Five Links for reading (Dec 2018 edition) – subscribe now

About ten times a year, I send an email to 35k+ people on five things to read. Below is the email from December 2018 (the Jan 2019 will come shortly). If you like these, subscribe to Five Links.

here are five links worth reading/viewing (this month we are focused on health care) … 

A Billionaire Pledges to Fight High Drug Prices, and the Industry Is Rattled by Peter Loftus
Five Links reader John Arnold has put $100 million behind efforts to curb drug prices.

Health care prices do not play the role most people believe by Random Critical Analysis
Interesting paper that suggests the problem in U.S. healthcare is the demand for services, not the expensive prices. (HT Alex Danco)

Melatonin: Much More than You Wanted to Know by Scott Alexander
As you know, an article from Slate Star Codex is almost mandatory in Five Links. 

Why Doctors Hate Their Computers by Atul Gawande
Like all Atul Gawande writings, this is incredibly insightful.  But like all Atul Gawande writings, this is also 3 times as long as it needs to be (so caution). 

Decline of cancer and heart disease (tweetstorm) by Aaron Mitchell
More and more, the most interesting “articles” are being published as tweetstorms. This is one of them.  (HT Matt Clifford)

Note: after reading 50+ articles (+1 book) on healthcare In November… my take-aways:
+ there is no 80/20 rule to fix U.S. healthcare.
+ there are a series of fixes that each improve the healthcare system by 2-5%.
+ so fixing U.S. healthcare is going to be really hard because no one thing will have a big effect.

In addition — Some books I read since the last Five Links:

Health Care Handbook by Elisabeth Askin and Nathan Moore
(HT Travis May)

How to Raise an Adult by Julie Lythcott-Haims  
(HT Brian Davis)

God is in the Crowd by Tal Keinan
(Tal is a Five Links reader)

Inspired: How to Create Tech Products Customers Love by Marty Cagan
(HT Lauren Spiegel)

the U.S. Healthcare system: it is complicated, nothing is as it seems, and there are no silver bullets

I spent the moth of November (2018) diving into the U.S. healthcare system. I read over 50 long-form articles, played with a bunch of Medicare datasets, and read one book. Below are a few random thoughts from my learnings.

There is no 80/20 rule
We all know U.S. healthcare is messed up. Compared to other countries … the outcomes are not superior and the costs are higher. And no one thinks the experience is a lot of fun.

Going into my deep dive, I thought I would come away with one big thing we could do to fix healthcare. To my surprise and disappointment, I did not see any silver bullets (even ones that could never pass Congress).

Instead healthcare needs hundreds of very small improvements
There are hundreds of important things we can do to improve U.S. healthcare … but no one thing will likely have more than 5% improvement. Which means this is going to be a really hard problem to solve. Really hard.

Does the U.S. spend too much money?
On the one hand, of course it does. We spend roughly double per capita on healthcare than the next leading country (without better outcomes). On the other hand, we spend more per capita on almost everything. We live in way bigger houses, we have bigger yards, we drive bigger cars. We also spend WAY more than 2x per capita on higher education.

So if you look at the ration of healthcare/higher-education (I know this is a weird ratio, but stay with me), we are the lower spending G20 country (by a wide margin).

So do we spend too much on healthcare? The answer is still yes but it is not nearly as bad as people think.

U.S. consumers significantly subsidize European consumers
One of the most interesting things I learned about is the wealth transfer from the U.S. to other very wealthy countries. Many countries pay dramatically lower for the same drugs than the average U.S. price. That’s because these countries negotiate as one market … but also because the marginal price of a drug is essentially zero so the drug companies have a prisoner’s dilemma game to play with the countries and often make the calculation that some money is better than no money.

A simple solution to this (from the U.S. perspective) would be to create a law that drug prices to U.S. government buyers (like Medicare, Medicare, Veterans, Military, etc.) must not be higher than any price to any first world country (it would still be ok to sell drugs for low prices to poor countries in Africa … but not to rich countries in Western Europe). That means that the U.S. government would never pay a higher price for a drug than the market price. It would also mean that prices for drugs would be standardized since all other first world countries would follow suit and create the same rule. That shift would result in U.S. drug prices falling and European drug prices rising — ended the billions of dollars that the U.S. is currently transferring to Europe.

