An Ode to the OKR – How to Motivate Greater Ambition in Teams

I remember the first time I wrote an OKR (objective and key result) at Google. “You should set your goals so that you attain 70%. That’s success,” my manager told me. “Even better if you have a moonshot goal in there, with a 5% likelihood of success.” I was uneasy with calling 70% goal achievement as success. The habits formed from 17 years of schooling and a 100 point scale run deep. John Doerr’s book Measure What Matters is a paean to the OKR. Andy Grove introduces Doerr to the idea at Intel and Doerr brings the concept to Google. Several years later, I found myself writing them. An OKR is a an objective with a key result. The objective is a goal. The key result is a quantified measure of success.` There are many goal management techniques, each with positives and negatives. I found OKRs effective for Continue reading "An Ode to the OKR – How to Motivate Greater Ambition in Teams"

A Crypto-Trading Uber Driver and a Billionaire’s Spat over Candy – On The Importance of Sticking to Your Strategy

At Redpoint’s annual investor meeting earlier this year, I quipped, “The day-trading taxi drivers of the dotcom era have been replaced by crypto-trading Uber drivers.” I said it tongue-in-cheek. But over the weekend, a grizzled Uber driver with a mane of grey hair and wind-and-sunburnt cheeks asked me about crypto. “Can you explain to me why public key/private key technology is important on the Blockchain?” He pointed out the Bitcoin ATM that charges 10% from his cigarette-infused Prius. “That’s for suckers; Coinbase charges only 2%,” he said as we whizzed past. A former yacht broker and pilot, he was deep in crypto. He likened it to Powerball. “I can put in a few bucks, buy some Dogecoin or Jesuscoin, and maybe it goes up 100x overnight and I’ve changed my life. I like Monero, too.” A few hours later, as I boarded the plane home, I
Continue reading "A Crypto-Trading Uber Driver and a Billionaire’s Spat over Candy – On The Importance of Sticking to Your Strategy"

The Challenge of Uncertainty

There’s the challenge of dealing with uncertainty, where you’re operating in the weird zone that you’re making decisions that have significant long term impact or that are difficult to reverse or course-correct in the face of great uncertainty. Uncertainty is often unnecessary in the sense that you could, in principle, reduce the uncertainty. You could go research the question more. You could obtain more information, or run an experiment. It’s not cosmic uncertainty, without absolute knowability. When there’s true, deep, un-mitigatable uncertainty then it’s not to hard to say, “we’re just going to choose something and make the best decision we can.” There’s a more frustrating uncertainty. When the uncertainty is not necessary. But the thing that’s limited is the cost in obtaining further information to reduce that uncertainty. And so you’re left in a dissatisfying situation in which I have to make a highly consequential decision with a Continue reading "The Challenge of Uncertainty"

The Quality of the Outcome and the Quality of the Decision

“Don’t be so hard on yourself when things go badly and don’t be so proud of yourself when they go well.” I think this is one of the hardest pieces of advice to follow. Chance is an important contributor to any outcome. sometimes we just get lucky. That recent crypto trade in which you made 25% in an hour. The time you met your significant other for the first time. The hiring decision in your startup that was a wild guess, but worked out beautifully. Annie Duke, a professional poker player, said the quote above. In hold ‘em poker, you may draw a King-high straight flush, one of the strongest hands in the game, and yet lose all your money. The odds are 1.5 million to 1. But you can still bust. In a recent interview, Duke talked about distinguishing the quality of the outcome and the Continue reading "The Quality of the Outcome and the Quality of the Decision"

The Effect of Flush Private Markets on Software IPOs

The venture capital markets are flush with capital. We’re approaching the heady days of the dot com era. In that epoch, despite the record volumes of venture dollars, startups went public quickly, in 4-5 years. Today, that timeframe is no longer realistic. In fact, the surfeit of private dollars delay IPOs.

From 2000-2005, the “typical” IPO-bound startup listed on an exchange 5 years after founding. After the Lehman collapse and the crisis of 2008, the IPO closed, and startup age spiked to 16 years median.

Since then, the trend has continued. 2017 and 2018 IPO startups are 11 years old when they do go public, more than double the early aughts.

The corollary to delayed IPOs: great companies age like bacterial colonies. They grow bigger with time. In 2017, the median company generated more than $160M in revenue. In 2018, the median IPO generated more than $340M.

