Notes from the TED Dinner Party

Thanks to my gracious hosts at Woodside Capital Partners, I was able to catch tonight's "Dinner Party" session of TED. I was looking forward to Jonathan Haidt's presentation, and he did not disappoint. Here are my notes from the event:

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Guests: Seth Godin, Stewart Brand, Sir Ken Robinson (a very funny and insightful guy)

Steven Pinker, Rebecca Newberger Goldstein

• The Debate on Reason
• Reason vs. Character & Conscience
• Reason + Self-Interest + Sociality = Morality
• We seem to be getting more humane
• Centuries ago, people burned cats alive for entertainment, kept slaves, and executed people for petty crimes
• Why did this occur?
• Our circle of empathy expanded (communications, transportation)
• Thinkers used reason to change the perception of what was and wasn't acceptable
• Contradictions bother us
• Reasoned arguments can, over time, change how people feel
• E.g. The Constitution's ban on "cruel and unusual punishments" stems from a pamphlet by Italian jurist Cesare Beccaria
• Eventually, things just "feel wrong," and the reasoned arguments are forgotten
• Even in cases where emotional appeals helped to change the world (c.f. "Uncle Tom's Cabin"), the intellectual underpinnings came from prior thinkers like John Locke
• What are things that future ages will look back on as backwards and unthinkable?
• The debate drifts. Today's gay marriage opponents would be considered leftist 40 years ago, because they accept that homosexuality is not a crime
• Slavery is illegal everywhere, but was legal in Saudi Arabia up to 1962 (on the other hand, there are more slaves today than at any other time in history...though the proportion of people living in slavery is at an all time low)

Julie Burstein

• Author of Spark
  
• Raku as a metaphor for the process of creativity
• The tension between what you can control and what you have to let go
• There are 4 aspects we must embrace to achieve creativity
• 1) Pay attention to the world around you...and be open to the experience that might change you
• 2) Embrace the challenging parts of your life
• Richard Ford credits his dyslexia for giving him a greater appreciation for language
• 3) Push up against the limits of what you can (and can't) do
• Richard Serra wanted to be a painter, but after seeing Las Meninas by Velazquez, he threw away his paints and began to explore. Eventually he became a sculptor.
• 4) Embrace loss.
• Joel Meyerowitz, after having photographed New York for years, returned to the city after 9/11, and decided to make a record of what had happened
• He photographed at the 9/11 site for 9 months
• "Nature, as time, was closing the wound. Time is unstoppable."
• Artists don't talk about their art, they talk about their work.
• SG: "Innovation is repeated failure until you get something that works."

Atul Gawande

• "How do I get good at what I'm trying to do?"
• Skills
• The cause of the healthcare crisis is the complexity of science
• 1937 (pre-penicillin): Medicine was cheap and ineffective
• The main benefits were warmth and care; doctors and medicine made no difference
• Doctors would frantically run tests to see if a patient had one of the few problems that they could treat
• A doctor could know it all and do it all--a life as a craftsman. Autonomy was the highest value
• Today: Medicine is expensive and effective
• We have treatments for almost every condition
• 4,000 medical and surgical procedures
• 6,000 prescription drugs
• We can't know it all or do it all by ourselves
• 1970: A hospital visit required 2 clinicians
• By 2000: 15 clinicians
• "We're all specialists now."
• "We trained and hired cowboys, when we need pit crews for our patients."
• There's little sense that all these amazing components come together
• The most expensive care isn't the best care; the best care often turns out to be the least expensive
• The healthcare institutions that look most like systems perform the best. Having great components isn't enough.
• Skills of a System
• 1) The ability to recognize success and failure
• This depends on the data
• E.g. In Cedar Rapids, a population of 300,000 had undergone 52,000 CT scans that year
• 2) The ability to devise solutions for failures
• We looked at what other high-risk industries (skyscraper construction, airplane manufacturing) do that medicine does not...they had checklists
• Pause points: Catch a problem before it's a danger
• A flight checklist isn't a recipe on how to fly a plane; it's a list of things that tend to get forgotten
• We created a 19 item, 2 minute checklist
• E.g. Make sure everyone introduced themselves to each other at the beginning of the day
• Implemented in 8 hospitals around the world
• In every hospital, complications fell 35%, death rates fell 47%
• 3) The ability to implement solutions (and convince others to do the same)
• New values: Humility, discipline, teamwork (vs. independence, self-sufficiency, autonomy)
• As it turns out, real cowboys now use wireless communications and have checklists
• In every field, knowledge has exploded, complexity has increased, and we need systems.
• Technology isn't the solution to complexity; technology has to fit into the system

