shouldn’t be there. I wake up in the morning excited to get to it. If I am not training I am missing it. There is no place I’d rather be. If you have that feeling then you are doing what you were put on this earth to do. [7:45]
The best way to prove your value is to work. To learn. To absorb. To be a sponge. You always want to outwork your potential. As hard as you believe you can work? You can work harder than that. [8:54]
I had a competitive nature, work ethic, and curiosity. I asked a lot of questions. I would always sit down with all of the Lakers’ greats and ask them questions about certain games I had studied growing up. [9:52]
Dreams should be pure. We are born into this world and we wind up going backwards. The more we mature the more responsible our dreams become. The more governors we put on ourselves and our ability to dream. Make sure your dreams always stay pure. If you protect your dreams and your imagination the world seems limitless. [11:34]
What was your articulated competitive philosophy? My philosophy was very simple. Rudy was one of my favorite films growing up. After watching that film I came to understand that if I could work that hard everyday –what would my career be? I made a promise to myself that I was going to work that hard every single day so when I do retire I had no regrets. Leave no stone unturned. Get better every single day. If I lived that way then over time I would have something beautiful. If you live your life to get better every single day and you do that for 20 years–– what do you have? [17:36]
As a leader of a team it is your responsibility to elevate the rest of the team. The way to make them better is to get them emotionally to want to be better. To get them to an emotional space where they wake up every morning driven to be the best version of themselves. [21:35]
How did you deal with teammates who weren’t as dedicated as you were? My response may sound a little tough but I’d kill them. I’d bury them. That mentality is not tolerated. If you show up and lallygag through this scrimmage or this drill, I am going to beat you. I am going to let you know I beat you. And I am going to want you to reconsider your professional life choice. [24:31]
If you are lazy I don’t want to talk to you. I don’t want to deal with you. You are going to make me feel dumber. You are going to lower my level. I don’t think so. [25:42]
How you create something that lasts forever: Pay everything that you have learned forward, to the next generation to come. Inspire one, who inspires the next, who inspires the next, and on and on you go. [39:54]
Full video here.
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Famous Warren Buffett quote: If you’ve been playing poker for a half hour and you still don’t know who the patsy is, you’re the patsy. [1:27]
The CFO of Spotify started in on this idea that the way we go about pulling off an IPO was designed 4 centuries ago. [1:57]
It hasn’t been updated for modern technologies. As a result there has been $171 billion of underpricing. Silicon Valley has been the patsy. The companies are getting the short end of the stick. [2:13]
It would be like selling your house and then finding out the next day that the broker resold your house to someone else for 80% more. Why would you celebrate that? [3:08]
The reason that mispricing can happen over and over again is because of a massive frequency mismatch. A founder does one IPO in their lifetime. The investment banks and the buy side are doing 20 to 40 a year. [4:18]
In game theory they have this thing called flow. In games where one side has way more experience than the other player, the less experienced player has anxiety. . . If you are anxious, you are more likely to fall back on tradition because it is the safest bet. [5:09]
Another crazy thing that happens is the company is told the ultimate goal is to be 10 to 20 times over subscribed. That is a euphemism for we are about to ignore 95% of demand. [10:12]
With a traditional IPO the decisions are all made by hand. Some human is going to guess what the share price should be and who should get the shares. [11:25]
In the last 18 months there has been $12 billion in mispricings. The deficit to the founder’s pockets— in just two companies [Elastic and Zoom]— was $200 million. [14:42]
[Bill favors direct listing instead of a traditional IPO] What should be happening is an algorithmic match. Line up supply, line up demand and then you match the people. [17:45]
It goes back to the pageantry of an IPO. The minute your are done —and your stock is popping —they put you on a pedestal, ring bells, throw confetti, and tell you what a wonderful job you did. I think it is all to make you feel good about something you shouldn’t feel good about.[22:02]
One of the great things about a direct listing is it just simplifies so much of this stuff. [28:11]
Direct listings means there is no lockup so you have more liquidity day one. [31:24]
Sequoia’s Mike Moritz said that the things that separate companies from doing direct listings are intelligence and courage. I think you need both. I don’t dismiss how hard that might be. [44:16]
Full podcast here: Invest Like the Best, EP.144 Bill Gurley – Direct Listing vs. IPOs
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What’s one thing you wish you would have learned earlier as a leader? I think I’ve found throughout the years that people really just enjoy working with leaders who have a little more intellectual honesty. Leaders that are real when they don’t know the answers. But also confident when they do. When you do this well, the organization just gets better at solving problems, because they’re able to be more honest with each other. If you as a leader are willing to say, “I don’t know the answer. There’s going to be times in the future where I continue to not know the answer. I’m not the best in the world at this job. That’s just how it is.” [2:06]
Get rid of this façade of we’re all going to be great, and just get to the reality of the situation. We’re all flawed people, our skill sets are all imperfect in some way. It just cuts out a lot of this theater around working and gets straight to the heart of the problem. How are we going to fix this? [3:15]
For founders in particular, I think we tend to be wired in a certain way where we feel like we can just figure things out. We feel like we don’t need a manager to coach us. And so you start to say, our organization doesn’t need management, or we don’t need these types of things. I didn’t need it. I figured it out on my own. Why does anyone else in our company need this? So you start to tell yourself that story. And I think it takes a little while to just unwrap that belief. Not all managers are bad. It took me a while to make that transition. [7:55]
Something that helped Wade learn how to become a better manager: There’s a really great podcast called Manager Tools. It’s two West Point grads who worked at PNG for a long time. They have this very no nonsense, sort of practical approach to management. [9:32]
It took me a while to figure out that management is a skill I have to work at just like any other skill you might have to develop in running a company. [11:34]
Your initial instincts about management may be wrong: Someone comes to you and says, “I have a problem.” And you’re like, I’m the manager, I’m the boss. My job is to solve the problem. So you jump in and solve the problem. But when you do that, you’re actually mistaking your roles. You’ve hired this person to solve problems. . .You’re missing out an opportunity to help them level up and be better. [13:26]
I do not want all decisions to run through me, and all problems to be solved through me. [14:25]
How does one’s leadership style have to adjust to running a remote company versus in person? I think the core psychology of management is the same, no matter if you’re in an office or if you’re remote. The principles still apply. You’re still trying to empower people to solve problems. You’re still there to provide feedback. You’re still there trying to help the organization hit its goals. All those things are the same. There’s just no differences. [16:30]
I occasionally will freak the team out because my communication style is short and direct. I don’t flower up my messages. When I onboard people into the team, I have a whole guide for how my communication style is. Here’s how to understand when I say certain things. [21:38]
How Wade improved how he gave feedback to employees: I think the realization for me that made it stick was, if you care about this person, and if you understand what their ambitions are, what their dreams are, what their goals are – if you notice something that you think would help them achieve those things, and you hold that back, that’s actually not a very nice thing to do. [26:36]
One of the thing we’re trying to do is we’re just trying to be faster in our go-to-market, and faster in how we respond to our customers. I think a lot of orgs are trying to just generally be faster. [29:42]
Full podcast here: The Heartbeat Podcast #33 Interview with Wade Foster, CEO and Co-Founder of Zapier.
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Even though we have had a lot of success, I would argue that we are far more successful in understanding failure. We are experts in failure. I’m going to talk about how we see companies fail. I have a top 10 list. [1:00]
Assuming that raising a successful seed round means you reached product market fit. This is extremely common. Founders tend to think that because investors want to invest in their company that their company must be amazing. That their company will go on to be the next big thing. That is rarely the case. The vast majority of the best investors have invested in dozens of companies that you’ve never heard of that have died. [1:30]
Hiring too quickly. Founders think they have to hire 8 to 12 people once they’ve raised an angel round. It is cargo culting what a successful company is supposed to look like. When you have that many employees, the primary job of a CEO switches to management. But for a pre-product/market fit company the primary job of the CEO should be to focus on achieving product/market fit. You can see the disconnect. A lot of the advice we have to give is you need to let some of these people go because you are running low on money. You didn’t find product/market fit. [3:22]
Not understanding your business model. We have a ton of B2B companies. The most common mistake they make is they don’t know if they can afford the process they need to do to acquire customers. Don’t just pursue the strategy that interests you. Pursue the strategy that is commensurate with how much you charge and who your customers are. [5:06]
Not understanding when it is the right time to sell into a tech startup. This depends on what you are selling. If you are selling key components the startup is less likely to rip it out [cancel]. [Using Stripe as an example] If your payment system works you are not going to rip it out. [You might be better off selling to existing businesses] There are some advantages and disadvantages to not selling to startups. Existing businesses have more money. They are less likely to churn. But if you are selling to a larger company you are often selling to an executive. You won’t know what their budget and decision making ability is. [6:02]
Assuming investors will be a large differentiator. The best advice I got as a founder was simple. An “A Investor” give you money, signs your paperwork, and shuts the f**k up. That is an A. There is a lot of room below an A. There is not a lot of room above. Founders often believe their investors will do far more for them then they actually end of doing. [8:40]
Not establishing best practices around hiring. You need to set up an intelligent hiring process that good candidates will enjoy going through. You need to have good, open communication about equity. You need to set clear expectations about what an employee’s role is going to be. And most importantly don’t over believe in your ability to hire great people. Founders always say their team is the best. Clearly not every team is the best. Companies should be trying to minimize their non-essential employees. You should not believe you are great at hiring. If someone is not an essential employee within 3 months that is a sign that you didn’t make a good hiring decision. [10:45]
Not establishing best practices around management. This is extremely common. Early stage management isn’t that complicated. What is missing is consistent 1 on 1s [between managers and employees]. Some type of all hands meeting. Getting employee buy in on strategy and tactics. If you are bringing in amazing, smart people into your company, why wouldn’t you want their opinion on what you are building? [12:42]
Not clearly defining roles between founders. After you raise money and have a few employees suddenly there are some hard decisions to make. Who is going to lead product? Who is going to lead tech? Who is going to lead sales? Who will be responsible for recruiting? It is often the case that teams will not make these decisions. [15:05]
Not having level 3 conversations within the founding team to relieve conflict. There will always be conflict within the founding team. There will always be the need for changes in roles and responsibilities. Great startups have a system to have hard conversations. Bad startups bottle it in. Bad startups get into constant fights. [16:35]
Assuming the series A will be as easy to raise as the angel round. Founders tell me every week that they can raise a series A with a $1 million run rate [There is no guarantee that is true]. I tell founders they should think about this differently. Think about it like a video game. If you have to fight a level 20 boss you have 3 options. [1]You grind up to level 10 and get your ass kicked 20 times in a row. [2]Grind up to level 20 and you have a 50/50 shot of winning. [3]Grind up to level 30 and you kill the boss every time. Which would you rather do? You need to go into a series A conversation with high amounts of leverage so you get the terms you want. Most people aren’t special. They need leverage. [17:54]
Full video here: A Decade of Learnings from Y Combinator by Michael Seibel
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We need robots to helps us continue to improve our standard of living. The average age of humanity is increasing very quickly. The number of people young enough to care for the older demographic is inadequate. [3:55]
Today the role of robots is to make our lives a little easier, cleaner, healthier. But in time, robots will be the difference between a decline in our ability to live independently, and a future where we have more control of our lives. [4:24]
iRobot has narrowed its focus to the home as a place where we want to innovate. We want to deliver tools that will help a home be a more automatically maintained place. A healthier place. Today we vacuum and mop. Soon we will be mowing your lawn. [6:01]
The direction iRobot is working towards: The robot is supposed to be your partner. Not just this automaton that goes and does what a robot does. [10:31]
Example: If you tell the robot, “I just dropped some flour next to the fridge in the kitchen. Can you go deal with it?” Wouldn’t it be awesome if the right thing just happens based on that utterance? [10:35]
[To accomplish that] The robot would have to listen to you. Understand the context of the sentence. Map it against its understanding of the home it lives in, and know what to do. [10:47]
Before Roomba I was a high tech entrepreneur building robots. It wasn’t until I became a vacuum cleaner salesman that we had any success. The point is technology alone doesn’t equal a successful business. You have to find the compelling need. [14:32]
We are just about none of the way to achieving what the potential of robots could be. [17:17]
I expect there to be at least one iRobot robot in every home one day. We have sold 25 million robots. We are in about 10% of home in the US. That’s a great start. [26:50]
Full podcast here.
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Since Apple was founded five years ago its sales have skyrocketed from $100,000 to $100 million. Steven Jobs helped builded the first Apple computer in his garage. He is now 26 years old and is Chairman of the Board. He sees his computer’s future as the future of mankind.
Steve: This is the 21st century bicycle. It amplifies a certain intellectual ability that man has. I think after this process has come to maturity the effects that it is going to have on society are going to far outstrip those that the petrochemical revolution has had.
Ted Koppel: There is a sense that many of us have —those who really don’t understand how computers work — that we are becoming controlled by the computers. Is there any danger of that happening?
Steve Jobs: The product we manufacture— many people see it for the first time and they don’t think it is a computer. It is about 12 pounds. If the relationship doesn’t go well you can throw it out of the window.
The process of the technological revolution we are all in is a process of taking very centralized things and making them very democratic. Very individualized.
The definition of bicycle for the mind: I read a survey in Scientific American that measured the efficiency of locomotion for various species on the planet and it ranked them. The condor won. It took the least amount of energy to get from point A to point B. Man was unimpressive about a third of the way down the list. Somebody had the idea to test the efficiency of man riding a bicycle. Man riding a bicycle was twice as good as the condor. This really illustrated man’s ability as a tool maker to fashion a tool to amplify an inherent ability that he has. That is what we feel we are doing. To amplify the ability of a certain type of intelligence.
When you watch kids interact with these computers what you see is an instantaneous reflection of a part of themselves. The creative part of themselves being expressed. It is very difficult to portray that as something very harmful. It is actually quite democratic.
In the personal computer area we have already reached 1 out of every 1000 households. I think over the next 5 or 6 years that figure will be 1 out of 10. Ultimately it will be 1 out of 1.
Full video here.
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What’s one thing that you wish you would have learned earlier as a leader? Value your financial people more than you do. If you’re a technology person, you tend to think that technology is all that matters. For many years, I was the most sophisticated financial person in my company. But until I actually had a CFO who was better at it than I was, I was just missing a huge opportunity. She came in and she renegotiated our contracts. She shifted many parts of the business and made it way more efficient. . . In the 90’s, we were always short of cash. And in the 2000’s, once we got this real financial discipline, we started putting money in the bank. We ended up putting tens of millions of dollars in the bank. And it was all about understanding what a powerful lever cash flow is. It was sort of like lacking financial discipline. We still succeeded but we could have succeeded so much more if we had been running tight from the get go.
We were always profitable. We were a company that had started with no investment other than $500 of used furniture that I used to start the company.
Our average revenue per book in our publishing business was about $250,000 per title. After the dot-com bust, it was about $60,000.
If you think about the portfolio of venture capital as a lab, they’re scientists in white coats, and they want their various lab cultures to grow fast. They want to figure out which ones are going to be winners. And that’s not necessarily the incentive for the entrepreneur.
Mark Leslie [Founder of Veritas] talked about the mistake that a lot of companies make on sales which is they build a giant sales force too soon. He said, “Look, when you’re trying to figure out whether you have the right product or not, you need to bring a very different kind of sales person. And you only need two or three of them because they’re doing discovery and you don’t want to scale it until you know that it works.”
I think way more businesses would benefit enormously if they understood that you’re not building a financial instrument, i.e. something to exit. You’re really trying to build a lasting business because then you have the opportunity to exit if you’re really successful. But we’ve increasingly gone into a world where it’s this self-fulfilling prophecy where you even go talk to an entrepreneur and you’ll say, “How are you doing?” And they’ll say, “Oh, we just raised our money.” And I go, “Well, that’s not about your business. That’s about your fundraising.” I want to hear them say, “We just have these amazing new customers.” Or, “Our users love us.” Why is the first thing out of your mouth is how much money you raised?
I had this really wakeup call with the dot-com bust where we shrank by 30%. We were about a $70 million company in 2000 [in revenue]. And then suddenly we were a $50 million company and we had to lay off a quarter of our staff. It was pretty harrowing. It was one of the worst experiences of my life.
A business model is the way that all the parts of your business work together to create customer value and business advantage. An example: Southwest Airlines and United. They’re both airlines. They have completely different business models. United had this hub and spoke model. Southwest is all point to point. United does baggage handling, Southwest doesn’t. They won’t forward your baggage from one flight to another. They’ve [Southwest] done all these things that make them able to be the low-cost airline. It’s just a really great way of forcing you to think about what makes you special, what is the source of your value.
You thought the dot-com bust was the end, it was actually the clearing out of the people who had the wrong business model.
Leadership is showing what’s possible.
Create more value than you capture because when you make an opportunity for others you can grow with the market.
Antoine de Saint-Exupery quote: If you want to build a ship, don’t drum up people to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.
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We wouldn’t describe Y Combinator as a venture capital firm. What we do is seed funding. There is not really any name for us yet [this podcast is from 2009!], because what we do is new. I have encouraged there to be no name for what we do. Whenever somebody starts to copy us the only way to describe what they are doing would be to mention us. They’d have to say it is a Y Combinator like thing.
If our success rate is as high as a good VC fund I would worry. That means we are being too conservative. There ought to be a lot of failures or we are being too careful.
I don't even know if Y Combinator is going to work. It seems promising so far, but I don’t know for sure. We certainly aren’t making lots of money yet.
3 reasons it is cheaper to start a startups: [1] Moore’s law has made computing effectively free. [2] The Internet has made promotion free. [3] Programming languages have gotten more abstract. That means you don’t have to do as much work to get a given amount of program done.
You can’t tell which ideas are going to work [beforehand]. We have funded 144 startups. I have seen so much stuff happen. I have been surprised so many times by people who seem promising and produce nothing. And other people who seem lame and produce amazing stuff.
By definition you can not predict the next big thing. If it is a really good idea it will seem kind of stupid.
We advise startups to release something as soon as you possibly can. The point of releasing is to start learning from your users. You learn from your users what product you should have been building.
On Hackers and Painters: I found that the interesting parts of programming you can’t make scientific. [Startups are the same.] What makes a programmer good at programming is more like what makes a painter good at painting. It is something a little less organized. It is taste. A sense of design. A certain knack.
I don’t use Facebook or Twitter. I already have enough distractions. I look at these things and they just seem like a time sink.
I feel like most people like to waste a lot of their time.
The United States has such a vibrant startup culture because there are so many immigrants. Immigrants start startups. Disproportionally so. There was some statistic that said more than half of the IPO’s were founded by immigrants. The single biggest problem that kills startups that we fund is VISA problems.
Paul’s advice to high school students. [Applies to adults too.] You have to be in charge of what you are going to do. You have to decide what you are really going to do. What is going to be your real life?
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If you don’t grow up with money you want it. I think the best entrepreneurs— if you can find the people with a chip on their shoulder — that came from some sort of messed up background — it is almost predictive that they will be very ambitious.
Growing up in Coney Island made me super skeptical, and cynical of human nature. I’m fond of the Shakespeare quote: There are daggers in men’s smiles.
Everything in my life I would describe as randomness and optionality. Ex post facto I can explain everything. A priori you never know.
If you are going to be skeptical of other people then you have to be a little skeptical of yourself.
For a huge number of the companies that we have invested in the ideas behind them, the technologies, the design — were modeled on things that happened 20, 30, 40 years ago in science fiction.
He [Lux cofounder] is the optimist. I am the pessimist. It is just my disposition. I expect the worst. He expects the best. If you had an entire firm that was like me, we would be a bunch of cynical short sellers just trying to spot the frauds. If you had a firm entirely like him, we would be lemming growth investors paying any price, and going off the cliff.
If two people think the same one of them is unnecessary.
We want really high scientific and technical complexity. Not because we want to tackle things that are really hard. It’s because we don’t want competition.
The problem with funding [and doing] easy things is you get hundreds of competitors.
I’m psychotic about competitive advantage.
The single best trait of an entrepreneur is someone who can tell a story. Somebody who has that narrative power.
E.O. Wilson had the biggest impact on me intellectually. His book Consilience: The Unity of Knowledge was modern renaissance thinking. Wilson turned me on to Charlie Munger. [I’ve learned from] Charlie’s view of renaissance thinking and worldly mental models, and Wilson’s view of the unity of hard sciences and soft sciences. Finding patterns helps you identify some universal truths. If you can continue to find those first principle, universal truths, I think that sets you on a good path to making good decisions.
I have given so many people copies of Poor Charlie Almanack: The Wit and Wisdom of Charlie Munger. [Founders #78 and #79 are about Charlie Munger]
Somebody asked Charlie Munger, “What is the single thing you would attribute your success to?’ He said, “Being rational.”
Even being aware of every cognitive bias humans have won’t stop you from falling victim to them. You can look at an illusion, know it is an illusion, yet it still works on you.
There is a barbell to capital allocation today. There is money going to very small funds. I call them minnows. At the other extreme is the Megas. The people that are raising billions of dollars. [It is the same for companies. One of my favorite Jeff Bezos quotes: On the Internet, companies are scale businesses, characterized by high fixed costs and relatively low variable costs. You can be two sizes: You can be big, or you can be small. It's very hard to be medium. A lot of medium-sized companies had the financing rug pulled out from under them before they could get big.]
We put a total of $3 million into this company that cleaned up nuclear waste. In the first year they did about $1 million in revenue. Then there was a negative black swan: The Fukushima Disaster. Revenue then went to $40 million, 80 million, 160 million. We sold the company for $400 million.
I think military technology is one of the most exciting and important areas in the next five years. In part because the vast number of big tech companies —Google on down —are eschewing working with the military. It is creating a giant, gaping hole where there is a tremendous opportunity for some of the smartest technologists to work on these problems in defense.
I like people that have this gritty, rebel side to them.
Reading great books is like having conversations with the best minds of history.
So many of my mentors I have never met. They are dead. They are alive in pulp [books] and ideas.
