Saturday, October 26, 2013

Passion and Pragmatism

One of the big trends in career advice has been telling young people to "pursue their passions."  Yet this advice is both simplistic and problematic.  I enjoyed this take by music producer Paul Cantor:
"Kids now aren’t taught to find careers. They’re taught to find their ‘passions.’ Then they’re encouraged to pursue them.

Except the world doesn’t bend to everyone’s beckoning whim— it doesn’t really give a shit about your passion— because it needs people to do normal stuff like collect garbage, police streets, put out fires and process applications at the DMV.

Which makes it hard. Torturous, even. Here you were, told that you were awesome and that you wouldn’t have to settle for a life of mediocrity, and that’s all you’ve got. That sucks."
This passage reminds me of a conversation I had recently with an entrepreneur friend.  He was pondering whether to join a new, highly speculative venture.  He's a successful entrepreneur, but hasn't made "FU" money and has plowed a lot of his net worth into angel investments.  And with three kids in private school, he was worried that pursuing his entrepreneurial dreams would place too much stress on the family finances.

Yet even after I helped him analyze all the potential issues with his venture, he still had the entrepreneurial itch.

It's easy for me to tell 25-year-olds to quit their jobs and start companies--the downside is minimal.  It's harder when passion and pragmatism collide.

When Ted Cruz was a long-shot Senate candidate, he went to his wife Heidi and asked her permission to plow their entire net worth into his campaign.  Heidi, a Goldman Sachs VP, was the family's main breadwinner.  She didn't hesitate, and told him to do it.

Foolish?  He won the election.  And even if he had lost, he and Heidi were young enough to make up for the financial hit.  But it certainly highlights the conflict between passion and pragmatism.

I didn't give my entrepreneurial friend a firm recommendation.  I simply told him, "Make sure you can live with your decision, then don't look back."

College Is For Trying

These days, the institution of college is under assault.  Critics charge that colleges fail to prepare students for the real world, other than by saddling them with overwhelming amounts of student loans.  Just recently, I heard a number of my friends argue that too many people go to college (though I like to note that almost all who believe college attendance is too wide-spread are themselves possessors of advanced degrees from expensive elite institutions).

While I agree that college isn't for everyone (my advice to Ben Casnocha was to attend college, but drop out, so that he wouldn't always wonder if he should have gone), I believe that my time in college was both a fantastic experience and essential to my later life.

What I find most amazing about college is the number of things you get to try doing.  At no other time in your life will you have so many opportunities to explore different passions and disciplines.  When you're younger (K-12), the resources aren't there.  When you're older (grad school, "the real world"), you're in a focused environment.  Only college offers the amazing combination of world-class everything and near-total freedom.

When I was at Stanford, I wasn't just a student.  I was also:
* A caveman (we actually made stone tools in one of my anthropology classes)
* A painter
* A sculptor
* A poet
* A woodworker
* A blacksmith
* A psychiatrist
* A photographer
* A journalist
* An actor
* A comedian
* A hybrid-electric vehicle expert
* A movie director
* A politician
* An athlete
* A playwright
* A teacher
* A dancer
* A chef

And that's just the things I can think of off the top of my head.

People say college is for dabbling as if it were a bad thing.  Dabbling is a wonderful thing; otherwise, how would you ever realize your passions?

It's been decades since I gave a dance performance or cast molten bronze, but those experiences stay with me, and give me a stronger appreciation for the lives of others.  And without my various experience, I might not have realized my passion for non-fiction, my fascination with psychology, or my calling as a mentor.

If I had been forced to choose a single field when I left high school, I would have had no clue, and would probably have chosen whatever is the hardest, much like my dad ended up in Electrical Engineering because he had top test scores (in Taiwan in the 1960s, the top students were automatically put into EE--a draconian but effective measure, given Taiwan's success in electronics since then).

When people question what college is for, tell them: College is for trying.