Jonathan Haidt

• Self-transcendence is a basic part of being human
• The mind is like a house with many rooms. But sometimes, a doorway appears, and we climb a staircase and experience a state of altered consciousness
• Uplifted, elevated: Better, nobler, and somehow uplifted
• People become loving and forgiving
• Means of self-transcendence
• Song
• Dance
• Drugs
• Nature
• War
• "Nothing brings people together like war."
• The Warriors: Reflections of Men In Battle
  
• "I may fall, but I do not die. What was in me goes forward and lives on in the comrades for whom I gave my life."
• Durkheim wrote about the division of life into two realms: the sacred and the profane ("homo duplex")
• Durkheim believed that the function of religion was to unite people
• Intense collective emotions
• VE-Day: Joy
• Tahrir Square: Anger
• 9/11: Grief
• Is the staircase a feature of evolutionary design? Or a bug?
• Darwin noted that many of our characteristics are useless to us, but useful to the larger group
• "Selfish and contentious people will not cohere, and without coherence, nothing can be effected."
• Group, or multi-level selection
• Within a crew team, the individual rowers are in competition
• The same competition is going on across boats...they have to cooperate because they're all in the same boat
• The main argument against group selection has always been the free-rider argument
• Without other mechanisms, exploiters will dominate cooperators
• Nature has solved this problem many times
• By putting everyone in the same boat...a superorganism of cooperative components can outcompete a selfish unicellular creature
• When wasps began to live in hives, they were forced to cooperate with hivemates...or be outcompeted by other hives
• Human beings formed tribes (though they are not nearly as cohesive as beehives)
• We evolved to be religious--to seek out sacredness
• Modern secular society evolved to serve the profane...we want to find a staircase, and seek something noble to do at the top
• Most people long to overcome pettiness and become part of something bigger
• Haidt: This area of research has been overlooked because academic are repelled by tribalism and religion
• Haidt: This got us into civilization, but civilization has been bloody--we've become less violent thanks to institutions

San Francisco vs. Palo Alto vs. South Bay

A history lesson on startup geography, inspired by this post by Michael Arrington:

The South Bay / Peninsula / San Francisco tango is a long tradition in the tech industry. Silicon Valley famously started in downton Palo Alto, with the famed HP garage (which I've walked past many times).

During the chip-dominated era (there's a reason we call it Silicon Valley), the South Bay reigned supreme. Intel, Cisco, and their brethren all hang out in the South Bay.

Once software became a bigger deal, Palo Alto and its proximity to Stanford (along with virtual suburbs Mountain View and Menlo Park) took over as the place for startups to get their start. Think everyone from Google to Facebook.

Yet during the dot com boom, San Francisco had its share of adherents, especially among media companies, which thrive on young creatives that don't need to worry about raising kids.

It certainly seems like San Francisco is the center of things these days--every company founded by twentysomethings seem to want to move to the city, but that's a reflection of the number of consumer/youth-oriented companies being started. I haven't heard of any chip manufacturers relocating their fabs to the Marina. And the current flavor of the month, Pinterest, is firmly ensconced in, where else, Palo Alto.

In the end, there are people who like and hate San Francisco, just as there are people who like and hate Palo Alto. And then there are the people who need the cheap land in the South Bay.

