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
there is a high correlation between the people you want to hire and the people that work an entire plane flight. next time you fly, just drop job ads off on the seats of all the people jamming
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.
All companies have tension. Two axes: Long-term vs Short-term projects. Doing things right vs doing things fast. pic.twitter.com/mEdSW6aXbY
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.
This is the tale of two very different car buying experiences.
In November (2020), my wife and I decided to buy two cars. Being city people, we did not use our cars too often pre-COVID (mainly drove the kids to school, soccer practice, etc.). I personally got around town with Lyft or Uber. But once COVID hit, we found ourselves in the car much more often (and taking a lot of family road trips). So we thought it was time for an upgrade.
At the time, we had two cars. The workhorse was a 2012 Honda CRV — which is an amazing car and has served our family really well. We got the car right before our first child was born and it is extremely well built (the only issue we had in nine years was having to replace the battery).
We had a second car, an Audi, which we leased and the lease was coming due. So we had some urgency to go car shopping.
We have a very narrow driveway so we determined the max width of a car we can buy is 74 inches. That eliminates a lot of car buying options for us but we were able to find two cars we really liked that worked for us: a Tesla Model 3 and an SUV from a car manufacturer that will be nameless but we will subsequently call CarX.
First, let’s talk about the amazing Tesla buying experience.
There is absolutely no need to talk to a Tesla salesperson if you don’t want to. If you know what you want (and we did a lot of research), you can just go to the web site and buy it. Buying a Tesla is a little confusing and Tesla.com could use a lot of UI work for the buying experience (I had to fill out the same form multiple times) … but it did work (with some minor annoyances).
One of the cool things about buying a Tesla is that you can basically customize everything and then they make the car. It is a lot different from getting the car from a dealer where you have to make compromises of all sorts of features and color of the car.
In early November I was able to order the Tesla directly on the web site without talking to anyone. It was an engineer’s dream.
But then, it got even better.
I got regular updates from Tesla (via a Tesla mobile app and direct SMS) on where our car was in the process — kind of like being able to follow your Doordash order. They estimated it would take 6-8 weeks to get the car made. And in 7 weeks, our car was ready. And then it got even better.
I got a text message from Tesla saying the car was ready and they would drop it off at my house! I texted back that it was cool with me if they came. Two days later I got a text saying the car was in my driveway! I was thinking — waaaaa?
I run to the driveway and there is a gorgeous car sitting there — but no human. Tesla has contactless delivery!
I was able to open the door to the car with my Tesla mobile app and start driving. It was easy and glorious. (I do suggest watching a few videos about how to drive the Tesla).
+100 points for Tesla.
A dark-side tale.
At the same time we bought the Tesla, we also bought CarX (in early November, 2020). The buying experience for CarX was not nearly as good.
I went to the CarX web site to configure the car I wanted (after doing a lot of research). Took a few times for me to configure because it kept not saving my profile. They finally helped me get in touch with a dealer.
CarX salesperson was very nice — all I needed was a quote. But she kept sending me quotes on cars that I did not want. Or on configurations I did not want. We were finally able (after over 20 back-and-forths) to get an arrangement on the right configuration of CarX and was promised the car would be worked on in December and ready by January. I sent them a deposit.
Since then, I have heard from CarX just once … to let me know there was a brief delay. As of this writing (early March 2021), I still have not gotten the car (4 months later). And I have not gotten any updates since January on when the car will be arriving.
(note: after pinging CarX during the process of writing this, they now say the car will arrive in mid-April — which will be over 5 months after putting down a deposit for the car).
-300 points for CarX.
A lot of people love Tesla but they always talk about the car and how great the car is. That’s all true. Their cars are amazing and beautiful and really fun to drive (and my kids love the Caraoke). But one of the reasons I love Tesla is that their buying experience was so much better than anything I have experienced. It was an easy, smooth process where they took speed and ease (and not just price) into account. Most people who buy a Tesla (and CarX) are less price sensitive and care a lot about service.
Disney was a fascinating person who captured the imagination of the world.
Two random insights from the book that are a bit non-obvious:
Disney was ALWAYS out of money
Much of the book is about how Walt Disney (and his brother Roy) were constantly searching for money. Everything they did was in the lens of needing capital. 100 years ago (when Disney started), it was REALLY hard to get capital. And capital providers were extremely controlling. And capital was really expensive.
