Today at a glance:

• Biggest takeaways from “Man’s Search for Meaning” by Viktor Frankl. Viktor shares his experience as a prisoner in the Nazi concentration camp.

• Links from this week that you might enjoy

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Why did I read this book?

This is one of the most recommended books. Many cite it as the most transformative book they’ve ever read. I remember reading it in 2017 for the first time and then re-reading the notes last year. Odds are you read it, but maybe we took away different things. Share what stood out to you?

Raw notes from the book/biggest takeaways

• We are capable of enduring great suffering for the right cause (our why)

• 3 ways to find meaning in life: 

  • work  = do something significant, contribute to well-being of others 

  • love = care for another person

  • suffering = have courage when things get tough 

• Our greatest freedom is the freedom to choose our attitude 

• We are responsible for finding meaning in our lives. Nobody will do it for us and it will be different for each person

• Meaning in our lives can change. Meaning is subjective and will evolve for some of us. We have to figure out what is meaningful to us throughout life (multiple chapters) and pursue that.

Quotes that stood out:

• “Everything can be taken from a man but one thing: the last of the human freedoms—to choose one’s attitude in any given set of circumstances, to choose one’s own way.”

• “Those who have a 'why' to live, can bear with almost any 'how'.”

• “Man does not simply exist but always decides what his existence will be, what he will become the next moment. By the same token, every human being has the freedom to change at any instant.”

• “What matters is to make the best of any situation.”

• “Life is not primarily a quest for pleasure, as Freud believed, or a quest for power, as Alfred Adler taught, but a quest for meaning. The greatest task for any person is to find meaning in his or her life.”

• “If there is meaning in life at all, then there must be meaning in suffering. Suffering is an ineradicable part of life, even as fate and death. Without suffering and death human life cannot be complete.”

Links from this week that you might enjoy:

• What it feels like to work in AI right now

• Tim Cook on shaping the future of Apple

• The gambler who beat roulette

• Industrial policy doesn’t have to succeed right away

• System designs and the cost of architectural complexity (skim paper + thread

• FastChat: open platform for training, serving, and evaluating LLM-based chatbots

• How to be a -10X engineer

• Chamath’s 2022 leter

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• Paying attention is a superpower. A common thread through multiple disciplines from art to stand-up comedy to poker

• How paying attention helps (1) develop product intuition, (2) build culture, (3) make you smarter at taking risks, (4) build design sense and more concrete examples

• Links from this week that you might enjoy

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Paying attention is a superpower

Observation is one of these common principles that threads through multiple disciplines.

In art we are studying the scene. What ends up on the canvas is our POV of the scene. Whether it is precise or abstract - the best artists will study the scene and get fully immersed. Dylan is a pencil artist (not a photo below) who shares his hyper-realist work on TikTok.

A large % of stand-up comedy is observation. Yes delivery matters, but so much of the routine is story-telling of everyday experiences, right? Comedians pay attention to the mundane and jot down stuff that happened to them. Comedians tell stories. They are dialed into the real world for us. We feel connected to their stories because they often remind us of the nuances of our own lives.

Poker is no different. If you are checked out at the poker table - you are not playing your A-game. If you are not collecting information at every hand (not just the hands you are in) you are giving up a % of your edge.

How does all of this apply to building? Will give concrete examples below.

How does paying attention help build great products/companies

Observe. Pay attention. Seek out the truth. And then act on this information. This includes working hard to try and change your mind based on new info.

Hard truth is that many PMs are glorified project managers. They spend hours optimizing some % of a UX on a product that already has strong PMF. They do not do the hard things and are not strong independent thinkers. So what?

Developing product intuition by paying attention:

• Use your product. A lot. And use it the same way that your users would. Many people sit on gigabit WIFI and 60hz monitors messing with their web-apps. What about an Android phone and a data plan?

• Spend time with users and pay attention to what they are saying. Watch them use the product on zoom or ask them to send you a video. Offer them something in return (many ideas). Do this 100s of times. Best PMs/founders never stop talking to users and never stop doing support

• Watch people. We learn a lot more from watching than from listening or from reading emails

• Pay attention to what is happening around you. Competitor features and feature requests, idea boards, trends. Be informed about your space

• TLDR: there is no substitute to spending time with the user

Coming up with product ideas by observing the real world (not our fantasy):

• Observe the real world. What are the big tailwinds today? Building with tailwinds and in a large market puts you in a powerful position.

• What are the problems that need to be solved? People want a few things from products. They want to save time, save/earn $, fall in love, have fun. Is there more? Does our product help?

Getting better at taking risks by paying attention to each bet:

• Make bets. Product bets - you learn by doing. Financial bets. Habit bets. Try stuff

• Play poker for real $. Am biased but poker is a great teacher!

• And watch how you react to risk. You will notice how your assessment of risk will improve and change from each bet. With each experiment you will get smarter.

• TLDR: Put yourself in situations where you are exposed to risk and there are consequences. Then think deeply about risk and about each bet (do not be along for the ride)

Developing intuition on shipping/execution

• Pay attention to what is the core function of the product. Ship that or less

• Pay attention to whether you have a clear idea of what is success. Few things are worse than an inconclusive bet

• Pay attention to the size of the team

• What would happen if we add: (1) more people to the project or (2) more features? It will probably suck. A good product is built by as few minds as possible.

• And features? All features are surface areas for bugs and UX complexity. Over long-enough time horizon regressions will equal # of fixed bugs

• Think about each experience - pay attention to what went right and what went wrong and why

Observation and developing design sense:

• What is good design? What would make this design better? Paying attention to the world around us and to what our user needs will help build better products

• Some of the best designs are invisible. Precognitive. What about ours?

• If you want people to use something - make it bold. 80%+ of people will pick the simplest/boldest option. Think deeply about what action you want the user to take on each screen and why.

Paying attention to build relationships with people on the team:

• Best leaders care deeply about the people and show up all the time (not just in scheduled 1v1). They are human. They avoid management speak

• Do I know team dynamics? Do I understand what brings each person on the team joy? How they work? When they are in flow? What is going on in their personal lives that might be impacting work? How I can help make their day 1% better?

Get smarter about your business by paying attention to your P&L:

• This will become a larger topic for founders in the high-interest environment

• It is important to obsess over the P&L and company metrics

• Specifically, I would dig through the #s myself. Do not delegate this. And cultivate the same habit in the rest of the team

• Pay attention to kinks in the curve for all #s and drivers for all key metrics. Why did the #s go up or down? What is really going on? Figure out the answers. Do not sugar-coat and then share in the open what you found. Encourage debate.

• Do not wait for arbitrary points in time (ex. investor update or end of year). Have a pulse on your #s and the truth behind the #s by paying attention to the metrics daily

Paying attention to what information we consume:

• If I am scrolling through the feed or reading mass media - I am being fed information. Yes curated. Yes reputable. Yes not all noise, but when I am online passively I am along for the ride and I am consuming what other people want me to consume. I am not saying that all of it is bad or that I don’t read it (i do)

• My point is that it is important to pay attention to information flows and the ultimate motivations of those who are feeding us this information. And then. - to take control.

• For example: figure out a topic you want to get smart on and go deep on that topic on your own until you get what you want. Another strategy is to figure out what the smartest people in your circle are consuming/doing.

Paying attention is a superpower.

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Links from the week that you might enjoy (got feedback that some links are paywalled so going fwd adding un-paywalled whenever possible):

• Incompetent but nice

• The contradictions of Sam Altman, AI crusader

• The teen mental illness epidemic is international

• SVB collapse could mean a $500B VC “haircut”

• The patriot act on steroids: D.C. Uniparty wants to sue anti-TikTok legislation as Trojan horse for censorship and surveillance

• US banks have $620B of unrealized losses on their books

• Reflections on 10K hours of DevOps

• AI vs AGI vs Consciousness vs Intelligence vs Agenc

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• Summary of “The Beginning of Infinity” by David Deutsch. Deutsch is a famous quantum physicist. He wrote this one and the fabric of reality.

• Interesting links from this week that you might enjoy: AI, econ, TikTok

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Why did I read this?

Someone recommended Deutsch last year so I read it this winter. This book is dense (for me). Deutsch covers complex ideas. In the context of AI, a friend brought it up this week so I thought I’d try to summarize it now.

What is this book about and how will you summarize it?

Good questions.

Deutsche attacks empiricism, inductivism, reductionism, and holism. He lays out several proofs for infinity. He shares his POV on progress and politics. Explains the multiverse, breaks down quantum mechanics, has an imaginary dialogue with Socrates, makes a claim that aesthetics are objective, and does a lot more. Flipping through my notes on the book I realize that I am still processing.

Some of his ideas may seem like tangents at first, but they are not.

So this summary will be just a few key ideas that stood out to me. There will be no quotes. He is a good writer, but I worry that the quotes are not going to do justice to his larger ideas without quoting half a page (too long for our email). Bottom line is if this is interesting - check out the book and form your own POV.

Ideas that stood out:

• knowledge is derived from theories, not just from our senses (empiricism)

• progress is a result of humans searching for good explanations

• knowledge grows because we correct errors in our theories over time

• problems are inevitable. All problems can be solved. Anything that is not forbidden by nature can be solved

• people are universal constructors. We are capable of understanding and building anything that obeys the laws of nature. People are capable of creating unlimited progress

• Universality is the tendency of some systems to improve to such a degree that they become universal in some domain

• AI field made no progress so far because we do not understand how creativity works. Once we do, we can program it

  • Deutsche proposes a test for AI to just feed it random #s (no human input/knowledge) and if AI can self-generate knowledge - we have arrived1

• Principle of optimism: all evil is caused by insufficient knowledge

• Good decision and policy making isn’t a process of picking from a fixed set of choices. It is also the creation of new options.