I have read anything I could from Charlie Munger and Warren Buffett. It gives you a grounding sense of a true business, and markets, and human psychology. If you haven’t studied those greats you have a massive deficit.
Book recommendations: How The Mind Works, I loved The Operator: David Geffen Builds, Buys, and Sells the New Hollywood. I like reading biographies. Why Zebra’s Don’t Get Ulcers, Elephant In The Brain, The Magus: A Novel, the writing of Rachel Cusk, The Overstory, The Diamond Age.
Stay close to the money. Find where the capital is flowing and stay close to it. That was one of the best early advice I got from somebody.
What do you know today that you wish you knew 20 years ago? I wish I would have known how rigged the game is. Every system at every point is rigged. There is always a game being played. There is a secret that the people who are making the most money keep. They won’t acknowledge publicly until after the fact. Appreciate that and look for it.
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What I love [about the shareholder meeting] is both the employees and shareholders of Berkshire are extremely enthusiastic. It is not just that they have made a lot of money —they feel like they are on the right side. . .It is like a cult. A good cult.
When people use the word common sense what they mean is uncommon sense. The standard human condition is ignorance and stupidity.
Q: Why is it that people can’t think clearly about investing or other decisions in their life?
A: They don’t think very well about sex or gambling either. The standard human condition is a lot of miscognition. You can improve your life by eliminating your miscognitions.
The economy sometimes booms and sometimes it doesn’t. You have to live through both episodes. Our attitude is we just keep swimming.
Q: Some people now say federal debt is not a problem at all?
A: If you believe that then you believe in the tooth fairy. Cause then we don’t have to have any taxes. We can just print money and live happily every after. There comes a point when printing money is counterproductive.
If you live long enough a lot of good things happen and a lot of bad things happen.
Q: Are Apple and Amazon technology companies or brand companies?
A: Both
I can’t think of a single example in my own life where keeping it simple has worked against us.
I would say that the chief advantage Berkshire has had in accumulating a good record is that we have avoided pompous, bureaucratic systems. We give power to very talented people and let them make very quick decisions.
In big bureaucracies they think the work is done when you get the work out of your inbox and into someone else’s. That is not getting it done. If everybody is in a big committee meeting all the time you are worn out at the end for the day and you haven’t done anything.
If we find things that are intelligent to do we do it. If we can’t find anything we let the cash build up. What the hell is wrong with that?
I’m ashamed of missing Google. We could have seen it if we looked at our own companies. Their [Google’s] advertising was working way better than other advertising. We weren’t paying enough attention.
I’m a huge admirer of Jeff Bezos. I think he has been a leader all by himself [like Lee Kuan Yew]. He is a perfectly amazing human leader.
Q: What do you think of those tech unicorns going public and not having any profitability?
A: There are a whole lot of things I don’t think about. And one of them is companies that are losing billions of dollars a year and going public. It is not my scene.
I think the shareholder meetings work best because they are spontaneous. If we were scripting things I don’t think people would like it.
I think my way of thinking will work for anyone. I’m trying to be very rational and disciplined. I’m always being visited by young men who say things like I’m practicing law and I don’t like it. I’d rather be a billionaire, how do I do it? I tell them a story about Mozart. One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You were writing symphonies when you were 10 years of age, and I am 21.” Mozart said, “Yes, but I didn’t run around asking people how to do it.”
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Decentralization was key to the Internet early on: The motivation for the Internet was to have a network that could survive a nuclear attack. It was born out of the dangers of the Cold War. At the time there were data networks but they all ran through centralized switches
People forget that it was actually illegal to use the internet for commercial activity until 1993.
The first Internet store was a book store. It was not Amazon. It was a little tiny science fiction bookstore called Future Fantasy Books.
Future Fantasy Books did not own a computer. They had a fax machine. You would order the book online and the bookstore would get a fax. The guy in the store would package up the book and ship it. In the first two weeks the bookstore’s business doubled. It turns out there were science fiction readers all over the world that started ordering.
E-commerce was not obvious. It was not obvious that it was going to make sense to have these online businesses. It was not obvious that the use cases were going to have consumer demand. It was not obvious that you were going to be able to secure it. It was not obvious that there would ever be a business model behind it. All of that had to be invented.
The original sin of the Internet: If you are paying for the information you are getting then you know there is an alignment of interest between the person giving you the information and you. You might thing the logical thing to do is have a buy button in the browser. You would think it was the most obvious thing to do. That didn't happen. Because we were unable to build payments into the browser the Internet [in the West] is predominately based on advertising. Downstream from advertising is everything else that people are anxious and worked up about online: privacy, user data collection, user data targeting, 3rd party ad networks that harvest all this data etc. The misalignment of incentives. Does the news site you are reading have the incentive to actually tell you the truth? Or are they getting their money from the advertiser and so they are just trying to get you hyped up so you click on more stories and they generate more revenue?
If we would have had cryptocurrency [in the early 1990s] we would have been able to have a completely parallel payment system [for the Internet] that would not have been reliant on the centralized gatekeepers [Visa, MasterCard, Banks]. Had we done that 80% of what people hate about the Internet today would not have been problems.
Cryptocurrency is the chance to revisit the original sin: What if you could align economics with user behavior? This is how the real world works. How do I know something is valuable? Somebody is willing to pay for it. The big what if is what businesses models could have existed this entire time? The Internet generated a lot of economic growth with just the advertising model. What if you had had a real economic model based on money integrated into the Internet from the very beginning? What kinds of services would entrepreneurs come up with that we haven’t even thought of yet?
What if we could build a different system? A system were advertising wasn’t the central model. How might that be an improvement? Either an improvement on what we have or just something completely different, better, and potentially much bigger than we have today. This is what we are seeing at our firm: Entrepreneurs thinking in these terms.
Full podcast here: a16z Podcast: From the Internet's Past to the Future of Crypto
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Where do you come up with all the extra time to do all these extra things? [Improving the performance of Ferrari’s, learning Judo and Brazilian jiu-jitsu, building a rocket company on the side etc..] I like to tell people you need to get enough sleep. If I don’t get 8 hours of sleep I start falling down. But there is a lot of hours left in the week after getting 8 hours of sleep.
What John learned from wrestling when he was younger: The wrestler ethos is embrace the grind. I was always obsessed but if I had more discipline when I was younger I would have been better off.
How John started learning Judo and Brazilian jiu-jitsu in his 30s: I went to a Judo gym and trained with a Cuban Olympian. It was a much more serious training environment. I did what I always do on something. I studied. I got the instructionals and the tapes and started working my way through them. I got pretty good at it. Then my wife got me a year of private lessons with Carlos Machado. That certainly took me up several levels.
There is value in finding where your limits are: A lot of people don’t understand how a technical, brainy person would appreciate practicing Judo. There is a value to getting people to feel the physicality of it. It is valuable for people to push as hard as they can and still can’t get through. It is valuable to find the extent of what you can and can’t do. To find the limits of what your body can do. I think that is good for everybody to understand at some level.
Difficulty makes you stronger: Sometimes you are the hammer and sometimes you are the nail. A lot of people go through their life without ever really internalizing that. Sometimes you get your assed kicked. You can come back stronger after that.
Full video here.
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Steve Jobs gave this talk a few weeks after returning to Apple.
I’ve been back at Apple for 8 to 10 weeks. What we are trying to do is not something highfalutin. We are trying to get back to the basics. We are tying to get back to great products, great marketing, and great distribution. [0:30]
I think Apple has pockets of greatness but has drifted away from doing the basics really well. [0:56]
We started with the product line. We said a lot of this doesn’t make sense. There was way too much stuff. There was not enough focus. We got rid of 70% of the stuff on the product road map. [1:05]
You will see the product line get much simpler. And you will see it get much better. We have been able to focus a lot more on the gems. [1:25]
We have not kept up with innovations in our distribution. . .We will not only catch up where the best of the best are in distribution, but we will be innovating and breaking new ground in distribution. [2:15]
To me, marketing is about values. The world is complicated. It is noisy. We are not going to get a chance to get people to remember much about us. No company is. So we have to be really clear about what we want them to know about us. [3:30]
The way to do that is not to talk about speeds and feeds. It is not to talk about why we are better than Windows. The dairy industry tried for 20 years to convince you milk was good for you. Sales kept going down. Then they tried “Got Milk?” and sales shot up. Got Milk doesn’t even talk about the product. In fact it is about the absence of the product. [4:45]
The best example of all. . .one of the greatest jobs at marketing the universe has ever seen is Nike. Remember Nike sells a commodity. They sell shoes! Yet when you think of Nike you feel something different than just a shoe company. In their ads they never talk about the products. They never tell you about their air soles and why the are better than Reebok’s air soles. What does Nike do in their advertising? They honor great athletes and they honor great athletics. That is who they are. That is what they are about. [5:02]
Our customers want to know who is Apple and what do we stand for. What we are about isn’t making boxes for people to get their jobs done. Although we do that well. Apple is about something more than that. Apple’s core value is we believe people with passion can change the world for the better. [6:15]
The ad campaign is called Think Different. It is honoring the people who think different and who move this world forward. It is what we are about. It touches the soul of this company. [Side note: The membership program for my podcast Founders is called Misfits. I stole that idea from the Think Different ad.] [8:55]
We have got to let people know who Apple is. And why it is still relevant in this world. [10:40]
This company is absolutely going to turn around. The question is not can we turn around Apple. It is can we make Apple really great again? [15:30]
Full video here.
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When I was young, I didn’t really know what I was going to do when I got older. People kept asking me. But then eventually, I thought the idea of inventing things would be really cool. And the reason I thought that was because I read a quote from Arthur C. Clark which said that, “A sufficiently advanced technology is indistinguishable from magic.” And that’s really true.
If you go back say, 300 years, the things we take for granted today, you’d be burned at stake for. Being able to fly? That’s crazy. Being able to see over long distances, being able to communicate anywhere. ..having access to all the world’s information instantly from almost anywhere on the earth. This stuff really would be magic in times past.
So I thought, well if I can do some of those things – basically if I can advance technology, then that is like magic and that would be really cool.
[In 1995] The Internet started to happen. And I thought well I could either pursue this technology [trying to improve the energy density of electric vehicles], where success may not be one of the possible outcomes, or I could participate in the Internet and be part of it. So, I decided to drop out.
The initial thought with PayPal was to create a conglomeration of financial services. You would have one place where all of your financial services needs could be seamlessly integrated and would work smoothly. And we had a little feature, which was payments through email. Whenever we’d show the system off to someone, we’d show the hard part, which was the conglomeration of financial services, which is quite difficult to put together. Nobody was interested. Then we showed people email payments, which was quite easy and everybody was interested. So, I think it’s important to take feedback from your environment. You want to be as closed loop as possible. We focused on email payments and tried to make that work. And that’s what really got things to take off. But, if we hadn’t responded to what people said, then we probably would not have been successful. So, it’s important to look for things like that and focus on them when you seem them, and you correct your prior assumptions.
When I started SpaceX, initially, I thought that well, there’s no way one could start a rocket company. I wasn’t that crazy. But, then, I thought, well, what is a way to increase NASA’s budget? That was actually my initial goal. I thought if we could do a low cost mission to Mars and land seeds in dehydrated nutrient gel, and hydrate them upon landing. . .you’d have this great photo of green plants in a red background. The public tends to respond to precedence and superlatives. And this would be the first life on Mars and the furthest life had ever traveled as far as we know.
Starting SpaceX was against the advice of pretty much everyone I talked to. One friend made me watch a bunch of videos of rockets blowing up. Let me tell you he wasn’t far wrong. It was tough going there in the beginning. Because I never built anything physical. I mean I built like a model rocket as a kid and that kind of thing. But I never had a company that built any physical. So, I had to figure out how to do all these things and bring together the right team of people.
It’s worth noting that Earth has been around for 4 billion years, but civilization in terms of having writing has been about 10,000 years, and that’s being generous. So, it’s really somewhat of a tenuous existence that civilization and consciousness has been on earth.
I think the overreaching point I want to make is you guys are the magicians of the 21st century, don’t let anything hold you back. Imagination is the limit. Go out there and create some magic.
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My basic observation was that the modern tech industry is about 70 years old. It was started when there were like 5 computers. Over the last 70 years we figured out how to pack super computer technology that used to cost $25 million into a $500 product that we all have. There was this 70 year journey to get everyone a computer and onto the internet. So what is next? [Here is the link to Marc’s 2011 essay Why Software Is Eating The World. It serves as the basis for this podcast.]
After the financial crisis, there was a prevailing mood of pessimism about the economy and the technology industry. My view was the exact opposite. Not only are we not done, we are just beginning.
Everybody is connected to the internet and [as a byproduct of that] connected to an entire universe of services, information, and communications. To me, that is just the beginning. So now [think about] what can we do on top of that?
[In my essay]I had 3 claims. The first claim: Any product or service —in any field that can become a software product— will become a software product.
The next claim is: Any company that is any of these markets in which this process is happening has to become a software company.
Claim 3: As a consequence of claim 1 and 2, in the long run, in every market, the best software company will win.
This [claim 3] is tricky because software is different. Software is a different kind of product to develop than most people are used to. The culture of a software company is different. The kind of people you need to hire to build software are different.
There are 500 self-driving startups within 50 miles of here. What those founders would tell you is that 90% of the value of cars [within a few years] will be software. Those cars will be electric. They won’t have all the internal combustion components that these car companies have spent 100 years optimizing.
When we started the firm 10 years ago I would never imagine we’d be investing in new car companies. The car industry was an entrepreneurial industry in like 1890. There were hundreds of new American car companies in the early 1900s and then they shrunk to basically 3.
A lot of VCs like us did not invest in Spotify because there was this 15-year history that all the other attempts to do what Spotify was doing had failed. But the time had actually come.
There are entire companies called API companies that build software building blocks that you plug together. It is this constant process of everybody building on everybody else’s creativity. The result is everything rises.
We started to see a new kind of founder. This hybrid type. For example: A PhD in biology that has been programming computers since they were young. We didn’t know quite what to make of these.
A lot of the best companies in Silicon Valley are founded by people who have one or two significant failures before they founded the winner.
Big companies are going to do the obvious ideas. We are doing the non-obvious stuff. The controversial stuff. The stuff that is not proven. There is a risk with each and everything we do. But when it works it can get really big.
People can’t visualize new products on their own. You have to paint a picture. The picture has to be vivid.
A lot of companies have a problem that I call too hungry to eat. You have a great product, your customers really want it but you are charging very little money for it. Usually these are naive founders who don’t quite understand business. They think if they charge less they will sell more. But they charge less and that is why they sell less. The reason is they don’t charge enough for the product — they aren’t getting enough revenue back into the company. They aren’t getting enough calories [dollars] into the company. They just get stuck. In a lot of cases, the right answer is to raise prices. It’s weird.
Full podcast here.
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I would like to move to virtual reality. I would like to physically move there.
I read a book in 2006 called Grey Hat Hacking. I realized that if you acquired these sort of powers you could control the world. I didn’t know much about computers back then. I started with electronics. The first iPhone hack was physical.
What systems have vulnerabilities these days? Everything does.
What have you learned about the design of systems? You learn to not take things for what people say they are. You look at things for what they actually are. I understand that is what you tell me it is, but what does it do?
Vulnerabilities exist in the world. Nation-states have them. High-powered bad actors have them.
Elon Musk was looking for someone to build a vision system for Autopilot. We talked about a contract. If I could deliver something that meets Mobileye level performance tomorrow I would get $12 million. I would lose $1 million for each month I couldn’t deliver.
In life, I usually get away with saying stupid things. Elon is very sharp. He immediately called me out on it. Most people don’t even notice.
If I sell out to make money I sold out. It doesn’t matter. What do I get? A yacht? I don’t want a yacht.
Tesla is going to win level 5. Tesla is gathering data on a scale no one else is. They are putting real users behind the wheel. The incremental strategy is the only strategy that works.
Lex: The way you make videos for your company is awesome. [He live streams videos from his phone] If stuff goes a little wrong you just go with it. It is real. It’s beautiful and in contrast to the way, other companies would put together videos like that. I think that is actually what people love. It’s genuine.
Before we ship a consumer product that can drive cars I want to make sure I have a driver monitoring system you can’t cheat.
A huge success for driver-assist programs would be if they could fix drivers that are drunk, distracted, and asleep. [The causes of a large percentage of fatalities.]
The long-term idea for Comma.AI to make money: Be a car insurance company. I have the best data set to see who statically are the safest drivers. We see you driving unsafely we won’t insure you. This causes a bifurcation in the market because the only people who can’t get Comma insurance are the bad drivers. Geico can insure them. Their premiums are crazy high. Our premiums are crazy low. We would win car insurance. Take over the whole market.
Our burn rate is about 200k a month. And our revenue is about 100k a month. We need to 4X our revenue. We sell stuff at shop.comma.ai. To me that is respectable revenues. We make it by selling products to consumers. We are honest and transparent about what they are.
I don’t want attention from the masses. I want attention from people who I respect. I respect people who have skills. I would like to be known among people who have real skills.
When I say that life is work what I mean is that work gives my life meaning. I don’t mean that every minute of the day you should be working. I don’t think that is the best way to maximize results. If you are working 12 hours a day you should be working smarter - not harder.
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I believe Jeff Bezos’ regret minimization framework is one of the most important ideas I have found.
Today’s email is different. I decided to transcribe a video of Jeff Bezos explaining this idea in 2 and 1/2 minutes. The transcript starts below:
I went to my boss and told him I was going to do this crazy thing.
I am going to start a company that sells books online.
This is something I had already been talking to him about in a more general context.
He said lets go on a walk.
We went on a two hour walk in Central Park in New York City.
The conclusion of that was he said it was a really good idea.
But it would be a better idea for somebody who didn’t already have a good job. [At this time Jeff was 30 years old and the a senior vice president at the hedge fund D.E. Shaw & Co.]
He convinced me to think about it for 48 hours before making a final decision.
So I went away and I was trying to find the right framework to make that kind of big decision.
My wife was very supportive. She was in 100% for whatever I wanted to do.
She had married a stable guy —in this stable career path —and now he wanted to go do this crazy thing.
So it really was a decision I had to make for myself.
The framework I found that made the decision incredibly easy was — what I called — which only a nerd would call — a regret minimization framework.
I wanted to project myself forward to age 80. I am now looking back on my life.
I wanted to have minimized the number of regrets I have.
I knew that when I was 80 I was not going to regret having tried this.
I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a big deal.
I knew if I failed I wouldn’t regret that.
I knew the one thing I would regret is not having tried.
I knew that would haunt me everyday.
When I thought about it that way it was an incredibly easy decision.
If you can project yourself out to age 80 and think— what would I think at that time? — it gets you away from some of the daily pieces of confusion.
I left this Wall Street firm in the middle of the year. When you do that you walk away from your annual bonus.
That is the kind of thing in the short term that can confuse you.
But if you think about the long term then you can really make good life decisions that you won’t regret later.
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You did not excel in school and got fired from your first few jobs. What changed?
I had a lot of insecurities and a lot of fear. I had to learn to understand [and use] my fears.
The owners of the studio asked me to come in on Easter in 1973 to answer the phones. My mother thought it was a bad idea. I went anyway. I was like I will do anything. It turned out they were testing me.
At 22/23 years old you wind up in the studio with Bruce Springsteen and John Lennon —how did you establish credibility with those people?
You are there to help make their project better. Part of that is caring as much about their music as they do. If they are allowing me in this room, then I am going to do as much as I can to be of service to them.
On what drove him:
I wasn’t cool. I wanted to be cool. I wanted a better life. I wanted money. I didn’t want to be a longshoreman [his father’s profession]. It was that simple.
I knew very little about the music business. All I knew was at my previous job I was getting paid by the hour. In my new job [as a producer] I was getting paid with royalties.
On how to deliver feedback:
Your job is to be honest. That is why you are there. Don’t do it with a sledgehammer. You have to be truthful. If someone plays me a song that I think is not as good as it could be, or should be, doesn’t mean that I am right, it is just how I feel. You have to say it. If you don’t say it then what are you doing there?
There is nothing like your first hit. Because The Night by Patti Smith was an incredible moment. That one song changed my life.
Why Jimmy decided to switch from producer to record label owner:
David Geffen had just sold his record company. I said to myself he kind of does the same thing I do but he is making a lot more money.
Jimmy wanted his record label to feel like Atlantic records in 1970. They had Ray Charles, Aretha Franklin, Led Zepplin, and The Rolling Stones. We wanted our company to feel like that.
In the first three years, Interscope records had Nine Inch Nails, Marilyn Manson, 2pac, Snoop Dogg, and Dr. Dre.
His management style:
The artists get to do exactly what they want. No compromise.
Napster changed everything:
I didn’t like the way the record industry was handling it. I just decided to build something else. I wanted to build businesses with our artists. That is how Beats by Dre got started.
Do what excites you:
I like to pivot. I get complacent and bored. I got bored of producing records. I got bored of running a record company. I wanted to move on.
I was always obsessed with streaming music. I just couldn’t get it done. Steve Jobs could:
I tried to start a music streaming company. [Before Steve Jobs] You couldn’t get the deals done. It was just impossible. When I met Steve Jobs and Eddie Cue I said these are the only guys that can get this done. They understand it. They can get it done.
Make your company go faster:
The music labels need to get more sophisticated in tech. They are banking on everything staying the same. Only the technology companies are moving at 100 miles an hour. When you are inside a tech company you realize how many years out they are planning.
Do you still enjoy what you do?
I don’t know if I ever enjoyed it. It is work to me. I look at it as work.
His most important idea:
Turn fear into a tailwind instead of a headwind. Fear is as powerful as the force. If you can harness it is an asset. You will have a big, big advantage. That has been my whole thing. When I feel fear I have trained myself to move forward. The fight is never over with fear. It is never gone. You have to harness it.
Do you have any regrets?
I don’t have a rearview mirror. I was always about what is new. What is tomorrow. I don’t look at life like that.