Today, Walt Disney would have been able to easily raise tons of money at good terms. People would be lining up to throw money at him. We entrepreneurs today have no idea how hard it was for many of the early pioneers. Many of them had to get personal bank loans to keep their companies afloat. We have it soooooo much easier today.
Roy Disney made Walt Disney possible
Walt Disney’s older brother Roy was the steady hand at the company. While Walt was the creative genius, Roy was the person who made sure the company was operating. The brothers had a tenuous relationship and Roy is not given enough credit.
Reading the book, I kept thinking about Steve Jobs’s partnership with Tim Cook. Steve Jobs no doubt revered Walt Disney (he even sold his other company, Pixar, to Disney Inc). But to really make Apple shine, Jobs needed to rely on people like Tim Cook.
But while Cook will forever have a special place in history (Cook has become a great CEO in his own right), Roy Disney has been seen as more of an asterisk (possibly because there is a cult and mystique of the founder).
The biggest predictor of whether a company will be an important company in the next ten years is the raw number of employees that really want that company to win. Not the percentage of employees, but the actual raw number.
This is why organizations with a large shared mission do so well. Some large organizations that will certainly still be important in the future include Apple, Esri, and the U.S. Military. These large organizations are the exceptions as they have a true share mission.
But most 10,000 person organizations have, at most, a handful of people who truly care about the long-term outlook of the organization.
There has been a lot written about customer success (especially with the super acquisition of Gainsight by Vista).
Everyone has a sense of what a good customer success function does. It keeps customers happy, churn low, and looks for expansion opportunities. But little has been written about what a GREAT customer success function does. That’s likely because customer success, as a function, is rarely great.
Let’s work together to change that. Here’s what it takes to build a great customer success function.
Great customer success teams massively increase NPS.
A good customer success team should increase your product’s NPS score by 10 points. But a great one will increase NPS by 40 points.
Yes, 40 points.
That does not happen overnight. And it won’t happen by just giving customers good service.
Ultimately, the only way to increase NPS is to make the product better for the customer. That doesn’t mean that the product gets better for every customer at once. It probably won’t. The goal of customer success should be to make the product better for groups of customers at a time.
Delegation is really hard to figure out. But it’s crazy important if you want to move as fast as a startup needs to move to be successful. Remember, speed is everything.
To delegate effectively, you need to ask a few questions:
1. How do I know what to delegate?
2. How do I inspect what I delegated?
3. How do I create a system to better delegate?
The best things to delegate are actually the things you are really good at because you know how to hire people who can do it.
This is not obvious. Most people think you should hire people to do the things you’re bad at and don’t like doing. But how would you know what skills or attributes a person needs to do those things if you’re bad at them? The only way you’ll hire the right person is if you get lucky.
Hire people for things you are good at. This way, you’ll know exactly what to look for in a candidate AND be able to evaluate that candidate’s work meaningfully.
Here’s the non-obvious delegation chart for reference:
The other kind of tasks you should delegate are ones you can hand to an API rather than a person. Ideally, these are also tasks you’re bad at and don’t like doing, so you can get them off your plate. An API is far more scalable than a person … and usually can get better at a faster rate. Great delegators are Zapier masters.
If you are going to delegate to a person, they do not need to be an employee. You can hire someone on Upwork (or your favorite labor marketplace). The advantage of delegating to an employee is that you will need to spend less time writing the delegation docs. The benefit of delegating to UpWork is that it is much more scalable.
Building a delegation system eats your time on the front end, and spits it back out (and more) on the back end.
One of the hardest things about delegation is that it usually takes longer to delegate initially … and then the returns to your time come slowly. So, you cannot delegate everything at once.
This is the biggest mistake most people make when they hire someone talented – they delegate too much, too quickly. Remember, each thing that you delegate takes your time (and the time of the person you delegated to).
Delegating a task well takes at least three times the time of the task to do. So, if a task usually takes an hour to do, it takes at least 3 hours to delegate. That adds up quickly, so be careful not to delegate too much at once.
And just because someone else is doing the task does not mean you do not have to inspect what they do. That takes time too.
So, if you delegate a task that takes you an hour a week to do, you might not break even on time until week 6. Of course, that is a fantastic return (thousands of percentages per year) in time savings … but it does come with an initial time cost.