Passion Turns Failure Into Success (Lessons from 11 years of Blogging)

A couple of weeks ago, I ran across this post from Jason Cohen. In it, Jason uses a series of excellent graphs to demonstrate one of the uncomfortable facts about entrepreneurship:

Success feels like failure until it feels like success.

Here's how Jason put it:

"What was going on during those first six months? Was the future bright and shiny even when there was no impressive customer curve? When half the customers were just personal favors called in and new signups didn’t happen daily?

Or was it barely-controlled chaos, not able to sleep at 2:43am for worry about how to make payroll in seven months or whether the numbers would look good enough by next spring to raise another round? Unsure which products to double-down on and which to kill, and worried the wrong choice would tank the entire company? Staying bright and cheery on the outside for the press, customers, and even employees but with Damocles’ Sword hanging overhead?"

I've worked on companies that failed, and I've worked on companies that succeeded (as in IPO succeeded). I've never had the good fortune to work on a company which felt like an immediate and continual success. I suspect that no one has. Google nearly went under several times. Mark Zuckerberg just wanted to sell off Facebook so that he could focus on his idea for a file-sharing network.

The closest I came was probably with Ustream, where usage surged upward month after month, and even there, the growth was extremely lumpy, depended an awful lot on random dumb luck (who knew people would go nuts over a puppy cam?), and in the back of my mind, I kept wondering, "How the heck are we going to pay for all this bandwidth?"

That's where passion comes in.

Following your passion doesn't guarantee success. But if you're following your passion, you're far more likely to persevere through what Seth Godin called "The Dip."

Only passion can keep you going through when feels like months of failure. Take this blog for example. I've been blogging since 2001. When I started, I was an unknown failed entrepreneur (if you don't believe me, read my first blog post), blogging was the province of a limited number of crackpots, and there was no conceivable reason to believe that my writing would help my stalled career.

Exactly 11 years later (my first post was on 2/20/2001), I'm no household name, but I've achieved a modicum of success, most of which I can attribute to my blogging (both here and in guest posts in places like TechCrunch, Mashable, and Venturebeat). And the only reason I persisted through 11 years and 1,460 posts is the passion I have for writing and expressing myself.

In one sense, it's hard to calculate an ROI on the time I've spent blogging (since I average about 30 minutes per post, that's 750 hours I've invested--$375,000 at a $500/hour billing rate). On the other hand, the value it's brought me is priceless, both personally and professionally.

I couldn't have known that when I started. In fact, it took 20 blog posts before I even got my first comment! The only thing that kept me going was my love of writing.

The beauty of passion is that it keeps you going, even when you expect no reward for your effort. That persistence is what allows you to push past the feeling of failure and reach success.

The Myth of the Celebrity Entrepreneur

A couple of days ago, I ran across a blog post asking how unknowns could compete with celebrity entrepreneurs. It's a common question, and becoming more relevant as the expansion of the startup ecosystem (including trade press like TechCrunch and Mashable, who act as our version of paparazzi) and the relative paucity of IPOs in comparison to acquisitions has generated a surge in the ranks of serial entrepreneurs.

In his post, Justin Krause relates how he and a neighbor built and launched virtual message board SkyChalk, only to see it fizzle out. Then he notes that Caterina Fake's latest startup, Pinwheel, is doing the same thing, and with a slightly envious tone, concludes that "connections and money may be more important than the product itself."

To put in bluntly, this is balderdash.

Yes, celebrity entrepreneurs have a major advantage when all other factors are equal. But all other factors are seldom equal.

Take Silicon Valley's three most valuable companies: Apple, Cisco, and Google. All three were founded by unknown, first-time entrepreneurs. Even the current crop of hot companies fails to demonstrate the dominance of celebrity entrepreneurs. While there are a number of successful serial entrepreneurs like Zynga's Mark Pincus, the single biggest hit is Facebook, whose founder Mark Zuckerberg was an unknown college dropout.