Summation: a month of deep dive, I know less than I did when I started the journey. Healthcare is complicated. Nothing is as it seems. People in it are really smart but also generally really conflicted.

Note: I had dozens of tutors but I want to especially thank Travis May (CEO of Datavant) and Joel Quadracci (CEO of Quad Graphics) for their guidance.

the experts are (usually) wrong – so dial down your trust meter

The experts are wrong a lot. If there is not a clear truth, the experts are usually wrong more than 50% of the time.

Experts (those who predict the future for a living) are, more often than not, dart-throwers. They usually perform no better than chance. And recently they have performed even worse than chance.

“Economists have predicted nine of the last five recessions.”

Most experts are biased by their experiences. In fact, the most dangerous person is one who says they are unbiased. “I am just using facts, not opinions, for this prediction” is almost always wrong.

We are ALL biased. We see the world through a very hazy prism of our experiences.

There is no unbiased news outlet. Even “real news” has lots of untruth to it. Almost every news story I had intimate knowledge of made a significant reporting mistake or factual error in the story.

We’re human and we make mistakes. We’re human and we see the world with our strong bias. We overweight certain sources and underweight others. We discount data that is very good and we rely on data that is wrong. We see patterns when there are none and see coincidences when there are conspiracies.

The “expert” can be dangerous.

We live in a world where people spend a lot of time building their bona fides so they can make their living off their “expertise.” Most of the top 1% of earners make their living predicting the future. But because people come with huge biases, their predictions can often be very, very wrong.

In even the most noble professions (like medicine), people have huge biases. Study after study finds top surgeons recommending treatments that they specialize in … even when the problem may be better served from another procedure. That’s because for most of us, every hammer is a nail.

Sacred cows tend to not be that sacred.

Experts tend to talk to other experts and can get sucked into a dangerous groupthink. Once all experts agree on something, even when it is highly speculative, it can become calcified.

Experts often say “that cannot be done” like it is a rule of the universe. But instead of a low of gravity, it is more akin to a custom (like setting fork on a left side of the plate).

We see groupthink happen most often is the softer sciences like political science, sociology, foreign policy, and economics. The more specialized the field, the more people find themselves talking to each other … and the more they will be prone to repeat one another.

While it is harder to happen in hard science, we see it happen there too. Wrong ideas are clung on to too long because it is hard to change one’s mind about the world. Max Planck famously said “Science advances one funeral at a time.”

None of this means experts are trying to be sinister. Yes, sometimes people are on the payroll of an interest (for instance, many people who campaign against oil pipelines are indirectly funded by the railroad companies or the Russian government), but that is not usually the case. Biases control people’s thoughts much more than money.

Protect yourself from experts through contrarian thinking

“Conventional Wisdom” is often very conventional thinking.

Before accepting opinions as truth, think through the issues yourself. Don’t just look for agendas but look for biases. If a surgeon recommends a specific procedure that only her hospital does, seek out other opinions.

Seek out outcasts. Seek out non-expert experts who often challenge the status quo. Some that I would recommend are: Peter Thiel, Naval Ravikant, Nassim Taleb, Paul Graham, Judith Rich Harris, John Hempton, Charlie Songhurst, Tyler Cowen, Sam Altman, Jonathan Haidt, and Slate Star Codex. I’d even throw in some more mainstream thinkers like Malcolm Gladwell, Susan Athey, Daniel Kahneman, Richard Feynman, Tim Ferriss, Daniel Yergin, Robert Cialdini, Oliver Sacks, Elie Wiesel, Robert Caro, and Charlie Munger because people like them will always make you think.

Of course, experts can be right. They often are.

You don’t have time to question everything in this world — you might turn into the Unabomber if you did.

For instance, even if you cannot prove the earth is round, it is not a good idea to think the world is flat. It is likely that the government did not fake the moon landing. And when you were born, you probably were not delivered by stork.

The 40-year life lesson: experts are (very often) wrong

Just because someone knows much more about you about a particular subject, do not assume there are correct. Do not bestow authority on them just because they are wearing a lab coat or possess a PhD.

Summation: just because someone has spent more time learning about something, it does not mean that they are a closer to the truth than you.