And while some people have massive amounts of capital, all of us have a very fixed amount of time. So you need to use your time wisely to ensure your delegation investment has a high rate of return. You can only delegate in series, not parallel (or at least need to limit the number of parallel tasks).
Delegation means you need to be ok with things not done the way you’d do them.
Delegation is also an act of decentralization. At least good delegation is. The person you delegate a task to needs to have agency over the task’s goal and freedom to improvise.
If you want something done precisely to your spec, best to use a robot or API (see above). Otherwise, give humans space to breathe, change the inputs, and make mistakes.
when you trust others to make decisions, it means they won’t always be made exactly the way you want them to be made.
You need to be ok with that.
it is a feature, not a bug, of decentralized decision-making.
Sometimes, the best alternative to delegation is not to do it at all.
Not all tasks need to get done. Many organizations create tasks just to keep their employees busy. Often their employees are creating reports that no one reads. If your employees are creating reports no one reads, eliminate the reports ASAP.
Part of your delegation system should include a filter that determines if a task needs to get done at all. This filter will save you a ton of time.
The biggest block to delegating efficiently is when you delegate entirely to your HR department.
Almost 100% of CEOs delegate to HR, and yet very few of them hire A-players for the HR role.
Too often, CEOs underweight HR and think it is an area about compliance. Of course, CEOs that feel that way end up hiring people that care about compliance.
HR isn’t about compliance. It’s about great capital allocation. The goal of HR is to deploy the company’s most valuable assets – its people. An HR leader makes investments in the company’s assets, grows the company’s assets, retains the company’s assets, redeploys the company’s assets, prunes the low-performing assets, and brings in more high-quality assets.
This, of course, is high-strategy. Outside of the core company strategy, this is THE AREA the CEO should be thinking about all the time.
If you are delegating to HR, make sure you’ve hired someone who is an A-Player in-step with you. Otherwise, you should take over this role yourself.
Summation: Delegate tasks you are great at and like to do, so you can hire the right person to do it. Build a system to delegate, with a filter for stuff that doesn’t need to get done at all. If you delegate to HR, make sure you’ve hired an A-Player.
There seems to be a lot of rumors, suggestions, and ideas floating around about secondaries but little hard data … so Tod Sacerdoti, Jeff Lu, and I decided to survey 100 founders (93 responded) of some of the largest tech companies about secondary transactions: and here are the answers.
Our hope from this survey was to help inform what the current best practices are.
On a personal note: I’ve never done a founder secondary transaction myself and likely never will (though one of cofounders at LiveRamp did a secondary). But if I did do a quality secondary transaction at LiveRamp, we likely would have never sold the company and instead took it to IPO (and thus have had a significantly higher return for our shareholders). So secondaries could add a lot of value – especially for founders without a significant previous exit.
As an investor, I have been an investor in many start-ups that have done secondaries. Meaning some of the old shareholders sold some or all of their stock. I have also participated in buying secondary shares of companies on many occasions.
In the first question, we got some requests for a sixth option for “early employees.” We didn’t want to change the survey in the middle to skew results, but we did want to flag that as some feedback. For the most part, it seems like everyone is open to secondary for a broad swath of stakeholders.
The next 2 questions go together. A little over half of the respondents have someone on their cap table who they regret having. Interestingly, in those cases, over 50%+ would prefer a new investor or operator/friend to buy the troublesome investors out vs. their existing investors.
One of the hardest things to do at a company is to kill off the parts that aren’t working. A company is all about building things, not destroying them. So it’s unnatural to go about tearing it apart.
But every so often, it’s necessary. To keep the business healthy, you have to take a hard look at operations and get rid of areas that are no longer important or contributing to growth.
And timing is critical for this. Killing off parts of your company is hard enough, but doing so early is truly difficult. That’s why one of the best times to take a hard look at what parts of the company you need to get rid of is during a recession.
If you have a big enough company, you could even designate someone as CKO — a Chief Killing Officer. That person’s entire job would be to look at everything the company does and try to kill it.
Here are some areas you should look at closely during a downturn to see what you can destroy:
1. Take a look at your products.
In a downturn, a company should focus on what it does really well and let go of what it doesn’t. That’s why it’s essential to take a hard look at your products to see what you can kill.
