On Marc Andreessen’s Plan to Win the Future

Tad Friend, writing in The New Yorker, pens a fascinating profile of the venture capitalist Marc Andreessen (and the firm which he co-founded and is currently a general partner, a16z). A representative snippet of the man:

Something of the transporter beam clings to Andreessen, a sense that he just rematerialized from a city on the edge of forever. He’s not great at the basics of daily life: directions confound him, because roadways aren’t logical, and he’s so absent-minded about sunglasses that he keeps a “reload station” with nine pairs on his hall table. Perhaps Edison haunts his conversation because Andreessen is a fellow-tinkerer, except that his gadgets are systems and platforms, and his workshop is his own mind. He regularly reprograms his appearance and deportment—his user interface—to suit his present role, and friends refer to chapters in his life as versions of an operating system: “Marc 1.0,” “Marc 2.0,” and so on. A charismatic introvert, Andreessen draws people in but doesn’t really want them around. Though he has a crisp sense of humor, it’s rarely deployed at his own expense. He hates being complimented, looked at, or embraced, and has toyed with the idea of wearing a T-shirt that says “No hugging, no touching.” He doesn’t grasp the protocols of social chitchat, and prefers getting a memo to which he can e-mail a response, typing at a hundred and forty words a minute. He didn’t attend Netscape’s twentieth-anniversary celebration, because it combined two things from which he recoils: parties and reminiscing.

Curious what would have become of Facebook if it weren’t for Marc’s advice to Mark Zuckerberg:

In 2006, Yahoo! offered to buy Facebook for a billion dollars, and Accel Partners, Facebook’s lead investor, urged Mark Zuckerberg to accept. Andreessen said, “Every single person involved in Facebook wanted Mark to take the Yahoo! offer. The psychological pressure they put on this twenty-two-year-old was intense. Mark and I really bonded in that period, because I told him, ‘Don’t sell, don’t sell, don’t sell!’ ” Zuckerberg told me, “Marc has this really deep belief that when companies are executing well on their vision they can have a much bigger effect on the world than people think, not just as a business but as a steward of humanity—if they have the time to execute.” He didn’t sell; Facebook is now worth two hundred and eighteen billion dollars.

I empathize with this philosophy for the world:

“I could never tolerate not knowing why…You have to work your way back to figure out the politics, the motivations. I always stop when I get to evolutionary psychology, and why we have tribes—oh, O.K., we’re primates cursed with emotions and the ability to do logical thinking.”

This is a key paragraph on how venture capitalism is more about errors of omission:

In venture, it’s not batting average that matters; it’s slugging average. Boldness is all. When Google Glass appeared, a16z joined a collective to seek out investments, and Andreessen declared that, without the face shield, “people are going to find they feel, basically, naked and lonely.” Google withdrew the product in January. But, he would argue, so what? His thesis is that such a16z failures as Fab and Rockmelt and Digg and Kno are not merely a tolerable by-product of the risk algorithm but a vital indicator of it. It’s fine to have a lousy record of predicting the future, most of the time, as long as when you’re right you’re really right. Between 2004 and 2013, a mere 0.4 per cent of all venture investments returned at least 50x. The real mistakes aren’t the errors of commission, the companies that crash—all you can lose is your investment—but those of omission. There were good reasons that a16z passed on buying twelve per cent of Uber in 2011, including a deadline of just hours to make a decision. But the firm missed a profit, on paper, of more than three billion dollars.

A must-read all the way through if you’re at all interested in tech, Silicon Valley, or entrepreneurship.

Why Photography Matters: an Airbnb Case Study

This is a superb read on one of my favorite start-ups, Airbnb, and how the company was able to double its revenues after a critical decision was made: get professional-looking photos of the listings.

At the time, Airbnb was part of Y Combinator. One afternoon, the team was poring over their search results for New York City listings with Paul Graham, trying to figure out what wasn’t working, why they weren’t growing. After spending time on the site using the product, Gebbia had a realization. “We noticed a pattern. There’s some similarity between all these 40 listings. The similarity is that the photos sucked. The photos were not great photos. People were using their camera phones or using their images from classified sites.  It actually wasn’t a surprise that people weren’t booking rooms because you couldn’t even really see what it is that you were paying for.”