Full video here.
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I don’t worry about being persuasive. I’ve never really try to change anyone’s mind. Instead, I try to communicate clearly. I tell the truth as I see it and let the chips fall where they may. If you try too hard to change people’s minds you will end up frustrated. The best advice I have is if you want to be persuasive, try not to be persuasive.
I don’t aim to be controversial. I just call it as I see it. Sometimes that is controversial. I think it is important to have a point of view. I think when you have a point of view you automatically become controversial to people who don’t share that point of view. If you don’t have a point of view at all then you can’t move people, or get them engaged. For me, it is important to say something that has a clear point of view and that I believe.
Charging your customers money instead of raising money from investors is a radical message in the software industry. It is not radical message anywhere else in the world. Pretty much every single business in the world just has to figure it out. Getting money from customers is extremely mainstream.
Raising a bunch of money and only considering a billion dollar business a success seems extremely radical. The odds are extremely against you. You have a much better shot at staying within your means, growing slowly, and being profitable.
There are a new crop of investors that are not trying to help you raise millions. Instead you can raise $100,000 or $150,000 to get going. Then maybe you can buy them out. I think that is a good pattern.
Independence is probably the most valuable thing we have. With profitability comes flexibility.
With more people [employees] you tend to become slower. All kinds of other problems creep up.
If we had a board we would have to justify ourselves. I have no interest in justifying myself. I just want to do the best work I can, with the best people we can find. We want to enjoy ourselves and make our own decisions. To me that is more valuable than anything.
As organizations grow they become more rigid. They form organizational scar tissue. They tighten up. We have tried to iterate rather than scar. Scarring would be this is the way we do it. Versus changing the way you work and how you approach things over the years.
Think about how changes impact your company. Just because it is the latest [new] thing doesn’t mean it is any better for us. Look at open floor plans. They’ve made office life worse for a lot of people. It’s important to revisit these decisions you’ve made.
If you could try something unconventional and didn’t have to worry it was going to work — it was definitely going to be an experiment that was going to work out — what would you change about how you run your company? I’d take a year off. I’d be curious to see what good things would happen. What patterns would emerge? What changes would be made? I’ve contemplated that before but never had the courage to do it.
Every time we built a brand new version of Basecamp we did it after we explored something else [a different product]. A lot of the ideas for Basecamp 3 came from us making another product and then returning back to Basecamp to make a new version of Basecamp. We think it’s a good idea to explore something else first so we can get some new ideas.
If you are a person who likes to make things you will always want to make new things. You will always see problems in the world. You’ll want to put your version of it out there. You simply can’t do everything you want. That never ends.
It is a good idea to be selective about what you choose to put your energy into. You have very limited energy, attention, and focus. The things you choose to spend that time on should really earn it. They should be worthy of it. Not everything is.
I am a big believer in little niche products. Things that are often overlooked.
I’m perfectly comfortable calling ourselves a one hit wonder. I don’t think there is anything wrong with saying we hit it big once and we are doubling down, tripling down, quadrupling down on this. You are lucky to have any hits in your life.
We built a job board called We Work Remotely in 3 days. It was making $40,000 a month.
I think people are making a grave mistake thinking email is dead. It is alive and well and only getting stronger and stronger. It is not going anywhere — nor should it — it’s fantastic. Email is amazing. It has a lot of advantages over real time communication.
The best way to validate your product is to put a price on it, release it to the market, and see if people are willing to pay for it.
[Advice for building a product] Do what you think is the best thing. Something that you believe in. Something you can stand behind. Something that you are doing because you understand why you are doing it.
Most companies are held together with duck tape. Very few things are what they seem with regards to how smooth and elegant things are. That is a freeing thought. Who knows anyway? No one really knows. Everyone is making it up as they go. You should too.
The right way is relative. It is not absolute.
There is no one right way to make a product. The only thing that tells you if it is right or wrong is the market itself.
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When you grow up you get told that the world is the way it is. And your job is to live your life inside of the world. Try not to bash into the walls too much. Have a nice family life. Save a little money. But that is a very limited life. Life can be much broader when you discover one simple fact: Everything around you that you call life was made up by people that were no smarter than you. You can change it. You can influence it. You can build things that other people can use. You can poke life and something will pop out of the other side. You can change it. You can mold it. That is maybe the most important thing. To shake off this erroneous notion that life is there and you are just going to live in it. Embrace it. Change it. Improve it. Make your mark on it. Once you learn that you will never be the same again.
I’ve never found anybody that didn’t want to help me if I asked them for help. I called up Bill Hewlett when I was 12 years old. He answered the phone himself. I told him I wanted to build a frequency counter. I asked if he had any spare parts I could have. He laughed. He gave me the parts. And he gave me a summer job at HP working on the assembly line putting together frequency counters. I have never found anyone who said no, or hung up the phone. I just ask. Most people never pick up the phone and call. And that is what separates the people who do things, versus the people who just dream about them. You have to act.
When we started Apple we had absolutely nothing to lose. And we had everything to gain. We figured if we crashed and burned — the experience would be worth 10 times the costs. I think that is a very healthy way to look at it.
The only thing you really have in your life is time. If you invest that time in yourself —to have great experiences that will enrich you— then you can’t possibly lose.
There is an entrepreneurial risk culture in Silicon Valley. Role models are a very big part. . . Starting with Hewlett-Packard. . . Steve Wozniak worked at Hewlett-Packard when we started Apple. Hewlett-Packard was the primary role model in the valley. It was the model for how you wanted to build your company. A company based on values —not just based on making money. They had a list of their values called The HP Way. [I created a podcast about The HP Way. You can listen to it here.] The first one was we need to make a profit or we can’t keep the company going. After that, they had ideas on how to treat individuals and conduct their corporate life. We were very much influenced by that.
We built a product that we were the customer for. Just like Hewlett-Packard started building test equipment for engineers. They were engineers so they could figure out what an engineer might want in a product.
In the first few years we were selling to people that were just like us. A lot of companies start that way.
Working in technology is a very strange business. This is not a field where one paints a painting that will be looked at for centuries. This is a field where one does ones work and in 10 years it is obsolete. It is like sediments of rocks. You are building up a mountain. You get to contribute your little layer of sedimentary rock to make the mountain that much higher. No one on the surface will see your sediment. They’ll stand on it. It will only be appreciated by that rare geologist.
Woz and I built the first digital blue box in the world [an illegal device that allowed you to make free long distance calls]. The fact that two teenagers could build a device for $100— and control hundreds of billions of dollars of infrastructure in the entire telephone network all over the world —that was magical. Experiences like that taught us the power of ideas. If we hadn’t of made blue boxes there would have been no Apple. It gave us confidence and a sense of magic.
Full video here.
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The process that I have been championing is the one Slack and Spotify used. It is called a direct listing.
If you understood how a traditional IPO is allocated — it is completely tautological that they would end up underpriced. It is as unscientific a process as you could possibly have.
There are numerous players in the traditional system that have access to —and are beneficiaries of —these large slugs of underpricing.
A professor at University of Florida calculated the amount of money given away by underpricing: Since 1980 it has been $896 billion. That is more than the market cap of Google.
All the people that are beneficiaries of that don’t want this to end: They come up with a long list of arguments. One of their arguments is this may work for Slack or Spotify but won’t work for anyone else.
In a traditional IPO, they handpick who they are going to give the stock to. They intentionally ignore people who want to pay more. They cut them out of the process.
Don’t investment bankers do that so they can prioritize long-term investors? That is the rhetoric. That is what they say. But if you talk to CEOs who have gone through this process they look at the cap chart six months in and it’s not the same people [investors]
If that agreement [to invest long term] was true perhaps they could enter into some type of lock-up or some contractual guarantee. But there is none. If that is the trade you are making shouldn’t there be something to hold them accountable to that?
Traditional IPOs have been underpriced for so long that venture capitalists and founders don’t want to sell into the IPO because they know it is a rigged price.
Bill is trying to change this by making more people aware of the problem: I have been talking to as many finance professors, lawyers, former SEC people as I can. I’m building a huge network of people who have thought about this [problem].
Why is this happening? There is a remarkable asymmetric experience. The bankers on the buy-side are doing 50-100 IPOs a year. The founder will do one in their lifetime. Two tops. The result is a remarkable amount of disinformation.
Traditional IPOs are like a big southern wedding: It is this thing that is only going to happen once in your life. You get all these handlers. You do it the way they tell you to do it.
Full podcast here.
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Rule number one: Have a vision. If you don’t have a vision of where you want to go you drift around. You never end up anywhere. You end up in the wrong place.
I was very fortunate that I stumbled on my vision: I was 11 years old and I saw a documentary about America. The bridges, the freeways, the skyscrapers. I said to myself that is where I want to be.
Arnold hated growing up in Austria: I couldn’t see myself becoming a farmer or a worker in a factory. I felt I was born for something special. For something unique. For something big.
The blueprint for Arnold’s life: I saw a bodybuilding magazine that had Reg Park on the cover. He was a 3 time Mr. Universe winner. He was in the movies as Hercules. I read that magazine over and over again. The magazine told me how he trained, how long he worked out, how he won all these bodybuilding competitions. How he was discovered for movies. I wanted to be just like Reg Park.
The majority of people don’t know where they are going: You know how great it felt that I knew where I was going? I was so relieved. Because when you have a goal everything becomes easy.
74% of people hate their jobs: The majority of people don’t like what they are doing. They are just aimlessly drifting around. For them, work is a chore. It is not fun.
People would ask me why I was smiling while working out so hard: I told them because I am shooting for a goal. In front of me is the Mr. Universe title. Every rep that I do gets me closer to accomplishing that goal. To make this vision turn into reality. I couldn’t wait to do another 500lb squat. I couldn’t wait to do 2,000 sit-ups. I couldn’t wait for the next exercise.
Visualizing your goal and going after it makes it fun: You need a purpose in life.
Rule number two: Don’t listen to the naysayers. Everything I ever did I was told it was impossible. When someone said to me it can’t be done, I heard it can be done. When someone told me no, I heard yes. When they said it was impossible, I heard it is possible. I am a strong believer in what Nelson Mandela said: Everything is impossible until someone does it. I did not listen to the naysayers.
No one knows what you can do: When I wanted to get into movies I was told no one in Hollywood has an accent like you. That my accent will give people the creeps. No one in Hollywood has ever become a leading man with an accent. It doesn’t happen. These are the kinds of things I heard. You know what? I didn’t give a s**t. Because I believed I could do it.
Rule number three: Work your ass off: There is no magic pill. You have to work. It drives me crazy when people say they don’t have enough time to work out or do something to improve. Imagine if you read one hour a day about history. How much would you learn after one year? Imagine if you work on some business you want to develop for one hour every day. Imagine how further along you will go.
We have 24 hours a day. Organize your day: I worked out five hours a day. I was working in construction because there was no money in bodybuilding then. I went to college. I went to acting class four times a week. There was not one single minute that I wasted.
What Arnold learned from Mohammad Ali: He worked his butt off. I saw it first hand. He was asked how many situps he did. He said he didn’t start counting until it hurts. Think about that. He doesn’t start counting until he feels pain. That is working hard.
Arnold believes in Ted Turner’s quote: Work like hell and advertise. You work your ass off and then you let the world know about your work. If you have a company, if you have a movie, if you do sports — work your ass off first and then let everyone know.
Rule number four: Don’t have a plan B: When you start doubting yourself that is very dangerous. What you are saying is if my plan doesn’t work I have something to fall back on. That means you start thinking about plan B. You are taking that thought and that energy from plan A.
Make a full commitment: Plan B becomes a safety net. It is important to understand we function better if there is no safety net. I have never, ever had a plan B. I made a full commitment that I am going to be a bodybuilding champion. I made a full commitment to be in America. I made a full commitment that I am going to get into show business.
Rule number five: Help other people. When I was an immigrant everyone helped me. They invited me to Thanksgiving. The bodybuilders in the gym brought me plates because I had no plates or silverware. I had no TV. No bed. They brought it to my apartment. They helped me.
Rule number six: There is no such thing as a self-made person. We all benefit from the help of other people. When you are born you need your parents to raise you. You need teachers to teach you. You need coaches to coach you. Everything I did I always needed help. You can call me anything you want. But don’t call me a self-made man. I did not get to this point by myself. How could I be successful in movies without an audience? The people that go see the movie help make you successful.
Full video here.
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What reading annual reports tells you: I like to know as much as I can about the person running the business. How they think about the business. What is really going on inside the business.
The perfect annual report would be: A report that was identical to my partner telling me the state of the business if I was away from the company for a year.
There needs to be an intent behind an annual report: If it is just [functioning as] a sales document I am less interested.
Why Warren thinks you should read the annual reports of every other company in the same industry: I like to understand what is going on in all kinds of businesses. If we own stock in one company in an industry —and there are eight other companies in the industry —I want to read their annual reports too. Because I can’t understand how my company is doing unless I understand what the other eight are doing. I can’t be an intelligent owner of a business unless I know what all other businesses in the industry are doing.
The difference between annual reports and Wall Street reports: Over the years I have found reading a lot of reports to be quite useful for making business decisions at Berkshire. . .It is amazing how well you can do in investing with outside information [information available to everyone]. In my view you can’t read Wall Street reports and get anything out of them —you have to do it yourself. I don’t think we have ever gotten an idea in 40 years from a Wall Street report. But we have gotten a lot of ideas from annual reports.
The time required: It will be 45 minutes to an hour for each report. If there are 6 to 8 companies in the industry that is 6 to 8 hours. The way you learn about businesses is by absorbing information about them. Thinking about them. Figuring out what counts and what doesn't. Relating one thing to another. That is the job. You can’t get that by looking at a bunch of little numbers on a chart or reading market commentary. That just won’t do it. You have to understand the businesses. That is where it all begins and ends.
Full video here.
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What is Shape Up? Shape Up is a detailed guide to how product development is done at Basecamp.
What is the book about? The book is about structuring work in such a way that teams don’t have a huge backlog. Teams don’t have any hazily defined, morale-draining projects. No projects that stretch on-and-on.
How do we know if the thing we are making is the right thing? These were the conversations we were having in the company. They felt like they were the most important conversations. It was natural for me to put more of my time into that side of things [product strategy].
Where the idea for Shape Up came from: Jason Fried suggested to me that he thought it was time to write a book and share what we figured out about how to work. He said I should write a book about that.
Before writing the book: I decided to hold a workshop as a prototyping device. I made it expensive enough that everyone who came would be really motivated. It was $1,000 a seat for one day. This gave me the opportunity to explain [and get feedback on] what I thought was meaningful: How we shape work, why we work in 6 weeks cycles, how teams work together, how we assemble projects etc.
Inspiration for the rough, authentic look of Shape Up: When I was younger there were these little books sold at Radio Shack. Every book was hand-drawn on graph paper. The author hand wrote it and interspersed the book with his little sketches. Millions of these things have sold. Those books gave me the confidence that things don’t have to be polished or professional-looking.
Something I didn’t know was a problem before the workshop: When designing a product people feel like they get pushed into too much detail too early.
A major theme of the book: Working with boundaries and constraints. Embracing them. Seeing boundaries and constraints as a helpful tool, rather than a roadblock.
We don’t have this giant list of things we have to do one day: Other companies create this big backlog of stuff. There is more on that list than you could ever do. It creates a bad feeling. That sucks. [Another reason to always work on your top priority]
The word bet is better than the word plan: Plan has a feeling of certainty. But the reality is you don’t know what is going to happen.
We have this thing called a circuit breaker: It is a very effective and severe policy. If the thing doesn’t get done in the time we give it is automatically canceled.
Work on what is most important now: Just because a task was important in the past doesn’t mean it is relevant now.
What do you want to do? If you don’t know what you want, no method can help you.
Full podcast here.
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It is always mysterious as to why it feels like we are the outliers. Why are we among the very few people who have reached these conclusions about the relative stagnation in science and technology? [The conclusions about] The ways in which this stagnation is deranging our culture, politics, and society?
It is striking how out of sync they [these views on stagnation of science and technology] feel with so much of our society.
The dominant narrative is something like: We are in a world of fast scientific and technological progress. [Peter believes the opposite of this.] Things are getting better all the time. There are some corner case problems. There is some dystopian risk because technology is so fast and so scary. It is a generally accelerating story.
I date this era of relative stagnation and slowed progress back to the 1970s. I think it has been close to half a century of slowed progress. A big exception of this has been the world of bits: computers, the internet, software.
The world of atoms has been much slower for something like 50 years.
Why do you think it is so hard to convince people of this [the relative stagnation of science and technology]? The direct scientific questions are very hard to get a handle on. The reason for this is in late modernity there is simply too much knowledge for any single human to understand all of it. In this world of hyper-specialization you have narrow groups of experts policing themselves and talking about how great they are.
If you were to say in these fields not much is happening — people just don’t have the authority for this. There is a very different feel for science today than you had in 1800 or 1900. Specialization makes it harder to get a handle on.
Specialization should make you suspicious. If it has gotten harder to evaluate what is going on then it has gotten easier for people to lie and exaggerate.
[On why lies go unchallenged: globalization, academia, trade etc..] If you pretend the system is working you are simultaneously signaling that you are one of the few people who should succeed in it.
[The benefits of broad learning] The polymaths would be the people who could connect the dots. They could say there is not much [technological and scientific progress] going on in my department. There is not much going on in that department. There is not that much going on in that other department either. [Broad learning is a way to detect BS.]
In a healthy system, you could have wild dissent and it is not threatening because everyone knows the system is healthy. In an unhealthy system, the dissent becomes much more dangerous.
I don’t see younger professors who are deeply critical of the university structure. I think it is just nuts. What does the $1.6 trillion pay for? It pays for $1.6 trillion worth of lies about how great the system is.
The more debt, the crazier the system becomes. The larger the debt the more you have to tell the lies. These things go together. At some point, this will break.
It is always dangerous to be burdened with too much debt. It does limit your freedom of action. It seems especially pernicious to do this super early in your career. If out of the gate you owe $100,000 it will demotivate you or push you into higher paying, very uncreative professions.
If you get into an elite university it probably still makes sense to go. It probably doesn’t make sense to go to the 100th best university. There is a way it can work individually even if it doesn’t work for the country as a whole.
We have super strict zoning laws so house prices go up. We think about housing as a nest egg instead of a place to live. I would try to figure out ways to dial that back massively.
When you are hiring for your company you’d want to hire people who went to a good college because you went to a good college. If you broadened the hiring maybe that would be self-defeating for your own position. I think one should not underestimate how many people have a form of Stockholm Syndrome here.
I don’t see the automation [automating away all the jobs] happening at all. We have been automating for 200+ years since the industrial and agricultural revolution. Most jobs today are non-tradable service sector jobs that are not easily automated.
It’s very hard to see how societies in Western Europe or the United States can function without growth. . . When the pie stops growing it becomes a zero sum dynamic and the legislative process does not work. [Peter thinks we need at least 3% to 4% economic growth per year]
I think a world without growth will be a much more violent or a much more deformed world.
People generally don’t think about the problem of violence as quite as central as I think it is. I think it is a deep problem on a human level. There is a lot of room for violent conflict in human societies. There are a lot of different traditions where human beings are, if not evil, they are dangerous.
There is a bias in late modernity that humans are by nature good. They are by nature peaceful. That is not the norm. People don’t believe it [violence] is that deep of a problem.
Peter on Rene Girard’s theory: It is a theory of human psychology as deeply mimetic. You copy other people. Book recommendation: Things Hidden Since The Foundation of The World by Rene Girard.
You imitate people. It’s how you learned your parent’s language. You also imitate desire. There are all sorts of mimesis that can lead to mass violence and insanity. It’s both what enables human culture to function but it is quite dangerous.
Peter realized how he was engaging in mimesis: I’ve been hyper tracked [Stanford Undergrad / Stanford Law / Manhattan Law Firm] Why am I at Stanford? Why am I doing all the things I am doing? It is a prism through which one can look at a lot of things that I have found to be quite helpful.
One of the challenges in resetting science and technology in the 21st century is how do we tell a story that motivates sacrifice, incredibly hard work, deferred gratification? A story that is not intrinsically violent?
Full video here.
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The reason we started working on Stripe initially is because we were astonished by the non-existence of something like Stripe. I was looking for the easy to setup thing that would enable you to charge a credit card. We are not talking about building a self-driving car. We are talking about charging a credit card. It seemed implausible something like Stripe would not exist.
Life before Stripe: [Accepting a credit card] was this mortgage-like process. Go to the bank. Describe your idea. Convince them. Weeks of setup. Paperwork. High barrier to entry.
The opportunity for Stripe: 98% of total consumer spending takes place offline. It seems so obvious there will be far more online-enabled payments happening in the future.
Silicon Valley is well known for being a cradle of entrepreneurship. But it is just as successful at being a grave.
There is a tendency - when describing product or business advantages - to over intellectualize it. You are always looking for the structural reason. There is no rigorous structural framework for describing polish, smoothness, or ambient superiority [of a product]. Yet it really matters.
What enabled initial growth at Stripe: It was just a better product. You could set it up faster. It was easier to understand.
It is a mistake to look at the economy as zero sum. It is possible for it to be positive-sum. Because the thesis of Stripe is to bring the 2% [of transactions done online] to 20% or 50%, there aren’t a whole lot of companies who are directly threatened or imperiled by Stripe.
In some ways, Stripe is a bet on human laziness. We are a bet that people will prefer to do things from their phone than going to physical places in person.
I think there is something incredibly potent to this technology-powered restructuring. If you looked at a snapshot of the economy in 30 to 40 years time a very large fraction of it will be occupied by companies taking advantage of things you are describing [bet on human laziness / focus on conveniences offered in the digital world that are not found in the industrial world].
What are the modern ways of competitive advantage that you think of developing within Stripe? The mindshare of all the developers. There is so much in their head that is wired for Stripe and not something else.
Full video here.
