Podcast
David Senra
Hosted by David Senra · EN
60episodes
Episodes
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A growth masterclass with Judd Legum of Popular Information
Jul 17, 201900:03:35Tap to summarizePopular Information is my full time job. I don’t do anything else that generates income. I just write my newsletter. At the beginning, it was a leap of faith. It worked out [for me] in a short amount of time. . . I had no idea how well it was going to go. I had no existing email list.I was worried about wiring about politics. Some other newsletters like Sinocism and Stratechery can be written off as business expenses. Both of those cover topics where there is some money to be made. They [the subscribers] can pick up one insight and it would pay for the subscription costs 100 times over. I wasn’t providing that because I talk about politics. So I was worried nobody would pay. I knew that I could find interesting things to write about that other people were focused on. But I was very concerned and worried that no one would want to pay for that. [Before turning on the option of a paid version] I was able to build my free list to around 20,000. Lean into your core strength: My core strength is the ability to do deep-dive research quickly. People will pay for information not available elsewhere. Something I didn’t anticipate: I thought the paywall motivated people [to upgrade to paid subscriptions]. But for most people that is not it. For most people they support you because what you are producing they really value and they want to be a part of it. Most people do not want more email. But if you create a different value proposition and create something you can’t get anywhere else they will support things they value. It’s the value not the frequency. If you create something and just wait for something to happen - I can tell you nothing will happen- you have to work on it [getting the word out]. Think of it this way: You’ve got two jobs. 1) Writing the newsletter. 2) You are the chief marketing officer / hype person. What do you think of the advantages of twitter threads instead of one off tweets? I think there are a lot of advantages. Social media is a brawl for peoples attention. Threads send more content into the ring. You have a better chance of capturing what is interesting about your newsletter in a thread than a single tweet. Creating a popular thread is more likely to get you more followers than an individual tweet. Full podcast here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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Long-Term Stock Exchange founder Eric Ries
Jul 15, 201900:05:23Tap to summarize* Long Term Stock Exchange is the 5th company in the United States that is authorized to operate a national securities exchange. * Our idea was to focus not on trading stocks, but on creating a better experience for being a public company. One that would allow companies to think more in generational terms. Long term, multi-stakeholder principals. And have that be part of every employees lived experience. * Why is there a need to have a different kind of stock exchange? Over the last 20 years the number of public companies in the US has been cut in half. If you keep extrapolating that trend what will we have ? Four giant tech companies that own everything and everything else will be private? * Companies are not going public if they don’t have to. The average time to IPO is up dramatically in the last 20 years. There is more M&A activity. There has been a rise of private equity. The general public is being left out of growth. * Does that really make sense? Is it a good idea for industry — especially the tech industry —to build products that affect everybody but the positive side of that success should be distributed to only a narrow set of people? I don’t think that is a good idea. * 80% of the companies that went public in 2018 were not profitable. * Signs of short term thinking by public companies: lower investing in R&D, lower investments in employer well being. * We have tried to build an exchange with a different business model. One that is not all about trading. We enable companies to pledge to do the right thing. On LTSE companies make pledges. If the companies violate these pledges that it is securities fraud. * Example of a pledge: You could pledge and say we aren’t going to use short term compensation instruments. Our executives will only be compensated by longer term, more value aligned instruments.* You would think that a company that was intensely short term, metrics driven, quarter-to-quarter based, would move fast. But if you actually study companies you notice those behaviors actually slow everything down. The fastest companies have this incredibly long-term oriented philosophy. You would think that would make people go slow. Why is that? * Budgetary decisions ultimately make things political, slow, and bureaucratic. As a consequence you don’t have a way to hold people accountable to the things that really matter. * Metrics are there to support vision. Not to replace it. * Full video here. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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How to Make $2.5 Million as a Solo Founder by Teaching What You Love with Adam Wathan