Graham tossed out a completely non-scalable and non-technical solution to the problem: travel to New York, rent a camera, spend some time with customers listing properties, and replace the amateur photography with beautiful high-resolution pictures. The three-man team grabbed the next flight to New York and upgraded all the amateur photos to beautiful images. There wasn’t any data to back this decision originally. They just went and did it. A week later, the results were in: improving the pictures doubled the weekly revenue to $400 per week. This was the first financial improvement that the company had seen in over eight months. They knew they were onto something.

This was the turning point for the company. Gebbia shared that the team initially believed that everything they did had to be ‘scalable.’ It was only when they gave themselves permission to experiment with non-scalable changes to the business that they climbed out of what they called the ‘trough of sorrow.’

Here’s the takeaway:

Gebbia’s experience with upgrading photographs proved that code alone can’t solve every problem that customers have. While computers are powerful, there’s only so much that software alone can achieve. Silicon Valley entrepreneurs tend to become comfortable in their roles as keyboard jockeys. However, going out to meet customers in the real world is almost always the best way to wrangle their problems and come up with clever solutions. 

Read the rest here.

 

The Pivot, or the Luck Factor in Silicon Valley

A thoughtful take on the concept of the “pivot” in Silicon Valley, from Scott Adams (the creator of the Dilbert comic):

Smart observers in the valley look for the “tell” that an early stage start-up will be a winner, but none can be found. Oh, sure, the team needs to be smart, talented, and willing to work long hours. But nearly every start-up has that going for it. Most have great ideas as well. None of it predicts success. 

So imagine if you will, some of the smartest, most rational humans the world has ever created, wallowing around in the absurdity of Silicon Valley, where success is mostly based on luck. How does one feel good about that? And what is the solution?

Answer: You institutionalize the pivot.

I’ve been watching the TV show Silicon Valley, and the episode where Pied Piper tried to pivot comes to mind.

Adams argues that the pivot is basically a way to optimize one’s luck:

Here’s the system:

1.      Form a team
2.      Slap together an idea and put it on the Internet.
3.      Collect data on user behavior.
4.      Adjust, pivot, and try again.

Thanks to Google Analytics, Optimizely, Bitly, and other tools for measuring customer behavior in real time, a smart team can try different approaches and different products until something works out. A start-up in 2014 is a guess- testing machine.

Read the rest here.

The Story of How Twitter was Founded

Nick Bilton pens a fascinating piece in The New York Times on the origins of Twitter and the roles Jack Dorsey, Evan WIlliams, and Noah Glass played from the company’s creation to becoming one of the top social media sites in the world.

On Jack Dorsey’s luck in discovering Ev Williams in a coffee shop:

In 2005, Jack Dorsey was a 29-year-old New York University dropout who sometimes wore a T-shirt with his phone number on the front and a nose ring. After a three-month stint writing code for an Alcatraz boat-tour outfit, he was living in a tiny San Francisco apartment. He had recently been turned down for a job at Camper, the shoe store.

His luck changed one morning as he was sitting at Caffe Centro off South Park. As Dorsey looked up from his laptop, punk rock blaring through his earphones, he noticed a man about his age. Evan Williams, then 33, was a minor celebrity on the San Francisco tech scene. A few years earlier, he sold the Web-diary service he co-founded, Blogger, a word he popularized, to Google for several million dollars. Now Williams was using some of his Blogger money to finance a new company, Odeo, that made podcasts. Odeo was co-founded by his neighbor and friend, Noah Glass. Its dingy loft headquarters happened to be located around the corner, a block from South Park. Williams had stopped in and ordered a coffee.

