Emotional Quotient (EQ) and Emotional Intelligence (also known as interpersonal intelligence) are incredibly important and will continue to be very important. However, until recently, it was THE most important type of intelligence. It’s not anymore. 

In the past, people with high EQ were rewarded with networks of people to leverage in deal-making. 

It makes sense that EQ was the dominant trait in a world previously dominated by: “it is not what you know, but who you know.” 

That was the world we lived in in the 20th Century — a world defined by middlemen and rent-seekers. The who-you-knows would put together two what-you-knows and take a transaction fee for their service. They were the brokers, bankers, agents, and management consultants – the ones using their high EQs to close deals and make sales. They were essential for society. 

In most professions, people with high EQ would massively outperform people who had very high levels of other intelligence (like IQ, creativity, intra-intelligence [self-awareness], spiritual intelligence, physical intelligence, and more). Most of the highest paying jobs in the last 100 years relied heavily on EQ.

But, technology is now replacing “who you knows” with platforms that do the same job.

In the last few years, technology has replaced the “who-you-knows” faster than the “what-you-knows.” LinkedIn, Facebook, and Google (not to mention tons of other companies that are taking market share from middlemen) are far better connectors than anyone profiled in Malcolm Gladwell’s Tipping Point.

Upwork is another great example. This database has replaced most talent agencies and allows qualified freelancers to provide quotes, book jobs, and create for their clients 24/7/365. The “who you knows” used to control these client leads. Now, it’s handled by code (much to the delight of the creative community).

In this new world, EQ will remain essential but will not be as dominant as it once was. IQ also may decline a bit (as computers are taking over that area too). We’ll see a higher value placed on some of the other skills, traits, and intelligence like creativity, self-awareness, spiritual intelligence, and more.

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One simple way to increase productivity is to say no to any priorities that are not in your top 100. (note that a “priority” is everything, you spend more than a few hours doing per month). 

what is the maximum # of priorities one should have?

probably 100.

one simple way to increase productivity is to say no to anything not in your top 100. one would be amazed how much time we spend outside of the top 100.

— Auren 📚 𝐇𝐨𝐟𝐟𝐦𝐚𝐧 (@auren) May 27, 2020

Whaaa?   “But I thought I can only have 3 priorities”

A lot of people say, “you can only have three priorities.” But everyone has way more.  Most people are juggling 300 things … not 100).  

In my opinion, each person you love is an individual priority. 

Maybe you’re fanatic about your sleep. If so, that’s a priority. 

If you binge-watch The Sopranos, that is a priority for you.

And yes, if you spend more than a few hours a month cleaning your house, it is a priority … your time does not lie.   

I’m not talking about macro goals like “build a profitable startup.” There are many smaller projects and workstreams that go into a macro goal like that. 

Imagine if an invisible evil elf teleported to your home from the Planet Krytonii and secretly recorded your every move for the last few months.  What would Mr. Evil Elf have noted?  Those are your priorities … your time does not lie.

If you spend a few hours on something per month, it’s a priority.  

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The number one thing that smart people do wrong is that they overvalue optionality. Contrary to popular belief, you should put yourself in a small box and limit your options so that you are clear and focused. 

Optionality usually leads to a worse outcome than focus.

Almost every smart person disagrees with me on this, but you should eliminate options. 

Most super-smart people are doing the opposite: they are continually growing their options. Business school teaches you to open up options. Businesses that value optionality will start a few different products with the hope that one of the businesses will take off, or they’ll make multiple bets valuing portfolio theory over focus.

Having multiple strategies often means that a company isn’t investing enough in the most promising path. The best businesses are clearly focused and say “no” to almost everything. They deliberately cut off options, and they publicly declare that they will not go into business lines in the future (even when businesses are adjacent to their core market).

Focus is the act of eliminating options. 

Eschew optionality and instead focus on the one thing you want to do really, really well. Create a strategy and execute on that strategy. Don’t A/B test. Instead, be deterministic about what path will work and follow that path. A CEO might be wrong about the path, or the business might not execute. But without a deterministic path, you are leaving yourself vulnerable to the focused entrepreneur.

“The difference between successful people and really successful people is that really successful people say ‘no’ to almost everything.”

– Warren Buffett

optionality is bad.

optionality basically means you cannot have a coherent strategy because people all the way down the chain do not know what trade-offs to make.

— Auren 📚 𝐇𝐨𝐟𝐟𝐦𝐚𝐧 (@auren) September 10, 2019

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How to successfully have a great online video discussion.

I have hosted hundreds of one-conversation dinner parties over the years.   

Moderating a great discussion by video has a lot of similarities to moderating a great dinner party but there are a few key differences.  

Quiet is golden

When hosting a great dinner party, you want to make sure you are in a quiet room so everyone can hear each other.