In some ways, unknown entrepreneurs have an advantage. Their efforts aren't subject to unrealistically high expectations (e.g. Color), and have time to build momentum. (Small comfort, I know, when you're an unknown entrepreneur desperate for anyone to pay attention, but an advantage nonetheless)

Another advantage is that a lack of resources forces you to attack opportunities that others overlook. When you have overwhelming advantages in terms of being able to raise money and generate press, the temptation is to attack known markets where you feel certain of a good payoff. Yet the most valuable companies result from disruptive innovations that create new markets.

Of course we'd all rather be celebrity entrepreneurs than unknown guys in coffeeshops. It's a lot more comfortable to start a company when all that's at stake is your reputation, and not your life's savings. But if you are an unknown guy or gal in a coffeeshop, your best strategy isn't to lament your fate--it's to find an opportunity that the celebrity entrepreneurs have overlooked.

By the way, that's exactly how those celebrity entrepreneurs achieved their initial success. Each of them started off as an unknown guy or gal in a coffeeshop, including Caterina Fake (who was certainly not appearing on the cover of Newsweek when she was an Art Director for Salon).

Reverse Demo Day (Thursday, February 23)

By now the rituals of Demo Day are familiar. The opportunities are great both for startups to tell their story, and for investors to see a lot of deals in a very short time. So why wouldn't the reverse be true?

Introducing the Valley's first Reverse Demo Day, where the investors sell themselves to entrepreneurs. Inspired by Betaworks' and AOL's New York VC Demo Day, I'm working with Orrick’s TOTAL ACCESS program to hold a Reverse Demo Day.

This event puts angel investors on stage and gives them up to five minutes to deliver their elevator pitch to entrepreneurs. (The succinct can take less time if they wish)

For startups, it's the perfect opportunity to get a better sense of some of the names you always see on AngelList. Remember, you can fire employees, but you can't fire your investors.

If you're an angel investor and want to be one of the speaker, please see below for details.

Date: Thursday, February 23, 2012
Time: 9:00 am – 11:00 am (registration starts at 8 AM)
Location: Orrick’s Silicon Valley Office (1100 Marsh Road, Menlo Park, CA)

>>Register to attend<<

Are you an accredited investor who'd like to present? Please email Joyce Chuang at jchuang@orrick.com and include your AngelList profile.

If you have any questions regarding the event, please feel free to contact Chad Lynch at clynch@orrick.com.

Big thanks to Jeff Clavier and Dave McClure who stepped up and volunteered to anchor the event!

P.S. Like this concept? Upvote it on HackerNews.

Jeremy Lin, Women in VC, and the Bigotry of Pattern Matching

Jeremy Lin is the talk of the NBA. Sportswriters everywhere are busy cranking out column inches on what people have called the ultimate Cinderella story: The emergence of an Asian-American Harvard graduate, seemingly from nowhere, as one of the NBA's biggest stars.

On February 3, Jeremy Lin was the Knicks' third-string point guard. Less than two weeks later, after leading the Knicks to six straight wins, including two consecutive games in which he scored the winning points, Sports Illustrated announced that they would put him on the cover of the February 20 issue with the caption, "Against All Odds."

Yet one group wasn't surprised by Lin's success. A new breed of basketball statheads (the hoop equivalent of the SABRmetricians popularized in "Moneyball") had predicted Lin's success from the start.

Prior to the 2010 draft (where all 30 NBA teams passed on Lin) their analysis ranked Lin #10 out of all players, and #1 among undrafted players. This analysis is purely statistical; the models don't consider height, vertical leap, foot speed, and perhaps most importantly, skin color. They simply look at statistical contributions made during basketball games.

Statistical analysis continued to rate Lin highly on his rookie season. He produced .157 wins per 48 minutes played, or more than 50% better than the average player, who produces .100 wins per 48 minutes played. (Incidentally, Carmelo Anthony produced .140 wins per 48 minutes played that season).