He sent a resume, got hired immediately, and the rest, as they say, is history. The idea for Twitter came a bit later, after the company Dorsey was working for, Odeo, became obsolete when Apple unveiled podcasts on iTunes:

One night in late February 2006, around 2 a.m., Dorsey sat in Glass’s parked car as rain poured down on the windshield. The two were sobering up after a night of drinking vodka and Red Bull, but the conversation, as usual, was about Odeo. Dorsey blurted out that he was planning his exit strategy. “I’m going to quit tech and become a fashion designer,” Glass recalls him saying. He also wanted to sail around the world. Glass pushed back: He couldn’t really want to leave the business entirely, could he? “Tell me what else you’re interested in,” he said. Dorsey mentioned a Web site that people could use to share their current status — the music they were listening to or where they were. Dorsey envisioned that people would use it to broadcast the simplest details about themselves — like “going to park,” “in bed” and so forth.

On how the name Twitter was born:

Soon, the question of a name came up. Williams jokingly suggested calling the project “Friendstalker,” which was ruled out as too creepy. Glass became obsessive, flipping through a physical dictionary, almost word by word, looking for the right name. One late afternoon, alone in his apartment, he reached over to his cellphone and turned it to silent, which caused it to vibrate. He quickly considered the name “Vibrate,” which he nixed, but it led him to the word “twitch.” He dismissed that too, but he continued through the “Tw” section of the dictionary: twist, twit, twitch, twitcher, twitchy . . . and then, there it was. He read the definition aloud. “The light chirping sound made by certain birds.” This is it, he thought. “Agitation or excitement; flutter.” Twitter.

One of Twitter’s early problems was the question of who was leading the company? Williams or Dorsey?

Dorsey raced home to try to figure out a plan for his resignation, but the Twitter board instead offered him a three-month window to fix the site and its issues. Not much changed, however, even as text bills mounted, and the site continued to crash. Before the three months were up, Dorsey recalled, Sabet and Wilson took him to a breakfast at the Clift hotel and told him that they were replacing him as C.E.O. with Williams. Dorsey sat before a bowl of uneaten yogurt and granola as he was offered stock, a $200,000 severance and a face-saving role as the company’s “silent” chairman. No one in the industry had to know that he was fired. (Investors would not want to be seen as pitting one founder against another anyway.) But Dorsey had no voting rights at the company. He was, essentially, out.

On Ev Williams ignoring the advice that it’s bad to hire your friends in a start-up:

He [Williams] saw his success as the result of a lot of hard work and also a fair bit of luck, and he wanted to give the people he knew the opportunity to be a part of it. He hired his sister, to stock the kitchens at Twitter; his wife, Sara, was hired to design the new offices; and he employed numerous friends from Google. Among them was Dick Costolo, who had recently sold his start-up for $100 million. After they bumped into each other at a party in 2009, Williams asked him to be Twitter’s chief operating officer. On his first day, Costolo, a former improv comedian, thumbed his first tweet: “First full day as Twitter COO tomorrow,” he wrote. “Task #1: undermine CEO, consolidate power.”

In the end, this is a familiar story in Silicon Valley:

In Silicon Valley, most companies have their own Twitter story: a co-founder, always a friend, and often the person with the big idea behind the company, who is pushed out by another, hungrier co-founder. 

Twitter is my favorite social network, so I highly recommended reading this piece in entirety.

On Henry David Thoreau and “Eat the Donuts”

In this lengthy post titled “The Inferno of Independence,” Frank Chimero summarizes the dissonance and reflections one might feel when doing a solo project, working as an entrepreneur, and/or working independently. I particularly liked this analogy to Henry David Thoreau and the concept of “Eat the Donuts.” Contrary to popular belief, Thoreau didn’t live totally alone in the cabin that he built; his mother and sister visited him and supplied him with cookies and donuts:

The quote comes from my favorite talk of the conference, by Maciej Ceglowski of Pinboard. “Eat the donuts” is a bit of a tangled metaphor that requires a small summary of Maciej’s talk, so I’ll try my best to be brief.

Maciej spent the better part of 20 minutes looking at Henry David Thoreau’s life and work (specifically Walden, of course) as a template for cultural criticism. Maciej was more artful and didn’t summarize things quite this bang-on, but I want to get to the donuts as soon as I can.