This is expanded from my 2017 post on Quora.

some totally random Rules for Life (2019)

ABC: Always Be Charging
Whenever you have a chance to charge your devices (phone, laptop, etc), always do it. You never know when you will lack access to reliable power.

Always Be Reading Long-form
Read at least 7 hours a week of long-form. Read books. But also read well-written articles longer than 3 pages. Save time to go down reading rabbit holes. Feel free to cut out short-form reading (like clickbait articles) to make time for long-form. The airplane is a fantastic place to read.

Always Go to the Bathroom
Whenever you have a chance to go to the bathroom, take it. Never “hold it in.” Just makes you very uncomfortable and unproductive.

Always Be Listening Long-Form
We are in a podcast revolution — take advantage of it. You also can get many books (but unfortunately only 20% of good books) on audio.

Always Love Email
Email is the best form of communication ever invented. All new communications methods in the last 20 years are inferior to email. Email is the greatest asynchronous communication tool. For synchronous communication: meet in-person, by live video, or talk on the phone. Slack and Facebook Messenger can be productivity killers.

Always be Writing
Try to write something over 500 words a few times per week … even if the only person who reads it is yourself. This will help you collect your thoughts.

Sometimes Change your Mind
At least once a year, challenge yourself to change your mind about a deeply held belief (business, family, political, societal, etc.).

self-driving cars will cause the Rich to Get Even RICHER

When self-driving cars come (and I’m skeptical they will come in mass in the next 20 years … but that is for another post), everyone’s commute will be much faster. That is because cars will be able to coordinate with each other and rarely need to go below 80 miles/hour on highways (even during the busiest of times).

But once self-driving cars happen, the next thing is to allow cars to pay up to go EVEN faster. There is no reason a car can’t go 160 miles per hour and get you there in half the time.

Cars that don’t pay up for the privilege will be forced to yield to cars that do. Essentially expect to see surge pricing to get to places faster.

Would you pay an extra $100 to get from San Francisco to Los Angeles in 100 minutes by car? An extra $300?

Note: I’ve been thinking a LOT about transportation recently because of all the transportation-related companies that use SafeGraph Places.

Summation: while self-driving cars will be good for everyone, they will be GREAT for people with lots of money (especially in capitalist societies like the U.S. and China).

Waymo self-driving car

Shorter deadlines for offers lead to better employees

Deadlines for offers should be extremely short. Ideally they are under 36 hours. There is even a good argument for deadlines to be under 20 minutes (as long as the employee knows it is coming).

Beside the obvious criteria for a great employee (smart, gets things done, etc), the number one (less obvious) criteria is that they REALLY want to work at your company. They will be so much more effective if they really want to work for you.

They need to have a REAL attraction to your company. Maybe is is because of the company’s mission. Maybe is is because of the culture. Maybe it is because of the people (or their direct supervisor). Maybe it is because of the technology. Maybe it is to get rich. … there could be MANY reasons … but that reason has to equal a genuine excitement to join your company that is beyond the rational pros and cons.

This is why you should give offers with a really short deadline. If someone needs a lot of time to make a decision whether to join your company or not, they probably are not super excited about your company. They still could pick your company and be a solid contributor … but my experience is that they rarely turn out to be amazing.

The a phrase in romance “he’s just not into you” applies in recruiting as well. You want people that want you. If a candidate, after the hours and hours of interviews, projects, reference checks, etc. still needs more time to decide to join your company or not, you should move on.

Summation: to most optimize for a 10Xer, keep deadlines for offers short.

Photo by Pixabay on Pexels.com

How to Select Vendors: look for rate of improvement in the product

When selecting software vendors, besides for just doing the usual (feature analysis, price, compatibility, ease-of-use, etc.) look for one core x-factor: rate of improvement of the product.

The faster the product has been improving in the last year, the more likely it will improve in the coming years.

Look for products that get better quickly. Look for products that fix bugs and performance issues quickly. Look for products that add new features. Look for products that keep delighting customers.

One way to do this is note your evaluation of the product when you first see it and then in subsequent times that you see it.

Look for companies that publish change logs

Reward companies that publish clear change logs on their product and show how the product is getting better over time (which means they are honest about past bugs). We’ve been experimenting with publishing change logs at SafeGraph and it has significantly helped our sales cycle and ability to gain customer trust. In addition, it is helpful for current customers to keep track of our ongoing changes. We would love for other companies to copy us.