• Rational and democratic decision making in groups is impossible

• Good political institutions are those that make it easy to detect whether a ruler/policy is a mistake and to remove ruler/policy without violence when it is a mistake

  • tldr: focus on firing bad leaders, not searching for good ones

• Culture consists of memes (ideas). Biological evolution is a preface to the idea evolution. memes have a replication mechanics and exist in mental/physical form. Creativity is a mechanism to download memes and thereby create knowledge

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Interesting links from this week that you might enjoy

• Interview with Nvidia CEO Jensen Huang about AI’s iPhone moment

• I lost everything that made me love my job through mid journey over night

• Microsoft Research says that GPT-4 is showing “sparks” of AGI

• OpenAI tech gives MSFT Bing a boost in search battle with Google

• Block: how inflated user metrics and “fricionless” fraud facilitation enabled insiders to cash out over $1B

• The Age of AI has begun

• The reverse turing test

• US needs economic regime change

• The winners and losers if the U.S. bans TikTok

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• Why no newsletter last Sunday?

• On problems and intensity. Why do i think this is one of the most important traits in a leader? 2x true if you are not technical

• Stuff I read this week

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Why no newsletter last Sunday?

Last weekend was the SVB crisis. If you are reading this there is a high % chance that you were somehow impacted. It was a tough weekend. And the hard part is that we are far from clear.

Similar to you, last weekend I was consumed by work and the SVB news. It didn’t feel right to share something other than SVB. I don’t know enough on the issue so I stayed quiet.

One week out and there are many learnings and many tailwind effects. Some of them are already in motion.

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On problems and intensity

Problems are inevitable. They must be faced.

Think that one of the most valuable traits in a leader, especially early stage, is how they handle problems. Let’s unpack.

Things will go wrong. There will be high highs and low lows. The hard thing is handling the non-obvious problems early.

If we are hit with a glaring issue (ex. server outage, unfair PR, someone backing out of a deal in bad faith) - we can solve these in the moment. There is nowhere to run - the glaring issue is staring us in the face. It’s time to solve.

The harder part are smaller issues. They grow over time. They metastasize throughout the company. They grow because they are aloud to grow.

Problems grow because they are not recognized and they are not addressed.

“Rivers are easiest to cross at the source”- a roman slave

Often we hope that things will be better. We hope that someone else will solve it for us, that the team will figure it out, that the market will turn around etc.

All of these are flawed. For example, if the market turns around - it will turn around for us and our competitors, but we still have our issue. We will long-term get buried with our unsolved problem.

I forget who said that “hope is not a strategy”. They are right.

So what? A few things:

• We need to be aware of the problem. We can spend pages discussing self-awareness and ego-less decision making, but in sum, we are all ridden by biases. There are many reasons for why a known problem is aloud to metastasize. Fear to face it, ego, self-confirmation or one of many other biases.

• Next, we can try changing our POV. We have some view that led us to this issue. Could that view be wrong? By changing our approach to the problem we might be able to solve it. This involves taking ownership of the problem. Everything in the business is our responsibility. There is no hiding. How do we change our POV? Seek new info and act on it. Be brutally honest about what is reality. What am I not seeing? Could I be wrong in assessing this?

• Act. With intensity. Today. The best builders/leaders I know are obsessed with action. They take massive action. They do not tolerate blockers. By taking massive action they (1) move their business forward, (2) build culture and set an A+ example for their team, (3) improve their decision making ability with each action. It’s almost unfair how much of an edge they have vs others just by acting with intensity and attacking problems. If we are dealing with a problem and someone says - yeah I will get back to you tomorrow or let’s build a plan to solve it this week. No. Why not today? - And then I would set an example and do it.

Watch out for smaller problems that grow over-time. Rivers are easies to cross at the source. Everything can be improved from product to culture to marketing to how we meet (or don’t meet).

And when faced with problems - go after them with immense intensity right away.

Stuff I read this week that you might enjoy:

• Why was there a run on SVB? And how will this affect startups and financial system?

• SVB bank failure analysis by JPM

• Zuck’s year of efficiency letter

• Just a cool design account I’ve been following

• Everything you think you know about homelessness is wrong

• Khan Academy integrates GPT-4

• One AI tutor per child: personalized learning is finally here

• I gave GPT-4 a budget of $100 and told it to make as much money as possible

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Today at a glance:

• Summary of “Power: why some people have it and others don’t” by Jeffrey Pfeffer. He breaks down what makes some people powerful. Pfeffer is a Stanford prof.

• Stuff i read this week you might enjoy

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Why did I read this?

Teammate bought it for me last year. I believe in a just world where your character and your output are tied to power. But the world isn’t just. I struggle with power dynamics, do not engage in power games, and resent those who are good at climbing. I’ve been working on changing my POV after reading this book. I haven’t made much progress.

Raw notes from the book

• Stop thinking the world is fair. People competing for advancement bend the rules and win

• Don’t trust all leadership advice. Leaders touting their success skip the games they played to get to the top

• Get noticed, reframe KPIs to match your strengths, keep boss looking good, don’t leave your reviews to change, be a sycophant1

• How picking where to start (your department) can impact power dynamics: profitable or strategically important team can be competitive, but the tide will carry you to the top vs weaker team with lower expectations

• Ask for help or opinions. People enjoy flattery + you have nothing to lose. Engage in self-promotion. Get noticed. Power creates likability: winning → momentum → more people support you → more people like you

• Build your power base by helping people. Do small important visible tasks.

• Network. Weak ties > strong ties

• Acting with power: express emotions/anger = high status, eye contact, take the time to respond, watch how you come off in every interaction = be ON, use lists, lean on us-vs-them rhetoric

• Image creates reality. Self-promote and have others speak on your behalf

• Don’t take things personally. Make important relationships work, at all costs

• Leave people an out when arguing

• Attach yourself to higher objectives (ex. shareholder value). They are indisputable

• Price of power: (1) public scrutiny, (2) people tell say you are right a lot = absence of truth/feedback, (3) addictive

• Do not be overconfident or insensitive once in position of power

• Leave gracefully. Leave before the party is over

• Take care of yourself. Don’t expect justice

Typing these notes I find myself disagreeing with some of this. So it’s a good gift and it’s healthy that I read it. Maybe I will change my mind.

Yes, the world is unfair and people climb.

Power does create leverage. We use leverage to make an impact so power is worth fighting for. What would it take to pave a more meaningful path to power? Could we build “fair” teams? How would that look like?

Quotes from the book that stuck:

• Do not complain about how life isn’t fair, or that your organization culture isn’t healthy, or that your boss is a jerk. You have both the responsibility and the potential to change your situation, either in your present job or in some new place. Stop waiting for things to get better or for other people to acquire power and use it in a benevolent fashion to improve the situation. It’s up to you to build your own path to power

• people will join your side if you have power and are willing to use it, not just because they are afraid of your hurting them but also because they want to be close to your power and success

Stuff I read this week that you might enjoy

• The build-nothing country. Stasis has become America’s spoils system and it can’t go on

• Startup decoupling & reckoning

• Planning for AGI and beyond

• Study on Harvard finds 43% of white students are legacy, athletes, or related to donors or staff

• Honestly, it’s probably the phones. The most plausible explanation for teenage unhappiness

• What i learned reading 1K investor reports last year

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I wanted to opine on everything at work. How something should be written or designed - if had a thought and we worked together - you’d hear it.

Or I would just redo your work. I obsessed over our results and I believed that by sharing my tweaks I was doing what is best for us at the time.

Looking back, I was often hurting us. I still do this, but I’ve been training myself to shut up more. F*ck my 2 cents!

Here’s why adding your 2 cents can hurt if you are a leader:

• Disempowers the person doing the work. The person doing the actual work may no longer feel ownership over it. Let the builders build. Plus, this hurts morale.

• Slows things down. First, reviews and edits take time. Second, leadership quips condition people that they need leadership approval. This is a problem at a start-up. No approvals or reviews should be needed for most things. Speed as an edge.

• I might be wrong. The person who spent time on this writeup/design/idea thought through it AND they will be the one executing it. I have to be confident that my 2c actually add value and is not just an opinion. This is dangerous.

• Takes away your energy from building. Energy is zero sum. If you are opining on everything, you are not focused on producing yourself.

There is nuance to this. First, all irreversible decisions need input. Second, if we are adding meaningful constructive improvements and not just an opinion - this can be fine. This is the difference between expert constructive feedback (good) and an opinion (can hurt). Last, relationship dynamics matter.

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Stuff I read this week that you might enjoy:

• Buffet’s 2022 letter

• Social media is a cause, not a correlate, of mental illness in teen girls

• U.S. corn-baed ethanol worse for the climate than gasoline, study finds

• A16Z and the “zero interest rate phenomena”

• Creation happens in silence

• Apple makes major progress of no-prick blood glucose tracking

• Gitlab startup acquisition process

• Don’t be a doomer. Flamboyant pessimism serves no useful purpose.