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Popular Information is my full time job. I don’t do anything else that generates income. I just write my newsletter. At the beginning, it was a leap of faith. It worked out [for me] in a short amount of time. . . I had no idea how well it was going to go. I had no existing email list.
I was worried about wiring about politics. Some other newsletters like Sinocism and Stratechery can be written off as business expenses. Both of those cover topics where there is some money to be made. They [the subscribers] can pick up one insight and it would pay for the subscription costs 100 times over. I wasn’t providing that because I talk about politics. So I was worried nobody would pay.
I knew that I could find interesting things to write about that other people were focused on. But I was very concerned and worried that no one would want to pay for that.
[Before turning on the option of a paid version] I was able to build my free list to around 20,000.
Lean into your core strength: My core strength is the ability to do deep-dive research quickly.
People will pay for information not available elsewhere.
Something I didn’t anticipate: I thought the paywall motivated people [to upgrade to paid subscriptions]. But for most people that is not it. For most people they support you because what you are producing they really value and they want to be a part of it.
Most people do not want more email. But if you create a different value proposition and create something you can’t get anywhere else they will support things they value. It’s the value not the frequency.
If you create something and just wait for something to happen - I can tell you nothing will happen- you have to work on it [getting the word out].
Think of it this way: You’ve got two jobs. 1) Writing the newsletter. 2) You are the chief marketing officer / hype person.
What do you think of the advantages of twitter threads instead of one off tweets? I think there are a lot of advantages. Social media is a brawl for peoples attention. Threads send more content into the ring. You have a better chance of capturing what is interesting about your newsletter in a thread than a single tweet. Creating a popular thread is more likely to get you more followers than an individual tweet.
Full podcast here.
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Long Term Stock Exchange is the 5th company in the United States that is authorized to operate a national securities exchange.
Our idea was to focus not on trading stocks, but on creating a better experience for being a public company. One that would allow companies to think more in generational terms. Long term, multi-stakeholder principals. And have that be part of every employees lived experience.
Why is there a need to have a different kind of stock exchange? Over the last 20 years the number of public companies in the US has been cut in half. If you keep extrapolating that trend what will we have ? Four giant tech companies that own everything and everything else will be private?
Companies are not going public if they don’t have to. The average time to IPO is up dramatically in the last 20 years. There is more M&A activity. There has been a rise of private equity. The general public is being left out of growth.
Does that really make sense? Is it a good idea for industry — especially the tech industry —to build products that affect everybody but the positive side of that success should be distributed to only a narrow set of people? I don’t think that is a good idea.
80% of the companies that went public in 2018 were not profitable.
Signs of short term thinking by public companies: lower investing in R&D, lower investments in employer well being.
We have tried to build an exchange with a different business model. One that is not all about trading. We enable companies to pledge to do the right thing. On LTSE companies make pledges. If the companies violate these pledges that it is securities fraud.
Example of a pledge: You could pledge and say we aren’t going to use short term compensation instruments. Our executives will only be compensated by longer term, more value aligned instruments.
You would think that a company that was intensely short term, metrics driven, quarter-to-quarter based, would move fast. But if you actually study companies you notice those behaviors actually slow everything down. The fastest companies have this incredibly long-term oriented philosophy. You would think that would make people go slow. Why is that?
Budgetary decisions ultimately make things political, slow, and bureaucratic. As a consequence you don’t have a way to hold people accountable to the things that really matter.
Metrics are there to support vision. Not to replace it.
Full video here.
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A lot of people can learn by watching you learn.
[The opportunity Adam is pursuing] I think the education around teaching people how to be software developers is broken in a lot of ways.
I don’t think the old-school university institutions do a very good job preparing people to be developers. I think learning to be a software developer should be treated like learning to be a carpenter. Where you actually get to learn from other people and do the job. Universities tend to focus on the theoretical stuff that isn’t necessarily preparing you for working in the field.
I’m not really happy unless I’m learning. I need to have something I’m excited about. Something that I’m diving into and trying to get better at.
[This applies to things outside of work too] When I was obsessed with powerlifting I was reading Russian strength training manuals and translating them into English so I could find what approaches people were using in different places. I’ll go to the ends of the earth to find the information I want.
All of this was somewhat of an accident. When I released my first book I didn’t have aspirations to be a full-time author/ course creator. I did it from a passion for making things and putting them on the internet. I wasn’t doing it to escape the 9 to 5. That just happened.
[Courtland]: Today your courses and books have generated millions of dollars in sales. You get to keep all of that. You don’t have a publisher. You don’t have an agent. It’s all yours.
Something I never thought too much about until I was in it: Your life is a lot different when you run your own business than it is when you have a job. I feel like I’m retired now because I get to work on the things that I want to work on. I can work my own hours. I have no one telling me what to do. All my income is not coupled to the amount of effort I put in. That is only possible when you have equity in something that makes money.
Advice that helped Adam get started: Start with a trip wire product. A product really small that you could charge $10 for. It gets your feet wet. You get to practice with marketing. Anyone who buys that is going to be more likely to buy from you in the future.
Adam’s wife’s reaction to his first really successful launch: She was scared. This doesn’t seem right. Are we doing something illegal? You are not supposed to just have money like this show up in your bank account.
I certainly don’t think building an audience could ever be a bad thing. Be helpful on the internet. Even if you don’t have anything to sell.
Look for what energizes you. Look for some alignment between the things you derive satisfaction from and things that also contribute to your end goal.
Common bad advice people give is that the first step to validating a product idea is make a landing page. To me that is the last step. No one is going to sign up on a landing page to buy something from someone who they have never heard of. Someone who has never delivered value before. The best way to test is to create free content first.
Adam’s most successful product launch so far: Refactoring UI did $40,000 in the first few hours. We hadn’t told a single person [that it was live]. It did close to $400,000 on the first day. $1 million in the first month. $1.3 million in total so far.
Tweets are not just sitting down and tweeting something out in 3 seconds. Some tweets take 2 weeks to make. They are like blog posts. Sometimes harder since you have to distill it into 280 characters.
Tweeting about a blog post is not going to get as much engagement as fitting the information from the blog post into the tweet.
When you first announce a product [and start to collect emails] you get a lot of signups on the first few days but then it drops off completely. What I do to keep new people signing up to the list is as I do updates to the product —like a new chapter or post — I make sure I announce that I’ll be sending that email on other channels first. Example: 2 hours from now I’m sending out a new chapter from Refactoring UI. In case you are not on the list here is the landing page in case you want to get a copy.
Don’t obsess over analytics. It is not the right place to invest your energy.
I have no idea how many visitors we have on our landing pages. I don’t know what percentage of those people sign up. I never thought to a/b test anything. I don’t know what websites they are coming from. All I know is anytime I put out a free blog post, a well-crafted twitter tip, or do a live stream I make more money. Those are activities that are delivering value to other people that I enjoy doing.
Optimizing analytics would not move the needle as much as making more awesome free stuff and being valuable to people on the internet.
Better to build a small product really well than a large one sloppily. [The SLC: Simple, lovable, complete product. Make a really good skateboard don’t make a crappy car.]
Full podcast here.
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I really think that some of the best things that happen come from a renaissance person mindset. It takes a whole person. A whole set of experiences to really bring about ideas and innovations.
We all go through life and have these wide varieties of experiences. Things we are exposed to. You have to believe the culmination of the unique experiences that you build up on your career, and in your life, are the fuel that will take you to wherever you go next.
\If you have the same life experiences as everyone else how are you going to have an innovative idea? It is the full set of experiences that enable us as entrepreneurs to actually do our best work.
Two things that differentiate humans from every other species: [1] We communicate in a more sophisticated way and [2] we build more sophisticated tools. Twilio sits at the intersection of those two most fundamental human things.
We are in the earliest stages in what will be seen as the great communications renaissance.
For most of humanity communicating meant talking to someone that was within a few feet of you. For the past 150 years you could communicate at a distance. Most of that was by a phone call. All that has changed in the last 15 years. The frequency with which we now communicate with each other brings us closer.
I think it is completely understated the way digital technologies are transforming our relationships.
The idea that one company would bring you all the innovation in the world? No way that’s going to happen. The thing that creates innovations is the creative energy of millions of developers and the entrepreneurial environment.
You have to step back and think: What is the purpose of communication? It is to engage with people with whom we care and depend on. We are confusing that with complete strangers, bots, and manipulation campaigns of foreign governments. Then throw into the mix that the whole motivation of these companies is not to connect us —it is to keep us glued to the screen.
There is a reason companies like Facebook and Twitter are not communications companies. They are media companies. The job of a media company is to keep you glued to a screen. The job of a communication company is to connect you.
I think you should take a step back and be weary of a system that is designed to keep you glued to a screen. Be weary of anonymous people on the internet.
The other insane thing is when someone says something crazy to you online — who are you arguing with? Why is this person worth your time or engagement?
I think we should just focus on the real people that are actually important to our lives. That seems like a much more fulfilling way to live our lives, doesn’t it?
I think that we are reaching this point of recognition that technology has the ability to manipulate the human mind at a chemical level. [Technology is] Hacking the brain stem to do the bidding of the people who write that software. For a long time we failed to recognize that.
With that recognition I am hopeful we will become skeptical to some of these technologies.
I’ve always thought that communications - the market Twilio is addressing - is essentially limitless in potential. Therefore we can keep building this company for decades. We could build an iconic tech company for the ages. [Because] How often do you get to see one of the largest and most important industries on the planet undergo a once-in-a-lifetime transformation? From its legacy in hardware to its future in software.
[As a public company] We have a bigger stage but we focus on the same things: Our customers, our product, our team. If you take your eye off those things then you are doing it wrong.
This is one of those once-in-a-lifetime opportunities to take new technologies —that allow you to build things that operate at scale — and build amazing companies as an entrepreneur because of it.
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Marc Andreessen: Two categories of entrepreneurs that have risen in the last decade. [1] O to O: Online to offline. Like Airbnb, Lyft, Uber etc. Those founders are much more operationally focused than the previous generation. It’s not just software. Those companies have a big real world logistical operations component. That has turned out to be a different kind of founder. They are more of a throwback. Like the semiconductor founders from 30 years ago: Harder core, dirt under the fingernails.
Marc Andreessen: [2] The other is the rise of the deep domain expert in a science like biology. A biology or chemistry PhD. [In the past] If you met a newly minted biology PhD they wouldn’t know that much about computers. Now they basically have a dual PhD in computer science. . . So you have these dual discipline founders. That is enticing. I think that is new.
Marc Andreessen: [On the founding of A16Z] There was a throwback element to what we were doing. We could talk about the history of venture. We spent a lot of time digging into the history. We were inspired by the people who came before us.
Marc Andreessen: [Another difference] We took seriously this idea of building the institution. In particular the building of a network and ecosystem. We made a long term, systematic, and costly investment [in the network]. That’s why we have all these operating functions and all these professionals here.
Marc Andreessen: A lot of people in the early 90s [investors, press] doubted the future of the Internet. We pitched all the big media companies [in the 90s]. They said the future [of the internet ] is AOL because AOL pays us for our content. On the internet we have to spend money to put up our content so that’s [obviously] never going to work. This thing is happening that will fundamentally change the world and people pooh pooh it. That might be the logical response because a lot of new things come along and people claim it will change the world. Most of those things don’t. . .Maybe our lot in life as founders is to be the fringe element.
Ben Horowitz: Prices of companies are always incorrect. Always. They are valued on future performance and no one knows what that is.
Ben Horowitz: What is going to be the user interaction model after the iPhone? What is the next platform? That is a big open question right now.
Marc Andreessen: [When analyzing an opportunity] We default into thinking this will happen [default optimism]. We don’t spend a lot of time on will this happen. Will this be a thing? Instead let’s assume it does happen. If it does happen where does it go? How high is up? How big can it get? You are looking for the things that can get really, really big.
Marc Andreessen: A Peter Thielism we quote all the time: It is not the first company that gets all the money. It is the last company in the market that gets all the money. In other words, it is the company that takes the market and forecloses the opportunity for startups behind it.
Marc Andreessen: Edison tried 3,000 compounds for the light bulb before he figured out the filament.
Ben Horowitz: Just knowing that you are not the stupidest entrepreneur of all time is really valuable. [His book The Hard Thing About Hard Things is about this]
Ben Horowitz: The thing that helped us the most was copying Michael Ovitz’s model at CAA. That jump-started us by five years. I can’t believe how well it worked. [You can read more about Ovitz’s model in his book Who Is Michael Ovitz?]
Marc Andreessen: Book recommendation: Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke. She talks about what is the nature of a mistake in a probabilistic domain? She uses the term resulting. Resulting is the process of looking at a bet that was made in a probabilistic domain that didn’t pan out and concluding that was a mistake. If you are in a probabilistic business resulting is the root of all evil because you will learn the wrong lessons. She says the thing to do is clearly separate process and outcome. Probabilistic domains means you don’t know the outcome of any bet ahead of time. [Since you don't know the outcome ahead of time] You need to design the best possible process to generate the best possible set of outcomes over time.
Ben Horowitz: Jeff Bezos has a real good idea. He says we rate people on their inputs not the outputs.
Stewart: From the entrepreneur’s perspective having a whole lot of money takes away a very critical forcing function which is: I’m about to run out of money. I better figure this out.
Marc Andreessen: Favorite two books of the year: How History Gets Things Wrong: The Neuroscience of Our Addiction to Stories and Can't Hurt Me: Master Your Mind and Defy the Odds.
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The Internet is so incredible it is hard to get the right analogy for it. A lot of how we decide how we react to things and what to expect about the future depends on how we categorize them. The tempting analogy for the boom/bust of the Internet is The Gold Rush.
How The Internet Rush and The Gold Rush were similar: Both were very real. Huge boom. Huge bust. Lots of hype. So many people left what they were doing to join both The Gold Rush and The Internet Rush.
In The Gold Rush people literally jumped ship. San Francisco harbor was clogged with 600 abandoned ships. Entrepreneurs turned the ships into hotels.
They had a bad burn rate in The Gold Rush. They loaded up their mules and horses and didn’t plan right. They didn’t know how far they had to go. It was so bad most of the horses died before they could get where they were going.
The same thing happened in The Internet Rush. Very bad burn rate calculations. OurBeginning.com spent $3.5 million on an ad for the Super Bowl when they had $1 million in revenue.
Where the analogy starts to diverge: In a gold rush when it is over it is over.
There is a much better analogy that allows you to be incredibly optimistic and that analogy is the electric industry. There are a lot of similarities between the Internet and the electric industry.
They are both thin, horizontal, enabling layers that go across lots of different industries. It is not a specific thing. They both can be used as incredible means of transmitting power. They both are an incredible means of communicating information flows.
The part of the electric revolution I want to focus on is the golden age of appliances. The killer app that got the world ready for appliances was the light bulb. They weren’t thinking about appliances when they wired the world. They weren’t putting electricity into the home. They were putting lighting into the home.
Appliances benefited from the heavy infrastructure that was laid down by the electric revolution. The Internet got to stand on top of all the heavy infrastructure that was put in place because of the long distance telephone network.
[At the beginning of the golden age of appliances] They hadn't yet invented the off switch. That came much later. They hadn’t invented the electrical outlet either.
If you think of the Internet in terms of The Gold Rush you would be pretty depressed right now. The last nugget of gold would be gone. With innovation there isn’t a last nugget. Every new thing creates two new questions and two new opportunities.
We are at the 1908 Hurley Washing Machine stage of the Internet. That is the level of primitiveness of where we are.
If you really do believe it is the very very beginning then you are incredibly optimistic. I do think there is more innovation ahead of us than there is behind us. We are very very early.
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The essay Increasing Returns and the New World of Business by Brian Arthur was influential to Bill.
There is a book called Complexity: The Emerging Science at the Edge of Order and Chaos. It is about the rise of the Sante Fe Institute. In that book, Brian Arthur is one of the heroes. He had a lot of radical, different ideas.
The notion of increasing returns: Some company that got to a big level would find it even easier to get to the next level.
I was covering Microsoft at the time on Wall Street. You could see this in play. The more of the OS that existed the more apps that were written for the platform. The more apps people wrote for the platform the value of the platform went higher. It just kept paying off. You ask yourself which other businesses are susceptible for this? This has been a mainstay mental model that I’ve kept in the back of my mind for every single investment we have ever made.
There is a concept that is known but no one has quite landed yet called the interest graph. This concept that there is a site or app you could go to and everyone that has your shared interest was already there. Example: I like mountain biking, this is my level, and I live here. I would then be automatically grouped with similar people. If you could do this it would monetize like crazy. I wouldn’t be shocked if a company [that does this] popped up tomorrow.
A rule to get a marketplace or UGC [user generated content] off the ground is to do tons of unscalable things. This drives 90% of entrepreneurs who have been to business school nuts. They say we can’t do this! How are we going to do this at scale? I say we aren’t going to do this at scale. This is a flywheel. We need to get it spinning. The cost of this activity today is irrelevant to the marginal cost of the activity down the road because we are going to stop doing what we are doing.
Example of this in the Glassdoor case: The very first company that was reviewed was Cicso. The founders went to the Starbucks near Cisco with a pen and paper and interviewed people for reviews. There is zero chance that’s going to be the long-term business effort but you have to seed the market.
I very frequently run into entrepreneurs who think they need to expand to 10 cities really quickly. I’m like no. If you have incredible unit economics and growth metrics in a single city - where it is obvious that your playbook is working - that is way more interesting.
I’m always surprised by what entrepreneurs can uncover. When it happens you say oh I should have thought about that. But you didn’t.
Until the Internet, there was no way to have perfect [or close to it] informational asymmetry. Now we can connect someone with a skill set being available and someone with that need. . . If there is a way to link these people there has to be more economic unlock. No one has really nailed that yet. [Tutors, coaches, plumbers, etc.]
We are creating more connectivity. Ideas can spread super fast. I’m amazed at the quality of conversations I have with people [some of which I didn’t know ] over Twitter DM.
A lot of people have started asking about vertical LinkedIn’s. That’s really interesting. I look forward 10 years and think won’t everyone who is in this occupation be connected in some way?
Certain businesses are prone to monogamy: babysitters, hair cutters, dentists, doctors. If things are succeeding you are not changing. Those businesses are tougher for marketplaces. Restaurants are prone to promiscuity. You go to your favorites but you want to try new ones constantly. That’s a different dynamic for a marketplace.
I’m fairly confident that in the very long run companies that are very good allocators of capital are going to trade at much higher multiples. Even if you are in a capital intensive industry you can understand this construct. I’m 100% convinced that Jeff Bezos has understood this since the beginning of Amazon but these entrepreneurs [some Silicon Valley entrepreneurs] don’t.
Bill’s essay on this idea: All Revenue Is Not Created Equal.
For the first time in history, private companies are the ones with more money and are attacking the long-held incumbents. That is a radical thing to think about.
[On the absurdity of IPO vs Direct Listing] Spotify is a little below its first trade price. Same as Uber and Lyft. But nobody says anything because no banker picked a price out of a hat and allocated capital based on that. Why? Because an algorithm properly determined how to match the buyers and sellers.
In the day of the Internet, you can know more about a subject matter than anyone else. You can keep narrowing the scope of that subject until you are the one who knows the most. Everyone else would run out of time.
I think it is critical to start with the historians of your industry and craft and know all that happened prior to now. [This is one of the reasons I read biographies of entrepreneurs on Founders podcast.]
For me that was having the bedrock of Munger, Graham, Dodd, Lynch. [Knowing this] gives me a different frame of mind than most of the people out here. You can do the same thing in any industry. Study the pioneers.
I still read today obsessively.
Bill’s talk Runnin’ Down A Dream: How to Succeed and Thrive in a Career You Love.
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Microsoft was lucky that it was not a capital intensive business. It was financed by money I had made in high school. I did the school scheduling. There were all sorts of things you could do with software to make money fairly easy in those days because the number of people who knew software was very small.
We knew software was this magical thing. Weirdly people didn’t understand that Moore’s law would mean computing power would be infinite. The best way to think about it was software would be the limiting factor towards any digitally assisted activity.
We had lots of customers who went bankrupt. I was hiring people who had children. They were moving to the city [for the job]. I always did this calculation: Do I have enough money that if no one pays me I can still pay the employees for a whole year?
[Why he recruited Steve Ballmer] I realized I needed somebody who could hire people and tell me not to sell things that weren’t done yet.
[Early Microsoft] Was a nice mix of young, naive, over optimistic people [who controlled everything] and the adults who could ask us to think twice before we did 3 crazy things per day. . .We [the young people at Microsoft] learned to accept the fact that they [the adults] weren’t quite as intense as we were. They had wives and kids. They would leave at some point during the day.
You can over worship and mythologize the idea of working extremely hard. It is true I didn’t believe in weekends. I didn’t believe in vacations. . .I don’t recommend it. I don’t think most people would enjoy it.
Once I got into my 30s I could hardly even imagine how I had done that. Now I take lots of vacations. My 20 year old self is so digested with my current self.
I have a fairly hardcore view that there should be a very large sacrifice made during those early years.
My greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft to not be what Android is: The standard non Apple phone platform.
If you were in your 20s today what would you work on? AI. Problem number one in software is not solved. So that is what you would work on. . . I would be drawn to thinking about the structure of the software that can do the equivalent of what a human can do.
It is nice that the idea of being a founder is a thing. That you can meet other people doing it. It’s got a real ecosystem.
As a result you can move faster. You don’t need to invent certain things - like scaling with cloud computing. But you also get intense competition.
You have said that the most important issue is often not technical but cultural- it is convincing everyone that the company’s survival depends on moving as fast as possible. On the importance of a focus on velocity.
What is the most impactful unsolved problem that technology can solve that you’d like to see someone take on? This idea of creating an agent that helps a student like a one-on-one tutor would. There is nothing that matches a great one-on-one tutor teaching somebody. That is the gold standard that all other methodologies are compared to.