Will this trend Continue reading "The Effect of Flush Private Markets on Software IPOs"

Why I Overestimate My Contribution to My Team

“When I die, I want all the people with whom I worked on group projects to lower me into my grave, so they can let me down one last time.” Someone once sent me this e-card as a joke. I laughed and laughed, and never forgot it. I can’t remember a school group project which teammembers contributed equally. Paradoxically, I bet everyone in the group felt the same way. There’s a good reason I bristled in those group projects. Every person in a team overestimates his or her contributions to the team. The bigger the team, the greater the overestimation - “especially when group members’ unequal responsibility allocations are made explicit.” Add an egocentrist, someone who takes more credit, and the social dynamics boil. Why does this happen? I suffer from a terrible bias. I know intimately the hardships and sacrifices I make. The late nights. Dead ends. Continue reading "Why I Overestimate My Contribution to My Team"

The Disappearance of the Fundraising Demo

Ten years ago, Guy Kawasaki took this photograph of me. I was attending my first YCombinator Demo Day, maybe three months into my time at Redpoint. Much has changed. I’m am not as young or as green. YCombinator has thrived and scaled. And the startup demo has disappeared. At that August Demo Day, each pitch lasted eight minutes. Without fail each featured a demonstration of the product. It was the height of the Web 2.0 era. The iPhone was just a year old and mobile hadn’t blossomed yet. The web was still the center of innovation. And the demo provided founders a chance to explain these innovations. I felt like I was seeing a wisp of the future incarnated in code. For example, this is Sachin Agarwal, the founder and CEO of Posterous. He was showing the audience how to create a blog post from an email. We were Continue reading "The Disappearance of the Fundraising Demo"

How to Reach More People with Content Marketing by Changing How You Write

Ben Franklin’s edits to the Declaration of Independence The average English sentence has been shortened by half over the last five hundred years. Read the first sentence of the Declaration of Independence to see why. It is 71 words long and contains 8 recursive clauses. I read it ten times before I understood it. I have 48 seconds with you, my reader. No time to mince words. To reach more people with your content, shorten your sentences and ditch the jargon. Why do we see jargon in business? The narrower the group of speakers, the more impenetrable the language. Linguists have observed this in Native American tongues.
the Mohawk word sahonwanhotónkwahse conveys as much meaning as the English sentence “She opened the door for him again.” In English, you need two clauses (one embedded inside the other) to say “He says she’s leaving,” but in Yup’ik, a language Continue reading "How to Reach More People with Content Marketing by Changing How You Write"

The Importance of Time Value of Money for Startups

A dollar today is worth more than a dollar tomorrow. This statement underpins all of finance. The idea has a fancy name: the Time Value of Money. It applies to all types of investments, including startups. Time Value of Money is the economic argument for startups to raise money when it’s available. If I give you a million dollars today, you can invest it. You might buy 151 bitcoins. Or invest in a certificate of deposit at 1.5%. Or pay a team of four engineers to build a feature for your software startup. Each of these are investments with some risk and some potential reward. If I promise you a million dollars a year from now, that’s worth much less. Bitcoin might 10x in that time, and you wouldn’t have missed the rally. You would have lost $15k in interest income from the CD. You would have to wait Continue reading "The Importance of Time Value of Money for Startups"

An Often Forgotten Characteristic About Your Startup’s Ideal Customer Profile

The Ideal Customer Profile. The perfect customer. Can you describe it for your startup? The more precisely you can describe it, the better. That will simplify disqualification. But articulating the ICP well isn’t enough. Vague ICPs are problematic. The company will focus on too broad a customer base, waste time and effort with unqualified prospects, and blunt their sales pitch with irrelevant value propositions. Clear ICPs can also be problematic. To describe the ideal customer well is not enough. Let’s use an example. A clear but useless ICP might be: a disenchanted thirtysomething mechanic who likes to play German board games, read Nietzsche and watch MMA. I can clearly articulate my ICP to myself and others. The target market is clear (and niche!) But how do I identify this person if I’m looking to sell to him? Where do I begin generating leads? Mechanics meetups? Board game conventions? Nihilist Continue reading "An Often Forgotten Characteristic About Your Startup’s Ideal Customer Profile"