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Today at a glance:

• Summary of “The Rational Optimist: How Prosperity Evolves” by Matt Ridley. Ridley is best known as the author of a # of popular science books. This one is about optimism and how/why things will get better.

• Stuff I read online this week that you might enjoy

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Why did I read this?

In 2018 someone in SF recommended The Red Queen: Sex and the Evolution of Human Nature by Ridley. It made me think so I got the next one. The Evolution of Everything: How Ideas Emerge and then this one.

Ridley has a few hot takes in this book that many will disagree with.

Raw notes from the book:

• Exchange of ideas, specialization in craft, and diversification in interests are critical to our progress.

• Cooking enabled our ancestors to trade gut size for brain size and predisposed humans to swap food (early trade?)

• Levels of trust and prosperity in society are correlated. Exchange breeds trust and visa versa

• Agriculture diverts the labor of other species to provide service to human beings. Possible that agriculture worsened sexual inequality

• Humans make up 0.5% of weight of animals on planet, but take 23% of primary production of land plans

• Organic farming is low yield and nitrogen difficient. Organic movement insistence to rely on old agricultural practices means it misses out on environment benefits brought by future innovation

• Urbanism and city design is progressive. Not only do cities help ideas expand, but they are also the right way to efficiently preserve our planet

• Renewable energy eats landscape. Less land → higher food prices → less food

• Ethanol is bad for planet. Gained traction in America because of lobbying from Big Co

• Energy efficiency and energy demand have historically risen. We will come up with new ways (ex. portable nuclear reactors) to get energy.

• Through ~50K years of history, no country remains a leader in knowledge creation and prosperity for too long. Why? (1) institutions/bureaucrats wrote too many rules to halt progress, (2) overpopulation, but can be solved now.

  • 3rd reason = good times create weak men?

• Innovators are in the business of sharing. Innovation is bottom-up. Individuals rather than institutions or society leaders create = a theme of this century

• Pessimism sells. And we might be wired to consume it. Ignore

• Critical assumption of pessimists is that if we stay course - we die. But we won’t stay course. We will find solutions. Most generations underestimated the potential of new ideas.

• 2 great pessimist stories of today: Africa and climate change.

  • Africa needs good property rights, abolish farm subsidies/quotas/import tariffs, and encourage growth of free trading cities.

  • Extreme climate outcomes are unlikely because they assume that progress will stop. They also neglect the fact that a warmer world is a richer world. A richer world will find solutions. Richest and warmest versions of future will have least hunger, longer life for all, better education. Richer versions will also find a solution to climate change.

  • Top 4 problems for humans we need to focus on are: hunger, dirty water, indoor smoke, malaria

Big ideas:

• We live in an amazing world that is healthier and smarter than our past. And there are many reasons to be optimistic about the future. Be positive. Be an optimist.

• Dark future scenarios may not be true. Important to think independently and based on facts. What are the trade-offs and what is the logic leading to X scenario vs Y.

• Trust and exchanges of ideas are key to innovation. Share your ideas. Build with others (ex. in person teams?). We will create a better world.

Select quotes

• Without trade innovation does not happen. Exchange is to technology as sex is to evolution

• It is my proposition that the human race has become a collective problem-solving machine and it solves problems by changing its ways

• Not inventing, and not adopting new ideas, can itself be both dangerous and immoral

• The cumulative accretion of knowledge by specialists that allows us each to consume more and more different things by each producing fewer and fewer is, I submit, the central story of humanity

• As I write this, it is nine o’clock in the morning. In the two hours since I got out of bed I have showered in water heated by North Sea gas, shaved using an American razor running on electricity made from British coal, eaten a slice of bread made from French wheat, spread with New Zealand butter and Spanish marmalade, then brewed a cup of tea using leaves grown in Sri Lanka, dressed myself in clothes of Indian cotton and Australian wool, with shoes of Chinese leather and Malaysian rubber, and read a newspaper made from Finnish wood pulp and Chinese ink.

Stuff I read online this week that you might enjoy

• What is ChatGPT doing and why does it work

• Bing “I will not harm you unless you harm me first”

• The Maze is in the mouse. What ails Google and how it can turn it around

• Turkey’s earthquake shows the deadly extent of construction scams

• Update from Andy Jassy on return to office plans

• Decoupling is not deglobalization

• Chemical health risks from the Ohio train incident - what we know so far

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Today at a glance:

• Context & what this isn’t about

• Why negotiations matter

• 3 quick stories: 2 wins and a loss

• Negotiation style

• Things I wish I knew earlier (now my evolving principles)

• Email exchange between Jobs and Murdock to negotiate audibooks

• Stuff I read this week online that you might enjoy (at the end)

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Context & what this isn’t about

This isn’t about salary negotiations.

Some of the same principles apply, but job offer negotiations is its own beast. A lot is written on salary negotiations, specifically for tech jobs. Plus, I don’t like negotiating for myself out of principle.

This will be about negotiating for your team or for your business. I have a few failures (now lessons), but also worked through a number of wins.

Why negotiations matter?

Why does anything matter? Think it’s important to be thoughtful because a well-done deal can have immense impact (see below). Plus, we are often responsible for other people. And so there is 10x reason to think deeper and try harder.

Let me share an anecdote and a hypothetical.

An anecdote. In business school we had to bid for classes. A bid auction was set up to handle classes with oversubscribed professors. The crux of the system is that you had 3,000 points to bid for the entire year. A student would take 12-15 classes per year. Based on historical bid prices to get a seat in professor Medvec class you had to bid ~2.4K points. And many did. Professor Medvec had a wait-list of people who were willing to spend ~80% of their annual points budget on just her class.

A hypothetical. Imagine you are going on a 10 year trip to live/work abroad. You can only go back after 10 years are up. The entire trip will either be a 10/10 or a 7/10 based on one thing.

Can you solve a rubik’s cube in under 1 min?

And let’s assume that you can’t solve it at all right now. You have your whole life to handle. All of your other responsibilities, core tasks at work, family etc. Learning how to solve a rubik’s cube sounds like a pain in the ass, but you will do it because it has exponential return on the effort invested upfront. You get a 10/10 decade! Negotiation prep is the same.

3 quick stories: 2 wins and a loss

Win #1. Unblocked tens of millions of $ARR and got to ship work that would have otherwise gathered dust by negotiating a favorable policy.  The main thing that worked here was spending a ton of time with the counter-party, helping them arrive at our vision AND spending a copious amount of time understanding their POV. Getting to know them on personal and biz level, unpacking their needs and their fears and then designing custom solutions for each of the needs and fears worked. This took time. It took flights and presentations, but we got there.

Win #2. Got a new revenue stream. An incremental ~5% of our P&L, but it was 100% pure profit. How? Because we persuaded someone to give us a kick-back.  #1 thing that helped was being ready to walk away and putting a deadline on it. They knew we had an alternative and my threat was credible.

Loss #1. Made a deal where I had asymmetric information, pushed too hard, and extracted too much. Way too much. It felt like playing poker against an opponent with only their cards face up. And I abused this to get max result early. When we closed, I felt like I delivered a big win for the team. Round 1 crushed. But then in X quarters they canceled. The terms were bad from economics POV. They realized it. And the deal made them look bad internally. Nobody likes that. I ended up with $0 MRR, a failure for the team, and having to clean up a fall out. It would have been much smarter to extract less so that everyone feels good and a deal lasts years, not months. Play long-term games with long-term people.

Negotiation style

People have different styles.  As with leadership - think it is important to develop your own. It will come with battle scars.

The style that works for me is candid, upfront, and high empathy. I prefer to get to the crux of it quickly. There are many differences between a good and a bad negotiator, but I think that one of the main ones is that a good negotiator gets more deals done than the bad one. And I believe that speed and empathy help with getting stuff done. In most cases I do not believe in extracting max value, even if it is possible. Karma is a bitch and people do not like to look stupid.

My approach varies based on negotiation. There are instances where it’s 100% better to be methodical and to take a lot of time (win #1). There are also instances where speed is best.

Regardless of the stakes and the case - I believe in hyper thoughtful prep (see rubik’s cube). Gathering max amount of information. Mapping out all the scenarios on paper and thinking through every decision tree branch.

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Things I wish I knew earlier (active WIP)

• Lean heavy on your edge. If you don’t push your edge - who will? For example: if we bring unique tech, customers, distribution, X - we need to go big on X. State how X is critical and how the future isn’t bright if X is not in play.

• Build BATNA (best alternative to negotiated action). Show them you have options. Then use it to get a much better offer. Building options is one of the best returns on time and the strongest lever we can have.

• Ask. Ask clearly and simply for the things you want. We get zero if we don’t ask, right? This is especially true for things you need to re-negotiate. There can be items in play that we didn’t even know are on the table until we decide to put them on the table. Simple example are payment providers or large infra contracts.

• Aim high. Important to be bold. Pay attention to how you de-anchor. Do not drop your anchor too much when giving concessions. Otherwise initial anchor can be perceived as artificial and you lose credibility

• Listen. Really listen. Figure out the other sides needs, desires, and fears. Make a list and write down solutions for each. Separate the people and the emotions from the deal. Work on solutions for both (the man and the deal).

