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Five Links for June

Every month I try to share the most mind-expanding links to read/watch/listen. If you find these interesting, please do share with your friends.

Here are five links worth reading…

The New Science of Alt Intelligence
The perceived objective of AI has always been to mimic human behavior. But most researchers today don’t want this. Instead, they’re focused on building what’s called “alt intelligence”.

Listen: Glenn Fogel: The Greatest Acquirer in History
M&A is messy and most of it fails. Fogel has somehow managed to complete several successful acquisitions while building Booking Holdings. What does he know that others don’t?

Perspective: What people get wrong about political polarization
While it may feel like polarization is at an all-time high, that democracy is crumbling and that misinformation is destroying society, a closer look at history may suggest otherwise.

Why don’t nations buy more territories from each other?
You can count all the transactions involving the sale of land from one country to another in the past century on one hand. Why don’t more countries sell off land? Tyler Cowen explores why.

Listen: Barry Nalebuff: A Radical New Way to Negotiate
Most negotiations are unfavorable for all parties because more time is spent bargaining for a larger slice of the pie and not enough time is spent defining the pie. Defining the pie can unlock win-win scenarios in most negotiations.

Bonus (Adorable): Coco: Investment Committee Memo
Dogs are undoubtedly the highest returning investment for most people. Here’s a very compelling memo explaining why.

Bonus (Listen): Introduction to Mimetic Theory
Most people want what others have. Rene Girard coined the term Mimesis, the desire to imitate one another, and concluded that it was Mimesis that drove most of society’s problems.

Graph of the Month: Slack is great… until it’s not

Books:

The Machiavellians by James Burnham (must read)
HT: Marc Andreessen

The Dawn of Everything by David Graeber & David Wengrow
HT: Sashi McEntee, Pete Zajonc, Roy Bahat

Blue Ocean Strategy by W. Chan Kim & Renee Mauborgne
HT: Russ Thau

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Five Links for May

Every month I try to share the most mind-expanding links to read/watch/listen. If you find these interesting, please do share with your friends.

Here are five links worth reading…

Did Making the Rules of War Better Make the World Worse?
The rules of war have changed dramatically over the last half a century. Improvements in military technology have given us fewer civilian casualties… but prolonged wars. 

Listen: David Perell: Building a Personal Monopoly
It’s more important than ever to play your own game in a society where everyone is imitating one another. The secret may lie in biblical and philosophical texts. 

Heresy
Heresy, while medieval in origin, manifests in modern western society in inconspicuous ways. Paul Graham provides heuristics on how to navigate conflicts of heresy in today’s world. 

Like America, The Sunshine State Also Rises
Florida (and in particular, Miami) has been dubbed as the new home of ambition. But Florida has a long history of ambitious endeavors. The state will only become more important over time.

Listen: Sebastian Mallaby: The Greatest Storyteller in Venture Capital
Venture Capital is evolving as we speak. New players are playing very different games from traditional VCs. Mallaby paints the picture of how we got to where we are today. 

Bonus: Demystifying the SafeGraph Facts
SafeGraph sells facts about places and our mission is to democratize access to data. Part of this mission means making it available in a self-serve way. But of course, making data accessible also has drawbacks.

Bonus (Listen): It’s Our Moral Obligation to Make Data More Accessible
In case you didn’t get to read my essay last month, here’s an audio version. Most of the world’s data is sitting on a shelf. This data, if properly used, could solve the world’s biggest problems.

Graph of the Month:

Books:

The True Believer by Eric Hoffer (must read)
HT: Garrett Johnson, Jack Franson, Francisco Dao

The Score Takes Care of Itself by Bill Walsh
HT: Keith Rabois, Jason Cook

How Rights Went Wrong by Jamal Greene

Blue Ocean Strategy by W. Chan Kim and Renee Mauborgne
HT: Russ Thau

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Five Links for April

Every month I try to share the most mind-expanding links to read/watch/listen. If you find these interesting, please do share with your friends.