A lot of things can be held against Thoreau, mainly his privilege. Thoreau came from a well-to-do family that allowed him the finances to build that cabin in the woods, and, of course, it takes a certain amount of affluence and privilege to be able to “opt out” of the dominant culture, stand back, and critique it. Still, Thoreau was a man with clear principles that embraced those with less opportunity than himself, and attempted to define the good life as something accessible to anyone. He valued convening with nature, going slow, stepping back, and—this is the donut part—accepting help. Thoreau was independent and he isolated himself, but he was not alone. Each week, his mother and sister would come to the cabin with pastries and donuts. And you know what? Thoreau ate those goddamn donuts.

Maciej’s lesson, through Thoreau? While living an independent life on principle, you should not refuse the help so generously offered. “Eat the donuts.” Take the good things as they come to you, and do not be ashamed or bashful to accept help.

And—if I can be so bold as to add something—make the donuts, too. Do that for the people who are building their cabins and pursuing their independence. If you’re living your dream, you need all the help you can get. Dreams are hard, and much too much work for just one person alone.

Bravo. Highly recommended reading the entire post.

###

I also like Frank’s extension of independence becoming co-dependence over time, once you unveil your thing for the world:

Once the work is done, it’s not yours anymore. You draw the comic, write the book, make the app, and then it makes its way out into the world. And it starts to talk back to you. It’s the weirdest thing—if the thing you make goes anywhere, it’s because other people carried it. Your thing becomes our thing. This is deeply unsettling, but it is also a beautiful situation that binds us to one another. So much for independence. It’s a false dream. What we really have is co-dependence, and what we desire when we speak of independence is equity and autonomy. Those are our goals.

We need each other, no matter what. The trick is producing the best terms—the ones most beneficial for everyone—that prioritize longevity, sustainability, and creativity over flash in the pans that burn out quick and get buried. That track is for investors who want to buy low and sell high, and the confidence men who skip town once the cash changes hands. It’s not for the creative people who put their identity in their work. If you make things, you’re playing the long game. There is no rise and fall, no sell it off and start again, because this is you, and if it goes, you go.

Not Everyone Wants to be an Entrepreneur

In a post titled “The End of Quiet Music,” Alina Simone discusses her dive into a solo venture to promote an album, failing, and learning what went wrong. Her story is interesting because she found a voice, later, through writing. She begins:

Not long before my first album was released in 2005, I spent a summer in Russia interviewing small business owners. An American microfinance organization had sent me there to gather rosy statistics and uplifting stories about how their loans had improved the lives of this new crop of entrepreneurs.

Instead, I would arrive in some city with a recently gutted economy, only to have men and women selling knockoff jeans or fruit from Uzbekistan tell me the same thing: they missed the factory. That is, their old jobs working at some inefficient Soviet enterprise. They didn’t like the financial uncertainty of their new jobs or the longer hours. They missed being able to check out at the end of the day. Many of them were less happy with the work itself. I heard the same thing again and again: Not everyone wants to be an entrepreneur.

At the time, I felt confused — what was so bad about being your own boss? Their words only resonated with me years later, when I abandoned my music career.

The realities of forced entrepreneurship in the music business hit me when, in 2010, the label that released my previous two albums went bankrupt. By the time its Web site vanished without warning one day, I was already done recording a record. Rather than cast about for another struggling indie label, I decided to go the route of so many other bands and put the album out myself. 

Alina mentions that she’s been friends with Amanda Palmer (who raised more than $1.2 million on Kickstarter) since middle school, but that even Amanda has

worried publicly about what the future will hold for the artists who refuse to roll up their sleeves and join the self-promotional melee — tweeting, fund-raising and “incentivizing fans” to run “jampaigns.” 

Her conclusion is a strong one:

We’ve placed the entire onus of changing-with-the-times on musicians, but why can’t the educational, cultural and governmental institutions that support the arts adapt as well, extending the same opportunities to those whose music provides the soundtrack to our lives? If they don’t, Darwinism will probably ensure that only the musical entrepreneurs survive. I can’t say if the world of music will be better or worse off if that happens, but it will certainly be a lot louder.