Jul 12, 201900:08:16Tap to summarizeA lot of people can learn by watching you learn. [The opportunity Adam is pursuing] I think the education around teaching people how to be software developers is broken in a lot of ways. I don’t think the old-school university institutions do a very good job preparing people to be developers. I think learning to be a software developer should be treated like learning to be a carpenter. Where you actually get to learn from other people and do the job. Universities tend to focus on the theoretical stuff that isn’t necessarily preparing you for working in the field. I’m not really happy unless I’m learning. I need to have something I’m excited about. Something that I’m diving into and trying to get better at. [This applies to things outside of work too] When I was obsessed with powerlifting I was reading Russian strength training manuals and translating them into English so I could find what approaches people were using in different places. I’ll go to the ends of the earth to find the information I want. All of this was somewhat of an accident. When I released my first book I didn’t have aspirations to be a full-time author/ course creator. I did it from a passion for making things and putting them on the internet. I wasn’t doing it to escape the 9 to 5. That just happened. [Courtland]: Today your courses and books have generated millions of dollars in sales. You get to keep all of that. You don’t have a publisher. You don’t have an agent. It’s all yours. Something I never thought too much about until I was in it: Your life is a lot different when you run your own business than it is when you have a job. I feel like I’m retired now because I get to work on the things that I want to work on. I can work my own hours. I have no one telling me what to do. All my income is not coupled to the amount of effort I put in. That is only possible when you have equity in something that makes money. Advice that helped Adam get started: Start with a trip wire product. A product really small that you could charge $10 for. It gets your feet wet. You get to practice with marketing. Anyone who buys that is going to be more likely to buy from you in the future. Adam’s wife’s reaction to his first really successful launch: She was scared. This doesn’t seem right. Are we doing something illegal? You are not supposed to just have money like this show up in your bank account. I certainly don’t think building an audience could ever be a bad thing. Be helpful on the internet. Even if you don’t have anything to sell. Look for what energizes you. Look for some alignment between the things you derive satisfaction from and things that also contribute to your end goal. Common bad advice people give is that the first step to validating a product idea is make a landing page. To me that is the last step. No one is going to sign up on a landing page to buy something from someone who they have never heard of. Someone who has never delivered value before. The best way to test is to create free content first. Adam’s most successful product launch so far: Refactoring UI did $40,000 in the first few hours. We hadn’t told a single person [that it was live]. It did close to $400,000 on the first day. $1 million in the first month. $1.3 million in total so far. Tweets are not just sitting down and tweeting something out in 3 seconds. Some tweets take 2 weeks to make. They are like blog posts. Sometimes harder since you have to distill it into 280 characters. Tweeting about a blog post is not going to get as much engagement as fitting the information from the blog post into the tweet. When you first announce a product [and start to collect emails] you get a lot of signups on the first few days but then it drops off completely. What I do to keep new people signing up to the list is as I do updates to the product —like a new chapter or post — I make sure I announce that I’ll be sending that email on other channels first. Example: 2 hours from now I’m sending out a new chapter from Refactoring UI. In case you are not on the list here is the landing page in case you want to get a copy. Don’t obsess over analytics. It is not the right place to invest your energy. I have no idea how many visitors we have on our landing pages. I don’t know what percentage of those people sign up. I never thought to a/b test anything. I don’t know what websites they are coming from. All I know is anytime I put out a free blog post, a well-crafted twitter tip, or do a live stream I make more money. Those are activities that are delivering value to other people that I enjoy doing. Optimizing analytics would not move the needle as much as making more awesome free stuff and being valuable to people on the internet. Better to build a small product really well than a large one sloppily. [The SLC: Simple, lovable, complete product. Make a really good skateboard don’t make a crappy car.] Full podcast here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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A Conversation With Twilio Founder Jeff Lawson On The Evolution Of Communication