When hosting a virtual discussion, sound quality is also very important.  You want to have a discussion with the microphone on for all participants. The conversation will be much more organic if no one needs to be on mute.  That means all the participants need to be in a quiet place or have a very good headset.  

Best discussions are 5-12 people where they can all see each other

The best discussions have 5-12 people.  The more the people, the better the skills needed for the moderator.  

Everyone should see everyone in the discussion so it is important that you view people in “grid view” (rather than speaker view).  Another nice feature of video chat is that they usually can put the people’s names on the screen (analogous to having nameplates for good dinner discussions).

How to do online Introductions

Usually when getting people together that do not all know one another, you go around the table and everyone quickly introduces themselves.  This is a good idea for virtual meetings too but it requires more moderation as it is not clear who is next. The moderator needs to jump in (“thank you Bill.  Susan: you’re up”).

Norms for discussions are important

Just like a great dinner party, you need everyone to show up on time and be engaged and present.  For virtual discussions, everyone needs to be present and not checking Twitter or another screen while the discussion is going on.  

A good moderator needs to enforce these norms and call people out that might be straying or looking less engaged.

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Almost every company spends over 95% of its time doing what every other company does. And it spends less than 5% of its time on things that are unique to the company.

Almost every company spends over 95% of its time doing what every other company does.
And it spends less than 5% of its time on things that are unique to the company.

That makes no sense.

— Auren 𝐇𝐨𝐟𝐟𝐦𝐚𝐧 (@auren) October 27, 2019

That makes no sense.

Ideally it should be flipped. Your company should spend the vast majority of its time focusing on things that are unique to your company.

Crazy thought experiment: Imagine a new type of company that decided to only do what it was really good at and essentially outsourced everything else.

Recruiting as a service?

Pretty much every company spends lots of time recruiting. Recruiting is a massive time suck. Yes, some companies do it better than others … but there are a set of best practices that all the good companies eventually master.

What if your company could completely outsource its recruiting (including interviewing) to another service? I know this seems completely crazy … but imagine if that could happen. Imagine the time savings.

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Over the last year I have been steadily putting together everything I know about running (and investing in) data companies. These companies are trendily known as DaaS (Data-as-a-Service).

I posted it to the SafeGraph blog: https://blog.safegraph.com/data-as-a-service-bible-everything-you-wanted-to-know-about-running-daas-companies-d4cf4c15c038

It is long (will take a good 30 minutes to read) but there is also a summary tweet-storm.

The tweet-storm about the DaaS Bible went viral so including it here:

1/ Data businesses are generally misunderstood. DaaS has different metrics than SaaS.

While there has been a lot written about SaaS businesses (how they operate, what metrics to watch, etc.), there has been surprisingly little written about data businesses.

— Auren Hoffman (@auren) June 18, 2019

3/ Data is ultimately a winner-takes-most market.

As a data company starts to dominate its niche, it can lower its price and gain more market share and use those resources to invest more in the data … thereby gaining more market share (and the cycle continues).

— Auren Hoffman (@auren) June 18, 2019

5/ DaaS is just about assembling verifiable facts. It is all about Veracity and TRUTH.

Good framework is truth vs. religion. pic.twitter.com/T1pMomSZhn

— Auren Hoffman (@auren) June 18, 2019

7/ DaaS margins look horrible at $10M ARR and look amazing at $100M ARR because the cost of data goes in COGS.

“incremental margins eventually become extremely attractive at successful data businesses” – Michael Meltz, EVP of @Experian

— Auren Hoffman (@auren) June 18, 2019

9/ DaaS is growing. Just 5 yrs ago, only ~20 of the 11,000 hedge funds were using alternative data. Today it is still only about 100 funds. In five years it will be over 500 funds.

And every other industry is buying data at the same rate as hedge funds.

— Auren Hoffman (@auren) June 18, 2019

11/ Read more about Everything you want to know about running DaaS companies (Data-As-A-Service Bible) at the @SafeGraph blog:https://t.co/tgrn8CVskL

— Auren Hoffman (@auren) June 18, 2019

So you want to start a business eh?
“Yes,” you say. “It has always been my dream to start a business. I just can’t figure out what to start.”

The answer is right in front of you. Literally. It is in this post. (just keep reading)…

The best business to start is to figure out the join of:
1. Something that will be very valuable in the future.
2. Something most smart people do not think will be very valuable in the future.
3. Something you have a real advantage doing.

If you find a business that fits all three criteria, you have a very good chance of building a massive business.

Of course, it is really hard to know what will be valuable in the future (criteria #1). As the future is very hard to predict.

But the good news is, it is much easier to figure out criteria #2 (something people do not think will be valuable) and criteria #3 (something you have a unique advantage in) … if you are honest with yourself. If you can get those two things right, you have a real shot on changing the world.