If there was a Microsoft of AI what would the business model be? A personal agent that sees all your information would replace all your applications. It is your portal to the world. It replaces social networking, search, productivity apps, going to amazon and shopping etc. So it has the opportunity to combine all those different elements - advertising, mark up etc. It would probably be done on a subscription basis for a lot of people so you don’t have to wonder about what the trade-offs are.
[Something I hope Bill is wrong about] The number of students who can learn without a social setting around it is very very small.
Learning is a weird social phenomenon.
Who is someone who has been instrumental to your success? Having people who have a little bit of distance is good. For the last 30 years I’ve gotten to be friends with Warren Buffett. He’s not in this tech world at all. Because he is not in this world he has a definite way of looking at things. Including this idea that work should be fun. He has made his work so much fun. He was a great counsel during the toughest time I went through [the antitrust lawsuit] That was a huge gift.
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Warren Buffet and Jeff Bezos talk a lot about that over time you end up with the shareholders you deserve. If you run your business in a short term way you are going to end up with short term shareholders. Similarly if you are clear about your long term priorities and principles - and you remain consistent to them - then over time you earn shareholders who will partner with you over the long term.
From an organizational standpoint I think this really applies. The right mindset is not how do you keep everyone happy but what kinds of people do you want to be really happy and how do optimize for them? How do you be the kind of leader they wished the organization had?
Think about this deliberately. Reframe the question from how do you keep people happy to how do you keep the right kind of people for your organization happy?
An example of this: We published a guide to our culture. We tried to write it in such a way that some people would read it and say this is not for me. We consider that success.
No product is the right product for every customer.
Before 100 employees you can reason individually about each person. Beyond that you have to be principle based and more methodical across the organization overall.
I think part of the value of having people join from other organizations is they are going to bring dissonance and friction. They will bring expectations, assumptions, and beliefs. Some times those will be wrong for your organization. And sometimes they will be right. The issues they encounter, or the deficiencies they observe are going to be blind spots that you have.
How do you know this is who we are as a company, these are the things we care about, this is who belongs and who doesn’t? I think it is a very difficult, subtle tension, and dialectic balance between your first principles and desires for the kind of organization you want to be. And the kind of organization that is going to be a good fit for you.
At Stripe we believe engineers working on customer-facing products have to have a good understanding how the customer uses the product, why the customer want this or that, and be willing to talk to customers. They have to be more than just an author of code. They have to be excited about understanding the customer need.
There has to be this ongoing reflection and incremental updating of your mental model based on what is working well, what did you expect to work well and didn’t, and what things did you not expect to work well and did.
[When called upon to make a decision] When we were 20 people I would think what is the best decision to make here. Now I often think why do we have to make the decision? The fact that we have to make this decision suggest maybe we are missing some principles or framework that would make the decision an easy one.
Example: We recently had a conversation about if a particular product was polished enough. I realized we shouldn’t be having that conversation. We should instead be thinking about what is our framework for deciding what level of polish a product needs to have at different stages of its life cycle.
Part of the essence of leadership is balancing twin forces. On one hand the empirical sense of what is working what is well and what isn’t. Not being too inflexible. And on the other hand being strict, and definite about the things that you aren’t willing to have vary. Being flexible but not too flexible. It is ultimately a subjective judgement call. That’s part of the reason leadership is hard.
A lot of things in life [and in companies] revolve around these very fine, highly ambiguous balancing acts.
Example: Being a micro pessimist but a macro optimist.
If you are overly cheery and think everything is awesome [lego movie style] about your day to day then you will miss really important problems. You will probably eventually fail because you didn’t fix things that demanded some urgent course correction. On the other hand if you are perpetually burdened and beset by challenges and frictions and problems – you will never able to inspire yourself [and others] to maintain the motivation to do whatever it is you are pursuing.
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How did you make your way into venture? It is actually an unusual story that exposes how much luck [and random opportunity] goes into these things. When I was in business school I was told you couldn’t just get into venture. I was told to go work for 20 years first.
My sister was an early employee at Compaq. I got exposed to what it meant to have options and for a company to explode.
I ran into a dead end trying to get into VC. The 2nd best thing was to become a sell-side analyst. I begged my way into a job at Credit Suisse First Boston. This job allowed me to build a network with a bunch of different people. Frank Quattrone called me and recruited me. He said if I came to work for him he would move me to Silicon Valley and introduce me to every VC he knows. After that [31 months later] Benchmark approached me with an offer I couldn’t refuse.
How has experiencing multiple booms and busts impacted your investing mentality? I have multiple views on this subject. I’ve read every book on the history of financial markets that I could. You can get tons of exposure to it if you just look for it. Silicon Valley is an interesting place because I have never been around a group of people where risk is forgotten so quickly.
Each day as the market expands people take on more and more risk. But they lose their aversion to risk very slowly. It is like the boiled frog. Over a 5 year period your VC firm has taken on tremendous amount of risk. But every day you just moved a little bit so you never felt you were making this massive gap in risk exposure.
When markets bust risk aversion comes on immediately. Overnight. Boom!
Here is why I said I have multiple views on this subject. I spent a ton of time the past couple years thinking about the cyclicality in venture markets. I was fortunate to spend time with the famous bond investor Howard Marks. He asked me to explain my business. After I explained it he said your business sucks. Your business can’t avoid cyclicality.
He said you will have boom and busts cycles always. I think he is right.
Venture is low barriers to entry high barriers to exit. As markets start to boom the amount of capital that comes into the category is immense. But when the market breaks the capital doesn’t have a mechanism to go away quickly because it is committed to these 10 year windows.
The other thing I realized is the vast majority of the average returns over a multi decade window are right at the end of the cycle. You can get conservative and pull back and miss [like venture firms pulling back in 1996 and missed the run of 97, 98, 99].
If you were to define risk - and it is arguable you could - as the burn rates these companies have ... the burn rates for some of these companies now are two orders of magnitude higher than they were in the 1999/2000 time frame. . .If capital gets hard that is going to be a really interesting issue. We haven’t seen capital get hard in a long time.
I’ve come to believe that people get into more trouble by over focusing on TAM analysis - especially in these super early stage companies. Example: Saying Uber should only be valued at $5 billion based on the existing black car and taxi market.
In 1980 AT&T hired McKinsey to predict the number of cell phones there will be in 2000. They were off by 100x.
All too often what I’ve seen is if technology brings about an easier, simpler, cheaper solution there is a good chance the thing could expand the market and blow things out of proportion.
How to be a good board member: Be prepared. Show up having read everything. Be intimately aware of everything you are supposed to be aware of. Speak less. Younger people on boards usually speak too much. You learn to change that behavior over time.
If you have an idea during a board meeting write it down. Ask yourself does this need to be discussed right now? Or is this something I can just put in a note to the CEO after the meeting?
In her recent book Thinking In Bets: Making Smarter Decisions When You Don't Have All the Facts, Annie Duke had an interesting section that said in a partnership or small group you come to know the weaknesses of everyone else.
[If you want to work in VC] You need to be passionate about being a venture capitalist. I think 20 years ago there were more people that were passionate about it as a career choice. I think there are less today.
What do you find the most challenging part of your role today? For the past 5 years the most challenging part for me has been the abundance of capital. It is equally mystifying to Howard Marks. And from reading the commentary, to Munger and Buffett. If interest rates are negative the model doesn’t work. There is so much peculiarity that is happening right now because of the massive amounts of capital. It raises strategic questions that have never been presented to boardrooms in the history of business.
My favorite book is Complexity: The Emerging Science At The Edge of Order and Chaos by Mitchel Waldrop. It is about multivariable nonlinear systems. I read it when I was 25 or 26. It had a profound impact on how I see models, systems, economies, opportunities, and investments. Because most things in life are multivariable nonlinear systems. I have a pile of that book in my office. I give it out all the time.
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One of the challenges of talking about, teaching, and writing about entrepreneurship is that there is something about entrepreneurship that is very unscientific.
Science involves things you can repeat. Things you can experimentally verify. In some sense things that are at least two of a kind. The great moments in business happen only once.
There is no formula for entrepreneurship: You can’t say follow these steps and you will succeed. Such a formula does not exist.
The contrarian business question: What great company is no one starting?
What I would like to do tonight is offer some of my answers to this question: What are some things that I think are true that very few people agree with me on.
That standard account of capitalism is that competition and capitalism are synonyms. My somewhat provocative thesis is that capitalism and competition are antonyms. In a world of perfect competition all the profits are competed away. A capitalist is someone who is in the business of accumulating capital.
As an entrepreneur, you want to aim for a monopoly. You want to be doing something so unique, so differentiated that you have some real pricing power.
There is this incredible distortion that happens. People who have monopolies pretend not to have them. And people who are in crazy competition pretend not to be in that great of competition.
People who come out of these incredibly powerful monopoly businesses they typically don’t understand what actually drives the business. Example: This is perhaps understood by the top 5 or 10 people at Google. But if you talk to the other 30,000 they would list things like this is the first company to appreciate smart people, free food, the perks etc...
There is a shockingly bad track record of people coming out of Microsoft and Google who start companies. I think part of it is they were intentionally misled by management in terms of what really made the businesses work. They try to emulate the fictional account that in practice doesn’t work. This idea is poorly understood.
Psychologically we are very powerfully attracted to competition.
Your goal is not to compete with and destroy large, existing companies. Your goal should be to create a valuable company in its own right.
The standard business school advice is go after big markets. The monopoly perspective is you want to go after big market share. So you want to start in very small market. That is how you get to big market share quickly.
Just about every trend is overrated. The buzzwords are a tell that the person is bluffing. The business is undifferentiated.
A deeper explanation of why we are so attracted to competition: In the time of Shakespeare the word ape meant both primate and to imitate. Aristotle said man differs from the other animals with a greater aptitude for imitation. Culture gets transmitted through imitation. [To learn more about this read Things Hidden Since the Foundation of the World by Rene Girard]
I like to contrast technology with globalization. Globalization is copying things that work. Technology is vertical, intensive progress. Going from zero to one. They are very different types of activities.
We have had much less technological progress than advertised. We have had some progress in the world of bit [computers, software, Internet]. We have had much less in the world of Atoms in the last 40 years.
Past books about the future are very interesting to look at because it tells you the perspective the people at the time had on the future. There is this book written in 1968 called The American Challenge. It said the United States was this technologically accelerating civilization. If you extrapolate that a few decades into the future America would leave the rest of the world in the dust. . . What happened instead was incredible convergence through globalization. It has made the world much more competitive.
One of the things that has become strangely dominant in our time is the idea of the future has collapsed. The idea that the future is a time and place that looks very different from the present. That can be a very powerful motivator for changing things.
There is a history of the United States one could tell where in 19th and 20th century America you had all types of these engineer, schemer type people. These people with complicated plans they tried to implement like a transcontinental railroad, or the Panama Canal. These very large projects. At this point that is just seen as ridiculous.
Speculation about why so many people that came out of PayPal ended up being quite successful: PayPal was not a business that worked automatically. There were a lot of tricky challenges. The general lesson learned was that it was hard to build a great business. That is a good mindset to have when you set out to start a new business.
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The web is the most important way for us to increase our rate of evolution as a species.
The web is fundamentally about communication. Money and transactions are a form of communication.
The best interface in the world is someone you trust and like showing you how to do something.
Writing is not the most important thing. Thinking is. But writing is probably the best way to improve your thinking. The process of writing and editing makes your thinking so much better.
What I’m looking for in potential colleagues [also things you can’t learn or coach]: 1) Taste 2) Work ethic 3) Curiosity 4) Ethics
Matt started working on Wordpress 16 years ago: I started writing on the internet using hosted tools [live journal, blogger etc]. This what led me to working on the tooling. None of these had the right mix of what I wanted to publish online. It’s fundamentally not that hard to put text in a database and get it out so I just started hacking on the software.
I didn’t really know anything [about technology]. I would just search online and I would find something that someone else had already figured out. It was so cool that people figured something out and shared it. Why not do that? It doesn’t cost you anything. It makes humanity better. This was my early exposure to the idea about the acceleration of evolution.
We evolve through communication and ideas spreading. Learn something, mash it up, and put it back out there. Someone will read it, mash it up, improves it, and puts it back out there. That kind of ping pong is all of human progress. We improve that process by publishing.
I like to think about the ratio between how long it takes to create the content to how long it takes me to consume it. Many people’s first book takes a lifetime to write. Think of Nassim Taleb’s first book Fooled by Randomness. That was the culmination of his life’s work until then. I can read that in 6 to 10 hours. Wow. That is an off-the-charts ratio.
Matt’s advice for writing online: Write for one person. You are publishing to the world but write like you are writing a letter to one [specific] person.
Why Matt ended up working in Open Source: Open Source software is essentially publishing your software so other people can comment on it, change it, and react to it. It is a fun mental exercise to imagine what if we worked together.
Getting better is all about iteration. Anything you enjoy in the world has gone through countless iterations.
I think most of the problems in the world come from “short-termism” [focusing on the short term] Under the short term you can ignore externalities, you can pass the buck to someone else. Sometimes we pass that buck to future generations. Expanding your thinking to a longer time frame acts like an amazing filter.
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The sacrifice and the wisdom and the value transfer that comes from one generation to the next can never be underrated. . . All of my life I have admired Confucius. I like the idea that there are values and duties that are learned. All of that should be passed onto the next generation.
I scratched out some notes about some ideas and attitudes that have worked for me. I think many of them are can’t fail ideas.
The safest way to try to get what you want is to try and deserve what you want. You want to deliver to the world what you would buy if you were on the other end.
Think about the type of funeral you want. There is a story about a person who died. The minister said it is now time to say something nice about the deceased. Nobody came forward. After long time a person came up and said, “His brother was worse.” That is not the kind of funeral you want.
Wisdom acquisition is a moral duty. It is not just something you do to advance in life. This means you are hooked for lifetime learning. Without lifetime learning you people are not going to do very well. You will not get very far in life based on what you already know.
Berkshire Hathaway may have the best long term investment record in the history of civilization. The skill that got Berkshire through one decade would not get it through another decade without Warren Buffet being a continuous learning machine.
I constantly see people rise in life who were not the smartest and not the most diligent. But they are learning machines. They go to bed a little wiser than they were when they got up. Boy does that habit help when you have a long run ahead of you.
If you watched Warren Buffett half of all the time he spends is sitting on his ass and reading. The other half of the time he is talking one on one with highly gifted people. It looks quite academic.
My advice to you is sometimes to keep your light under a bushel. [Some people don’t like that you know more than they do.] Charlie tells the story of a friend who worked at a law firm. He knew too much and showed it. He was told: Your duty is to behave in such a way that the client thinks he is the smartest person in the world. Then you make your senior partner think he is the smartest person in the world. I didn’t do this. I always obeyed the drift of my nature. If other people didn’t like it well I don’t need to be adored by everybody.
Cicero is famous for saying A man who doesn’t know what happened before he was born goes through life like a child.
The way complex adaptive systems work is that problems are usually easier to solve if you turn them around and reverse them. [Always invert!]
What do you want to avoid in life: Sloth and unreliability.
Avoid extremely intense ideology. It turns your brain into cabbage.
Do not overspend your income. There once was a man who became the most famous composer in the world. But he was utterly miserable most of the time. He always overspent his income. If Mozart can’t get by with this asinine conduct, I don’t think you should try it.
Generally speaking envy, resentment, revenge, and self-pity are disastrous modes of thoughts. . . It is a ridiculous way to behave. When you avoid it you get a great advantage over everyone else.
Something Charlie learned from Ben Franklin: If you wish to persuade appeal to interest, not to reason. [Human self-service bias is so extreme.]
Incentives are too powerful a controller of human cognition and behavior.
Avoid working with someone you don’t admire and don’t want to be like.
Two types of knowledge: (1) Plank knowledge: The people who really know. (2) Chauffeur knowledge: They know how to sound like they know. I just described every politician in the United States.
Intense interest in a subject is indispensable if you want to excel in it. [Follow your natural drift.]
Life will have terrible blows in it. Horrible, unfair blows. It doesn’t matter. Some people recover and others don’t. The attitude of Epictetus is the best. He thought every mischance in life is an opportunity to behave well and learn something. He thought you should utilize the terrible blow in a constructive fashion. That is a very good idea.
You could say who wants to go through life anticipating trouble? I did. All my life I have gone through life anticipating trouble. I have had a favored life. It didn’t make me unhappy. It didn’t hurt me. It helped me.
Full talk here.
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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What would you attribute your success to? Since I do tech videos the obvious answer is tech has been interesting and important for so long. Just being in the tech space has helped a lot.
The channel has its own unique style. It has a consistent voice since it’s been me for 10 years.
Was there any particular inflection point? No. It’s just been consistent growth over a long period of time.
I see my job as a professional user. I just have to use the product to figure out if it is actually useful.
The MKBHD content evolves over time, guided by his own interests: Currently it consists of:
Reviews of smartphones.
The AutoFocus series on electric vehicles.
The Space Series is about how other creatives use their workspace.
A podcast to talk to other creators is coming soon.
I consider tech the star of the show. I inject my own personal perspective because it keeps it interesting. I try to make the tech the main story. The one thing string that ties everything together is it’s coming from me.
You need your own perspective. Don’t try to be something else that already exists because there won’t be any reason to watch it - it already exists.
How he thinks about communicating with the audience: The shortest, most succinct way is usually the best way.
His daily schedule: Weekdays are divided by production and post-production. Production days are filming, editing, and writing. Post-production is email, strategy, travel, etc. At nights it’s practice and for Ulitmate Frisbee. [He plays for a pro team]. Weekends are all for playing Frisbee. I don’t work on weekends and I’m disconnected from the internet.
How MKBHD makes money: Ads on YouTube. Affiliates for the products reviewed. Merch store/fashion brand. Advice for creators: Just have different ways of supporting the same thing.
His income breakdown is roughly 50% YouTube ads, 20% sponsored ads, 10% affiliates. [This doesn’t add up to 100%. Maybe the rest is merch?]
More on creators making money: At a certain point you can ask dedicated viewers to support you directly. If they really like your work they won’t have a problem with that. This works best if your work isn’t common. If what you do is rare, really high effort, or not something you can find somewhere else.
I don’t have any long-term goals. If I was forced to guess what the company looks like in 10 years I would say it would be more of a media company. It would have multiple YouTube channels, a podcast, a service to assist other channels with production.
Y Combinator Podcast #118 Marques Brownlee on Building an Audience and Other Advice for Creators.
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Thingtesting is an Instagram-based, review compendium, of direct-to-consumer brands - with pictures and a review from Jenny’s perspective.
The reviews are written from two perspectives: 1) A personal one based on how the user experience was. 2) A VC perspective that describes the company, industry landscape, and market.
I never thought I’d work in VC. I thought I’d work in fashion. I dropped out of college to learn visual merchandise. One of my teachers said. “Retail is dying. We need to teach you photoshop and design.” That came in handy when I started Thingtesting.
How Jenny found out about startups: There was a startup event called Slush. I noticed they didn’t have any social channels. I cold called them and offered to be their official Instagrammer. That led to a job running their brand and marketing. I did that for 3 1/2 years.
A VC called me and said they needed help with marketing. I thought this opportunity was interesting. I got a job at Backed VC.
Not everyone following Thingtesting is interested in startups. A lot of people follow it to discover new products.
I definitely never expected Thingtesting to grow in to what it is today. I just had a list of products I wanted to try. I wanted a channel to learn about products. I wanted a way to share my perspective as a user and a VC. It was that simple.
Thingtesting has grown into a website and an email newsletter. It grew so much that I couldn’t just do it at night and on weekends. I am on sabbatical right now so I can work on Thingstesting full time.
We use the term direct to consumer because it’s a new thing. I think in a few years we will just call them brands. They just started out in a different way than brands previously did.
Don’t be afraid to be different: A lot of brands use the same fonts, colors - they even use the same law firms. I think there are a lot of interesting things to be explored by broadening. . .to just look different.
I’d love to expand the reviews to include other people’s opinions. To be less about me.
I think people like scrappy. Thingstesting is quite scrappy. It’s just me and some foam boards. It’s not a huge production. It makes it relatable and authentic. Brands lose scrappiness as they grow.
Companies over think a lot. They think they need something with a high production value. But the real thing that makes it engaging is the creativity. Thingtesting posts contain a lot of text, filled with typos. It is authentic. People can tell it is written by a real human being.
Well Made #73 Testing Things with Jenny Gyllander, founder of Thingtesting.
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Jason on one of the lessons he learned from his parents: Always figure out the right thing to do in any given situation. You won’t always do the right thing, but you should know what the right thing is. An example: Jason’s dad paid for basketball camp for a friend that couldn’t afford it.
We made sure to create an environment where no one is looking around to see who is working the hardest. Hard work to me is manual labor. We are making software. This isn’t hard work. We are fortunate to be able to do this. We can sit in AC and work on a computer. Jason wrote a blog post about this called If you’re reading this, you probably don’t do hard work.
You don’t need 12+ hours a day to do great work. The reason people are working longer hours is not because there are 12 hours of work to do. It is because they can’t find a few continuous [uninterrupted] hours to do their work.
Everyone at Basecamp gets a full 8 hours a day to themselves. How they spend it is up to them. If you want to take someone else’s time, you have to ask them for it.
Time is incredibly valuable. You should have a good reason to ask for someone else’s time.
Basecamp organizes product development in 6 week cycles. There are usually 2 to 3 product teams working on features we want to build. These teams are 3 people or less. 6 weeks is enough time to make substantial progress on something that is important.
How does Basecamp pick what to work on next? As a cycle is coming to an end, a few of us get together and think about what we should do next. These could be ideas we’ve had or ideas that have come up through customer requests.
You use the word feel. That’s interesting when we are in this age of algorithmic informed insights: I put a lot of value on feel, gut, and intuition. We are not a data driven company in terms of product development. We use data [where it is appropriate] to measure the performance of our infrastructure, or how long it takes to respond to a customer.
I try to be ignorant about the trends in the industry. Ignorant of what competitors are doing. The more I pay attention to that stuff, the less free my mind is. You have less space for your own thoughts.