Jul 10, 201900:09:59Tap to summarizeI really think that some of the best things that happen come from a renaissance person mindset. It takes a whole person. A whole set of experiences to really bring about ideas and innovations. We all go through life and have these wide varieties of experiences. Things we are exposed to. You have to believe the culmination of the unique experiences that you build up on your career, and in your life, are the fuel that will take you to wherever you go next. \If you have the same life experiences as everyone else how are you going to have an innovative idea? It is the full set of experiences that enable us as entrepreneurs to actually do our best work. Two things that differentiate humans from every other species: [1] We communicate in a more sophisticated way and [2] we build more sophisticated tools. Twilio sits at the intersection of those two most fundamental human things. We are in the earliest stages in what will be seen as the great communications renaissance. For most of humanity communicating meant talking to someone that was within a few feet of you. For the past 150 years you could communicate at a distance. Most of that was by a phone call. All that has changed in the last 15 years. The frequency with which we now communicate with each other brings us closer. I think it is completely understated the way digital technologies are transforming our relationships. The idea that one company would bring you all the innovation in the world? No way that’s going to happen. The thing that creates innovations is the creative energy of millions of developers and the entrepreneurial environment. You have to step back and think: What is the purpose of communication? It is to engage with people with whom we care and depend on. We are confusing that with complete strangers, bots, and manipulation campaigns of foreign governments. Then throw into the mix that the whole motivation of these companies is not to connect us —it is to keep us glued to the screen.There is a reason companies like Facebook and Twitter are not communications companies. They are media companies. The job of a media company is to keep you glued to a screen. The job of a communication company is to connect you. I think you should take a step back and be weary of a system that is designed to keep you glued to a screen. Be weary of anonymous people on the internet. The other insane thing is when someone says something crazy to you online — who are you arguing with? Why is this person worth your time or engagement? I think we should just focus on the real people that are actually important to our lives. That seems like a much more fulfilling way to live our lives, doesn’t it? I think that we are reaching this point of recognition that technology has the ability to manipulate the human mind at a chemical level. [Technology is] Hacking the brain stem to do the bidding of the people who write that software. For a long time we failed to recognize that. With that recognition I am hopeful we will become skeptical to some of these technologies. I’ve always thought that communications - the market Twilio is addressing - is essentially limitless in potential. Therefore we can keep building this company for decades. We could build an iconic tech company for the ages. [Because] How often do you get to see one of the largest and most important industries on the planet undergo a once-in-a-lifetime transformation? From its legacy in hardware to its future in software. [As a public company] We have a bigger stage but we focus on the same things: Our customers, our product, our team. If you take your eye off those things then you are doing it wrong. This is one of those once-in-a-lifetime opportunities to take new technologies —that allow you to build things that operate at scale — and build amazing companies as an entrepreneur because of it. Full podcast here. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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Marc Andreessen & Ben Horowitz on Entrepreneurs, Then and Now [a16z Podcast]
Jul 8, 201900:09:31Tap to summarizeMarc Andreessen: Two categories of entrepreneurs that have risen in the last decade. [1] O to O: Online to offline. Like Airbnb, Lyft, Uber etc. Those founders are much more operationally focused than the previous generation. It’s not just software. Those companies have a big real world logistical operations component. That has turned out to be a different kind of founder. They are more of a throwback. Like the semiconductor founders from 30 years ago: Harder core, dirt under the fingernails. Marc Andreessen: [2] The other is the rise of the deep domain expert in a science like biology. A biology or chemistry PhD. [In the past] If you met a newly minted biology PhD they wouldn’t know that much about computers. Now they basically have a dual PhD in computer science. . . So you have these dual discipline founders. That is enticing. I think that is new. Marc Andreessen: [On the founding of A16Z] There was a throwback element to what we were doing. We could talk about the history of venture. We spent a lot of time digging into the history. We were inspired by the people who came before us. Marc Andreessen: [Another difference] We took seriously this idea of building the institution. In particular the building of a network and ecosystem. We made a long term, systematic, and costly investment [in the network]. That’s why we have all these