He also shone in the NBA's Developmental League (a minor league of basketball), where he produced at a .211 clip.

In other words, when you looked at pure production, Lin was a top prospect. His rise only seems unlikely when you consider non-basketball factors, like his race or educational institution.

Trendy sports blog Deadspin tweaked the madness best, titling a February 7 blog post, "Asian Harvard Grad Somehow Succeeding In New York."

It's a funny one-liner, but it underscores a more serious issue.

Lin's high school coach noted that his star player wasn't recruited by any colleges, despite leading underdog Palo Alto High to the California state title. He also noted that the following year, a number of scouts came to games to watch another of his players who wasn't as good, but was African-American.

Stereotyping has legitimate purposes. If you knew that Harvard University had produced twice as many presidents (8) as NBA players (4), you would be right to guess that any generic Harvard basketball player would be unlikely to make the NBA. But stereotyping only makes sense in the absence of better data.

In the case of Jeremy Lin, publicly available statistics proclaimed his value, but scouts preferred believing in stereotypes to trusting in data.

Sadly, this kind of bigotry isn't limited to the world of sports. Even here in Silicon Valley, where we like to think of ourselves as a meritocracy, we practice a particularly pernicious form of stereotyping on a daily basis.

Investors love to talk about "pattern matching." A common expression is, "I've seen this movie before." There's a reason why entrepreneurs constantly pitch themselves as "the AirBnB of ice skating" or "the iPhone of Valentine's Day cards" (hmmm, that actually doesn't sound so bad....).

This made sense in the absence of better data. When investors had to make decisions based on a PowerPoint deck and some rough prototypes, falling back on stereotypes was a good strategy. Indeed, I like to describe the default investing strategy of Silicon Valley as "invest in charismatic 20something Computer Science graduates from Stanford, MIT, and CMU (with Berkeley, UIUC, and Harvard as fallbacks), as long as they're male and either Caucasian or Asian."

In today's world, with the ability to judge entrepreneurs based on a vast amount of publicly available data, ranging from social media to GitHub, with the ability to launch MVPs and generate tangible engagement and conversion statistics without raising money from investors, we now have the better data we need to make stereotyping AKA "pattern matching" AKA bigotry obsolete.

But old habits die hard. Just in the last few months, we saw a CNN special on black entrepreneurs in Silicon Valley. Whether or not you feel that CNN used ambush tactics to help stir up controversy, the fact is that African-Americans make up only 1% of venture-backed entrepreneurs nationwide. And just last month, Whitney Hess conducted an analysis of top venture capital firms that showed that the most gender-balanced firm was Kleiner Perkins at 23% female, while the majority of those firms had zero female investors.

Discussing such topics makes people in Silicon Valley uncomfortable. Few of us like to think of ourselves as racist or sexist. Yet I know of many entrepreneurs who feel that they are overlooked because of their skin color, gender, age or simply because they didn't go to the right schools.

Jeremy Lin has been called the Asian Tim Tebow (or is it that Tim Tebow is the white Jeremy Lin?); we need to extend the lessons of Jeremy Lin beyond sports to the startup world. Decisions need to be based on performance on the field of play, not race, gender, age, or education.

And for those who are the first to recognize "pattern matching" for what it is, the rewards can be great. How many of those other 29 NBA teams could use Jeremy Lin on their team right now?

UPDATE: #Linsanity continues. Jeremy Lin had 10 points and 13 assists in 26 minutes of play during a blowout win over the Sacramento Kings. 7 wins in a row.

UPDATE: Looks like this post struck a nerve. Head on over to Hacker News and upvote, please.

UPDATE: The news gets worse for NBA GMs. Pre-draft tests show that Lin is actually faster than NBA MVP Derrick Rose, as well as #1 picks John Wall and Kyrie Irving. Incidentally, Lin's Knicks beat Irving's Cavs last night. Lin had 19 points, 13 assists, and perhaps most importantly, only one turnover.