I prefer to pay attention to things out of my industry. I get inspiration from architecture, art, nature.
We don’t need to dominate an industry. We just need to find a small number of customers who believe in what we are doing. We found many of them. Over 100,000 pay for Basecamp every month. You only need millions of customers if your costs are out of control. If you have thousands of people. We only have 55 people.
Other business owners Jason admires: My friend has a small grocery store. I admire that he can get to know his customers by name. He can experiment faster by putting something out and seeing how it sells. There is a repair shop that has been in business for 80 years. That blows my mind. I admire what Stripe is doing and how they are doing it. I admire Charlie Munger for his clarity of thought. I admire his commitment to value and common sense. I admire a personal trainer I know. I’m jealous that it’s just him. It’s kinda nice to not have any employees. To truly do your own thing, your own way.
You win in business by surviving. The best way to survive is to be profitable.
If someone chooses to work at your company, they are saying no to a million other opportunities. I should respect that and create a place where they can do their best work.
Be careful when setting arbitrary goals: I wanted to run a 6 minute mile. I didn’t hit that goal and I remember being disappointed. Why was I disappointed? I enjoyed the run. I got fresh air. I worked my body, heart, and mind. While I was running I saw exciting things. How are any of these outcomes negative? If you measure yourself against a number, you can feel disappointed. It’s not a satisfying way to go through life.
I used to try to speed things up. I’ve come back to a slower pace. Why am I rushing?
On parenting: I decided to not ask other people on parenting. It’s hard to evaluate the information and compare. I’m a fan of child led learning. Letting them get into what they are into. I’m a fan of the book The Self Driven Child: The Science and Sense of Giving Your Kids More Control Over Their Lives.
Advice for my children: Find your path. Figure out what you like. Find out what drives you. Find out what you are curious about and go into that. There is a lot of depth in anything.
The thing that surprises me the most is how poorly school teaches people how to write and communicate. You can graduate college and not know how to explain yourself well. Or not know how to get to the point.
Rework is about how we run our business. It’s our cookbook. Here are our recipes. It Doesn’t Have to Be Crazy At Work is about pushing back on unhealthy work trends.
I’ve always been inspired by Chefs. They aren’t afraid of sharing their recipes. They aren’t afraid of someone taking those recipes, opening a restaurant, and putting them out of business.
Shane has an idea that people that interrupt their time with their family to respond to work messages, are tying to signal to their family that they are important because someone needs their help. It’s actually inverse signaling. His theory is the people that send messages after work are the ones that are most unhappy with their relationships outside of work. It creates a virus of unhappiness.
Jason thinks it might signal [sadly] that that person would rather be at work.
I think you don’t want a lot of screen real estate. I’m a one screen at a time person. I find that it helps me focus. I find it to be valuable. I see a lot of manic switching. A lot of attention deficit disorder when it comes to work. You see these people with 7 screens up. You don’t need that. This isn’t NASA mission control.
Full podcast here.
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Brief bio for Naval: When I got to Silicon Valley I started working for a little ISP called @ Home Networks. Then I helped start a company that made linearized optical amplifiers. Then I helped do the same thing with the 3D graphics team that eventually created Google Earth. Then I started Epinions, which went public as part of Shopping.com.
The precursor to Angel List: In 2007 I started a blog with Babak Nivi called Venture Hacks. We were laying bare the game theory of venture capital to entrepreneurs who were raising money. After investing in a whole bunch of companies, I took the list of investors that I worked with and opened it up as a public resource. I said, “I’m going to share all my deal flow with you. Feel free to share back.”
Today Angel List is a platform. You can do financings completely online through Syndicates. It is the largest driver of capital into the seed stage financing marketplace. We run the largest recruiting site for startups at AngelList Talent. We have Product Hunt where people launch their products online.
The arc of history is giving more and more power to the individual. This is great for individual liberties and freedom, but not so good when it comes to blowing things up. It’s just the nature of the Faustian bargain with technology that we get so much more power over our natural environment. That power includes the ability to destroy things and the destructive power arrives long before the protective powers do.
Amara’s Law: We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.
Destructive technology is spreading. It is getting easier and easier. What do we do about that?
Whose bread I eat, his song I sing. – Charlie Munger.
The asymmetry between the destructive power and the protective technology in this particular case [drones] is pretty strongly in favor of the aggressor. –Rob Reid
On the nuclear side, we forget, after the war was over, how many of the scientists were absolutely horrified. Many of them had huge regrets over what they’ve done. Including Einstein. So far their fears have been unrealized. That is because nuclear weapons are still hard to build. But that is not true of the new class of emerging technologies.
Theres a famous thought experiment called AI Box. The AI is in some kind of box/cage and it can’t get out. The problem is if the AI could communicate with you - which it would be able to - it can always get out of the box. It would offer you everything you ever wanted. And if you refused it would resort to threats of violence. And finally it will make this same offer to every other human alive. So now you are not just betting against the AI, you’re betting that all of humanity will hold the line. Someone is going to give in.
I do think it [general AI] is improbable in the next 50 or 100 years. I think we are overestimating our ability to simulate the human brain. Most of the approaches today tries to simulate the brain, neuron for neuron. But that assumes that there is not any computation going on below the neuron level. I would argue that there’s computation going on at the cellular level, at an atomic level, at the quantum level. Nature doesn’t waste space, it’s very efficient.
There are no experts on creating artificial general intelligence. It’s never been done. There are not experts on some hallowed ground where other smart physicists, scientists, mathematicians etc can’t play. So we can’t just blindly follow them off a cliff.
If you build something smarter than you, why would it care about you as anything other than a pet? We have out evolved every other creature on this planet. And you can see what we have done to them to get an idea of what they’ll do to us.
I have an app on my phone that does facial recognition. It has not failed once. I use it at parties all the time. It always identifies a person without fail. I would say physical privacy is dead. [The app is in closed beta.]
Rick and Morty is my favorite TV show. You realize when you have advanced technology, you destroy the universe on a regular basis!
We have to remember the nation-states have routinely engaged in bioweapons research in complete contravention of international laws. Joseph Stalin famously said, “The UN? How many divisions do they have?” He meant tank divisions. International law, unfortunately, has no real force on these issues.
After On Podcast #44 Naval Ravikant Part 1 | End Games
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In college, I started out creating templates. I was making money. So when I graduated college I said I guess I’ll just keep doing this.
Where HTML 5 UP! came from: Things we’re going well for a while. I got complacent. I let my skills wane. I decided to get my s**t together. So I taught myself responsive design.
HTML 5 UP! led to a paid service called Pixelarity. I charged for premium templates and support. This project kept me going until I started Carrd.
AJ optimized his personal runway: Even when I was making money, I kept my costs low by continuing to live with my parents. This allowed me to save a good amount of money.
People think it would be great making money doing pretty much nothing. But you feel like s**t because you are not being productive. I started to think I needed a new challenge. I was in this mode where I wanted to avoid complacency. This led me to starting Carrd.
I am not a tool purist or zealot. Use whatever the f**k you want. If it works, it works.
If someone offered you $50,000 to never use Twitter again. Would you accept it? I get significant value from using Twitter. I wouldn’t trade that. I learned so much from people who are just out there making stuff, starting their own businesses. If I had to pay for Twitter, I’d happily pay for it.
Carrd is a one man show with low expenses. Within the first few months it was profitable.
If you want to launch a product that is free, make sure it launches with the paid version already built in. You don’t want to miss the opportunity to convert to paid right off the bat.
In the past you were sharing a lot of numbers as Carrd was growing. You’ve slowed down recently: I’m comfortable sharing the challenges of building Carrd, and some numbers. But now that Carrd is pulling down a decent amount of money each month - in my particular case, it just doesn’t feel right.
When you are working on your own products there is a good chance that there is not enough separation [from work and the rest of your life]. Even when you are doing something that’s not work, you are thinking about work. I have to consciously remind myself to avoid doing this as much as possible.
If there is one thing I learned in the last two years is scale changes a thing into something else entirely. It is not just more of something – it is a completely different ballgame. The time and growth of something puts you in a different place, with completely different things you have to think about – with completely different rules.
I think people tend to over optimize a situation. Example: AJ sends plain text emails. They will say, “Hey I am running a sale right now. Here is a coupon code. Have a nice day.”
I know I am not alone when I say, naming something you make is a pain in the ass.
Constraints really do bring out your creativity. If you have too many choices you might not know where to start.
If you want to build something, start small. Solve a small problem for yourself. You’ll feel a sense of empowerment. You’ll realize you can make your own things that solve other people’s problems to the point they will pay you money for it.
I’m not trying to out Squarespace, Squarespace. I’m not trying to out Shopify, Shopify. Whatever I come up next for Carrd has to fit the ethos of what the platform is about.
Yo! Podcast #01 - @AJLKN - Founder of Carrd, Pixelarity, HTML5 UP!
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Full podcast here.
Where the idea for Lambda School came from: I was working at a company called Lend Up. I was thinking about how you can help move people from where they are now, to a place of better financial health. There wasn’t anything out there that was increasing people’s income.
I felt I needed to get to Silicon Valley. But I didn’t have any money or connections. I drove to San Francisco and lived in my car for a few months.
Living in your car in Palo Alto is disorienting. You are surrounded by so much wealth, but you have none of it.
This made every thing feel very urgent. Every minute I spent not working was another day I’d spend living in a car.
People vastly underestimate the psychological impact of having just a little bit of money. Having just a few thousand dollars is vastly different compared to having no money. This impacts the kind of risks you can take. This impacts a lot of what we do at Lambda School.
I had a company blow up before. I had to go get a job. It was fine. I play a psychological trick on myself. I think there is no downside. It was a benefit to hit rock bottom and bounce back quickly.
We have never lived to please investors. We never run the business to make it marketable to VCs. I think that is a recipe for disaster.
Something I think about all the time is an idea from Ev Williams: You can build a great product if you think of a fundamental human desire, and then take out steps.
How Lambda School applied Ev’s idea: We started out as 1 of 200 code schools. We had no differentiation. We realized what people were really looking for was a high probability of a positive outcome with low risk. We came up with an offer. We said if you put $1,000 up front, after you get a job you can pay us the rest. Normally we would get one or two applications. That time we got 150.
This led us to make Lambda School completely free upfront. You don’t pay anything until you get a job.
We want to eliminate unemployment and make income mobility instant. What if there was an easy way to have all the training and resources you need to get a new job, and it was risk free?
How do you iterate so quickly? It is something we had to build into our DNA. The Lambda formula: We run a lot of experiments, we run them concurrently, and we run them quickly.
Jeff Bezos says what if you were a baseball player, and every time you hit a home run you’d score a million runs? You should be swinging for the fences every single time. I think that is true for startups. If you find something that really hits, you win. So the focus should be on the number of at bats more than anything else.
We have a culture that if we have an idea, it needs to be shipped by the end of the day.
Book recommendations: Les Miserables and The Wright Brothers.
What do you believe that others disbelieve? That unemployment is an optimization problem that will be solved in the next 20 years.
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Full video here.
I was inspired by three people who were heroes of mine. I noticed a pattern amongst them. That is what I am here to talk about.
A dream job is a career where you have immense passion. Life is a use it or lose it proposition. Most humans take one career path. If you only have one shot, why not do what makes you most happy?
I want to tell you three stories of luminaries. And then five guidelines I’ve learned from what they did.
The first story is about Bobby Knight.
What ended up making Bobby successful isn’t what happened in the gym. It is what he did outside. In the first five years of his coaching career, he befriended five of the top basketball minds.
The second story is about Bob Dylan. He was in love with Folk music. He studied every Folk album he possibly could. He didn’t have money. He would spend hours in record stores, listening to the records for free.
Bob Dylan took one of the most ambitious actions that anyone has taken to pursue their dream job. He hitchhiked from Minneapolis to New York City. That is 1,200 miles. He had a guitar, a suitcase, and $10.
He went to New York to find Woody Guthrie. He loved the way Woody played and wanted to know everything about it. Bob was studying, studying, studying.
The third story is about Danny Meyer. His mom made him journal and take notes. He went back and looked at his notes. He noticed all of them were about food. He loved food.
One night he was out to eat with his family. He told them he was going to take the LSAT the next day. His uncle said why would you do that? You love food. Why don’t you open a restaurant?
Danny was making $125k a year as a salesman. He quit to work at a restaurant for $12,500. He chose the restaurant because he wanted to be around the chef, who he admired.
He did something really interesting. He made a list of 12 people doing innovative things in the restaurant industry. He started studying them.
He travelled to Europe to work in a restaurant. He had to pay $500 a month to work there.
What he does is what you think he would do. He studies. He is watching the chef. He is watching the recipes. He goes on the sourcing trips to see how they pick food at the market. He takes tons of notes.
He goes back to New York. He spends six months searching one hundred locations to find the very best place to launch his first restaurant. He is 27 years old when he opens Union Square Cafe.
A quote Bill loves: “I spent nearly two years doing the best work ever as a student.” –Danny Meyer. He is most proud of the studying he did on his own. Not the studying he did in college.
Danny went on to build sixteen high-end restaurants in New York City, and founded Shake Shack.
The first Shake Shack makes more in profit than any of his high-end restaurants.
I noticed that there was a similar strain running through each of these stories.
1) Pick a profession about which you have immense passion. A deep personal interest. Nothing will make you more successful than if you love doing what you. You will work harder than anyone else because it will feel like fun.
This should be your personal passion. Not your parents. Not what is expected of you.
Everybody has the will to win. People don’t have the will to practice. –Bobby Knight.
I think this is the test of whether or not you are pursuing your dream job. The part of your job that would be considered studying or practice - do you enjoy that part?
2) Be obsessive about learning in your field. Hone your craft. Constantly. Understand everything you possibly can about your craft. Consider it an obligation. Hold yourself accountable. Keep learning over time. Study the history. Know the pioneers.
Strive to know more than anyone else about your particular craft. You should be the most knowledgable person. It is possible to gather more information than someone else.
An interesting story from Bobby Knights biography. The second time he meets Pete Newell, Bobby walks into the room with 74 plays diagrammed on index cards. He asks Pete to go through the plays with him. He got the number one winner he could find, and made him go through all the plays.
These quotes really drive home the point I am trying to make to you: Bob Dylan calls himself a musical expeditionary. A sponge. There’s a ruthlessness in the way Mr. Dylan finds sources, uses them and moves on: the ruthlessness of an artist’s best instincts.
An example of the level of detail Danny Meyer thinks about food. Here is Danny describing his process before opening a BBQ restaurant. This is from his book Setting the Table: During one 36 hour road trip through North Carolina I tasted 14 different variations of chopped pork. Each defined by a subtle difference in texture, the degree and type of smoke used, the amount of tomato or vinegar in the sauce, how much heat was applied to the meat, how much or how little crackling got chopped up and tossed in.
The good news: If you are going to research something, this is your lucky day. Information is freely available on the Internet. The bad news: You have zero excuse for not being the most knowledgeable person in any subject you want. The information is right there at your fingertips.
3) Develop mentors in your field. Take every chance you can to find somebody to teach you about the field you want to excel in. Document what you hear. Share it with others.
I had the remarkable fortune to meet Stan Druckenmiller and Howard Marks. I read everything they write. I listen every time they speak. I got to talk to them for a few hours about investing. The things they said changed some of the actions I am taking in my work.
4) Embrace peers in your field. Have discussions with them. This is how you learn. This is a way to hone ideas.
Always share best practices. Don’t worry about proprietary advantage. It is not a zero-sum game.
Celebrate their accomplishments as if they are your own. Send them notes. That will come back to you in spades.
Twitter is the most amazing networking and learning network ever built. For someone pursuing their dream job, or chasing a group of mentors or peers, it is remarkable. In any given field, 50% to 80% of the experts in that field are on Twitter sharing ideas.
5) Always be gracious and pay it forward. Give the majority of credit to other people that helped you. It is the right thing to do. It will keep you from being an a*e.
I am convinced that you get what you give, and you get more by giving more. Generosity of spirit and a gracious approach to problem solving are, with few exceptions, the most effective way to earn lasting goodwill for your business. –Danny Meyer
When someone asked Tom Petty what advice he would give, he said: “Do something you really like and hopefully it pays the rent. As far as I am concerned that is success.”
In his book, [Setting The Table: The Transforming Power of Hospitality in Business] Danny uses the phrase Professional Research constantly. I think it is an interesting phrase. Do you go home at night and study for yourself? To improve your own skill set? Most people don’t do that.
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Why did you choose to write pseudonymously online? It’s useful to have a firewall between anything you say online and your real personality. But the main reason is who I am is not relevant to what I am saying. A lot of social branding is noise. I think the best way to be successful publishing online is to have the best signal to noise ratio.
It is somewhat overrated to accumulate social capital only under your own name. I still have control over the various [pseudonymous] accounts I have. It’s like a Swiss bank account. I can transfer out of it whenever I want.
5 years ago I dropped out of college. I was working as a dishwasher. Today I am a particularly productive person. I have a fast growing company. I have a lot of distribution for my ideas online. It’s been rapid improvement mainly due to getting my habits right.
It is easier to improve by removing things. Remove unhealthy foods, remove binge watching tv shows, remove unhealthy people. It is very important to remove people from your life that don’t really want to see you happy.
Things I’ve added: exercising regularly. Your physical and mental health is upstream of your productivity. Trying to be productive first is virtually impossible.
Technology is the most fascinating thing going on right now. Humans are tool builders. Everything around us was a technology once before. So building new technology is really just building the future.
I had something I wanted to exist. I thought why not try to build it? I was shocked at how easy it was to build.
I don’t think people understand how coding works today. There are tons of powerful libraries and technologies that are free to use. They are fully documented with examples for virtually anything you want to do. They think you have to be a wizard, or somebody needs to teach you how to code. That’s not the case. It is a massive amount of leverage for a curious person.
Originality is important. You need to have an original information diet. If you consume the same information as everyone else, how can you come up with unique ideas?
Recommended blogs: Blake Masters’ notes on CS 183 [the source material for Zero to One], Melting Asphalt and Reaction Wheel.
You can build a Twitter feed that is high quality by removing people that tweet about anything topical. Anything that won’t be relevant in a day is unlikely to be a source of solid insight. If it won’t matter tomorrow why would you want to consume that information today?
Bottomless is a smart subscription. We use a weight sensor that figures out the perfect time to ship your next order. The sensor captures how much you have, and how fast you are going through it. Right now we are a coffee company. In the future who knows what else this can be applied to.
[An opportunity for entrepreneurs]: Humans are not predictable creatures. Our consumption of various things are not predictable.
I didn’t pick something I knew how to do. I just picked something that I thought could be great and figured it out. The scale had to be easy to build because I am not a hardware engineer. I didn’t even know what voltage or current were when I started Bottomless.
Doing a Kickstarter to perfect the hardware is overrated. A lot of companies die doing Kickstarter. The iterative process got us to where we needed to be.
Something under explored from a business strategy perspective: A lot of very valuable companies own the customer relationship.
An example of the entrepreneurial emotional rollercoaster: When you are putting your whole life into something that is so high variance, it is natural to have high variance feelings about it. Small sample sizes can create anxiety. Our pilot program had 15 people in it. Not much data. One person cancelled and I felt this definitely won’t work.
My cofounder is my wife. I think it is a huge advantage.
People of action are very rare in the world. Maybe more rare than people who have unique insights.
I think the number one cause of startup death is your acquisition costs increasing. [They reference the Social Capital letter that states 40 cents out of each venture dollar is going to Google or Facebook. You can read the letter here.]
Wanting someone else to do well, regardless of how that reflects on you, is fundamentally kind.
Full podcast here.
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Is there even such a thing as a new idea? It's really rare. So usually if something looks like a new idea, it's just because you don't know the lineage of all the failed attempts that came before. So there's a pre-history to basically everything.
One of my theories is there may be a fixed number of new ideas the world could absorb every year. It's kind of like path dependency. I'll give you my favorite example. There was a company called Autoped. And they made an electric scooter in 1910. It looks exactly like somebody using an electric Lime scooter [founded 2017].
What did you think about Artificial Intelligence in the early 90s? I thought it had failed. AI had been a pipe dream for 50 years. When people try and fail to do something for 50 years, there are two possible conclusions you can draw. 1) That was a bad idea. 2) It’s right around the corner. Which is a more logical expectation to have? And I think we all fall into that.
You fancy, better-educated founders call them pivots. In the old days we used to call them f**k ups.
I think the thing that's least understood about the best founders is their level of depth. The cliché of the founder is, it's a kid with a crazy idea and blah blah blah. No, it's somebody who has thought about this stuff for 5 years, 10 years, 15 years. It may not be visible but they're actually super deep on it. They've been coming at whatever the thing is for a long time, maybe in different ways.
Somebody said, "Never be worried about telling somebody your idea. If your idea is any good, you're going to have to beat people into accepting it."
A big part of distribution is psychology. Are people ready for this thing? How do you convince somebody they want something that they didn't even know existed yesterday?
We are always talking to our entrepreneurs about cracking the code on the economics of distribution. It is as important as getting the product right. Because the world is a very big place. People are already very busy. They don't have any room left by default.
You can never do two things excellently at the same thing. So whatever you're going to do, make sure that is the one thing you're going to do.
The misunderstood genius. It's the whole Edison versus Tesla thing. Nicola Tesla had all these great ideas and everybody was too dim to see them. The problem with that is, it's not just the person. it's not just the idea. It's the ability to build the team. It's never a solo thing. Can you put together a team? Can you recruit resources around you? Can you recruit a team of co-founders around you? Can you recruit a team of executives, a team of engineers? And then can you attract resources? Can you attract investment capital? Can you go get customers, can you go get articles written about you in the press? Can you go do all these things that you need to do to be able to make the thing work?
The advantage of going into an existing market is people are already spending a lot of money on it.
The advantage of going after something brand new is there's no competition.
Big companies have a special advantage in the world. They get to pursue the good ideas that look like good ideas. As a consequence, what's left are the good ideas that look like bad ideas. That's the sweet spot for the entrepreneur.