• Do not be afraid to walk away. It’s great if you have options. Sometimes we don’t have an out and we need this. And yet, it might be okay to walk away. Maybe the other party is acting in bad faith? Maybe the terms are bad for your team or for you? There are always their competitors :)

• Turn it into a multi-issue negotiation. People tend to get fixated on quantifiable things (ex. price, total salary). But a lot more can be in play than quant issues. And as you add more things, you can attach different weights to things (ex. express large interest in Y -> make a concession in Y → ask for concession in X) or construct a more interesting offer.

  

• Get a bad cop. Manufacture one if it’s just you. People want a reason for why you are firm on issue Y and sometimes it’s just the way it is because of person X.  We can do an entire post on structuring arguments, but one key things is that people are much more likely to acquiesce if you give them reason. Any reason. Bad cop will also help with relationships - the person running the business should stay on good terms after the deal is done. This is important. One trick I’ve used is letting the other side know that I need to check with the CEO if we can do this. But there is no CEO/CFO. It’s just me.

  • Good news. Our CEO approved, but we need ABCD from you.

  • If we don’t get this done, the CFO will force me to do shut this down. You are now too expensive given the value we bring. I have until our budget review in 3 days to give an update or we go all-in with player B.

• Use Bayesian thinking and decision trees. I would map out every branch and play out all scenarios. Negotiation prep is ~80% of the result.

Direct email exchange between Jobs and Murdoch to negotiate audiobooks

Check out the exchange here or here (easier to read but incomplete).

#1 thing that stands out to me is how Jobs paints the future. His first response isn’t a counter-offer (often a mistake). Jobs spends energy reframing the world in which they are negotiating in a way that makes sense for Apple. Once we agree on what the world is - the terms will follow.

Jobs presses his advantages (distribution, alternatives, credit cards on file). He lays out price equilibrium for book prices and consumer preferences in a way that is not up for debate. It just is. The future can either be bright for Murdoch or he can miss out on a lot. Which will it be?

Stuff I read this week online that you might enjoy

• Meta to ask many managers to become ICs

• Did anyone else loose their marbles?

• The state of Bidenomics

• Scaling problems in social control

• The P&L tells the story

• My 5th year as bootstrapped solo founder

• SV needs to stop laying off workers and start firing CEOs

• American universities are hiring based on devotion to diversity

Today at a glance:

• Summary of “the Artists’s Way: A Spiritual Path To Higher Creativity” by Julia Cameron. The first edition of this book came out in 1992. The purpose of the book is to help people with creative discovery by sharing 12-week exercise program and by dismantling self-destructive behaviors we may have about art.

• Things I read online you might like

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Why did I read this?

3rd time founder recommended it in 2019 and I bought it on the spot. I didn’t read it until fall of 2021. That summer I realized that I’ve dropped all of my creative outlets. I also felt like I was unoriginal at work where most of my ideas were derivatives, but nothing bold. Lot’s of 1 to 1.1 ideas, but no 1 to 2 or 1 to 5.

Plus cover page of this book has an endorsement from Martin Scorsese so it must be good, right?

Raw notes from the book:

This book is 80% exercises that the reader must do while reading followed by daily non-negotiable exercises. They make you open up. Never summarized the exercises, just a few macro points. Here they are:

• Everyone can be creative. This isn’t limited to X% of population.

• How to know if you are creatively blocked? Jealousy (I resent that artist/builder), excuses (I need money/time/X), fear (judgement of others)

• Learn to recognize and nurture inner artist → move beyond pain → enjoy a fuller life. Life is creativity. Create > consume

• Filling the well to have creative energy = do stuff that delights/intrigues. Focus attention.

• To recover as an artist, must be willing to be a “bad artist”. Stop demanding that we look good to ourselves or others. Impossible to get better and look good at the same time. Perfectly imperfect.

• Core negative beliefs I resonate with most (out of 20): I will only have one good piece of work in me, it is too late.

• Blocked creatives sit on sidelines critiquing others or self. Do not do that. It is my job to do the work, not judge the work.

• Be present

• Antidote for shame is self-love. Invest in yourself and in your life to better show up in art/work. Enjoy life and experiences, not possessions. Say no. Take care of your body (zen of sports).

• An artist must have downtime. Time to do nothing.

• Take action. Take risks. Do not worry about perfection.

• All artists suffer loss. Loss of hope, face, money, self-self

• Inability to start is not laziness or procrastination. It is fear of X.

• Artists are asked to repeat creations (sequels). If you made it - do you continue with sequel or explore from zero again? Balance $ vs freedom?

• Ignore the competition. The desire to be better than will choke the simple desire to be.

Select quotes:

• Serious art is born from serious play

• An artist must have downtime, time to do nothing. Defending our right to such time takes courage, conviction, and resiliency. Such time, space, and quiet will strike our family and friends as a withdrawal from them. It is. For an artist, withdrawal is necessary.

• Very often a risk is worth taking simply for the sake of taking it.

• Like a career of any athlete, an artists’s life will have its injuries. These go with the game. The trick is to survive them, to learn how to let yourself heal.

• To be an artist is to recognize the particular. To appreciate the peculiar. To allow a sense of play in your relationship. To ask the question “Why?” To be an artist is to risk admitting that much of what is money, property, and prestige strikes you as just silly.

• Progress, not perfection, is what we should be asking of ourselves.

• The trick is to metabolize pain as energy. Learn, when hit by loss, to ask the right question: "What next?" instead of "Why me?”

• All too often, it is audacity and not talent that moves an artist to center stage.

No macro lessons section. These quotes are a good place to end.

Things I read online you might like:

• 4 charts reveal seismic shifts in global energy within one lifetime

• Going through levels of wealth

• Scalability is overrated

• Attention is All You Need → paper credit with start of ChatGPT

• Introducing the Slickest Con Artist of All Time or 10 tweets about ChatGPT

• I lost $209K of my own money trying to start a business

• Control, Complexity and Politics: Deconstructing the Adani Affair

• Design your pricing and tools so you can adapt them later

Today at a glance:

• Lessons

• Things I read this week on the internet that you might enjoy

This is part 3 of lessons from building Minecraft, Streamlabs, and 2 failed startups. Part 1 is here and part 2 is here.

I started part 1 by saying that the lessons are noise. 1s and 0s on a page. I say this because I believe that most of the time we have to live through it, suffer the consequences (win or lose), extract the lessons, and adjust for the future. This was true for me - none of the books or advice landed as well as the actual experience.

Cool, so why repeat the same point as in part 1 and why write at all? I repeat this because the #1 thing that matters is action and moving forward. I hope that you are making moves. And why write? I write because (1) the builder’s journey is lonely and even if I help 0.1% - I am happy, (2) I want to create more, (3) this is difficult for me therefore I should pursue it.

Summer of 2021. I moved back to NYC in search of something. And I distinctly remember writing these lessons down in this studio. I was obsessed with making Streamlabs (the people and the business) successful.

This is what was on my mind at that time. Let’s get on with it!

Shit happens. Keep going:

• Life/business is much more stochastic than we think. We are bad at processing random events. You could do everything right and still fail for XYZ reasons. There are 2 implications from this.

• First, when things go poorly - we fall to the level of our systems/habits. Therefore invest in systems. Bet on culture/systems/mental models/people. This is immutable and if done right, will prevail in the long-term - amidst all the things that go wrong. You also avoid destination disease (ex. what happens when you reach your goal? How do we not settle?).

• Second implication is to keep going. Work hard. Work like hell. Show up and do your best. Many start-ups fail because founders run out of energy, not because of lack of funding.

If you are going through hell, keep going - Churchill

Think independently from the ground up and encourage team to do the same:

• Important to think deeply about all P0 issues. Come up with an independent POV and only then share with others. Encourage others to practice independent thinking. Avoid consensus seeking culture.

• Be mindful of how I am showing up in conversations and what implicit influence I am having on others. For example - if I say “have we thought of doing X in ABCD way” there is a high % chance that people will look at X in ABCD way. There is also a % chance that some may interpret this as an order. That’s not good.

• Embedded in this a lot of behavioral psychology about how you say what you say to get to best outcomes, how you show up to ensure that people are bringing forward their authentic POVs, how to encourage psychological safety, how to avoid the naked king/queen tragedy. Holding back your POV and actively soliciting POVs of others may help.

Give feedback:

• I’ve never regretted not giving feedback (praise and tough love). I’ve almost always (handful of exceptions) regretted delaying feedback. You are doing a disservice to the person and to your team. Do not conflate being popular in the moment (because you skirted the hard truth), with being effective long-term. And when you give the feedback → prepare, be specific, be kind, and follow up.

• Do not coddle or overprotect people. Ensure that there is good team cohesion. You can get the team through almost anything if the bonds/cohesion is good. And if there isn’t team cohesion - get to the bottom of the issue and find solutions.

  If there is no enemy within, the enemy outside can not harm us - african proverb

Do not take anything for granted. Keep up the rigor:

• Resources ($ or time) may seem in abundance once you reach milestone X, but need to apply the same rigor as when we had nothing. Why? Shit happens. Community trust can be lost. Competitor can emerge. Platforms copy. Market can turn sour.

• This is especially true with money. It is easy to get desensitized to resources once you have them and it is easy to feel the pressure to spend once you have the $. Once something becomes a recurring line-item on your P&L - it rarely gets questioned. What does this mean long-term?

• A poker analogy. You take a shot at higher stakes. Things go your way and you are up 2 buy-ins by midnight. Grinding non-stop at your regular stakes - it would take you a week to win this much, but you have it in a few hours. You get comfy and accustomed to the pace of the game and the large bets. You start making questionable decisions pre-flop because “you are up a lot and it’s only $100”. Few hands later, you get in a spot with a weak hand that you should have folded against a tough opponent and they take you for all you’ve got. The end.