operating functions and all these professionals here. Marc Andreessen: A lot of people in the early 90s [investors, press] doubted the future of the Internet. We pitched all the big media companies [in the 90s]. They said the future [of the internet ] is AOL because AOL pays us for our content. On the internet we have to spend money to put up our content so that’s [obviously] never going to work. This thing is happening that will fundamentally change the world and people pooh pooh it. That might be the logical response because a lot of new things come along and people claim it will change the world. Most of those things don’t. . .Maybe our lot in life as founders is to be the fringe element. Ben Horowitz: Prices of companies are always incorrect. Always. They are valued on future performance and no one knows what that is. Ben Horowitz: What is going to be the user interaction model after the iPhone? What is the next platform? That is a big open question right now. Marc Andreessen: [When analyzing an opportunity] We default into thinking this will happen [default optimism]. We don’t spend a lot of time on will this happen. Will this be a thing? Instead let’s assume it does happen. If it does happen where does it go? How high is up? How big can it get? You are looking for the things that can get really, really big. Marc Andreessen: A Peter Thielism we quote all the time: It is not the first company that gets all the money. It is the last company in the market that gets all the money. In other words, it is the company that takes the market and forecloses the opportunity for startups behind it. Marc Andreessen: Edison tried 3,000 compounds for the light bulb before he figured out the filament.Ben Horowitz: Just knowing that you are not the stupidest entrepreneur of all time is really valuable. [His book The Hard Thing About Hard Things is about this] Ben Horowitz: The thing that helped us the most was copying Michael Ovitz’s model at CAA. That jump-started us by five years. I can’t believe how well it worked. [You can read more about Ovitz’s model in his book Who Is Michael Ovitz?] Marc Andreessen: Book recommendation: Thinking in Bets: Making Smarter Decisions When You Don't Have All the Facts by Annie Duke. She talks about what is the nature of a mistake in a probabilistic domain? She uses the term resulting. Resulting is the process of looking at a bet that was made in a probabilistic domain that didn’t pan out and concluding that was a mistake. If you are in a probabilistic business resulting is the root of all evil because you will learn the wrong lessons. She says the thing to do is clearly separate process and outcome. Probabilistic domains means you don’t know the outcome of any bet ahead of time. [Since you don't know the outcome ahead of time] You need to design the best possible process to generate the best possible set of outcomes over time. Ben Horowitz: Jeff Bezos has a real good idea. He says we rate people on their inputs not the outputs. Stewart: From the entrepreneur’s perspective having a whole lot of money takes away a very critical forcing function which is: I’m about to run out of money. I better figure this out. Marc Andreessen: Favorite two books of the year: How History Gets Things Wrong: The Neuroscience of Our Addiction to Stories and Can't Hurt Me: Master Your Mind and Defy the Odds. Full podcast here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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Jeff Bezos on The Electricity Metaphor for the Web's Future
Jul 5, 201900:07:37Tap to summarizeThe Internet is so incredible it is hard to get the right analogy for it. A lot of how we decide how we react to things and what to expect about the future depends on how we categorize them. The tempting analogy for the boom/bust of the Internet is The Gold Rush. How The Internet Rush and The Gold Rush were similar: Both were very real. Huge boom. Huge bust. Lots of hype. So many people left what they were doing to join both The Gold Rush and The Internet Rush. In The Gold Rush people literally jumped ship. San Francisco harbor was clogged with 600 abandoned ships. Entrepreneurs turned the ships into hotels. They had a bad burn rate in The Gold Rush. They loaded up their mules and horses and didn’t plan right. They didn’t know how far they had to go. It was so bad most of the horses died before they could get where they were going. The same thing happened in The Internet Rush. Very bad burn rate calculations. OurBeginning.com spent $3.5 million on an ad for the Super Bowl when they had $1 million in revenue. Where the analogy starts to diverge: In a gold rush when it is over it is over. There is a much better analogy that allows you to be incredibly optimistic and that analogy is the electric industry. There are a lot of similarities between the Internet and the electric industry. They are both thin, horizontal, enabling layers that go across lots of different industries. It is not a specific thing. They both can be used as incredible means of transmitting power. They both are an incredible means of communicating information flows. The part of the electric revolution I want to focus on is the golden age of appliances. The killer app that got the world ready for appliances was the light bulb. They