Full podcast here.
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I think people who come from outside an industry have a superpower. You are able to see things in a different way compared to people who have spent all of their time within an industry. Before the internet happened, I was planning on getting a PHD in renaissance literature. The internet was an alternate path for me.
I encourage people to emphasize the parts of themselves that are different from the mainstream expectation of who you are supposed to be. Coming from a different direction is almost always an advantage.
We didn’t set out to start Flickr. We were in the process of building something different. A game. This was right after the dot com bust. We couldn’t get funding for our game. Flickr was a Hail Mary that turned into a successful business. Things were different back then. We looked at Flickr as an online community [as opposed to Social Media].
There are some entrepreneurs that are so bull headed and stubborn. They won’t quit. Companies go out of business when the founders quit. When they stop. When they can’t take it anymore.
Is it true your team would manually greet everyone who came to Flickr in order to build the community? In the first 3 months of Flickr each team member would post in the forums 50 times a day. They were commenting on people’s photographs. We were very strong participants in the community as it was being built. I am a big believer in this.
I wrote an article for Wired talking about how founders are “The Abraham”. In the Bible Abraham begat a person, and that person begat someone else, and so on. I believe the entrepreneur is The Abraham of the company. They dictate what the behavioral practices of the community are.
All of those things are how communities are built. Contributing to the conversation all the time is a really important part of building an online community. Things went off the rails when online communities were renamed and repackaged as social media. Then it became a media platform in which attention could be sold. That’s very different than building a community from the ground up.
Being different is an advantage: There are many things about me that are not typical. Coming from a humanities background gave me a special [different] view that other people weren’t seeing.
One of the reasons I’m an entrepreneur is so I can manage my own time. I think the highest quality of living comes from being the master of your own time.
One of my theories on cultural movements right now is there is a very strong desire to simplify your life. We want protection against being constantly bombarded with information and choices.
When I am my most productive self, I’m online a lot less.
A quote Caterina loves: “If I had my life to live over again, I would have made it a rule to read some poetry and listen to some music at least once every week, for perhaps the part of my brain now atrophied would then have been kept alive through life. The loss of these tastes is a loss of happiness.” - Charles Darwin
Quote from Caterina’s essay on behavior you see on social media: Social peacocking is life on the internet without the shadow. It is an incomplete representation of a life, a half of a person, a fraction of the wholeness of a human being.
Book recommendations: How Buildings Learn: What Happens After They’re Built, Labyrinths by Jorge Luis Borges, The Odyssey by Homer, A Tomb for Boris Davidovich, Hannah Versus the Tree, The Emigrants by W.G. Sebald.
Books that Caterina has given as gifts the most: Letters of Note: An Eclectic Collection of Correspondence Deserving of a Wider Audience, Drawings and Observations, The Principles of Uncertainty.
Full podcast here.
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Last year Qualtrics was worth $2.5 billion. A year later it was $8 billion: That is what happens in SAAS. The whole world is waiting for you to fall. If you can just hit that next checkpoint without crashing it will compound. SAAS is like compounding interest.
Switching the name of the company from Survey Pros to Qualtrics was the best thing we ever did. We wanted to do more than just surveys. We could do under the Qualtrics umbrella.
People would criticize the name Qualtrics. They’d say it is not descriptive. They’d say they didn’t know what it is. The reality is people don’t know what anything that anyone is creating is.
SAP was criticized for spending $8 billion on a company no one has ever heard of. There were 300 articles about our IPO and no one heard of us. This may be helpful for Founders: There is this whole rationale around doing fundraising and marketing so people know who you are. They won’t know who you are. So just go out there a build a good business.
We were bootstrapped because we didn’t want outside bosses. Every year that we waited to raise increased our valuation by $100 million.
The longer you can wait the more money you end up with.
Your cap table is your number one asset as a founder and as a company. If my kid was joining a company the number one thing I would say is what does the cap table look like.
I’ve watched really smart founders get lapped by us because they had a bad cap table.
Sometimes an influx of capital can make you take the shortcuts. If we would of had capital, we would have never gone after the academic market. We had to find an efficient way. One that worked at scale before going into the corporate market. The percent of revenue from the academic market went from 100% of our revenues to 10%.
We always had the goal of being number one in whatever market we went into. We wouldn’t go into the market if we didn’t think we could be number one.
There are two things that are happening in tech that scares me. 1) Founders are not thinking long term enough. It is going to take longer than they think. Nothing we have ever done has been shorter than we thought. 2) When your company is valued at over $1 billion or $2 billion, there are not that many companies that can acquire you. And they don’t buy all the time.
You should build your business with the goal to go public. Build your company to be able to do that. Act like there is no other option. If you are not building a company that can go public no potential acquirer will want it anyways. There is always an outlier or two. The fact that we were about to go public made SAP want us more.
One thing I am really proud of is only $30 million of the $8 billion went to people who weren’t in the building. We created more millionaires than any other company I know about.
The most important lesson is you have to have good products that people want to use.
We teach a case study at Stanford about why we turned down a $500 million acquisition. The decision was easy. I talked to my wife. She said, “Ryan you don’t need a bunch of money. I don’t want you home more. Just go for it.” Everyone thinks it is a math equation. After we got the money from this sale there was no emotional reaction. If you think you are going to sell and think you have arrived, you will be seriously let down. It is about building. It is about the journey.
Full podcast here.
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[Innovation is being completely mispriced in the public markets as the public markets go passive]: I totally agree. John Bogle [the inventor of the index fund] was awesome. May he Rest In Peace. One of his last comments was that passive index funds are too big. [You can learn more about John Bogle by listening to Founders #57 and #58]
[We believe that due to cost declines in battery pack systems, we will see EV sales increase from 1.3 million in 2018, to 26 million by 2023. A 20 fold increase if the battery capacity and production capacity is there. What do you think of that?]: Elon’s response: That sounds about right. You might be off by a year or two but not by much.
I want to emphasize that if I give estimates there is a lot of guess work. Especially on an exponential curve – a year or two difference is enormous. We got a lot of criticism for the number of cars we delivered in 2017. The area under the curve of production in 2017 was quite small because it was the beginning of an exponential ramp. Once that got going, the area under the curve was enormous. People were so shocked. Last year we made about as many cars as we did in our entire history [combined].
[Most people thought it was impossible]: If you were doing a linear extrapolation it certainly would be.
When making estimates against an exponential curve, small changes in the calendar breakpoint have enormous percentage differences. The time difference is small, but the percentage difference is enormous.
My estimate of getting to 5,000 cars per week was off by approximately 6 months. In the grand scheme of things, 6 months late for a massive new program is not too much. This was characterized in the press in terms of the percentage of units instead of a calendar shift. It was perceived as a massive shortfall when in fact it was merely a 6 month delay.
[With that in mind] If you are asking what my guess for production for Tesla in 2021 is, it’s 1.5 million cars.
You can think of our cars, long term, as carriers for autonomy software. They are a vehicle, literally and figuratively, for autonomy software.
I still think the last 10% of autonomy is extremely difficult. Or even the last 1% of autonomy is really difficult.
I think we will be feature complete, full self driving this year. Meaning the car will be able to find you in a parking lot, pick you up, take you all the way to your destination without an intervention. I am certain of that. That is not a question mark.
Some people will extrapolate that to mean it works with 100% certainty, requiring no observation, perfectly. That is not the case.
Once it is feature complete then we have to figure out how many 9’s of reliability do you want it to be? And then when do regulators agree it is reliable? I manage autopilot engineering directly every week, in detail. I’m certain of this.
Something we don’t control: When will regulators allow these features to be turned on with human oversight? And then when can this be done without human oversight?
Some people think that I am a business person, or a finance person. I’m an engineer. I do engineering. Always have. I wrote software for 15 or 20 years. I understand technology and software at a fundamental level. I think we have an extremely good technical team. I am certain we will get this done this year.
The advantage we have that is very difficult to overcome is we have a vast amount of data on interventions. Effectively, the customers are training the system to drive. There are millions of corner cases that are so obscure and weird you wouldn’t believe it.
Every time somebody intervenes, takes over from autopilot, that information is saved and uploaded to our system.
The reliance on LIDAR is unwise. It gets you to a certain point but no further. A series of if/then statements and LIDAR will not solve it. You have to solve vision, perception, essentially understanding. And then it is solved. You don’t need anything else.
[How Elon describes how humans drive cars now]: We drive cars with basically two cameras that aren’t very good. On a gimbal that doesn’t move very fast.
If you want a complex neural network you need a combination of software and hardware. Your software needs to be better to compensate if the hardware is weaker. Think about how video games progress. It’s a combination of software and hardware. No amount of clever software could produce a video game of today on old hardware. It is the same for neural nets.
We started off with highway [autonomy] because that tends to be what matters most. Stop and go traffic is painful. Freeways are usually congested in every city in the world. Highway accidents tend to be higher velocity and more dangerous. Fatalities are very much related to speed.
When I hear companies say they are changing the world I think of Silicon Valley [on HBO]. The show is pretty funny. Literally every company says that. Making the world a better place by social/mobile/crypto.
Full podcast here.
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Last year was the longest, shortest year of my life. We have been working to unify our team into a single location. Our teams were split for 5 years. The creative team was in San Francisco. The sales team was in New York.
As you grow you add complexity to the business. Communication got really difficult. There was a lot friction around communication. How have you made this additional complexity less overwhelming? We do team level OKR’s [Objectives and key results] every quarter. It has been hugely important for helping everyone prioritize and work toward the same goal.
A helpful tool for company communication: We are a die hard Asana company. We’ve used it for 7 years. It is incredible.
Book recommendation: The Great CEO Within: How to build a category-killing company from the ground up. [You can read the book for free here]
More book recommendations: Radical Candor: Be A Kick-Ass Boss Without Losing Your Humanity, Measure What Matters: How Google, Bono, and the Gates Foundation Rock the World with OKRs, The One Minute Manager, Getting Things Done: The Art of Stress-Free Productivity.
You can’t make good stuff if you don’t believe in what you are making.
A lesson Emily learned from Principles: Life and Work by Ray Dalio. The difference between skills and attributes. Attributes are things that are kind of fixed in you. For example, being detailed oriented. You can get a little better with training, but if you don’t have that internal wiring you won’t be great at it.
How they use this idea at Baggu: When we are hiring we try to figure out the intrinsic traits that need to already exist. And then figure out what are the skills we can teach after they are hired.
Our theme for this year is mastery. Last year was figuring out new things. This year we are focused on getting really good at all the things we do.
We are seeing the most growth in our direct channel: Baggu.com.
We are focusing on our direct business and worrying less about what a few large wholesale accounts think. The results of this shifting focus: We had more creative freedom. Our designs got weirder. And better. We connected more with our customers.
If we don’t think something is cool we shouldn’t make it. There was stuff we’ve made that we didn’t love but thought people would buy. That was always a mistake.
We have some products that we have been selling for 13 years. [The holy grail of entrepreneurship: longevity.]
The North Star of long-term thinking: When we think about our goals we think about how to add long-term equity to the brand. Not just focus on monthly sales goals.
Full podcast here.
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When I was 15 I got a job at an internet company. They were trying to recruit my Dad. He already had a job. He told them to talk to me because I was good programmer.
[The idea for Squarespace]: I wanted to make a website for myself. At the time you had to put all these different software programs together to make a website. Blogging software, page building software, software to tell you who is visiting the website etc. Then you’d go somewhere else to find hosting. I didn’t want that. I didn’t want this missmash of things.
I wanted more than just a blog. I wanted a full functioning website. The blogging services didn’t let you do that.
I made this for myself. I showed it to one of my friends and he said, “I’ll give you $200 for that.” That made me realize other people could use this. It evolved into a business. [Read Derek Siver’s essay: Don’t start a business until people are asking you to.]
[How Anthony thought about the potential market for Squarespace]: When blogging was taking off I saw that as the beginning of the do-it-yourself wave. People realized they could publish too. I thought people should have a more powerful tool. I wanted them to be able to publish whatever they wanted. With Squarespace you could publish a blog post, a page, a photo gallery etc. It was always about doing more.
[How Anthony funded Squarespace]: I needed money for servers. My parents were the first investors. They lent me $30,000.
[How Anthony came up with the name Squarespace]: I needed a name that was available. The domains had to be for available for purchase. I didn’t have enough money to negotiate for a domain. There were zero Google results for Squarespace.
I purchased two servers and put them on the floor of my dorm room. They were so loud. The sound was intolerable. At the time I was reading a lot about software development. One of the blogs I read was by Joel Spolsky. His blog was hosted by a company in New York. I knew I wanted to be in New York so I drove my servers there.
At the beginning Squarspace had a free plan. There were plenty of examples at the time of giving away software for free and getting millions of users. Blogger, MySpace etc. Everyone told me give it away for free and people would upgrade. I realized there were a lot of people who were never, ever going to upgrade. I didn’t have any other money. I needed to focus on the people who would pay for this. I didn’t want to be the next LiveJournal or Blogger. I priced it at $5 or $15 a month so it was really inexpensive.
After the first year Squarespace had a run rate of $50,000. I started to think I could double or triple that. I needed to buy myself more time. I stayed an extra year in college. I took a light class load so I could work on Squarespace.
The first year we had $50,000 in revenue. The second year was $200,000 in revenue. It wasn’t $1 million overnight. [He was the only employee until 2007. Squarespace reached $1 million in revenue as a one person company.]
I reinvested as much of the revenue back in Squarespace as I could.
Google AdWords was the initial distribution channel.
It took me a few years to understand what the stress was doing to me. I’d have panic attacks. My heart would race. My throat would close up. I’d have trouble breathing. Nothing would trigger it. I’d just be sitting there thinking about it and start to get stressed.
I teamed up with a more experienced person. He wanted to help me hire and expand. He offered to join Squarespace as the CEO. I didn’t know what titles meant at the time. I felt like I was still running the company. This created more stress for me than I realized. I was 24 or 25 years old. This didn’t work for me.
I leaned a lot of lessons the hard way by making every mistake imaginable.
We launched a huge update to the platform called Squarespace 5. It was a total disaster. We flipped it on for every customer at once. It was full of bugs. Everyone in the company had to do customer support. At this time we had 85,000 customers and were doing around $10 million in revenue.
Around this time Getty Images offered to buy the company. I was struggling with this decision. I never started Squarespace to sell it. But I didn’t have a lot of money. At the same time some investors contacted me. They told me I didn’t have to sell. The offered to invest money into the company and buy some of my shares. I liked that idea. I could get liquidity, a board for accountability, and the ability to keep running the company.
You need to create an environment where you hear feedback even if you don’t agree with it. If you create an environment where you don’t hear feedback you become vulnerable to a seismic shift where you ignored something to the point where it is going to break.
I’ve made so many mistakes in the past it would be silly for me to think I’m not making any now. I have to be. Hopefully I’m just faster at resolving things.
Squarespace experienced a lot of success from advertising on podcasts. The first podcast ad was on This Week In Tech. It was $30,000. That was our whole AdWords budget for a month. We decided to try it. It immediately worked for us. There is a really authentic thing with podcasts. You are supporting a show host. You are supporting the creation of this content.
The core of Squarespace is entrepreneurial success. To help you put the site online that you want. To sell online. To help you be successful.
Full podcast here.
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Subscriptions are a tried and true business model. Subscriptions have been around for a long time.
People used to pay for things they use. This backward world [a world based on advertising and paying with your attention] has only existed for 15 years.
What is infuriating to me is this weird love triangle we have set up. You have a person who makes a thing, a person who consumes a thing, and then an advertiser who gets in between. That is where the revenue is generated. Consumers end up paying with their privacy and their attention. I do not think that is a great business model. It has a lot of downsides.
Is the world you are trying to craft [people paying creators directly] working? Yes. It is working really well. This year we will send over $500 million to creators.
Patreon’s revenue is 5% of the payments. If Patreon pays out $500 million, they would receive $25 million in revenue.
It is not just individuals using Patreon. There are companies like Kinda Funny and Phil DeFranco that have entire teams working together.
For platforms [like Facebook] the customer is the advertisers. They build products for advertisers. The problem of not getting paid enough for your content is a problem for creators. Not advertisers. So it is not a priority to them.
This first version of the web is being funded by attention and privacy. I think the next version of the web is integrated consumer payments. This will drive the next wave of really beautiful production.
Connie Chan on When Advertising Isn’t Enough and Outgrowing Advertising: Multimodal Business Models as a Product Strategy.
There are over 100,000 creators making money on Patreon. There are 3 million patrons. The average monthly payment is $11 to $12. Half of the payments come from people who are subscribing to more than 1 creator.
I started Patreon because I have been a creator for 10 years. I am still creating. Last year I made 100 music videos. I built a following on YouTube. I would get a million views on a video and make a few hundred bucks in ad revenue. I thought there is something wrong here.
I built Patreon for myself. I asked my fans to become a member. Within two weeks of launching I was making $4000 to $5000 a month.
Other creators saw this and started signing up. We didn’t do any sales or marketing at first. It was all organic.
One thing I didn’t know before starting a company is the compounding complexity of scaling a global technology product. The number of systems that need to be maintained and need to scale: human, technical, operations etc is unfathomable.
The word “influencer” is weird to me. It rubs you the wrong way. It commoditizes creators. It strips away anything that is unique and special and different about them. It sells the fact that they can influence people. It sells that influence like a commodity in a marketplace. Almost like you are buying corn.
There are software developers that are using Patreon for subscription payments. Their benefits are new software updates. [The largest creator on Patreon is an example. Global ++ has 64,000 members]. There are physical stores using Patreon to give membership benefits in person.
Full podcast here.
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I have become so convinced that the only thing that my firm has to do is find the smartest, most talented people in the world, and make bets on them as people. We need to trust that they will figure out the right ideas and businesses.
Our greatest differentiator is that we run YC in the way we tell our startups to run. Almost every VC gives advice they never follow themselves. They don’t build differentiated products. They are not network affected businesses. They don’t try to build a community.
You can always scale systems more than you think. But you can never predict where the choke points will be.
I think the most important invention of the industrial revolution was the joint stock corporation. This allowed for large groups of people to coordinate towards a common goal. And aligned their incentives.
I’ve met many people smarter than me, but only a small handful of people that are more curious than me.
One of the most important traits in an entrepreneur is relentless resourcefulness. [Read Relentlessly Resourceful by Paul Graham]
Example of what relentless resourcefulness feels looks like: The thing you are working on is so important to you that you are going to figure out to get it done. Whatever it takes. Whatever you need to learn. Whoever you need to convince. It will get done.
It is important is to be internally driven. Compete with yourself. Don’t compete with other people. If you compete with other people you wind up in this mimetic trap. You play a tournament where if you win, you lose. If you compete to be the best possible person you can, there is no limit to how far that can drive you.
The best book I’ve read last year was The Mind of Napoleon.
I strongly believe that momentum [at all levels of organization: a person, a company, a city, a country] is so important.
People are more convinced by imagery than facts.
One thing that has gone badly wrong in the United States, is we have pursued a policy where housing is an investment, and not a consumption asset. This causes housing prices to grow faster than the rate of inflation. A few decades of this and you get the predictable disaster we are in now. You basically steal the future from young people.
If I could do one thing that would encourage economic opportunity, I would reduce the cost of housing near high quality jobs.
Why does weightlifting correlate with successful founders? It is a proxy for driven people. It is fun to have numbers that go up and to the right.
Internalize that most things in life are not as risky as they seem. Most things are two way doors. You can come back. People may call you an idiot. It doesn’t mean you have to listen to them.
I would encourage people to avoid doing something that somebody else has done. Shoot for something that no one has done yet.
One problem with really smart people is they tend to be mimetic. They all have the same aspirations. They all want to work on the same problems. Find problems no one else is working on.
Why startups are counterintuitive: All the best ideas, when I first heard them, sound bad.
I taught a class at Stanford in 2014. It was called How To Start A Startup. Without Stanford’s permission I put the entire class online. I still get dozens of emails per week from people around the world who watched the videos and learned something new. This taught me that we need to put everything we know about startups out there. We try to open source everything we know.
Full podcast here.
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Steve Jobs: The Lost Interview.
How did you get involved with personal computers? I had the privilege of using a time-sharing terminal at NASA’s Ames Research Center. I was 10 or 11 years old. It was remarkable. You could write a program. The machine would take your idea. It would execute it. You would see instant results. It was an incredibly thrilling experience. I was captivated.
I called Bill Hewlett when I was 12 years old. There was no such thing as an unlisted telephone number back then. I asked him for parts for a frequency counter I was building. He talked to me for 20 minutes. I will never forget that. He gave me the parts and a summer job working at Hewlett-Packard. That made a remarkable influence on me. Hewlett-Packard formed my view of what a company was.
At Hewlett-Packard, I saw the first desktop computer ever made. It was completely self-contained. I fell in love with it.
I met Steve Wozniak around this time. He was the first person I met that knew more about electronics than I did.
Steve and I read about this guy named Captain Crunch. He figured out how to make free telephone calls. We thought it must be a hoax. We started looking through the libraries looking for the secrets that would allow you to do this. We found an AT&T technical journal that laid out the whole thing. It was a moment I will never forget. We set out to make a device that made these calls.
This was important because we were young and we learned that we could build something that could control billions of dollars worth of infrastructure. We were just two people who didn’t know much. We could build a little thing that could control a giant thing. That was an incredible lesson. I don’t think there would have ever been an Apple Computer if it wasn’t for this experience.
Why did you build a personal computer? Necessity. There was free time-sharing computers available. But we needed a terminal. We couldn’t afford a terminal so we built one. The Apple I was an extension of this terminal with a microprocessor added.
How Apple Computer started: We made some printed circuit boards. I walked into a computer shop to see if I could sell our boards. They wanted to buy 50. But they wanted them fully assembled. We had never thought of that before.