Summation: a great way to chose a vendor is to look for the rate their product is improving.

Photo by Christina Morillo on Pexels.com

Tipping for is popular in B2C … could it be a new trend in enterprise software?

Have you noticed that there has been a proliferation of opportunities to tip people? Tipping has become ubiquitous. It is everywhere. Well, everywhere in B2C. But I have not yet seen it in the B2B world.

Backstory: I absolutely hate tipping.  I have tipping anxiety.

Tipping is an awful thing. I’m the sucker that always gives a 20% tip (it is much easier math than 18%), even when the service does not warrant a tip. When I go abroad, the servers are shocked at my “American tips.”

Random questions:

  • Why are tips a percentage of revenue?  (The rich just get richer)
  • Why tip at all in a restaurant? Even worse, tipping at checkout counter.  Square has massively increased my tipping anxiety.  It is just a way of squeezing an extra 20% out of suckers like me.
  • Why isn’t tipping just included in the price? You don’t (yet) tip when you buy an airline ticket or buy a book from Amazon.

Tips used to be for showing appreciation but today they are usually just to avoid embarrassment.  

Tipping in the enterprise

In my almost 20 years of selling software, I have never been “tipped” by a client.  

But that got me thinking, maybe SafeGraph should start asking for a voluntary 15% “tip” during our quarterly-business-reviews (with customers).  Maybe 25% of clients would pay (if they had a way of doing it).  
I have no idea how these customers would pay … but wanted to put it out there to some of your smart readers can figure it out.  

Summation experiment: next time your lawyer does an outstanding job, try to tip her.

Photo by maitree rimthong on Pexels.com

Spending LOTS and LOTS of time alone is a key ingredient for massive success

Spending time alone is really, really important

If you are a big biography reader, you’ll find that most of the super successful entrepreneurs spent a massive amount of time alone when they were kids and young adults. And most of these people still spend a much larger percentage of their time alone today than most outsiders would think.

Especially when people are growing up, spending time alone gives one the space to explore, to be weird, to learn, to imagine, and to dream.

Reading is really (REALLY) important. 
Read a wide variety of books and articles that stretch your imagination. Don’t just read easy books (like Harry Potter). Read difficult texts that really stretch your mind.

Read fiction and non-fiction. Read wonderful novels written by authors from far-away lands. Read things that challenge your political thought. Read the Bible (New and Old Testament) and ancient mythology. And don’t just read conventional things assigned to you in school (like Hemingway, Shakespeare, Twain, and more) but try to seek out authors on your own.

Most people that are successful today (that grew up pre-Internet) spent a huge portion of their time just reading the encyclopedia. Ask almost any super successful person over 40 and they will tell you they spent gobs of time in the Library pouring through the encyclopedia. Many of them would eventually read every encyclopedia volume letter. These people had an insatiable need to learn new things. Today one can can do the same thing going down a Wikipedia wormhole.

When today’s successful people walked to class (in high school), they were probably reading a book or a magazine (in those days, it was a paper book). Some of these people even got injured walking into things because they were reading.

Most of these people had parents that asked them to READ LESS.

Today the encyclopedia is free and on the internet. But today the encyclopedia is so big that it would be impossible to read in a lifetime — so today choices about what you read could be a bit harder. But reading is still really important.

Play acting
At an early age, most of the super successful people spent more time play-acting than others. If you go through the top 100 tech entrepreneurs, very few of these people spent their time playing organized sports … they instead were in their bedroom, backyard, or nearby park playing by themselves (or with their siblings in the case of the Collisons). They were letting their imagination run wild.

They were imagining themselves as secret agents, slaying dragons, marshaling their toy soldiers to do battle, starting businesses, dealing with family situations, and more.

Experimenting
It is amazing how many successful people lit things on fire, blew things up, captured and studied bugs, built bird nests, and more. My guess is that every single one of the most successful people subjected themselves to multiple electric shocks (some on accident, some on purpose).

They were building, creating, viewing, and observing. And they were the ones in charge of the experiment — they were the prodders.