weren’t thinking about appliances when they wired the world. They weren’t putting electricity into the home. They were putting lighting into the home. Appliances benefited from the heavy infrastructure that was laid down by the electric revolution. The Internet got to stand on top of all the heavy infrastructure that was put in place because of the long distance telephone network. [At the beginning of the golden age of appliances] They hadn't yet invented the off switch. That came much later. They hadn’t invented the electrical outlet either. If you think of the Internet in terms of The Gold Rush you would be pretty depressed right now. The last nugget of gold would be gone. With innovation there isn’t a last nugget. Every new thing creates two new questions and two new opportunities. We are at the 1908 Hurley Washing Machine stage of the Internet. That is the level of primitiveness of where we are. If you really do believe it is the very very beginning then you are incredibly optimistic. I do think there is more innovation ahead of us than there is behind us. We are very very early. Full video here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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Invest Like The Best Podcast: Bill Gurley on All Things Business & Investing
Jul 3, 201900:11:56Tap to summarizeThe essay Increasing Returns and the New World of Business by Brian Arthur was influential to Bill. There is a book called Complexity: The Emerging Science at the Edge of Order and Chaos. It is about the rise of the Sante Fe Institute. In that book, Brian Arthur is one of the heroes. He had a lot of radical, different ideas. The notion of increasing returns: Some company that got to a big level would find it even easier to get to the next level. I was covering Microsoft at the time on Wall Street. You could see this in play. The more of the OS that existed the more apps that were written for the platform. The more apps people wrote for the platform the value of the platform went higher. It just kept paying off. You ask yourself which other businesses are susceptible for this? This has been a mainstay mental model that I’ve kept in the back of my mind for every single investment we have ever made. There is a concept that is known but no one has quite landed yet called the interest graph. This concept that there is a site or app you could go to and everyone that has your shared interest was already there. Example: I like mountain biking, this is my level, and I live here. I would then be automatically grouped with similar people. If you could do this it would monetize like crazy. I wouldn’t be shocked if a company [that does this] popped up tomorrow. A rule to get a marketplace or UGC [user generated content] off the ground is to do tons of unscalable things. This drives 90% of entrepreneurs who have been to business school nuts. They say we can’t do this! How are we going to do this at scale? I say we aren’t going to do this at scale. This is a flywheel. We need to get it spinning. The cost of this activity today is irrelevant to the marginal cost of the activity down the road because we are going to stop doing what we are doing. Example of this in the Glassdoor case: The very first company that was reviewed was Cicso. The founders went to the Starbucks near Cisco with a pen and paper and interviewed people for reviews. There is zero chance that’s going to be the long-term business effort but you have to seed the market. I very frequently run into entrepreneurs who think they need to expand to 10 cities really quickly. I’m like no. If you have incredible unit economics and growth metrics in a single city - where it is obvious that your playbook is working - that is way more interesting. I’m always surprised by what entrepreneurs can uncover. When it happens you say oh I should have thought about that. But you didn’t. Until the Internet, there was no way to have perfect [or close to it] informational asymmetry. Now we can connect someone with a skill set being available and someone with that need. . . If there is a way to link these people there has to be more economic unlock. No one has really nailed that yet. [Tutors, coaches, plumbers, etc.] We are creating more connectivity. Ideas can spread super fast. I’m amazed at the quality of conversations I have with people [some of which I didn’t know ] over Twitter DM. A lot of people have started asking about vertical LinkedIn’s. That’s really interesting. I look forward 10 years and think won’t everyone who is in this occupation be connected in some way? Certain businesses are prone to monogamy: babysitters, hair cutters, dentists, doctors. If things are succeeding you are not changing. Those businesses are tougher for marketplaces. Restaurants are prone to promiscuity. You go to your favorites but you want to try new ones constantly. That’s a different dynamic for a marketplace.I’m fairly confident that in the very long run companies that are very good allocators of capital are going to trade at much higher multiples. Even if you are in a capital intensive industry you can understand this construct. I’m 100% convinced that Jeff Bezos has understood this since the beginning of Amazon but these entrepreneurs [some Silicon Valley entrepreneurs] don’t. Bill’s