Friday, August 16, 2013

Life is Fragile; Don't Postpone It

People in Silicon Valley are unusually likely to believe themselves immortal.  Literally.  Whether it's cryogenic preservation or the uploading of consciousness, we go so far as to deny death's inexorability--at least for us.

I'm sympathetic, since I'm terrified of death--my children all know that my fond wish is to be put into a robot body when I grow old.  But denying death keeps us from living the lives we might wish, thinking that there's always more time.  "After my liquidity event," is an all too common phrase.

Recently, I was struck by two news stories that hammered home the fragility of life.  First, Ilya Segalovich, the co-founder of Yandex, died of cancer at age 48:

Then, I saw that Sam Simon, 58, winner of 9 Emmy awards and the co-creator of "The Simpsons," was dying of colon cancer, and had pledged his TV fortune to good causes:

These are/were two eloquent, brilliant, generous, well-liked men, who might have had decades more to do great things.

The same year he founded Yandex, Segalovich founded a charity to help orphans. "I would like some kind of miracle, a magic time wand, and for all orphans to be taken into families. For this invention I would pay any amount of money," he said.

"The truth is, I have more money than I'm interested in spending," Simon told The Hollywood Reporter. "Everyone in my family is taken care of. And I enjoy this."

Entrepreneurs are all about the future.  They have a vision they're willing to sacrifice to achieve.  But I want you to remember that no amount of success, fame, wealth, or good works can immunize you against tragedy.  You can't always count on the long-term.

Build your company, but don't postpone your life.

Crappy Product + Great Market = Success

Many people in Silicon Valley, including me, advise entrepreneurs to build insanely great products.  But every once in a while, it's a good idea to remind yourself that at the very beginning of your startup, you should focus more on finding a great market...for which you can then build an insanely great product.

The founders of Ooomf wrote a fantastic post about how the very first version of their product was a WuFoo form and a MailChimp mailing list:

"We manually contacted the best developers/designers we knew, with the promise of delivering a stream of high quality, paid projects. If they didn’t like the work, they could unsubscribe.

We then asked our original ooomf members what development or design help they needed with their current mobile projects.

Rather than creating a fully featured marketplace with portfolios, ratings, or even accounts, we used a Wufoo form to accept projects and a Mailchimp email newsletter to send the projects out. The first week, we signed up 200 developers and designers and ran $15k worth of projects through our system. The average project budget was $2k and each one matched within 72 hours."

I love this story.  In their first week, they were able to create $15,000 of transactions.  How many startups take more than a year to create $15,000 of value?

From there, they iterated, step-by-step, until they had built a real product.  But the key is that they always had a real business, and they were able to validate it using two free web services and a single web page.

Ooomf's first product was, to be frank, crappy.  The fact that they succeeded regardless showed them that they had found a great market.  A great market is one where the need is so great and the value so obvious that even a crappy product finds traction.

Before you build your insanely great product, find your great market.

The Crucible of Reality

I was talking history with my old friend Alvin Fu when we both realized that there seemed to be a consistent pattern with some important implications for the startup world

Our conversation began with a discussion of Ulysses S. Grant, the great Civil War General and two-term President:

When the Civil War began, Grant was a miserable failure, working in his father's tannery after being forced to resign from the Army for excessive drinking.  Three years later, he was the highest-ranking military officer in the United States, and in overall command of all the Union armies.

Two things stand out about Grant's meteoric rise.  First, Grant was an outsider who had to lobby like mad simply to get back into the regular Army.  And second, his rapid advance came about for one simple reason: he won battles.

The story of Ulysses S. Grant illustrates what Alvin and I dubbed "the crucible of reality."  During desperate times, nations (and companies) don't have the luxury of considering anything other than what offers the best chance of survival.

Another example is General Curtis LeMay, the father of the Strategic Air Command:

LeMay grew up in poverty, constantly moving because his father couldn't hold a job for more than a few months at a time.  In 1940, he was a young 1st Lieutenant in the Army Air Force.  By 1951, he became the second-youngest 4-star general in American history, trailing only...Ulysses S. Grant.

This advancement came despite LeMay's lack of social or political skill.  Robert McNamara (no stranger to bluntness himself) said of LeMay, "He was the finest combat commander of any service I came across in war. But he was extraordinarily belligerent, many thought brutal."

When Air Force Chief of Staff Hoyt Vandenberg was considering candidates to lead the Strategic Air Command, one of his aides recommended LeMay.  Vandenberg was reluctant to promote the combative LeMay, but was persuaded when the aide asked, "If war started tomorrow, who would you want in command?"

A similar pattern plays out in the startup world.  In "wartime," when a startup's very existence is at stake, the choice is simple: Pick whomever will give you the best chance at survival.  There's no time for infighting or political appointments.  But in "peacetime," e.g. when a startup has established itself and is minting money, leaders stop focusing as much on performance, and start considering other factors.  The result is all too familiar--bloat, drift, and indecision.

As an entrepreneur, you need to realize that you're caught in the crucible of reality.  It's wartime, not peacetime, and you need to do what it takes to win.  Tradition and comfort are luxuries you can't afford.

The plus side is that those startups and leaders who are able to deliver results from within the crucible can rise more rapidly than during sleepier times.

Monday, August 12, 2013

"The Blip", False Patterns, And How Startups Are The Future of Work

I spend a lot of time thinking about the future--both mine, and that of the world as a whole--and one of the things that has been on my mind is the need for us to do things differently.

A recent longform piece in New York focused on the theory that the seeming inexorable economic progress we've experienced from the industrial revolution through the 1960s was an anomaly rather than the new normal...a blip in the history of man:

I often make a similar argument when discussing macro policy.  My thesis is that the great American post-WW2 expansion was a historical anomaly, consisting of export- and consumption-driven growth in a temporarily uncompetitive global economy.  My conclusion is that the large number of medium-skill, high-wage, middle-class blue collar jobs were a temporary phenomenon.

Human beings are pattern-matchers; if we see two points, we can't help but draw a line between them and conclude there's a trend.  Yet I would argue that both sides--both the people who, like Barbara Eherenreich, mourn the workers' paradise lost of the post-WW2 era, and the catastrophists of "The Blip" who believe the age of growth is over--are seeing false patterns.  They look at the data and draw their conclusions without trying to understand the reasons behind the data.

Since the financial crisis and global recession of 2008, growth has been slow.  Yet think of all the value that has been added to the world since then.  For example, the iPhone was only 1 year old in 2008, and the iPad was only a twinkle in Steve Jobs' eye.  Think that the iPhone and iPad are just trinkets?  I'd argue they represent as big a revolution as the original PC, by making computing intuitive and accessible to everyone.

It may be that conventional economic factors such as an aging workforce augur poorly for the future, but I believe that considering existing factor misses the point.  The key factors are likely to be things we barely recognize today, whether it's practical electric vehicles, the revolution in the science of being human, or hyperloops (whatever they are).

Yes, if we keep doing things the same way, we are doomed.  Growth will slow, and climate change will kill us all.  But we don't have to keep doing things the same way.  Startups demonstrate the ability for a small number of people to catalyze mass change.  The first wave consists of the crazy ones, but pretty soon, even the cautious are busy downloading Angry Birds.

Work in the future will be more like the startup world--chaotic, unstable, but creative and productive.

I think humanity's best days lie ahead of us.  The future is waiting.  We just have to invent it.