Lots of creative activities
While most of the super successful entrepreneurs are known for their right-brained prowess, most spent a very large percentage of their childhood and adolescence doing very creative things. They were writing short stories and plays, painting, sculpting, writing poems and lyrics, writing computer programs, and more.

Creating versus Consuming
Reading, watching wonderful movies, listening to music, etc. are all great ways to spend time. But they are passive — these are consuming functions.

Most of the super successful people spent a large percentage of their time creating vs. consuming. They were building things, starting things, etc. This is really important.

Today it is harder to spend time creating because there are so many more options to consume. In the pre-Internet days, one would get bored pretty quickly of the consuming options (usually the best option was to read a book or watch bad television) where today there are just so many more options. In fact, the tablet is essentially designed to maximize consumption (unlike the PC which is a better tool for creation).

Get away from the social pressures of school
School, especially middle school and high school, is socially incredibly high pressure for everyone. People are jockeying for position and cliques are forming and unwinding constantly. There is a “Game of Thrones” aspect to the social standing within high school that is ultra competitive and hard to escape.

By spending time alone, people get needed breaks from the high school Game of Thrones. Alone-time allows you to spend time actually exploring yourself (rather than spending time conforming to some sort of norm).

Today, alone-time is frowned upon
Something happened in the last 30 years to encourage parents to spend more time with their kids. Another huge trend has been for parents to give their kids opportunities by enrolling them in lots of sports, weekend classes, summer learning retreats, and more.

While there are so many good things about the trend of more involved parenting, one of the very important unintended consequences is that kids have significantly less alone-time than they once did. And even when they are alone, they have the means to be a part of of the larger group through social networks, SMS, and more. So it is harder for them to escape the social pressures of school.

So we should expect the best strategy for kids today to not be the same as the best strategy for past generations.

Summation: most everyone (young and old) — especially those that have good social lives and have been reasonably successful — could use more time alone and more time to themselves.

Note: this article is updated from the original: a 2016 post on Quora.

The LiveRamp Mafia (and company alumni networks)

the LiveRamp team on Aug 22, 2012

Many companies have strong alumni networks. The most famous of which is the PayPal Mafia which includes Peter Thiel, Reid Hoffman, Elon Musk, David Sacks, Jeremy Stoppelman, Luke Nosek, Keith Rabois, Reid Hoffman, Max Levchin, Roelof Botha, and many others. It is a truly astonishing alumni network.

The best predictor of having a strong alumni network is a company that: (1) had a successful outcome but not crazy successful (like a Facebook or a Google); (2) the company went through a bunch of trying times (and almost went out of business); and (3) the employees built a company that was super enduring and even prospered post-exit.

PayPal fits all three of these criteria. It had a strong exit (but not Google-like escape velocity), it almost went out of business multiple times (highly recommend reading PayPal Wars by Eric Jackson), and it continues today as an independent company (NASDAQ:PYPL) that was spun out of eBay (its original acquirer in 2002).

I often get asked why the LiveRamp alumni have been so successful. While the exit was only 20% of PayPal, it had many of the exact same characteristics. (1) The exit was good; (2) the company almost went out of business multiple times (and like PayPal, we had to pivot hard from “Rapleaf” to “LiveRamp”); and (3) we built a company so enduring that it ended up being the crown jewel of the acquirer and now is an independent public company (trades at NYSE:RAMP).

At the time of announcing our exit (in May 2014), LiveRamp was around 50 people. It is amazing how many of those original LiveRampers are now doing super interesting things.

So without further ado, I list the notable LiveRamp alumni and what they are doing at time of writing (Jan 2019) … please let me know if I missed anyone.