• Do not settle and do not take anything for granted - keep building. 

Adjust beliefs based on new info:

• Apply Bayesian thinking to everything and keep learning. Given X, how do we change our approach to Y where Y can be a dynamic with a specific person, a cultural element, product strategy, capital allocation, marketing approach etc.

• All of it is iterative and bayesian as long as you apply yourself and think about thinking. This is different from coming up with your own POV. It is a call to (1) think about all aspects of the team/business and (2) adjust beliefs based on new info.

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Things I read this week on the internet that you might enjoy

• TikTok enshittification

• Adani Group: How The World’s 3rd Richest Man Is Pulling The Largest Con In Corporate History

• ChatGPT cheatsheet

• Vertical communities

• Best and worst decisions I’ve ever made

• Chess is booming and our servers are struggling

• Sam Altman managed to pull the coup of the decade

• Higher rates will lead to the next generation of great tech startups

Today at a glance:

• Raw notes from “The Power of Now: A Guide to Spiritual Enlightment” by Eckhart Tolle. This book is about how we interact with life and with ourselves. The book was published in 1997 and sold >2M copies.

• Things I read online this week that you may enjoy

Why did I read this book?

Someone recommended it. Around that time I read the Surrender Experiment and decided to check it out.

Raw notes from the book1

• We are not our mind. Start watching the “thinker” to go to next level of consciousness. 3rd person. We are not the emotion, but the watcher

• Accept the now and make the present the focus.  First accept → then act 

• Pain feeds on pain. To heal: observe the pain→become aware of it→do not judge it or analyze it. To fight pain you must become aware of pain 

• Dissolving yourself from pain is dissolving yourself from a part of your identity which is scary. Am I deriving pleasure from being unhappy? 

• Power over others is weakness disguised as strength. True power is within

• Your ego is afraid to die. Fear of being wrong, fear of failure, fear of being hurt. Our mind and our ego love problems because they give ego an identity

• Ego is a derived sense of self. It needs to be defended and fed constantly (possessions, social status, being right etc.)

• We engage in dangerous activities (i.e. mountain climbing, car racing, surfing) because it forces us into the now (flow).

• All negativity is caused by worrying about the future or the past. All of our lives are full of problems. Is there a problem this very moment? 

• Do not be concerned with the results of your actions. Focus on the action itself. Results will come

• If unhappy - take action, speak up, or leave the situation. No other path 

• Growth is considered positive, but nothing grows forever. Forever growth is destructive so problems are a natural part of life. Embrace problems.

• Let negativity pass through you

Select quotes that stuck with me:

• Any action is often better than no action, especially if you have been stuck in an unhappy situation for a long time. If it is a mistake, at least you learn something, in which case it's no longer a mistake. If you remain stuck, you learn nothing.

• Where there is anger, there is always pain underneath.

• Wherever you are, be there totally. If you find your here and now intolerable and it makes you unhappy, you have three options: remove yourself from the situation, change it, or accept it totally.

• If small things have the power to disturb you, then who you think you are is exactly that: small.

Things I read online this week that you may enjoy:

• 20 things I learned in my 20 years as a software engineer

• Stock market charts you never saw

• Why to start a startup in bad economy?

• My 8 best techniques for evaluating character

• GPT-3 is the best journal I’ve ever used

• The art of knowing when to quit

• What can we learn from Barnes and Nobles surprising turnaround?

• How much does aging really hurt a country?

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Today at a glance:

• 3 feedback-related stories. Odds are you experienced at least one of these

• Importance of giving feedback or what happens if you don’t

• Why do we struggle to give feedback

• What worked and what didn’t

• Reading that helped

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3 stories. All are true and I bet you’ve had similar experiences.

Teammate A comes to you. They are at the brink with teammate B. A tells you that the entire working team isn’t happy with B and this week was the last straw. B didn’t do their one task and didn’t take responsibility for fucking up. You (or your HR if you are a larger team) ask A for all the feedback they’ve given to B to date. A hems and haws. There is nothing. If we start the conversation with B today - this will be the first time B will learn they are not doing well. Not good.

You reflect on the last year with your leadership team. One of the main learnings is that we should be giving more praise and more feedback. You do a training. You read a book together. You make a commitment to up the feedback game. 6 moths later at people review the same names come up as not having an impact and hurting culture. Not good.

Teammate B is on your team. B is not A+, but the rest of the team are some of the best you’ve ever worked with. You are moving. The energy on the team is infectious. B has a tendency to not check his work. Sometimes it feels like he mails it in. Each time you fix it to keep the momentum, but do not tell B why this hurt. Your priority is to keep things moving. B also has personal errands and they pile up. They also seem to be the kinds of errands and life events that must happen on weekdays. So B is now out large % of Thursdays or Fridays. Often B posts about this in team chat to give people heads up - because in your culture you over-communicate. You assume positive intent and keep going. Except now 2 things start to happen: (1) another person on the team starts to mail it in, (2) X% of the team is out on Fridays for all kinds of reasons. Bad habits metastasized. Not good.

Odds are you’ve been in these situations. I have and to my core I regret not doing more. The consequences of not giving feedback (tough love and praise) are large. So let me share what I’ve learned and if you have things you’ve learned or if you think I am off in any of this - please share. Let’s learn together!

Importance of giving feedback or what happens if you don’t

First, if we don’t give feedback - we are holding the team back from achieving true potential. Opportunity costs of a wrong hire are high. A bad fit at a startup can wreck havoc. If the person is senior - it hurts even more because they cost more and because they have leverage on the team. If the person is not just slacking, but hurting, meaning they are detracting from the work, making bad decisions, diluting the culture - the damage is 100x. Bad habits spread. Subpar performers bring everyone to their level and now we are swimming in glue. These costs are even higher on teams who treat everyone like an owner (a good thing). If a bad actor is trusted and empowered - the damage can be catastrophic.

Second, if we don’t give the feedback - we are hurting the individual. The person must know the truth. If the person is surprised by being let go for performance - leadership fucked up. I’ve made a lot of mistakes. Some cost millions (not exaggerating), but part of the reason why I was able to continue was because I was fortunate to have had teammates who called me out. People have blind spots. People often may not know how they are showing up or what impact their action (or inaction) is having on the team.

Another part of it is fit. Some things have an end. Despite all the conversations, the good intentions, finding another role on the team (90%+ a mistake) - it’s just not working. What if this is just not a fit? A good culture is pointed and not for everyone by design. There might be a culture that is a better fit for this person. Parting ways with a team can be a good thing. Getting laid off from D.E.Shaw seemed like a life-ending event to me, but I am now grateful to them for letting me go.

Who we build with is more important than what we are building.

Taking care of the the team and investing in people is a P0. Getting assholes and culture-detractors off the team is also a P0.

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Does feedback always mean tough love? No

Tell people they are doing an amazing job. Do it often and do it in public. Make sure that they know why this specific thing was good and re-enforce your values. There are a ton of psych studies that show that receiving praise at work is rare, but it matters so much. Receiving praise from teammates and from managers is a high driver of morale. You get to celebrate the person, you get to let the team know what is A+ behavior, you get to also build a deeper relationship.

Building a company is hard. Building great culture is hard. Building a team where everyone is operating at the next level and loves it is hard. These things get harder as the team grows and as you hire. There is 100% chance that there will be recruiting mistakes. Knowing that hiring is hard and that mistakes are inevitable, one of the largest -EV moves a leader can make is to let a bad hire stay on the team.

It takes deliberate daily effort (and often sacrifice and pain) to hold a high bar. And so to build something great I do not see an easy path that skirts these conversations.

Evolution is painful by design, which is why having these difficult conversations in the moment is a must.

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Why do we struggle to give feedback, specifically tough love?

We know we should. We read the books and the blogs. We reflect on it in leadership meetings and we still flop. Here are some of the most common reasons for why people tend to avoid these conversations:

1. I worry they will react poorly/not hear me and we get nothing out of this

2. I don’t have the time

3. I worry I will upset this person. I want to be liked

4. It is not my responsibility. Someone else is already handling this or should

5. I am not sure how to do it well

6. This is not in line with our “culture” where we insert_nice_words

I am still avoiding some of these conversations because of #1. #6 is common - especially in tech. It is a colossal mistake to use high-empathy caring culture as a shield to not have tough conversations. We should unpack each of these and consider the other side of that argument. What is the worst thing that may happen if we do go through with this conversation vs. what happens if we do not?

What would it take to get past these fears and act?

These are real problems. I don’t think we are going to unpack each one here. But I do think that the onus is on leadership to do the hard things. Shocking insight! I think that leadership should be obsessing over every aspect of the team and certainly over team dynamics. The job of leadership isn’t necessarily to be liked 24/7/365 by everyone. The job is to do the right thing for the people and the business. Sometimes it means having a tough thoughtful in-the-moment conversation.

What worked and what didn’t

Giving feedback worked. The end.

We could have ended the email here, but I wanted to share the 3 stories with you. Reflecting back on 10+ years in tech the #1 thing is to share. Give the love. Thank people. Tell them where they let you down or how they can do better. Do it thoughtfully, read the how advice (all the advice on feedback has the same patterns - it’s worth reading), but the #1 thing is to do it.