How do you determine the best business to start?
1. will be very valuable
2. most ppl don't will be valuable
3. Something you have a real advantage doinghttps://t.co/Z8cMnkuIjI

— Auren Hoffman (@auren) June 4, 2019

Every year I re-edit my list of favorite books of all time.  This year's edition has a few subtractions from years past and a two additions I read in 2014 (one by Peter Thiel and one by Ben Horowitz).  Enjoy:

Ultimate Auren Hoffman Reading List:

Against the Gods
The Remarkable Story of Risk
by Peter L. Bernstein

The Cash Nexus: Money and Power in the Modern World, 1700-2000
by Niall Ferguson

Coming Apart
by Charles Murray

Churchill: A life
by Martin Gilbert

Difficult Conversations
by Douglas Stone, Bruce Patton, and Sheila Heen

Economics Facts and Fallacies
by Thomas Sowell

The Effective Executive
by Peter F. Drucker

Exodus
by Leon Uris
(fiction)

Fooled by Randomness
by Nassim Taleb

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
by Steven D. Levitt, Stephen J. Dubner

Generations: The History of America's Future, 1584 to 2069
by William Strauss & Neil Howe

Genghis Khan and the Making of the Modern World
Jack Weatherford

The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
by Ben Horowitz

How the Mind Works
by Steven Pinker

Influence: The Psychology of Persuasion
by Robert B. Cialdini

John J. McCloy: Chairman of the Establishment
by Kai Bird

Just and Unjust Wars
by Michael Walzer

Justice
by Mike Sandel

The Man Who Mistook His Wife For A Hat : And Other Clinical Tales
by Oliver Sacks

The Moral Animal : Why We Are, the Way We Are: The New Science of Evolutionary Psychology
by Robert Wright

The Next 100 Years: A Forecast for the 21st Century
by George Friedman

Night
by Elie Wiesel

The Nurture Assumption
by Judith Rich Harris

Outliers
by Malcolm Gladwell

Path to Power: Early Life of Lyndon Johnson
by Robert A. Caro

A Piece of the Action
How the Middle Class Became the Money
by Joseph Nocera

The Prize
The Epic Quest for Oil, Money, and Power
by Daniel Yergin

Revolution 1989
Victor Sebestyen

The Signal and the Noise
by Nate Silver

Social Animal
by David Brooks

Stumbling on Happiness
by Daniel Gilbert

Surely You're Joking Mr. Feynman!: Adventures of a Curious Character
by Richard P. Feynman

Thinking Fast and Slow
by Daniel Kahneman

Too Big to Fail
Andrew Ross Sorkin

We Wish to Inform You That Tomorrow We Will be Killed With Our Families: Stories from Rwanda
by Philip Gourevitch

We the Living
Ayn Rand
(fiction)

Why We Buy: The Science Of Shopping
by Paco Underhill

A World Lit Only by Fire : The Medieval Mind and the Renaissance – Portrait of an Age
by William Manchester

Zero to One: How to Build the Future
Peter Thiel

How to optimize for growth

In this economy, most people are lucky to find one job.  But a select few have multiple offers of  interesting opportunities.  If you are one of those people, picking the right opportunity can be difficult and stressful.  Here are some easy heuristics to help you make the best decision.

First, let’s think about what you want to get out of a job.  Very few people are trying to maximize their short-term compensation.  If you are trying to do that, no need to read further.  Just take that job at a top hedge fund (or, better yet, get drafted by the NBA).  But read on if you are trying to maximize growth, learning, and long-term success.

Long-term success requires massive growth.  Most smart people out of college grow an average of 10% per year.  Which means they are roughly twice as effective 7 years after graduating college.  That makes sense as most 29 year olds make double what they did their first job out of college.  But growing at 10% per year is way too slow if you want to accomplish great things.  You should be aiming to grow at a rate of at least 25% per year for your first few years out of school (like all things, your rate of growth (the second derivative) will slow over time). 

To grow quickly, you need a job with the following criteria:

1. You’re surrounded by people who are smarter than you
2. You have an opportunity to fail
3. The company has a history of giving massive responsibility to people that look like you

Find a company where at least 30% of the people are smarter than you

You will grow the most through the people who surround you, so make sure those people are really impressive.  Because people tend to hire those they know, many of these people will likely be your colleagues for the next 30 years.  So pick your colleagues wisely.  One simple heuristic to determine how smart the people are at the company are is how selective they are in hiring.  You want to pick a company that has a really hard (and often long) recruiting process where you need to meet a lot of people, complete a project, and have some grueling interviews.  While not perfect, at least you know that everyone else the company hired went through the same process. 