I called a bunch of suppliers and convinced them to give us the parts we needed on net 30 days credit. We built the computers and sold 50 of them. Suddenly we were in business.
I realized there was a much bigger market than just hobbyists. For every one hardware hobbyist that could assemble their own computer, there were a thousand people that couldn’t do that but wanted to mess around with software. So my dream for the Apple II was to sell the first real, packaged, personal computer.
You started Apple at 21 years old. How did you learn to run a company? I always asked why people did the things they do. The most common answer is this is the way it is done. Nobody thinks about things very deeply in business. That is what I found.
I call it folklore. In business, a lot of thing are done because they were done yesterday. And the day before. What that means is if you are willing to ask a lot of questions, and think about how to do things, you can learn business pretty fast. It is not the hardest thing in the world. It is not rocket science.
I view computer science as a liberal art.
What is it like to get rich? I was worth $1 million when I was 23. Over $10 million when I was 24. And over $100 million when I was 25. I never did it for the money. The most important thing was the products we were making. I never sold any stock. I really believed the company would do very well over the long term.
I saw the graphical user interface when I visited Xerox Parc. I thought it was the best thing I had ever seen in my life. It was obvious to me that all computers would work like this some day. The inevitability was obvious.
John Sculley came from PepsiCo. They would change their product once every 10 years. If you were a product person you couldn’t change the course of that company very much. So who influenced the success of PepsiCo? The sales and marketing people. They were the ones who ran the company.
It turns out the same thing can happen to technology companies who get monopolies. [Example]: If you were a product person at IBM or Xerox and you make a better printer, so what? When you have monopoly market share the company isn’t any more successful. So the sales and marketing people end up running the companies. The product people get driven out. The companies forget what it means to make great products. The product genius that brought them to that monopolistic position gets rotted out.
They have no conception of the craftsmanship that is required to take a good idea and turn it into a good product. [To understand Apple’s design process I’d recommend reading Creative Selection: Inside Apple's Design Process During the Golden Age of Steve Jobs]📚
People get confused. Companies get confused. When they start getting bigger, they want to replicate their initial success. They think there was some magic in the process that made that success. So they try to institutionalize processes across the company. Before long they get confused and think the process is the content.
After I left John Sculley got a serious disease. It is the disease that thinking a really great idea is 90% of the work. The problem with that is there is a tremendous amount of craftsmanship in between a great idea and a great product.
As you evolve a great idea, it changes and grows. It never comes out as it starts. You learn a lot more as you get into the subtleties of it. You also find there are tremendous tradeoffs you have to make.
Designing a product is keeping 5,000 things in your brain, and fitting them all together in new and different ways to get what you want.
A metaphor for teams working on a product they are passionate about: There was an 80-year-old man that lived on my street. One day he showed me a dusty old rock tumbler. We took regular, old, ugly rocks and some liquid and powder and put them in the tumbler. He said to come back tomorrow. The next day and we opened the can. We took out theses amazingly beautiful, polished rocks. The same common stones that had gone in – through rubbing against each other, creating a little friction, creating a little noise –had come out these beautiful polished rocks. It is through a group of incredibly talented people bumping against each other, working together, they polish each other. They polish the ideas.
The difference between the average and the best in most things is 20% to 30%. In software the difference between average and the best is 50 to 1. Maybe 100 to 1. Very few things in life are like this. I have built a lot of my success off finding these truly gifted people.
Tell us about your departure from Apple: It was very painful. I’m not even sure I want to talk about it. I hired the wrong guy. He destroyed everything I spent ten years working for. Starting with me.
He got on a rocket ship that was about to leave the pad. It left the pad and he got confused and thought he built the rocket ship. Then he changed the trajectory so it would inevitably crash into the ground.
The industry went into a recession. John didn’t know what to do. He had not a clue.
John had an incredible survival instinct. He didn’t get to be the president of PepsiCo without these instincts. John had cultivated a very close relationship with the board.
There were competing visions for the company? It wasn’t so much competing visions for the company because I don’t think John had a vision for the company.
I believed we needed to rein in expenses on the Apple II and that we needed to be spending very heavily in the Macintosh area.
John’s vision was that he should remain the CEO of the company.
I don’t think I was capable of running the entire company at that time.
I was told there was no job for me. It would have been far smarter for Apple to let me work on the next product. I volunteered to start a research division. Give me a few million a year. I will go hire some really great people. They said no.
When I left, Apple had a 10 year lead on everyone else in the industry. We watched Microsoft take 10 years to catch up. Apple has spent close to $5 billion on R&D. What did they get for it? Their differentiation has eroded.
Microsoft has two characteristics. 1)They are very strong opportunists. 2) They just keep on coming.
The problem with Microsoft is they have no taste. They don’t think of original ideas. They don’t bring much culture into their products.
[Example of culture in a product]: Proportionately spaced fonts come from typesetting and beautiful books. That is where one gets the idea. If it wasn’t for the Mac they would never have that in their products.
I have no problem with their success. I have a problem that they make really third rate products. Their products have no spirit to them. They are very pedestrian. They are McDonald’s.
Software is infiltrating everything we do these days. In business, software is one of the most potent competitive weapons. It is becoming an incredible force in this world. Software will be a major enabler in our society.
The web is incredibly exciting because it is the fulfillment of our dream that the computer would ultimately be a device for communication. With the web that is happening. It is exciting because Microsoft doesn’t own it. Therefore there is a tremendous amount of innovation happening. The web will be profound on our society.
About 15% of the goods and services are sold through catalogues and television. All of that is going to go to the web, and more. Billions and billions will be sold on the web.
A way to think about it is it is the ultimate direct to customer distribution channel.
Another way to think about it is the smallest company in the world can look as large as the largest company in the world.
The web will be the defining technology. The defining social moment for computing. I think it will be huge.
What is your passion? What drives you? I read an article that measured the efficiency of locomotion for various species on the planet. The condor won. It was the most efficient. Mankind, the crown of creation, came in with an unimpressive showing about a third of a way down the list. Someone had the brilliance to measure a human on a bicycle. It blew the condor away. This really had an impact on me.
It made me realize humans are tool builders. We build tools that can dramatically amplify our innate human abilities. The personal computer is the bicycle of the mind. I believe that with every bone in my body. Of all the inventions of humans, the computer will rank near, if not at the top. It is the most awesome tool we have ever invented.
How do you know what is the right direction to move in? It comes down to exposing yourself to the best things that humans have done. Then try to bring those things in to what you are doing. Picasso had a saying. Good artists copy. Great artists steal. We have always been shameless about stealing great ideas.
Excerpts of the interview:
Steve Job’s Passion
Good Artists Copy, Great Artists Steal
Steve Jobs on why Xerox failed
The Gaps of Life by Steve Jobs
Success is about creating content not managing process
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Justin Kan was interviewed on this episode of Venture Stories.
I used to think a lot about how other people would describe me. I wanted to optimize for how other people thought about me, and my Wikipedia page. I don’t really care anymore. What you think about me today won’t really matter in 10 years. Or in 50 years. It all just fades away. You probably won’t remember me at all. That’s just life.
I started a bunch of companies most of them failed: Justin.tv, Exec. One of them worked [Twitch] and we sold that to Amazon.
I sold a company for a billion dollars but I’ve got to tell you none of that affected my baseline happiness in a lasting way. No amount of success has delivered that to me. You think it will. But that never works. I wish someone would have told me that 10 years ago. [The book, A Guide To The Good Life: The Ancient Art of Stoic Joy, talks about the difference between natural and unnatural desires. Natural desires, like thirst for water, can be satisfied. Unnatural desires, like luxury items, can not. Seneca uses the example of a friend that becomes wealthy. His house has marble floors and gold. His clothes are royal purple. This fails to make him happy. He just craves more luxury. The desire for luxury is an unnatural desire.]
I started a company called Atrium which is a full stack, tech enabled, law firm for startups. It has been stressful. Ups and downs. Often times it feels like more downs than ups. I thought surely I’ve mastered the game of startups by now. But there is always more to learn. The stress is just as bad as any of the other startups.
I was looking for a way to deal with all this stress. It felt like I was floating in the ocean after a shipwreck. I was looking for a piece of wood to hold onto. I needed a set of practices that would enable me to add a little more calm in my life. Things like meditation. Removing my attachment to outcomes. I now do this regularly and it has been working. [Justin published his Feeling Good program. You can read it here.]
You don’t need to work anymore. Why start another company? I think humans are wired to want to build stuff. To have creative outlets.
A company can be your vehicle for continuous learning. Not just the first few years, but 10 or 20 years in the future. That is the stage I’d like to get to. If you get the chance to run a company for such a long time that is a huge blessing. There are so many things you can learn from that experience. [I think this is the Holy Grail for entrepreneurs.]
Atrium decided to charge subscription pricing because that incentivizes us to figure out how to lower costs. It incentivizes us to improve over time. Compare that to a traditional law firm which uses an hourly billing model. They aren’t incentivized to improve over time. I want to change the incentives for legal work.
There are startups that fail because of bad management. There are startups that succeed and still have bad management. Management is a skill that you learn by doing. Very few people are just naturally good managers.
What Justin looks for in coworkers: people that take ownership and responsibility, low ego, willing to do whatever it takes.
The content marketing strategy for Atrium was taken directly from YC’s playbook. If you are helpful to the entrepreneurship community and share information that is helpful to people, then they will like you.
I used to think there was one way to start a company: Two guys in a room talking to customers and programming something. But there are many different ways to do it. Look at Beats by Dre. Who would have guessed that a rapper and a producer could start a $3 billion company when they entirely outsourced their product? That’s completely the opposite of the YC way. But there are many ways to skin a cat.
The best people are always learning. They have a growth mindset. They are learning about what is the next thing coming. I’m always impressed by the dedication to learning.
When you found a company you will experience struggle, pain. and problems. Some people hit those things and they give up. Other people hit them and get stronger.
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Why did you decide to be an entrepreneur? I really didn’t want to work for other people. I wanted the freedom to make things.
I wanted to justify the time it takes to make something by selling what I make. Example: In high school I wrote nonfiction booklets and sold them through classified ads.
I was looking for ways to own my own time. I tried several different businesses until I finally realized I have this skill that so few people have [programming and marketing]. Why don’t I double down on that?
I didn’t know it at the time but my decision to start writing a blog was the seed for every thing else I did [like MicroConf and my podcast].
I took an unusual approach to entrepreneurship. I noticed there were all these little tools and businesses that weren’t making much money. I’d buy them and apply my tool set [SEO, AdWords, copywriting]. I had a portfolio of these little products. 6 or 8 of them. Together they generated $10,000 to $12,000 a month.
This all started by asking myself: Could I just buy one product that is kind of working, and make it work more? So I can skip all the trial and error.
I didn’t know what to do with my time once I was freed from my job. I just started pouring out more information. I blogged more, podcasted more, and started a conference.
I found a way to find neglected apps [and potential business opportunities]. In 2011, I started searching for top 100 startups of 2006, top 100 startups of 2007 etc. Then I would cold email the founder to see if they want to sell.
Why Rob wrote the book Start Small, Stay Small: I was 5 years into the blog. I had this massive list of questions people would send me about starting a company. I realized I had some knowledge to share. I could write a book answering these questions. I had imposter syndrome, but decided to try anyways. Before writing the book I put up a landing page to gauge interest. Around 600 people gave me their email. I thought I could sell 200 copies at $30 each for a total of $6,000. It took me 2 to 3 months to write. I sold 300 copies the first month. It kept selling a few hundred copies a month. So far I’ve sold 11,000 copies and made about $250,000 from it. It was self published.
Great Ben Franklin quote: Experience keeps a dear school, but fools will learn in no other, and scarce in that. What that means is it is great to learn from your own mistakes. But it is better to learn from other people’s mistakes so you don’t have to make those mistakes yourself.
The thought process to starting Drip: I wanted to know what it was like to run a 7 figure business. I wondered if there was something out there that could be a higher price point [higher than $10 a month], lower churn, and not built on someone else’s platform [Google or Twitter etc]? I built a little email capture widget. That eventually turned into a email service provider like Mailchimp.
How did you validate the idea for Drip? Before writing a line of code I asked 17 founders I knew. I described what Drip would do and the value it would provide. I asked them if they would pay $99 a month for that? 10 of them said yes.
Drip got stuck for a little bit once we got to around $8,000 in monthly revenue. Customers would cancel after a month or two because they thought it was too expensive. When this happens some founders lower the price. Instead I asked the customers [that cancelled] what features would make it worth the price? That’s how I found out about marketing automation. That’s the path we decided to go down.
You sold Drip. You don’t need to work anymore. Why start TinySeed? I wondered why there wasn’t an accelerator for people who want to bootstrap their company. An accelerator that provided enough funding to get to the point where you are sustainable.
TinySeed is the first startup accelerator designed for bootstrappers. It is a remote accelerator that lasts 1 year. Why a year? It takes a long time to grow SAAS apps.
I’m not anti VC funding. I never have been. I’m just anti everyone thinking that is the only way to start a business.
Advice for people thinking about starting a company: Know that it will be harder than you think and start small. You don’t have to stay small but you should start small.
Full episode here
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I knew I wanted to be an entrepreneur since I was 15 years old. Everything I’ve done since then has been to achieve that goal. I’ve started 7 or 8 companies with only one prior success [Rapportive].
To understand Superhuman you have to understand it’s predecessor Rapportive. Rapportive was a plug in for Gmail. It scaled to millions of users. When people emailed you we showed you what they looked like, where they worked, their recent tweets, and links to their social profiles. Two years later we were acquired by LinkedIn.
While I was working at LinkedIn I saw Gmail getting worse every year. It was becoming more cluttered, using more memory, slowing down your machine, etc. [Josh Wolfe’s idea to find opportunities: Ask yourself what sucks?]
So I asked what would Gmail look like if you built it from scratch using today’s technology? We imagined an experience that was blazingly fast, search is instantaneous, every interaction happens in 100 milliseconds or less, an experience that had all the best plugins built in natively, and yet was somehow subtle and minimal.
I liken the job of a founder to making a really heavy flywheel spin faster and faster. When you don’t have capital you have to figure out a way to spin that flywheel. The normal way is to build a great product and get early users that love it. That was the Rapportive story. I single handedly got that product to tens of thousands of users and then used that traction to recruit cofounders, get into Y Combinator, and raise a seed round. When you are starting a company for the 2nd time you can do things in reverse order.
His initial concept for Superhuman was just one picture of Gmail with all the parts he didn’t like inked out in red.
Rahul has an essay on how Superhuman built an engine to find product/market fit. You can read the essay here.
Before launching I was looking for the classical definitions of product market fit. Paul Graham’s definition: You have it when you made something that people want. Sam Altman’s definition: It is when users spontaneously tell other users to use your product.
Marc Andreessen’s definition: You know it when customers are buying your product just as fast as you can make it. Usage is growing just as fast as you can add servers. Money is piling up in your checking account. You are hiring sales and support as fast as you can. [Founders Podcast #50 is about the ideas in Marc Andreessen’s blog archive. You can listen here.]
I realized we weren’t there yet. So I wondered could you measure product market fit? If you can measure it, you could optimize for it. It turns out you can. I just needed the right metric.
The leading indicator for product market fit is asking your users how they would feel if you could no longer use the product.
The companies that struggle to grow get less than 40% of their users to say they’d be very disappointed. So if 40% or more of your users would be very disappointed without your product, then you have initial product/market fit. I had laser focus on that metric.
You should understand who the people are that love your product. To do this we used The High Expectation Customer Framework created by Julie Supan. You can describe the framework this way: The highest expectation customer is the most discerning person within your target demographic. They will enjoy your product for its greatest benefit. They will spread the word. Others will inspire to emulate them because they seem clever and insightful.
We are intense fans of customer feedback. We’ve implemented one of the more sophisticated feedback triage systems that I’ve seen. We have tens of thousands of pieces of feedback that are logged against the feature and the person [who they are and what they are asking for]. We use Airtable.🛠
When we survey our customers we ask them what is the main reason you love the product. I take these responses and throw them into a word cloud. When you do that the reason people love your product will be staring you in the face.
I think you should stop pushing for premature growth before product/market fit. This ends in disaster. The pressure for premature growth is all too common. Use my suggested iterative process before focusing on growth.
Our approach to onboarding new customers is considered to be crazy. First they have to take a survey that prequalifies them. It lets us know if they are likely to be a happy user of superhuman. They have to preauthorize a credit card. This shows us they have an email problem and they are willing to pay for a great solution. Then we spend 30 to 60 minutes over a Zoom call.
The magic of this onboarding method is we are able to filter out the people who don’t really have an email problem. We can really focus on delivering the best possible service and personalized insights to each new user.
Book recommendation: The Art of Game Design by Jesse Schell. I would strongly suggest any product designer study game design. Our passion about this area gives us a significant advantage.
Full episode here.
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Knotch is a full blown analytics and data company that is surveying the largest brands in the world.
From their website: Knotch is the independent content intelligence platform that helps CMOs and their teams measure and impact the outcome of their content efforts via real-time, actionable intelligence across all of their content investment.
Content is a better way to connect with your audience. TV ads, outdoor ads, banner ads etc have been proven to be ineffective. Content has become an interesting value exchange between a brand and its audience.
B2B is a great fit for me. I have always enjoyed thinking about the strategy of business. I am able to sit down with our customers, get feedback, and understand them. This helps me know the products we need to build to address their needs.
What is the difference in running the company in New York as compared to when you were in Silicon Valley? When we were in Silicon Valley we were in an echo chamber of buzz words.
What problem are you trying to solve? The human incentives around the marketing ecosystem have been flawed for a long time. You assume data flow is perfect. It’s not. All of the reporting is being done by the distribution channel [Facebook, Snapchat, a media company etc]. This is like you being able to grade your own homework. This is completely crazy.
We asked brands if they would rather have their own collection tagging across all of their advertising [so you can verify the data you are getting back are accurate]. They said, “Yes but they won’t let us.” I told them you are the ones spending the money! You should ask for it.
So that is what we’ve been doing: creating visibility and transparency across all these different channels brands are doing content advertising with.
Content is the fastest growing category in advertising.
We have been extremely disciplined about not doing trials. Everything we sign is a 12 month contract, at least. It is enterprise software. You pay a flat fee. Because of this we never have the issue of the fluctuating, unpredictable revenue traditional ad tech companies experience. [Anda thinks of Knotch as a marketing tech company]
Do you use an ad blocker? The majority of people do. Content is the future of advertising.
My big vision [transparency] is to use our product as an empowering mechanism for consumers to have more control over what data gets shared with brands and what happens with that data. More legislation around privacy and data collection would need to happen before brands would want to do this. I think more legislation is inevitable. GDPR is just the first iteration. I think California will have their own version. This will continue around the world.
Brands are becoming aware of the downsides of having your entire marketing strategy on a channel that actually owns your audience [Facebook and Amazon] and gives you no data. There is going to be more investment into your owned and operated properties [website, mailing list etc].
Full episode
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Ben Clymer is the founder of Hodinkee. He was interviewed on The Digiday Podcast Hodinkee’s Ben Clymer: Flipping from advertising to commerce revenue is difficult.
Hodinkee began as my personal blog about watches. It began out of a love for these mechanical objects, a love of writing, and a love for the internet.
It quickly evolved into creating original storytelling. Original videography, original photography, and really strong writing.
This was in 2010. I was a graduate student in journalism. My professors were curious how I could pay my rent in SoHo from a blog about watches.
What I realized is we hit on something that hadn’t been touched before: An approachable vehicle to explain this world of high luxury to men. Most luxury publications are focused on women.
I never intended to turn this into a business. I wanted to be a journalist. Hodinkee got me into journalism graduate school. While I was in graduate school Hodinkee really took off.
After some initial success [Time named Hodinkee one of the 50 best websites in the world] we launched an e-commerce platform [built on shopify]. We designed some straps for vintage Rolex’s and Omega’s etc...We sold out instantly. In just a few hours.
Now we do limited edition watches. We collaborate with high end watch makers to design products that say Hodinkee on the back. They are sold exclusively through us. We take a margin just like any other retailer.
One of the greatest things that ever happened to me was what I didn’t know. When I started Hodinkee I didn’t know what a publicist was. I didn’t know what a marketing person was. I didn’t know anything about the media’s relationship with industry. If I did I would have reached out and asked what they wanted me to cover. I was writing about the stuff that I was interested in. As an enthusiast. This is what ultimately differentiated us. [Innovation usually comes from industry outsiders. Listen to Founders #61 for an example of this.]
High end watches are a champagne and caviar world. That’s not me. You can appreciate watches, like I do, in a way that has nothing to do with cost.
Hodinkee started out as a media brand. Now we view Hodinkee as a consumer brand that does media. We sell 25,000 straps a year. We sell a few thousand watches a year.
We have an anti-hypebeast model. Hodinkee is about quality made products that are made to last. Things that have a design ethos that is not trend specific. This is about lasting design. Something that will look great years down the road.
You were bootstrapped for a long time. Now you raised money. Why? I was anti venture capital for a long time because I didn’t want to build a big business. I wanted to build a wonderful business for me. Kevin Rose and Tony Faddel convinced me to take some money and build this together. All of our investors are fans. That’s the difference for us.
We must stay focused. We are a watch publication.We have no plans to make content for any other products. It is tempting for your own vanity to say I could do this again in cars, or architecture etc. We have a wonderful opportunity ahead of us in watches [$20 billion a year industry]. It would be foolish to take our foot off the gas and go into other domains.
We don’t want to be the biggest anything. We just want to be the most influential.
We have an audience, not just traffic. We have a real community. We’ll say, “Hey come to this bar tomorrow at 6pm just to hang out and talk.” A thousand people will show up. They are excited to come b**t about watches with other watch people.
Hodinkee’s storytelling moves a lot of product. We made 36 watches at $45,000 a piece. We sold them out in 20 minutes. We had 400 people on the waiting list after. The only promotion of that watch was one blog post on our site. We are creating the demand and we are fulfilling the demand.
Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast.
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