Here are five links worth reading…

It’s our moral obligation to make data more accessible
The deep truths of humanity are at our fingertips. But we remain unwilling as a society to harness the power of our greatest asset: Data.

The Future of the European Union
The EU has all the makings of a global superpower: size, population, GDP and military. But why has it been left behind over the past 2 decades? Ukraine might be the catalyst to change this.

Listen: Daniel Gross: Why Energy is the Best Predictor of Talent
Spotting talent is really hard and identifying A-players can feel impossible. Daniel Gross (CEO, Pioneer) explains how to distinguish between good and great employees & what makes a 10xer.

Deep Learning is Hitting a Wall 
Despite all the innovation in artificial intelligence, we’re still very far from where we thought we’d be. This is largely due to inherent limitations of deep learning. 

Google Search is Dying
If you’ve also had a terrible experience searching on Google, you’re not alone. People are looking for authentic content and SEO is killing search. Reddit may be an alternative solution.

Bonus (Listen): Tyler Henritze: Thematic Investing to Predict the Future
Tyler has worked on over $100bn of transactions at Blackstone Real Estate. He shares how Blackstone predicted the future with large concentrated bets that paid off. 

Bonus (Personal Growth): Managing people
Most people are terrible managers (I too am trying to improve every day). Andreas Klinger shares very tactical advice on how to be a better manager. 

Graph of the Month:

Books:

Talent by Tyler Cowen and Daniel gross (must read)
Great read on how to identify talent that can transform an organization

Amp It Up (must read)

Functional Medicine by Kevin Hoffarth

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Five Links for March

Every month I try to share the most mind-expanding links to read/watch/listen. If you find these interesting, please do share with your friends.

Here are five links worth reading…

The Economics of Data Businesses
A deep dive into what makes data businesses special.  A must read if you enjoyed my DaaS Bible.  HT Abraham Thomas.

Listen: Tyler Cowen: Identifying Talent and Measuring Organizational Capital
Tyler needs no introduction.  He breaks down how to spot promising talent and why our allocation of our time (our most valuable resource) would be one of the most powerful datasets. 

Theses on Sleep
A controversial perspective on sleep. The author suggests that it is healthy to sleep less.

Listen: Niall Ferguson: Writing History with Data
Technology drives many societal transformations.  Yet, very few people working in technology spend time studying the past.

Slow-Motion Suicide in San Francisco
Over the past two years, 2x more people have died from drug overdose in San Francisco than from COVID. 

Bonus (Serious): I Thought I Was Prepared for Grief. Then I Lost My Dad
Grief is more complicated than anyone ever imagines.  And nobody is ever fully prepared for it. 

Bonus (Inspirational): ‘Manhattan Phoenix’ Review: From Grit to Greatness
The story behind the catalyst for the explosive development of Manhattan in the 19th century.

Graph of the Month:

Books:

The Power Law by Sebastian Mallaby (must read)
The best history of venture capital

The World for Sale by Javier Bias & Jack Farchy (must read)

Comrade J by Pete Earley (must read)
HT Josh Steinman
Fantastic story about the art of spying for the KGB/FSB

The King of Content by Keach Hagey
Story of Sumner Redstone

Fall by John Preston
Story of Robert Maxwell

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Why Energy is the Best Predictor of Talent

Join the podcast: Daniel Gross on World of DaaS

Spotting talent is really hard. Identifying A-players can feel impossible. Peter Thiel has one of the best interview questions for identifying talent, “What important truth do very few people agree with you on?” But Daniel Gross disagrees. Daniel believes easygoing questions like “What movies do you like to watch?” elicit more telling responses.

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My conversation with Tyler Cowen

World of DaaS podcast with Tyler

The World of DaaS is now officially in the top 50 technology podcasts!

Check it out: https://www.safegraph.com/podcasts/tyler-cowen-identifying-talent-measuring-organizational-capital

Tyler is one of the very few truly committed to constantly learning. He also reads 5-10x faster than a fast reader, so his superpower is consuming large amounts of information.