essay on this idea: All Revenue Is Not Created Equal.For the first time in history, private companies are the ones with more money and are attacking the long-held incumbents. That is a radical thing to think about. [On the absurdity of IPO vs Direct Listing] Spotify is a little below its first trade price. Same as Uber and Lyft. But nobody says anything because no banker picked a price out of a hat and allocated capital based on that. Why? Because an algorithm properly determined how to match the buyers and sellers. In the day of the Internet, you can know more about a subject matter than anyone else. You can keep narrowing the scope of that subject until you are the one who knows the most. Everyone else would run out of time. I think it is critical to start with the historians of your industry and craft and know all that happened prior to now. [This is one of the reasons I read biographies of entrepreneurs on Founders podcast.] For me that was having the bedrock of Munger, Graham, Dodd, Lynch. [Knowing this] gives me a different frame of mind than most of the people out here. You can do the same thing in any industry. Study the pioneers. I still read today obsessively.Bill’s talk Runnin’ Down A Dream: How to Succeed and Thrive in a Career You Love. Full podcast here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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Venture Stories Podcast: Bill Gates on Advice For Founders, Mistakes, and Philanthropy
Jul 1, 201900:09:03Tap to summarizeMicrosoft was lucky that it was not a capital intensive business. It was financed by money I had made in high school. I did the school scheduling. There were all sorts of things you could do with software to make money fairly easy in those days because the number of people who knew software was very small. We knew software was this magical thing. Weirdly people didn’t understand that Moore’s law would mean computing power would be infinite. The best way to think about it was software would be the limiting factor towards any digitally assisted activity. We had lots of customers who went bankrupt. I was hiring people who had children. They were moving to the city [for the job]. I always did this calculation: Do I have enough money that if no one pays me I can still pay the employees for a whole year? [Why he recruited Steve Ballmer] I realized I needed somebody who could hire people and tell me not to sell things that weren’t done yet. [Early Microsoft] Was a nice mix of young, naive, over optimistic people [who controlled everything] and the adults who could ask us to think twice before we did 3 crazy things per day. . .We [the young people at Microsoft] learned to accept the fact that they [the adults] weren’t quite as intense as we were. They had wives and kids. They would leave at some point during the day. You can over worship and mythologize the idea of working extremely hard. It is true I didn’t believe in weekends. I didn’t believe in vacations. . .I don’t recommend it. I don’t think most people would enjoy it. Once I got into my 30s I could hardly even imagine how I had done that. Now I take lots of vacations. My 20 year old self is so digested with my current self. I have a fairly hardcore view that there should be a very large sacrifice made during those early years. My greatest mistake ever is whatever mismanagement I engaged in that caused Microsoft to not be what Android is: The standard non Apple phone platform. If you were in your 20s today what would you work on? AI. Problem number one in software is not solved. So that is what you would work on. . . I would be drawn to thinking about the structure of the software that can do the equivalent of what a human can do. It is nice that the idea of being a founder is a thing. That you can meet other people doing it. It’s got a real ecosystem. As a result you can move faster. You don’t need to invent certain things - like scaling with cloud computing. But you also get intense competition. You have said that the most important issue is often not technical but cultural- it is convincing everyone that the company’s survival depends on moving as fast as possible. On the importance of a focus on velocity. What is the most impactful unsolved problem that technology can solve that you’d like to see someone take on? This idea of creating an agent that helps a student like a one-on-one tutor would. There is nothing that matches a great one-on-one tutor teaching somebody. That is the gold standard that all other methodologies are compared to. If there was a Microsoft of AI what would the business model be? A personal agent that sees all your information would replace all your applications. It is your portal to the world. It replaces social networking, search, productivity apps, going to amazon and shopping etc. So it has the opportunity to combine all those different elements - advertising, mark up etc. It would probably be done on a subscription basis for a lot of people so you don’t have to wonder about what the trade-offs are. [Something I hope Bill is wrong about] The number of students who can learn without a social setting around it is very very small. Learning is a weird social phenomenon. Who is someone who has been instrumental to your success? Having people who have a little bit of distance is good. For the last 30 years I’ve gotten to be friends with Warren Buffett. He’s not in this tech world at all. Because he is not in this world he has a definite way of looking at things. Including this idea that work should be fun. He has made his work so much fun. He was a great counsel during the toughest time I went through [the antitrust lawsuit] That was a huge gift. Full podcast here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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Interview with Patrick Collison of Stripe