Do not delay. Think about the team and the other person. Be kind. Share.

For fun I searched in 3 different g-drives for <feedback> and/or <leadership> and/or <lt>. Search results brought up many docs. Despite the fact that these are different teams, with different business models, and different team dynamics - one common theme is feedback. We wished that we either gave more feedback sooner or we set a goal to be more deliberate about feedback in upcoming quarter.

The other part of this is the how behind feedback. What is a constructive way to share that something is going well (easier) or something is broken (harder)? I am going to skip the how part for 2 reasons: (1) it feels prescriptive and you get it, (2) there are good books on this, which I will link below.

Giving feedback often and not letting things fester will make the conversations 10x easier. Then we want to land in the top right quadrant and we are good.

Reading that helped

Radical Candor by Kim Scott. It’s one of the most well-known books on feedback. I read it in early Streamlabs days and found it useful.

Difficult conversations by Douglas Stone. You will find this useful in all aspects of life - from romantic relationships to work to having a conversation with your parents. My #1 takeaway from this book was the importance of empathy and perspective taking - really trying to understand and hear the other side. I read this book during Minecraft days.

Dare to lead by Brene Brown. Brown is also famous for this one. Friend recommended so I read and found parts of it useful.

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• Book summary: “Flow” by Mihaly Csikszentmihalyi. Classic psychology book where author breaks down an “optimal experience” and how to get in the flow state. I share raw notes from, select quotes, and key things I learned.

• Select things I read this week that you might enjoy

Why did I read this book?

I was interested in deep work and read this during winter of 2018. We can be in the zone when playing sports or when gaming. What is it about those experiences that puts us in hyper-focus? How do we create a culture at work where the team is in flow state max % of the time - a culture where we achieve results and enjoy the journey?

Raw notes from the book:

• Chaos is a fundamental part of universe. Universe was not designed with our comfort in mind. It is full of pain/suffering/emptiness. How we parse issues that come up as well as how we handle entitlement to happiness or lack thereof are important to achieving balance1

• Need to achieve autonomy and learn how to find enjoyment/purpose regardless of external circumstance 

• Autotelic people = internally driven = exhibit sense of purpose + curiosity. Higher % chance of achieving flow state  

• Flow = situations where attention is invested to achieve a person’s goal

• Searching for happiness = focus on how to make everyday life more harmonious rather than chasing money/status

• Pleasure = restorative homeostatic experiences (basic needs) = sleep, rest, food, sex

• How to get into flow state:

  • A challenging activity BUT have a chance of winning it (ex. top tennis player vs amateur isn’t it)

  • Clear goals

  • Immediate feedback = clear clues n how you are performing 

  • Allow to exercise control, esp if there is risk

  • No distractions. Zero

• Need to re-frame from work that is an imposition/infringement on freedom to flow-like activity

• Dissipative structures = harness and transform energy (ex earth, plans, humans with fire) = thus integrity of self depends on our ability to turn destructive events into positive ones 

• Steps to deal with stress

  • Understand that your goals may be subordinate to some external constraints and play within those constraints 

  • Discover new solutions = every situation presents possibilities for growth? Do you need to alter goals? Are there other ways out? 

• Biology (food/comfort/sex/dominance over others) and society (slim, rich, educated, well liked) create preconceived notions of happiness/success. If we embrace these goals and are lucky - we may replicate ideal physical/social image that fits within our point in time. Is this the best use of our energy/potential? What if we can’t realize some of these “societal” goals - is that failure?

Select quotes:

• The best moments in our lives, are not the passive, receptive, relaxing times—although such experiences can also be enjoyable, if we have worked hard to attain them. The best moments usually occur when a person’s body or mind is stretched to its limits in a voluntary effort to accomplish something difficult and worthwhile

• ...It is when we act freely, for the sake of the action itself rather than for ulterior motives, that we learn to become more than what we were

• Of all the virtues we can learn no trait is more useful, more essential for survival, and more likely to improve the quality of life than the ability to transform adversity into an enjoyable challenge

• It is better to look suffering straight in the eye, acknowledge and respect it’s presence, and then get busy as soon as possible focusing on things we choose to focus on

• The mark of a person who is in control of consciousness is the ability to focus attention at will, to be oblivious to distractions, to concentrate for as long as it takes to achieve a goal, and not longer. And the person who can do this usually enjoys the normal course of everyday life

Lessons:

• Meaningful things in life are on the edge. Raise the stakes. Seek challenges.

• It is 100% possible to build a flow culture at work

• It is possible to transform shit life throws at us into opportunities. Forge resolve

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Select things I read this week that you might enjoy

• Seven signs of ethical collapse. Signal that points to corporate scandal

• 2023 predictions from 40 founders, investors and operators

• How do you protect your children from internet addiction

• What I learned at gitlab that I don’t want to forget

• Carmack’s resignation letter

• SBF written testimony notes

• TikTok’s secret sauce. It is not the algo

• 22 most amazing discoveries of 2022

Historic football match! Well-deserved by Messi and Argentina

have a good one

• Take care of your health

• Set clear vision, missions, and values. Repeat them often

• Set & enforce exceptionally high standards

• Treat people with kindness

• Give. Create more than you consume

• Kindness vs niceness. Avoid death by niceness as you scale

• Optimism + a plan will work

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This is building on an earlier post with lessons from building Minecraft, Streamlabs, and 2 failed startups. I wish I learned these things sooner, which is one of the main reasons for why I am sharing these now.

Take care of your health

• Think actively about managing our energy so you can serve your team better and make better decisions. You need a clear mind to move all P0 work fwd and to make max # of +EV decisions per day.

• Whatever method works for you (working out, no processed food, sleep, spending time with loved ones, meditation, going on a walk) is what you should pursue. Your best version of self can support your team and your users. They shouldn’t have to settle for less.

Set clear vision, mission, and values. Repeat them often and imbue them into the fabric of your company

• Repeat in public and in private. Build mechanisms and behaviors into the culture that repeat and reinforce mission/vision/values without you (i.e. all hands, gratitude practice, over-communicate reasoning for why we do X on problem Y rather then just sharing that we are doing Y). I believe that a large % of leadership is repetition from the heart. The goal is to build a self-reinforcing culture machine.

• Do not peanut butter your culture. Same as with product. If you build for everyone - you build for nobody. The right culture attracts some and repels others. It is 100% by design that our culture is not a fit for some people. It is also 100% by design that our culture makes a few people fall in love with our company.

Set & enforce exceptionally high standards

• And invest in people who mirror this principle. High standards are contagious. So is complacency. Over time 7s bring down the team (this deserves a separate post, but I’ve thought a lot about this). Do not let complacency/mediocrity metastasize. If it can - it will.

• Leadership owns everything. There are no bad teams - only bad leaders. Everything trickles down from the top. A good analog is rowing. Each rower may pull with varying strength and efficiency on the oar, but the pace in the boat is set by the stroke seat (the first person). And if the stroke stops rowing or drops the cadence without a plan (leader checks out) - the people behind the stroke will crash and the boat (the company) will stop.

  

Treat people with kindness

• Teammates, partners, 3rd parties, everyone - default stance is kindness and empathy. Think it is correct to start from a position of kindness/warmth/understanding the other person and then adjust.

Give. Create more than you consume

• Pour all of your energy into your team and into the users. Work really hard and do things that don’t scale. Treat every user as a VIP, especially early. Help people on the team and go out of your way to give. Do good for others, invest in people, and invest in customers. Be a shoulder to people outside of work.

• Looking back, this attitude hurt me (an individual) a # of times. I took a few hits, but as a macro path - I believe it the maximum EV path for the teams (the collective). I also believe that this path and the hits taught me a few things and made me stronger.

• I am not sure how the dots connect, but I continue to believe that the pain and the sacrifice were worth it. So give!

“Wherever there is a human being, there is an opportunity for a kindness” - Seneca

Kindness vs niceness. Avoid death by niceness as you scale

• As teams get larger things slow down. People start to feel like they are swimming in glue rather than building. This is especially true in today’s environment loaded with entitlement and a mix of ideals that I won’t name (but I assume you know) - ideals that started out as good, but got twisted. We are also wired to be liked, but leadership is often not about being popular in the moment. It is about doing the hard thing. Put all of that together and niceness takes over.

• This is bad trajectory. And it is on leadership to set the right example.

• Avoid conflating being empathic with being nice. You can still be kind and empathetic WHILE disagreeing and driving towards results. Task oriented conflict is great. Tough love and constructive feedback is great. It is important to strive for this environment.

• It is important to do what is best for the company and the team long-term. Often (not always, but often) this is doing a hard thing in the short-term.

• If you have spinach in your teeth a nice person will not tell you anything because they do not want to be uncomfortable. A kind person will let you know because they are truly looking out for you.

Optimism + a plan will work

• Our world is built by optimists. You need to be a battery of optimism/positive energy when building. Optimism is 2x important when things are hard, which is 99% of the time when building a startup.

• An optimistic mindset and thoughtful plan is the backbone of a leader. A large part of the job is to be a cheerleader (with a plan) and to manage the emotional energy of yourself and your team.

Have more written down and will share in future posts.

Take care & drink water!

• Book summary of “Finite and Infinite Games: a vision of life as play and probabilities” by James P. Carse. James explores different aspects of life (ex. society, nature, sex, our genius) from a perspective of a finite game (play to win) vs an infinite game (play for sake of play).