What Intelligence Tests Miss (is Wisdom)

When I ran across this passage from Keith E. Stanovich's book, "What Intelligence Tests Miss", I came to a full stop. Here are the mental dispositions he states as contributing to real world performance:

"The tendency to collect information before making up one's mind, the tendency to seek various points of view before coming to a conclusion, the disposition to think extensively about a problem before responding, the tendency to calibrate the degree of strength of one's opinions to the degree of evidence available, the tendency to think of future consequences before taking action, the tendency to explicitly weigh pluses and minuses of a situation before making a decision, and the tendency to seek nuance and avoid absolutism."

Here in the Valley, and in the world at large, we celebrate boldness, risk-taking, and certainty.

We have aphorisms like, "Fortune favors the bold," and famous quotes like, "Damn the torpedoes, full speed ahead!"

Yet according to Stanovich, the tendency to seek nuance and avoid absolutism is the key to success. (Clearly, he's never run for President!)

What struck me is how well his quote describes my current mental processes...and how poorly they describe my personality when I was a brash young prodigy.

If I were to sum up Stanovich's preferred mental dispositions in a single world, I would choose Wisdom.

Thank You For Your Support!

I spent the morning in the much-hated city of San Francisco, cycling for a good cause.

Thanks in part to your support, I raised an even $2,000 (or 4 times my original commitment of $500), and contributed to a record $6.1 million raised this year for cancer research.

Here's a picture of my cycling team. We're looking forward to making 2013 even more successful!

(Left to Right: Jeff Kutash, Purnima Kochikar, Christa Sober Quarles, Catherine Trible Holtan, Roni Grossman, Yours Truly)

Sleep Deprivation = Drunkenness

I read this doozy of a paragraph in a story in Inc on "Sleep & Productivity":

"Lose just one night's sleep and your cognitive capacity is roughly the same as being over the alcohol limit. Yet we regularly hail as heroes the executives who take the red eye, jump into a rental car, and zoom down the highway to the next meeting. Would we, I wonder, be so impressed if they arrived drunk?"

Note the perfect use of the jarring juxtaposition. It's a master stroke, much like Seth Godin calling for "global warming" to be renamed "climate cancer."

Needless to say, I'm a big champion of sleep. And since I'm still sick with a cold, I took a 12-minute nap on my famed afternoon sleeping cot earlier this afternoon!

Branding -> Accomplishment -> Ability

This blog post began as a comment on Ma.tt's blog. You may want to read his post first for maximum impact.

The shift away from traditional credentials like degrees, honors, and past accomplishments has been gradual.

In the ancient days, people focused on brands on resumes--which school did you attend? Which companies did you work for?

When I was at D. E. Shaw in the 90s, we had a specific list of 25 CS departments we were allowed to recruit from. Resumes from other schools were automatically filtered out.

The shift to accomplishments was actually progress--rather than relying on brands, we actually cared what people had done. But this was still somewhat unreliable because of the major role luck plays in success.

YC's accomplishment in hiring Aaron Iba and Garry Tan is to focus on ability, independent of resume brands or the magnitude of accomplishments. EtherPad was a great product (disclosure, I was an investor) even though Google shut it down after the acquisition. Posterous is a great product, even though its traffic and traction are overshadowed by Tumblr.

I also think that YC is very smart to focus on design and coding for its hires. As an accelerator/seed firm, YC deals with very early stage startups. I often tell founders that until they have a great product, outbound sales and marketing are a waste of time.

But I also want to be fair to the many traditional VCs who do a good job. As a company grows beyond the YC stage, considerations like sales, marketing, operations, and people management become increasingly important.

Many of these are issues that can only be dealt with based on experience, rather than on what one reads in Hacker News. As you grow, traditional VCs and other grey hairs can actually help (though they don't always do so).

UPDATE: One thing I just realized is that this transition isn't universal. When I meet people outside Silicon Valley, they still seem inordinately impressed by my degrees. It will be interesting to watch whether this ethos spreads to the wider world.