  • Caitlin MacDonald Bartley – CEO at Cred
  • Ryan Buckley – CEO at MightySignal
  • Eric Chernoff – CEO and cofounder at Retain.ai
  • Phil Davis – Chief Business Officer at TowerData
  • Ken Dreifach – Member, ZwillGen
  • Bryan Duxbury – Chief Technologist at StreamSets.
  • Dayo Esho – CEO and cofounder of TravelJoy. Dayo was a cofounder of LiveRamp.
  • Greg Fodor – fmr CTO and cofounder at AltspaceVR
  • Auren Hoffman (that’s me) – CEO of SafeGraph. Previously CEO and cofounder of LiveRamp.
  • Thomas Kielbus – cofounder at RideOS
  • Chris Kline – cofounder at CTO at TravelJoy
  • Ron Johnson – Vice President Sales Analytics at Workday
  • Anders Jones – CEO at Facet Wealth
  • Jeremy Lizt – on the beach taking a much needed break. Jeremy was cofounder of LiveRamp and ran engineering from founding (2006) until Jan 2018.
  • Nathan Marz – founder of Apache Storm
  • Travis May – CEO and cofounder of Datavant. (Travis succeeded me in running LiveRamp in 2015)
  • Luke McGuinness – President & COO at TVision Insights
  • Patrick McKenna – Founder, HighRidge Venture Partners
  • Bryan Morris – CFO at Kinetica
  • Brent Perez – President and cofounder at SafeGraph
  • Mike Safai – Founding Partner at Dexterity Capital
  • Armaan Sarkar – CTO at Wove
  • Dan Scudder – CEO at Highland Math. Dan is the person responsible for coming up with the “LiveRamp” name.
  • Pete Schlaefer – VP Business Operations at AppLovin
  • Justin Schuster – Head of Marketing at Blend
  • Manish Shah – CEO of Peerwell. Manish was cofounder of LiveRamp.
  • Mohammad Shahangian – Head of Data Science at Pinterest
  • Vlad Shulman – cofounder and CTO of Retain.ai
  • Eddie Siegel – CEO and cofounder at Wove
  • Dan Stevens – cofounder at VP Data at Windfall Data.
  • Vivek Sodera – Co-Founder at Superhuman. Vivek was cofounder at LiveRamp.
  • Nikhil Sud – CTO at CoWrks
  • Chris Taylor – CRO at Wove
  • Michel Tricot – cofounder at RideOS
  • Alex Wasserman – cofounder at Wove
  • Takashi Yonebayashi – CTO at SafeGraph

In addition, many of the best people at LiveRamp are STILL at LiveRamp. That includes:

  • James Arra – President and Chief Commercial Officer at LiveRamp
  • Sean Carr – VP of Engineering at LiveRamp
  • Anneka Gupta- President and Head of Products and Platforms at LiveRamp
  • Joel Jewitt – VP of Strategic Operations at LiveRamp
  • Allison Metcalfe – General Manager of LiveRamp TV at LiveRamp
  • Rebecca Stone – Head of Marketing at LiveRamp
  • and many many others at the company

Summation:  while LiveRamp was a company chock-full of talent. Its alumni success was due to being a company that: (1) had a successful outcome but not crazy successful (like a Facebook or a Google); (2) the company went through a bunch of trying times (and almost went out of business); and (3) the employees built a company that was super enduring and even prospered post-exit.

What-You-Know now beats Who-You-Know

What-You-Knows ascends past Who-You-Knows

The old adage that “it’s not what-you-know but who-you-know” is so entrenched that we don’t question the premise. Undoubtedly, who-you-know has been important throughout history, whether in the trade networks of ancient Greece, or in the dense web of high tech companies in Silicon Valley. A good network is especially important when capital is scarce, information hoarded, and when finding the appropriate contacts is difficult. For much of history, knowing the right people was crucial if you wanted cash and cache.

By definition: a “What-You-Know” knows a lot about a certain thing. They possess a lot of knowledge, insight, and research. They usually spend a lot of time reading broadly and interacting with a few dozen select people (strong ties).

A “Who-You-Know” generally has a very large network of weak ties. The ultimate who-you-knows make money by being in a profession that introduce two what-you-knows together and taking a vig. In the 1980s, the professions with the highest prestige were the what-you-know professions (like investment banker, corporate lawyer, real estate agent, wealth manager, etc.).

Because the who-you-knows were constantly talking to smart what-you-knows, the who-you-knows ACTUALLY BECOME what-you-knows because they had access to a ton of proprietary knowledge.

Think back to the 1980s … there were no blogs and there were a very small number of news sources. Information was really hoarded and having a deep network was one of the best ways to get access to interesting and unique knowledge.

But something happened in the last 10 years … it is easier to find people, connect with them, learn new things, and get access to capital. So the what-you-know has been ascendant.

Finding people is easier.  So is connecting with them.