We cover how the last year drove the end of the Great Stagnation, society’s newfound appreciation for big business, why Tyler thinks economists’ use of data is overrated, how to spot talent, why organizational capital would be one of the most valuable data sources, and so much more.

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Absolute wealth, relative wealth, taxes, and staying rich

how to get rich and stay rich

Above a certain amount of assets, wealth is extremely relative.

The goods that most people consume have fairly fixed prices. Some go up 1-10% per year. Some go down 1-10% per year. The prices of the goods and the basket of those goods are fairly predictable.

For most people, wealth is absolute. It is not really about keeping up with the Joneses … it is about keeping your head above water and doing everything possible for your family to have a normal life.

But once your assets cross a certain threshold, almost all your spending is relative to the Joneses. The amount of absolute wealth no longer matters — what matters is the amount of wealth relative to your peers.

Most goods that cater to the wealthy (high-end real estate, charitable giving naming rights, art, buying 10% of a YC company, etc.) are extremely relative. And most really wealthy people are trying to protect their status — their biggest worry is a new class of people getting richer than them fast.

For the super wealthy, the easiest way for them to protect their wealth is to raise taxes. The higher the taxes, the easier it is for wealthy people to maintain their status and to stop pesky outsiders from usurping them.

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Harnessing tension within companies

Companies and orgs can promote and thrive from tension

All companies have tension.

There are at least two axes where tension resides:

  • Long-term vs Short-term projects.
  • Doing things right vs doing things fast.

This tension exists within a company, between departments, within a department, and even between cofounders. This tension is very healthy and often propels companies to succeed greater than they would without the tension.

Let’s dive in.

Doing things right vs doing things fast

This is the classic tension that many companies, especially start-ups, think about. Every individual has a personality trait that has them fall somewhere along the axis.

Mark Zuckerberg’s famous line “move fast and break things” was Facebook’s motto for its first ten years (2004-2014). Moving fast and putting out new features is why Facebook was so successful. But in 2014, Facebook decided to move on the axis from “doing things fast” to “doing things right” and Zuckerberg changed the motto to the less-catchy “Move Fast With Stable Infra.” That change is representative of the tension that exists within companies … and also the evolvement of all companies.

Most venture-backed start-ups err on doing things fast verses doing things right. Moving fast is the main advantage of a small organization because all large organizations move rather slowly. So one of the best vectors to compete against more entrenched incumbents is speed.

In my piece “Pace, Tempo, Speed, and OODA loops” I lead off with the quote from Jeff Bezos: “Being wrong might hurt you a bit, but being slow will kill you.”

The best strategy for larger organizations is to pick a small number of really important things to do — and make sure those things are done right. A great example of “do things right” strategy is Apple … but even Apple also needs to care about speed.

Even within companies, there is a LOT of tension between doings things fast and doing things right. If you were 100% on one side or the other, the company would almost surely fail.

Cofounders themselves can have conflict. I’ve seen successful start-ups with two cofounders where one has a “fast” personality and the other has a “right” personality. I’ve seen successful start-ups where both cofounders have “fast” personalities. Curiously — I have never seen a successful start-up where both founders have a “right” personality — those have always failed. In the end, speed wins for start-ups.

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Response to Investing as Entertainment – Betting vs Investing

Shreyas Hariharan wrote a great post, Investing as Entertainment. Highly encourage you to read it (go on, I’ll wait).

In the post, Hariharan makes the case that there is a big difference between “investing for retirement” and “investing for sport.”

Robinhood isn’t competing with Interactive Brokers and Charles Schwab. It is competing with Netflix and TikTok. DeFi has built an even better casino than Robinhood and Wall Street. Besides the profits and the novelty, people are attracted to DeFi because it is entertaining. DeFi is an e-sport.

Hariharan makes a super point.