Monday, October 21, 2013

"The Barriers are Self-Imposed"

Jeff Atwood recently wrote a great piece about the classic book, "Masters of Doom," about the origins of id Software, the creators of the first-person shooter:

I still remember the first time I saw Castle Wolfenstein 3D.  I was a junior at Stanford, and for the first and only time in my life (thank goodness!) I was living on an all-male environment (my dorm that year had a male floor, a female floor, and a co-ed floor--I'm not sure why my roommate and I ended up on the male floor).

Down the hallway, Haresh Kamath (now a leading light in the alternate energy field) had a 386 PC, complete with Wolfenstein 3D and other classic games like Star Command.  The members of that hallway spend endless hours sitting around Haresh's computer and playing those games.  Even then, it was clear that id had created something special.

Of course, at the time, I assumed this amazing game was the product of some huge studio.  Nope.
"Carmack disdained talk of highfalutin things like legacies but when pressed would allow at least one thought on his own. “In the information age, the barriers just aren’t there,” he said. “The barriers are self-imposed. If you want to set off and go develop some grand new thing, you don’t need millions of dollars of capitalization. You need enough pizza and Diet Coke to stick in your refrigerator, a cheap PC to work on, and the dedication to go through with it. We slept on floors. We waded across rivers."
John Carmack is oversimplifying a bit; not everyone has the advantage of being one of the most brilliant hackers of all time.  But he's essentially right.  Time is money; if you have the ability to invest the time, you don't need the money.

And Carmack was doing this in the early 1990s, when he had to distribute his software using bulletin board systems.  We were still years away from Netscape.

If you have an idea, and you have the time, you can make it real.

Sunday, October 20, 2013

Reputational capital is just as precious as Financial capital

One of the pieces of advice that entrepreneurs receive is to ask any investors they meet to introduce them to other investors.  This is good advice, but it's incomplete.

You should only ask for introductions to other investors *if* the investor is serious about investing in your deal.

The reason is that experienced investors understand that their reputational capital is just as precious as their financial capital.  Entrepreneurs may think that intros are an easy ask, but they're not.

Almost every investor, angel or VC, participates in syndicated rounds.  This means that we're repeatedly working with other investors.  Because of this, reputational capital is critical.  The main way we learn about deals is from other investors.  And while we expect to reject nearly every deal someone brings to us (that's just the numbers game of investing), I definitely keep mental tabs on which investors bring me good deals, and which bring me bad ones.  Therefore, I know that other investors are doing the same to me.

I guard my reputational capital just like I guard my financial capital, perhaps even more so.  This is even more true of VCs, who can obtain more financial capital from limited partners, but have to rely on their own track record for reputational capital.

If I'm not interested in a deal, I might make an intro if pressed, but I'll preface my email to the other investor with a note like, "This deal is outside my sweet spot for the following reasons, but the entrepreneur requested you by name.  Do you want to take a meeting."

In other words, I'll help, but not at the cost of my reputational capital.  We make these intros because every investor does think differently, and one never knows.  But you're a lot better off if an investor makes an intro to help him or her do due diligence or assemble a syndicate, than if an investor makes an intro to get rid of you.

Technique Matters

You've probably heard the term "judo strategy" (a very popular meme from the dot com era), but you may not have thought about what it really means.  I learned, from of all places, an interview that Joe Rogan gave to astrophysicist Neil DeGrasse Tyson.

In the interview, the former Fear Factor host talks about the importance of technique in jiu-jitsu.  Mastery of technique allows you to overcome inferiority of strength.

I think this is an important point.  Here in Silicon Valley, we often talk about the importance of speed and being nimble, but all the speed in the world doesn't help without the proper technique.

It's far too easy for young entrepreneurs to get caught up in talk of disruptive technologies without appreciating the importance of good technique on the business side.

I find it funny that hackers who instinctively know the value of using the right development frameworks, and are obssessed with the latest libraries and patterns, don't seem to realize that the same applies to sales, marketing, and strategy.

Ironically enough, technical founders do seem to appreciate the value of technique when it comes to fundraising--too bad fundraising, while important, is necessary but insufficient for success.

As an entrepreneur, you don't have the advantage of strength.  You have to develop superiority of technique, on the business side as well as the technical side.