Charles Bukowski on “Slavery was never abolished, it was only extended to include all the colors.”

In 1969, publisher John Martin offered to pay Charles Bukowski $100 each and every month for the rest of his life, on a single condition: that Bukowski quit his job working at the post office and commit to becoming a writer. The then 49-year-old Bukowski did just that, and in 1971 his first novel, Post Office, was published by Martin’s Black Sparrow Press.

Fifteen years later, Bukowski wrote the following letter to Martin and spoke of his joy at having escaped full time employment:

8-12-86

Hello John:

Thanks for the good letter. I don’t think it hurts, sometimes, to remember where you came from. You know the places where I came from. Even the people who try to write about that or make films about it, they don’t get it right. They call it “9 to 5.” It’s never 9 to 5, there’s no free lunch break at those places, in fact, at many of them in order to keep your job you don’t take lunch. Then there’s OVERTIME and the books never seem to get the overtime right and if you complain about that, there’s another sucker to take your place.

You know my old saying, “Slavery was never abolished, it was only extended to include all the colors.”

And what hurts is the steadily diminishing humanity of those fighting to hold jobs they don’t want but fear the alternative worse. People simply empty out. They are bodies with fearful and obedient minds. The color leaves the eye. The voice becomes ugly. And the body. The hair. The fingernails. The shoes. Everything does.

As a young man I could not believe that people could give their lives over to those conditions. As an old man, I still can’t believe it. What do they do it for? Sex? TV? An automobile on monthly payments? Or children? Children who are just going to do the same things that they did?

Early on, when I was quite young and going from job to job I was foolish enough to sometimes speak to my fellow workers: “Hey, the boss can come in here at any moment and lay all of us off, just like that, don’t you realize that?”

They would just look at me. I was posing something that they didn’t want to enter their minds.

Now in industry, there are vast layoffs (steel mills dead, technical changes in other factors of the work place). They are layed off by the hundreds of thousands and their faces are stunned:

“I put in 35 years…”

“It ain’t right…”

“I don’t know what to do…”

They never pay the slaves enough so they can get free, just enough so they can stay alive and come back to work. I could see all this. Why couldn’t they? I figured the park bench was just as good or being a barfly was just as good. Why not get there first before they put me there? Why wait?

I just wrote in disgust against it all, it was a relief to get the shit out of my system. And now that I’m here, a so-called professional writer, after giving the first 50 years away, I’ve found out that there are other disgusts beyond the system.

I remember once, working as a packer in this lighting fixture company, one of the packers suddenly said: “I’ll never be free!”

One of the bosses was walking by (his name was Morrie) and he let out this delicious cackle of a laugh, enjoying the fact that this fellow was trapped for life.

So, the luck I finally had in getting out of those places, no matter how long it took, has given me a kind of joy, the jolly joy of the miracle. I now write from an old mind and an old body, long beyond the time when most men would ever think of continuing such a thing, but since I started so late I owe it to myself to continue, and when the words begin to falter and I must be helped up stairways and I can no longer tell a bluebird from a paperclip, I still feel that something in me is going to remember (no matter how far I’m gone) how I’ve come through the murder and the mess and the moil, to at least a generous way to die.

To not to have entirely wasted one’s life seems to be a worthy accomplishment, if only for myself.

yr boy,

Hank

In Factotum, he was even more direct:

It was true that I didn’t have much ambition, but there ought to be a place for people without ambition, I mean a better place than the one usually reserved. How in the hell could a man enjoy being awakened at 6:30 a.m. by an alarm clock, leap out of bed, dress, force-feed, shit, piss, brush teeth and hair, and fight traffic to get to a place where essentially you made lots of money for somebody else and were asked to be grateful for the opportunity to do so

Fascinating. It’s incredible I haven’t read Bukowkski before. I am remedying this situation by having ordered the Kindle versions of his books: You Get So Alone at Times That It Just Makes Sense (only $2 on Amazon), Love is a Dog From Hell (also $2), and Women ($3).

###

(via Letters of Note)