• A mix of links from last week that you might enjoy: GPT3, SBF, Iran, content moderation and more

Why did I read this book?

I was exploring different ontology angles in 2018 and this book came up on Twitter and on Goodreads. Nobody recommended this, but I was interested and read it in 2019 after we sold Streamlabs. Then I re-read my notes from this book January 2022.

I’ve given this book as a gift to a few people because I think that everyone may see something different in it.

Raw notes from the book:

Good reminder that these are my notes via my biased lens on the world at that point in time. These notes are a mix of personal questions and quotes. The book is abstract. If this is interesting - you are better off thinking through this on your own.

• Finite games = played for purpose of winning. Ends with a winner

• Infinite games = played for the purpose of play = joy 

• Surprise is a key element in finite games 

• Winner of finite game gets a title = others acknowledged winner. Titles are public

• Evil is termination of infinite play (ex. EU collonization of US) 

• Man is born free and everywhere he is in chains 

• Power vs strength: power is a feature in finite games and strength is a feature in infinite games. Power is about bringing the past to an outcome. Strength is about infinite possibilities in the future. Few can be powerful. Everyone can be strong. Unlike a powerful person, a strong person is strong not because of what they can force others to do, but because of what they can allow them to do. Evil can be forced expression of power.

• Society is a finite game with many games and many prizes within it necessary to reinforce society and to protect from competition. Recursive.

• Deepest conflict of the society is not with other societies. It is with itself. The powerful vs the original thinkers (poeitai).

• Culture is an infinite game 

• Consumer = finite game with winners  = we display success of what we have done, by not having to do anything = so wealth is performative? 

• Patriotism → desire to protect society → belligerent by nature because prizes only exist with existence of society → society without opponents → patriots must create enemies that require protection against them → patriotism can flourish when boundaries are clear 

• Each participant in culture enters into existing context + changes the context at same time → culture in society and at work 

• If a state has no enemies it has no boundaries 

• Under the danger of war - the people are more obedient. War veiled as self protection, but its just self identification 

• We are all different and we own all that we do → it is because i can not see what you see that I can see at all 

• Sexuality for infinite player has no private parts, no attention on climax or failure and nothing hidden. The point of finite sexual play is to bring itself to an end → move from play to body to closure. 

• Early in the game time is abundant and players feel free. Later - time is consumed and player choices become more important. Errors cost more (ex. poker tournament, negotiations, youth)

• For finite player - freedom is a function of time. We must have time to be free!

• For the infinite player - time is a function of freedom. We are free to have time -> put time into play 

• Nature is the realm of the unspeakable. It has no voice. It has nothing to say. It is indifferent to humans. Nature’s perfect silence. Source of metaphor. Our attempt to control nature are futile.

• Finite speech ends when it is heard. Paradox of infinite speech is that it continues as a way to listen

• Infinite games change the experience for the player and the end is the beginning 

• Desire to have power over nature is a facade. All we seek is power over each other. Science as means to societal games

• The more power we attempt to exercise over nature - the more powerless we become 

• Using machines is giving up originality because we set ourselves aside when operating machines 

• Perfect machines are invisible

• What is style?

• To be at home everywhere is to neutralize space

• How to encourage spontaneity in others?

• Waste is unveiling of our society. Waste is the antiproperty → possession of the losers

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Interesting quotes:

• A finite game is played for the purpose of winning, an infinite game for the purpose of continuing to play

• The joyfulness of infinite play, its laughter, lies in learning to start something we cannot finish

• Titles are powerful. Those around them are expected to yield.

• No one can play a game alone. One cannot be human by oneself.

• The power in a society is guaranteed and enhanced by the power of a society…It is in the interest of a society therefore to encourage competition within itself, to establish the largest possible number of prizes, for the holders of prizes will be those most likely to defend the society as a whole against its competitors

• Culture is an infinite game. Culture has no boundaries. Anyone can be a participant in a culture - anywhere and at any time.

• The more powerful we expect the person to be, the less we expect them to do, for their power can only come from that which they have done.

• Property must not only intrude on others, it must continue to intrude on others…It is the common goal of the rich to establish a mode of visibility that will extend itself over generations…It is apparent to infinite players that wealth is not so much possessed as it is performed.

• Under the constant danger of war the people of a state are far more attentive and obedient to the finite structures of their society…War presents itself as necessary for self-protection, when in fact it is necessary for self-identification

• The paradox of genius exposes us directly to the dynamic of open reciprocity, for if you are the genius of what you say to me, i am the genius of what i hear you say

• We must have the time to be free. For the infinite player in us time is a function of freedom. We are free to have time. A finite player puts play into time. An infinite player puts time into play.

• Infinite play remains invisible to the finite observer

• Nature is the realm of the unspeakable. We experience the unspeakability of nature as its utter indifference to human culture

• I will press my explanations on you because I need to show that I do not live in the error that I think others think I do…Knowledge is like property. It must be published, declared, or in some way so displayer that others can not but take account of it

• What this example shows [nuclear bomb] is not that we can exercise power over nature, but that our attempt to do so masks our desire for power over each other

• A culture can be no stronger than its strongest myths

Macro thoughts:

• Every activity in life from work to love to war to observing nature to our interactions can be seen as a game. There are finite and infinite games. Finite games have winners, losers, titles and other artifacts. Infinite games are played for the sake of play

• I think I resented and still resent finite games. Why?

• Infinite games are pure

• Art for the sake of art. Building a company or a team for the sake of building rather than to exit.

• I feel like I need to maneuver through finite games to have the “resources” to play the infinite games. Is that a real or a self-imposed fear?

  

Things I read last week that you might enjoy:

• Summary of the best gpt3 threads. A funny gpt3 prompt.

• Apple moving ~40% of iPhone production from China to India

• Beyond Meat is struggling and the plan-based meat industry is worried

• Why hasn’t SBF been arrested yet?

• Iran abolishes morality police

• Best leaders are ICs?

• Elon let me help you speed run the content moderation learning curve

• Instagram is over. The app’s original purpose has been lost in the era of “performance” media.

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There is nuance and deep thought at every step. I am an optimist and I believe that in most cases everything can be done well and on the right terms such that both parties feel great after the deal is done.

But this email won’t break down the process in sufficient detail.

To make a sports analogy. If we are training for a race, the penultimate advice is to get a coach and go through every step of the training plan - all custom to you.

This email isn’t the equivalent of a full-time coach. This is more like a no-nonsense reddit post from someone who ran the race and will walk you through the course so you know what to expect.

Few things before we get into the process:

• This applies to teams who have traction, but are not a rocket ship with all trends in their favor. If you are a Figma or an OpenSea of 2020 you are not selling. You are waving off buyers and building.

• This does not apply to teams early in their journey. This also doesn’t apply to someone who wants a simple process. A simpler alternative is Microacquire or entities like Tiny.

• I will skip negotiations. This is a key part of the process that deserves its own post or several posts. I have many thoughts.

• This is all based on my experience selling a company I helped build, advising on sale of other start-ups, and being on the other side as an acquirer. And while there is nuance to each process and each business, I do think that at the most fundamental level - there are patterns that govern these things.

So let’s get into it. For the sake of this exercise, let’s assume that we are a series A/B consumer startup with some signs of revenue, large and growing MAU, team of 50, and product market fit.

Here’s the process from the POV of our start-up:

1. You decide you want to sell.

2. You put yourself out there. There is a saying: companies are bought, not sold. This saying has merit. How are we going to get bought? People need to know that we exist. Sometime it means getting on the radar of potential buyers who do not yet realize that we are a +EV add-on to their business. Cool so how? Different growth hacks to generate buzz, personal relationships, media, a quarterly report, a conference that you organize, direct pitching by us, a banker pitching their network, buying a billboard outside the F500 office or doing another off-line stunt, and many others. Sometimes it is serendipitous. Other times it can be hyper calculated.

3. Make a hit list. Who might be interested? Why? Who at each company would be a potential deal champion?

4. Form relationships and generate buzz

5. BigCo reaches out to learn more or to see how you can partner

6. You might be engaged with more than one potential buyer and running several processes concurrently until you enter diligence with one. This depends on you, but in a vacuum multiple offers are better because they give you choice and leverage.

7. Few calls or emails. You will be asked to share more about your business. How you see XYZ? What are key metrics? Can we see a demo of your product?

8. You sign an MNDA

9. Few more calls and emails. Maybe you get a list of questions. It’s starting to feel like mini diligence.

10. Sometime between step 1 and before the upcoming letter of intent you should share your intentions with your board. The sooner the better. You want to have an intellectually honest conversation with the board about the state of the business and why or why not selling now makes sense.

11. By now you should have a clear idea of who is your deal champion. More on this later.

12. The buyer will ask to learn more. You will answer. Some may ask a lot. You will need to figure out what to share with whom and where to draw the line. This is nuanced.

13. People on the email/calls from the buyer will often be a mix of the business unit and corp dev team.

14. They may declare their intention here or the dating will keep going. This varies by the buyer and can take many forms.

15. You will visit their office or do a Zoom where you present your business. Other SVPs will be in the room together with your deal champion.

    1. Some buyers will want your standard pitch and your voice-over

    2. Others will want a more concrete POV on how your business fits within theirs. This will require custom work and you should do it in spades.