Tools such as LinkedIn and Google, democratize the ability to network. If before it was difficult to ferret out the perfect contact, today finding a right marine biologist in New Zealand or the genetic researcher in Norway is as easy as a Google search. And social media has made it even easier to connect with that person.  

Access to capital is much easier.

Today, capital is relatively plentiful and accessible. In fact, it is the easiest time in history to get capital. That does not mean getting capital is “easy” — it certainly is still really hard. But it is significantly easier than in the 1980s (and the 1980s were easier than the 1880s). It is also much easier than ever to get access to people who have money (accessing capital can be as easy as sending an email). 

Access to information is easier.

Information, too, has been democratized. It used to be that if you wanted to get access to cutting-edge ideas in technology, you needed an invitation to an exclusive conference like TED … or to attend a university like MIT. Today, TED lectures and MIT courses are offered free online. The only barrier to most of the world’s best information is knowing English (and even that is changing).  Some of the best information is available on blogs.

As an aside, I count myself extremely lucky to be friends with Tyler Cowen (who is truly a wondrous person). But if I knew someone like that in the 1980s, I might have 95% advantage (in getting interesting information) than people that did not know him. Today, anyone can read Tyler’s blog (which I highly recommend you do). It is chock-full of information. My information advantage in knowing Tyler may only be 15% more than those that do not. That is a huge change in a short time.

Given our hyper-connected world, could it be that “who you know,” while still important, matters a little less than in the past? Could it be that “what you know” carries more weight? The answer to both questions is undeniably “yes.”

My intuition is that “what you know” has now crossed the line to be more important … and possibly even MUCH MORE important … than “who you know.” Like Kurt Vonnegut said in Breakfast for Champions; “new knowledge is the most valuable commodity on earth. The more truth we have to work with, the richer we become.” 

In today’s world, if you know something really compelling, you will be sought out … and sought out directly. In the past, the people with connections were gatekeepers who controlled access to the elite circle and got paid handsomely for that. Today, people that invent interesting things (the true What-You-Know people) will reap many more rewards than the brokers who make introductions.  

Even the traditional who-you-know professions such as banking and law are becoming more specialized.  The lawyer that understands the intricate tax implications of U.S.-Brazil joint ventures is now much more valuable than the generalist lawyer that introduces you to that person.   

Today the professions most prized are the what-you-knows. The inventors, hedge fund managers, etc. One hundred years ago, most inventors would capture only a small portion of their intellectual property. Most of it would be taken by the who-you-knows.

All this does not mean that your network isn’t important. Of course it is. Who-you-know is still incredibly useful. But it will just be less important than it has been in the past.  Even the Wizard of Oz was looking to network: just before he leaves the Emerald City he tells Dorothy that he is off “to confer, converse and otherwise hobnob with my brother wizards.”

Summation: In the new world of abundant capital, easy access to information and people with knowledge, the what-you-know skills are more important than those of the who-you-know.

This is drawn from my original 2012 post in Summation and my  2014 post on Quora.

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Accelerate your personal growth by getting more opportunities to fail

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 of skill) will slow over time). 
 
To grow quickly, you need a job with the following criteria:

  1. You’re surrounded by people who are super smart
  2. You have many opportunities 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 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. Because you know that everyone else the company hired went through the same process.  So never take a job at a company that doesn’t put you through the ringer and make it really hard to get an offer. If the offer comes easy, best to decline the offer.
 
Opportunities 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. I will not improve my tennis game playing against my six-year-old. (Of course, I will also not improve playing against Roger Federer). Too often, undergrads are put into jobs that they will definitely succeed at (this is too often true at some of the “best” places to work like McKinsey, Goldman Sachs, and Google). And while definite success initially feels good, it doesn’t help you grow very fast. 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 who 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. If your abilities warrant it, you can also be given the chance. Also ask people during the interview process where you could be in three years if you turn out to be a superstar. If the company says “executive” — then that’s a good sign. (too often though it is “associate level 3”).
 
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 have been choosing start-ups over traditional choices like Google, Goldman Sachs, 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.  So you should expect to make almost 2x more at a company that will offer you lower growth company than at a company that will give you the option to get high growth. You have to decide for yourself if that trade-off is worth it.
 
Summation: 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.

Note: this is based on a 2016 post I did in Quora.