For example, Uber has a lot of initiatives involving trucking and self-driving cars. Those might be really good investments or they might be distractions to their core businesses. This is a good time to really dive into them.
Photo by Kai Pilger on Unsplash
Imagine where your company would be if it outsourced everything it wasn’t good at and focused only on what it was good at. A recession is a great time to ask this question and see what you can lose.
“Being wrong might hurt you a bit, but being slow will kill you.” – Jeff Bezos
Last year I read a biography of former Air Force Colonel John Boyd. Boyd was one of the most decorated fighter pilots of all time (he flew in the Korean War). But he was most known for changing the way people thought about warfare — he pioneered the OODA loop (Observe, Orient, Decide, Act) — which is essentially about how to move quickly.
He realized that even underpowered planes could beat much better equipped flying machines if they got to take more actions. Maneuverability beat velocity. But the deciding factor was the number of actions a pilot could take in a minute. The F16 was built as an intentionally underpowered plane (it is one of the slowest fighter planes) — but it is super easy to move, has great visibility for the pilot (just one pilot unlike the very bulky F14 that was in the Top Gun movie), and is very small.
Moving fast and the ability to react and keep moving and changing is what wins wars. The Israelis embodied Boyd’s lessons in the Six Day War. Tempo wins.
This idea of OODA loops and Actions Per Minute will be very familiar to video game fans (where pace intensely matters).
The OODA loop is even more important in start-ups. Being slow WILL kill you. Pace is very important. Again, tempo wins.
“Good things may come to those who wait, but only the things left by those who hustle.” – Abraham Lincoln, Queen Elizabeth, or John Snow (no one actually knows who originated this quote)
This is not to underestimate thinking strategically and planning. The bigger the organization, the more important planning is. Big companies can only do a very small number of things … so it is really important to pick the things that they do.
Small companies’ only advantage is that they can move fast. So they should never give up that advantage by over-planning. Small companies ideally should know what their true north is (5 year goal) and have very fluid quarterly plans. Hard plans beyond a quarter are almost certainly going to be wrong.
That does not mean that planning is useless for start-ups. It isn’t. And as start-ups get bigger, they need to plan more. Overplanning is bad. So is underplanning. But if you have smart employees that are empowered and know the true north of the organization, underplanning is much preferred to overplanning.
The only way you can be successful while underplanning is if your employees are empowered. What happens in some start-ups is that they both underplan and the CEO insists s/he needs to review everything. That is the worst of all worlds because the CEO becomes the gate to getting anything done because one person can only do so much. If the CEO needs to make all big decisions, then you need to make fewer decisions (this is where planning is so important).
At SafeGraph, I try to deliberately make as few decisions as possible. I deem it a failure if I need to make a decision … because that means we are moving slower in that area. That does not mean I don’t make any decisions — I do. But those are failures I hope to improve upon in the future.
Additionally, you don’t want the management team making all the decisions. For instance, your VP Engineering should not be making most of the engineering decisions. The vast majority of engineering decisions should be made by the engineers (working with product and the other internal colleagues). Same thing with every department in the company. And again, that does not mean that the VP Engineering makes no decisions … but ideally she is only making decisions that only she can make.
Pace, pace, pace.
Increasing tempo is hard because it means sometimes you have to trade-off doing things right for doing things fast. It also means you need to trade-off features on things you don’t think are as important — and it is hard to make those trade-offs while moving lightning fast.
“Culture” is what makes a company look strange to others from the outside. It’s a combination of all the quirks, traditions, and personalities that make it unique. Ultimately, culture is defined by how your company is different from all the others, not how it’s the same.
A company culture is defined on how you are different, not how you are the same.
A company’s culture should be like an Indian wedding.
If you’re American and have never experienced an Indian wedding, it will seem very strange at first. They are colorful, elaborate celebrations that can last multiple days. From choreographed dances during the Sangeet (the pre-wedding party) to the groom riding in on a horse, to the bride’s vibrant-colored Sari (there’s no white dress), they can feel otherworldly.
The traditions are so specific at an Indian wedding that you find out quickly whether you like or dislike the cultural experience (I love it). This isn’t a comment on whether Indian weddings are better or worse than other kinds of weddings – they are just unabashedly different.
Company cultures should be like Indian weddings. They need to have key elements that make them distinctly different from other companies.