Jun 28, 201900:06:40Tap to summarizeWarren Buffet and Jeff Bezos talk a lot about that over time you end up with the shareholders you deserve. If you run your business in a short term way you are going to end up with short term shareholders. Similarly if you are clear about your long term priorities and principles - and you remain consistent to them - then over time you earn shareholders who will partner with you over the long term.From an organizational standpoint I think this really applies. The right mindset is not how do you keep everyone happy but what kinds of people do you want to be really happy and how do optimize for them? How do you be the kind of leader they wished the organization had? Think about this deliberately. Reframe the question from how do you keep people happy to how do you keep the right kind of people for your organization happy? An example of this: We published a guide to our culture. We tried to write it in such a way that some people would read it and say this is not for me. We consider that success. No product is the right product for every customer. Before 100 employees you can reason individually about each person. Beyond that you have to be principle based and more methodical across the organization overall.I think part of the value of having people join from other organizations is they are going to bring dissonance and friction. They will bring expectations, assumptions, and beliefs. Some times those will be wrong for your organization. And sometimes they will be right. The issues they encounter, or the deficiencies they observe are going to be blind spots that you have.How do you know this is who we are as a company, these are the things we care about, this is who belongs and who doesn’t? I think it is a very difficult, subtle tension, and dialectic balance between your first principles and desires for the kind of organization you want to be. And the kind of organization that is going to be a good fit for you.At Stripe we believe engineers working on customer-facing products have to have a good understanding how the customer uses the product, why the customer want this or that, and be willing to talk to customers. They have to be more than just an author of code. They have to be excited about understanding the customer need. There has to be this ongoing reflection and incremental updating of your mental model based on what is working well, what did you expect to work well and didn’t, and what things did you not expect to work well and did. [When called upon to make a decision] When we were 20 people I would think what is the best decision to make here. Now I often think why do we have to make the decision? The fact that we have to make this decision suggest maybe we are missing some principles or framework that would make the decision an easy one. Example: We recently had a conversation about if a particular product was polished enough. I realized we shouldn’t be having that conversation. We should instead be thinking about what is our framework for deciding what level of polish a product needs to have at different stages of its life cycle. Part of the essence of leadership is balancing twin forces. On one hand the empirical sense of what is working what is well and what isn’t. Not being too inflexible. And on the other hand being strict, and definite about the things that you aren’t willing to have vary. Being flexible but not too flexible. It is ultimately a subjective judgement call. That’s part of the reason leadership is hard. A lot of things in life [and in companies] revolve around these very fine, highly ambiguous balancing acts. Example: Being a micro pessimist but a macro optimist. If you are overly cheery and think everything is awesome [lego movie style] about your day to day then you will miss really important problems. You will probably eventually fail because you didn’t fix things that demanded some urgent course correction. On the other hand if you are perpetually burdened and beset by challenges and frictions and problems – you will never able to inspire yourself [and others] to maintain the motivation to do whatever it is you are pursuing. Full podcast here. I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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20 Minute VC: Bill Gurley on why the abundance of capital is today's biggest challenge in VC & the right way to think about market size when assessing opportunities