Real investing is about accumulating new capital very slowly. It is about using the power of compound interest. As Charlie Munger reminds us, when he was younger his goal was to get rich SLOWLY. Real investing is very, very boring.

In fact, the best strategies for real investing start with the word “passive.” Even the best funds for retirement investing are called “passive” funds. It is about getting low fees so you can get rich … but get rich slowly.

But now-a-days, many people don’t want to be passive. They want to be part of the story.

Watching a movie, while incredibly rewarding, is very passive. And people that like watching movies or curling up with a long book are likely highly correlated with people that engage in long-term passive investing.

By contrast, playing video games is very active. You are part of the story. Sometimes, you ARE the story. And people that play video games are likely highly correlated with people that want to be more part of the story when investing.

When you are part of the story, then you are very likely betting and not investing.

Most people bet on sports because they want to be part of the story. It is really fun. Very few of us will ever get to hang out with LeBron James, but we all can bet on basketball games. We even can run a fancy parlay bet and make watching the NBA finals even more fun.

Super fans love to bet … because they are now no longer just passive spectators … betting transforms them to active participants. And that is what more people that play video games regularly want to be. Being passive is boring.

This is why people even bet on the Academy Awards or the Grammys … the primary goal is not to make money but to be part of the broader story.

Which brings us back to Hariharan’s astute point … betting on stocks is fun. It is entertaining. Yes, some people do get rich by betting on stocks but most just do it because it is fun. They get to be part of the action. They might never get to hang out with Elon Musk in person but they can buy an option in him.

Elon Musk's new official title: 'Technoking of Tesla'

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Now is a great time to build a pure-play data (DaaS) business

There are hundreds of amazing companies that sell software and tools to data scientists and machine learning teams. In fact, many of the best companies in the last 15 years have been exactly that.

But outside of SafeGraph (where I work), there are almost no companies that specialize in selling data to data scientists.

Why?

Partially it is because it is MUCH easier to get to $10 million ARR by selling applications (traditional SaaS). Partially it is just tradition coupled with stagnation. Partially it is because venture capital firms have been wary of funding data companies. And, most convincingly, being a data-only business is less exciting to most entrepreneurs because data is a supporting role (see the last section on data and humility).

But selling data to data scientists is starting to be a big business. 

Selling data (DaaS or Data-as-a-Service) historically has not been a great business.  Outside of Zoominfo and a few others, there have been almost no pure-play data unicorns built in the last 20 years.

Check out the DaaS Bible — the ins and outs of running a data-as-a-service business (DaaS accounting, winner-take-most dynamics, and more)

That’s because very few companies had the ability to make use of raw data in the past.  10 years ago, only the most advanced engineering teams were able to make use of external data.  But that’s changing.  An order of magnitude more companies buy data today than did five years ago.  That’s because a good engineer with a tool like Snowflake can be as productive as a great engineer was 5-10 years ago.

This is happening across industries. 

One example is hedge funds.  Not that long ago, just ten funds were buying significant alternative data.  Today it is still under 100.  But there are 500-700 funds that are currently making the investment to ingest large amounts of data.

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Eight napkin graphs to building a unicorn

For those of you that missed the SaaStr SCALE conference last month, Jason Lemkin has a great overview including links to the top eight presentations.

The #1 rated session was an interview with Todd McKinnon, CEO Okta — it was excellent and I highly recommend it.

My presentation was the #2 rated session. Here is the full video:

And here is the full learnings:

(1) Avoid good opportunities

the MOST IMPORTANT advice I can give you is to avoid good opportunities.

avoid good opportunities like you work to avoid the coronavirus.