Opportunity to fail

You grow the most when you have a 33-66% chance of failure.  To improve, you want to be in a position where success is not guaranteed. When success is difficult to attain, people push themselves much harder.  Too often, people (especially recent grads) are put into jobs that they will definitely succeed at.  I will not improve my tennis game playing against by 22-month old daughter.  If you are playing chess, you’ll learn the most playing people within 100 points of your score (in the chess Elo ranking, a 100 point difference means a 2-to-1 advantage).  And while definite success initially feels good, it doesn’t help you grow. You should find an organization that will give you projects where there is a high chance of failure. 

Opportunities for massive responsibility

Assuming you are an ambitious person that wants to have continued growth, you want the opportunity to be promoted and to be given continuously greater responsibility.  The companies that are most likely to promote you quickly have a history of doing so and are experiencing high growth. Find people that joined the company with a similar profile that you have and see if some of these people were given outsized responsibility in the company.  If your abilities warrant it, you can also be given the chance.  But if you have a hard time finding people, there will be little chance the company will look to promote you quickly.

These three criteria are heavily weighted towards the selection of start-ups (fast growth companies with under 200 people).  And it is not an accident that the very best grads over the last few years are choosing start-ups over traditional choices like Goldman Sachs, Microsoft, and McKinsey.  In fact, so many great people are joining start-ups that traditional employers have been forced to massively increase salaries to attract students with the promise of short-term compensation. 

But not all start-ups are created equal.  Look for the ones that have a really hard interview process, where they give you an opportunity to fail, and have examples of people just a few years older than you that have been given outsized responsibility.  

 

Great conversion about changing law schools to two years (from three):

This was originally posted in MediaPost.

CMOs are getting smarter and taking control

Limited by the indefinite and imprecise results of traditional marketing, CMOs of the past could not realize meaningful metrics to measure success.  But today’s technology has ripened, enabling sophisticated and precise decision-making.  CMOs have adapted and thrived accordingly, so much so that they will soon lead not just marketing, but companies in their entirety.

The CMO as Billy Beane 

Michael Lewis’ Moneyball chronicles how baseball teams evolved to embrace new and more sophisticated metrics to achieve success.  Traditionally, teams looked to antiquated statistics (e.g., batting average, stolen bases) to determine a player’s worth.  Around the year 2000, the Oakland A’s realized that advanced stats like slugging and on-base percentages were far better indicators of value.  Building a roster with these new metrics, the A’s became one of the best teams in baseball despite one of the smallest payrolls in the sport.

Marketing is experiencing a similar revolution now.  In the past, no substantial feedback loop existed to tie customer choices to marketing activity.  Marketers had to do things by touch and feel, often betting their careers on the black-boxed “genius” of creative agencies or the fuzzy results of focus groups.  Ultimately, CMOs simply had to hope that correlation was causation; that an uptick in sales was actually attributable to them and not some confounding factor.

That’s all changed.  With the plethora of analytics tools, big data platforms, and precise tracking methods available today, marketers can see inside the black box.  Like in baseball, sophisticated metrics have emerged to enable better decision-making.

Enter the Moneyballer CMO. 

Today’s Moneyballer CMO plans her marketing initiatives the way Billy Beane built the Oakland A’s.

She uses streams of analytical data and relies less on subjective focus groups or simplistic measures.  Her analytics are acute and precise; the impact of every marketing and branding initiative is quantified.  She leverages granular data on customer actions to expand beyond the traditional CMO role, influencing product strategy, customer service, and optimized sales pitches.   

The Moneyballer CMO still uses smart agencies and consultants, but insources the core marketing strategy using the increased visibility her technology allows.  She also insources her company’s data, employing it across multiple platforms and applications.  Silos are the enemy of the Moneyballer CMO, because connected data means more holistic and measurable results.     

Moneyballer CMOs and Technology

The rise of the Moneyballer CMO is both a symptom and a cause of marketing technology growth.  As data becomes more integrated and accessible, smart marketers demand better analytics, so companies respond by spawning countless marketing applications. 

Analogous to Moore’s law, the number of marketing applications doubles every two years.  Just think of all the platforms that have emerged in the past 12 years: search marketing, social media, cloud applications, site analytics, mobile devices.  With so many new technologies to manage, CMOs have had to become smarter, shrewder, and data savvy to stay competitive. It’s little wonder that they have become some of the smartest people in the room.      

Residing on the cutting edge of technology, the Moneyballer CMO is often the most forward-looking executive at an organization.  She’s always scanning the horizon for the next platform that will complement her technology stack, improve leads, or lift conversions up another fraction of a percent.  That foresight is key to keeping an organization modern and relevant across all departments.

The CMO’s Touch

Business is just starting to experience the positive influence of the Moneyballer CMO.  Marketing technology companies are in their infancy and we should anticipate an explosion of new tools that will yield massive returns for marketers and customers alike.

The CMO is moneyballing everything that touches the end customer.  That’s why the CEOs of the future are the CMOs of today.