Jun 26, 201900:13:25Tap to summarizeHow did you make your way into venture? It is actually an unusual story that exposes how much luck [and random opportunity] goes into these things. When I was in business school I was told you couldn’t just get into venture. I was told to go work for 20 years first. My sister was an early employee at Compaq. I got exposed to what it meant to have options and for a company to explode. I ran into a dead end trying to get into VC. The 2nd best thing was to become a sell-side analyst. I begged my way into a job at Credit Suisse First Boston. This job allowed me to build a network with a bunch of different people. Frank Quattrone called me and recruited me. He said if I came to work for him he would move me to Silicon Valley and introduce me to every VC he knows. After that [31 months later] Benchmark approached me with an offer I couldn’t refuse. How has experiencing multiple booms and busts impacted your investing mentality? I have multiple views on this subject. I’ve read every book on the history of financial markets that I could. You can get tons of exposure to it if you just look for it. Silicon Valley is an interesting place because I have never been around a group of people where risk is forgotten so quickly. Each day as the market expands people take on more and more risk. But they lose their aversion to risk very slowly. It is like the boiled frog. Over a 5 year period your VC firm has taken on tremendous amount of risk. But every day you just moved a little bit so you never felt you were making this massive gap in risk exposure. When markets bust risk aversion comes on immediately. Overnight. Boom! Here is why I said I have multiple views on this subject. I spent a ton of time the past couple years thinking about the cyclicality in venture markets. I was fortunate to spend time with the famous bond investor Howard Marks. He asked me to explain my business. After I explained it he said your business sucks. Your business can’t avoid cyclicality. He said you will have boom and busts cycles always. I think he is right. Venture is low barriers to entry high barriers to exit. As markets start to boom the amount of capital that comes into the category is immense. But when the market breaks the capital doesn’t have a mechanism to go away quickly because it is committed to these 10 year windows. The other thing I realized is the vast majority of the average returns over a multi decade window are right at the end of the cycle. You can get conservative and pull back and miss [like venture firms pulling back in 1996 and missed the run of 97, 98, 99]. If you were to define risk - and it is arguable you could - as the burn rates these companies have ... the burn rates for some of these companies now are two orders of magnitude higher than they were in the 1999/2000 time frame. . .If capital gets hard that is going to be a really interesting issue. We haven’t seen capital get hard in a long time. I’ve come to believe that people get into more trouble by over focusing on TAM analysis - especially in these super early stage companies. Example: Saying Uber should only be valued at $5 billion based on the existing black car and taxi market. In 1980 AT&T hired McKinsey to predict the number of cell phones there will be in 2000. They were off by 100x. All too often what I’ve seen is if technology brings about an easier, simpler, cheaper solution there is a good chance the thing could expand the market and blow things out of proportion. How to be a good board member: Be prepared. Show up having read everything. Be intimately aware of everything you are supposed to be aware of. Speak less. Younger people on boards usually speak too much. You learn to change that behavior over time. If you have an idea during a board meeting write it down. Ask yourself does this need to be discussed right now? Or is this something I can just put in a note to the CEO after the meeting? In her recent book Thinking In Bets: Making Smarter Decisions When You Don't Have All the Facts, Annie Duke had an interesting section that said in a partnership or small group you come to know the weaknesses of everyone else. [If you want to work in VC] You need to be passionate about being a venture capitalist. I think 20 years ago there were more people that were passionate about it as a career choice. I think there are less today. What do you find the most challenging part of your role today? For the past 5 years the most challenging part for me has been the abundance of capital. It is equally mystifying to Howard Marks. And from reading the commentary, to Munger and Buffett. If interest rates are negative the model doesn’t work. There is so much peculiarity that is happening right now because of the massive amounts of capital. It raises strategic questions that have never been presented to boardrooms in the history of business. My favorite book is Complexity: The Emerging Science At The Edge of Order and Chaos by Mitchel Waldrop. It is about multivariable nonlinear systems. I read it when I was 25 or 26. It had a profound impact on how I see models, systems, economies, opportunities, and investments. Because most things in life are multivariable nonlinear systems. I have a pile of that book in my office. I give it out all the time. Full podcast here. Learn from founders who came before you. Every week I read a biography of a founder and tell you what I learned on Founders podcast. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit davidsenra.substack.com
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