Good opportunities must be avoided at ALL costs.

this is true if you want to build a great company … but this is JUST AS true in life.

the more successful you become, the more good opportunities are going to come at you.  soon you will be swimming in good opportunities.

again, that’s true for companies and true for you individually.

let’s first dive into this advice individually and then show it applies to building a business. 

let’s say you are 22 years old and don’t have any money.  well then you are likely going to see very few opportunities to invest and most of them will be bad.  but as you gain wealth, you will see more opportunities to invest — and many of them will be good.  but even the good opportunities take time and effort to review — so it is in your best interest to do everything possible to wait only for the great opportunities.

this is even more true when running a company.  the possibilities of the number of things you can do to grow your business are endless.  you can launch new products, be better at recruiting, speak at SaaStr, and so much more.  my advice, have some sort of rubric that allows you to ID good opportunities and avoid them.

but how do I know when an opportunity is just good and not great?

my simple heuristic: if the opportunity has few obvious downsides, it is almost certainly NOT a great opportunity.  all great opportunities have very big and very obvious downsides.

of course, just because it has obvious downsides doesn’t mean it is a great opportunities — it still is more likely to be a bad or good opportunity … but if you see something with no obvious downsides, it almost certainly is not great.

this is also true with people you hire.  if you want to hire a 10xer, that person will almost certainly have glaring faults.  anyone that you can hire without glaring faults will, at best, be good — they will certainly not be great.

summary: avoid good opportunities like you avoid COVID-19

(2) Delegate things you are good at

most people advise us to delegate things you are not good at.  they advise to surround yourself with people that have different strengths and different weaknesses. 

this is the conventional advice.

maybe someone on your board already gave you this advice.

most of us have heard this advice many times over the years.

but this is terrible advice.  don’t listen to it.  ignore it.  take it outside in the backyard and bury it.  stab it and kill it.

do the opposite.

instead: Delegate the things that you are good at.

I know this sounds really strange … so let me explain. 

the things that are the EASIEST to delegate are the things you are already good at.  you know how do those things really well.  you might already be an expert in them.  you can break down these things well.  you can also hire for these things. 

so delegating these functions will, for sure, have the highest success rate.

if you are a great engineer, who do you think you will be better at hiring — other great engineers or great salespeople?

the answer is obvious — you will likely hire super engineers and very mediocre salespeople. 

so the first thing you should always delegate are the things you are best at. 

I cannot stress this enough.

you even see it in all great companies – they rarely get great in things that are not traits of their founders. 

for instance, Marc Benioff is the world’s best software marketers.  he was an amazing software marketer ever before he started Salesforce.  he’s incredible.  he’s hired great marketers and delegated to them.  Salesforce continues to be great at marketing. 

but Marc Benioff is not a great UI/UX person.  while he’s been able to acquire great UI/UX people through acquisitions over the years (Stuart Butterfield, CEO of Slack, is one of the world’s greatest), the Salesforce product still suffers from having one of the worst UI experiences. 

and guess what?  it hasn’t mattered. 

it is better that Benioff focused on his strengths.

you should focus on your strengths too — you cannot be all things to all people.   focus on being great at just a few things.

let’s look at the napkin graph (above).

on the y-axis is things you are good and things you are bad at.  the x-axis is things you love to do and things you really hate doing. 

when you get a chance, try to fill out these quadrants for yourself. 

the easy thing is to delegate as much as possible on the things you are already good at.

build systems to make delegation easier.  hire super talented people and work on up-leveling them.

now you have two other buckets left.

for the things you like to do but are not yet good at … work on investing in yourself.  get a coach.  read.  learn.  try a few different things (and know that you will fail).   while it is unlikely you will ever become great at these things … you can get yourself to good.  once you are good, you can better effectively delegate (and hire). 

now there are things that you are bad at and you also do not like doing.  my advice in this quadrant is to do everything possible to get leverage through APIs or software … or maybe you do not need to do them at all.  remember, you don’t have to do everything to have a super company.  there can be many functions that you either outsource or just not do.

the great thing is that the number of vendors you can choose from is growing exponentially.  you have amazing choices. 

the number one skill to have in the next 20 years is the ability to select and manage vendors —  almost every company now has more vendors than employees.

(3) Do the opposite of “smart” people

take a look at what the smart people around you are doing … and do the opposite.

most smart people optimize for the mid-term.

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