    3. Some will not ask for (b), but you should think through several moves ahead, figure out why they are interested, what your deal champion wants, and position your business that way.

16. There will be a letter of intent (LOI) or expression of interest (EOI). These are non-binding. Not spending much time on the POV of the buyer, but generally the deal champion will seek approval from the leadership team (no board involved yet unless the $ is exceptionally large) to get this LOI. Sometimes the LOI may have a target price, but no other deal terms will be stated.

17. You may chose to shop these around in good faith and anonymously. This is another topic and ties into negotiation strategy, relationship, and seller/buyer dynamics. A core part of any negotiation is information gathering and the person with perfect information wins (ex. can see your cards in poker).

18. You should be thinking about whether this is a company that you can see your team with. Is it a culture fit? Assuming you agree on the #s and the legal terms, does this make sense for the team?

19. You sign the letter. The time window from getting the LOI to signing the LOI is relatively quick (i.e. not months).

20. Dillegence begins

21. Your team will be invited to a deal room on dropbox/gdrive. Different companies will run it differently, but there is often a checklist. It can contain 100s of items. Diligence will depend on the buyer and the profile of your business. Typical buckets include people, product, tech/IP, financials, legal, key customers, security and more. You will be asked to answer additional questions and to submit specifics to the deal room ranging from all signed agreements to audited financials to open source dependancies to team stuff to key customer information to security. And the list goes on. This is justified.

22. There will be a model. If you are a SaaS business and especially if you are a B2B SaaS business - this will be more clear cut. You either have the metrics or you don’t. If you are a consumer-app, especially if you are unprofitable and pre-revenue, you will need to build a model with logical assumptions that take you to a state where you are profitable and generating revenue. The buyer will also have a model, but they will want to understand your long-term thinking about your business in excel.

23. Throughout this period or sooner, you begin to hash out principle deal terms.

24. Conversations with deal champion and the business unit continue throughout diligence. These conversations are additive to the diligence. The goal is to learn. Some of this might feel repetitive or arduous, but our strategy should be to answer everything fully and in good faith. For the buyer this is just as significant. They want to learn and understand. They are betting on you with their time and reputation. You and the deal champion will also want to close the valuation gap (you believe you are worth 10X and deal champ thinks you are worth X). This learning period will help you both get there and will help the deal champion advocate for you internally. What is the right way to think about your business and your potential?

25. You want to discuss values, operating plan, roadmap with your deal champion and/or CEO of the buyer. This will be several conversations and/or a few thoughtful emails. Money aside - how does the business operate after we sell? What kind of culture do we want to build? What values matter? What are our big product bets? 2 books that might help think through this are Creativity Inc and Loonshots.

26. There will be an offer. Unlike with step #14, our deal champion and the CEO will generally go to the board to get approval. Internal team will work on a concise deck that summarize your business, deal rationale, the model and key assumptions, operating and integration plan, value to the buyer, go forward plan. If the deal is small relative to the buyer’s P&L, board approval is not needed.

    1. Note: at this stage we still do not tell our team. We want to minimize unnecessary stress and protect the people building.

27. You negotiate on the high-level terms

28. Lawyers engage to negotiate the deal agreement and finalize principle deal terms in writing. Other key terms are escrow, earn-out (if applicable), retention for key people, IP transfer, disclosures. Disclosures can be 50-100+ pages, depending on the business. The buyer will want to mitigate as much risk as possible from the transaction. Someone explained it to me that it is similar to purchasing a forever home. The house is advertised as X bedrooms/Y location/near Z school and that’s what you’ve discussed to-date (your metrics, product, team). But then you also want to hire an inspector to check the foundation of the home. You do not want to buy a home and find out later that something is broken in the basement because that is now your asset. So the buyer will do more diligence with their legal team, as they should. You and your legal team will also want to disclose everything about your business in disclosures so that there are now clawbacks from escrow and no surprises for your team.

29. You sign and announce the deal to the rest of the team. There is a waiting period between signing and official closing in courts.

30. Papers are filed in court and it is official. You closed!

31. Money starts to flow. From the buyer to you. From you to your VCs and angels. You might get a few questions or congratulations from angels or VCs who just found out. This depends on your relationships and check sizes.

32. Integration starts

Rough estimate for a Series A/B deal is anywhere from ~3-9+ months

1. 1 week to 10+ weeks = dating period before LOI

2. LOI to first offer (diligence) = 2-10 weeks

3. Key terms negotiation = 1-4 weeks

4. Legal terms, disclosures, deal agreement = 2-6 weeks

5. Signing to closing in court = 4-6 weeks

Great chart from Battery that is relevant to #2 below.

Macro things to keep in mind:

1. Act with max integrity, professionalism, and empathy with everyone involved. Can’t say enough about the team, but whether it is protecting their time and their energy (see #7) or ensuring that they are well taken care off - this is on you. The same goes for the buyers. Whether it is engaging in the process with buyer A and deciding to go with buyer B or negotiating with buyer B and not agreeing on terms - it is important to treat people like people.

2. Your VC valuation is not the sale price. This is especially true in today’s environment. Public markets adjusted and many private companies are dead on arrival (see above). There are a few I can think of who raised at 50-80X ARR and would be in the 2-5 range today. The point is that you are worth what someone is willing to pay at a certain point in time. A VC valuing us, especially during a frothy period, isn’t comparable to a sale price. Besides embracing reality, another implication of this is that this is the buyers market relative to what it was FED rate was low.

3. You should have audited financials, historical P&L, all of your metrics, cap table, key legal agreements signed to date and a go-forward model. Different teams will want different things, but everyone will want this.

4. You should have a pitch deck that has your mission, key stats, product, team. This deck will improve as you go through the process. I wouldn’t overcomplicate this or turn this into a production for you or your team. See #7 below.

5. Your go-forward model might vary depending on the buyer and your business. Most startups won’t have one. Time to build it. Fidelity of this model will vary based on the buyer, but everything is doable.

6. Continue to build a meaningful relationship with your deal champion. Not just to close the deal and get through negotiations, but to connect and to understand. You and your team will work side by side with this person.

7. Deals far apart. Often. For many reasons and despite everyone’s best intentions. There are 2 key implications from this. First, I strongly believe that a small subset of the team should be involved in the deal to minimize disruption to the team. Second, you and the select few who are involved must be focused on the process and the business. Regardless of the outcome of this process (sell or pass) - you do not want the business to lose the momentum. Keep building. The latter is idealistic, but I think is correct. Some will say that you need to be 100% focused on the process and if things fall so be it - I disagree for # of reasons. There will be many times where you need to be Atlas. This is one of them.

8. Depending on where you are as a business, your edge, what you raised, your investors and other variables - you and the board may want different things. There are different reasons for why you might want to sell. You might see something that you board does not. You might run out of energy. Odds are your board will discourage you from selling. They are smart, have good intentions, and are here for a reason so it is important to have an intellectually honest and open conversation with the board.

9. Buyer may want you for 3 reasons: (1) your business/product, (2) team or acquire, (3) IP. Sometimes it is a mix of these. The valuation will depend on these.

10. Think about your post-close incentives. What do they do to your team dynamics and to your business trajectory short-term and long-term? For example, what would emphasis on revenue vs. MAU do? You want to win the battle and the war.

11. Figure out where your buyer is and reverse-engineer your strategy. This partially ties to negotiations so won’t take about this much, but heads up. The buyer may want to move fast because of internal dynamics. They might have a window within which they are working and the reasons for that window can vary. The buyer may want to move slow to de-risk the acquisition. Why? Maybe there are #s that are just around the corner that are embedded in your forecast that they can see to feel better about their model or maybe you are in the middle of selling a key customer/landing a key deal and they want to see it close.

12. If the buyer starts the process and then proposes a deeper partnership or a co-marketing deal - I walk away in most cases. Not because there is clearly no deal, but because these things are often a massive distraction for the team and will hurt the start-up speed. These proposals looks good to execs and BD guys, but do little for the product and the end-user. I’ve found these to be -EV and a waste of everyone’s time even if the buyer team is really nice and smart.

13. Make progress every day. Initial getting-to-know you period with several buyers before you enter diligence might feel like playing 1 v 10 in tennis. An avalanche of serves in your direction. You might get the same feeling when you enter diligence with one buyer. There will be 101 requests from the buyer or from the legal teams. Think it is important to get organized, answer everything with max professionalism/polish, and return everything as it comes in. Do not let things stack. Maintain momentum.

14. Do as much as you can in writing and over email. Make lists and methodically address every point. Save the calls to land key things, to connect with deal champion, and for legal. Not everything needs to be a phone call.

15. If you want to do any changes to the business or the team - now is a great time to do it. Your company is already going through a transition period. If you need to make tough calls - do them now. One example is parting way with teammates who are not performing or might not be a fit with the plan after the sale. Be decisive.

16. You might be getting a lot of advice. Do not attempt to act based on the average of all advice given to you. Think independently from the ground up. Weigh the advice of your leadership team and most trusted advisors who have your back above everyone else.

17. Take care of your health. Be mindful of your energy.

Who are the main players from the POV of a startup?

Usually there are 3: (1) the team, (2) the banker, (3) the lawyer.

The team is standard. This should be a small group made up off the founders and select members of the leadership team.

The banker is standard, but I believe you can do without one for most start-ups. Yes, I am a product of my own experience and I sold without a banker. Zero. Was it a mistake? I am not sure. I think that you need more professional help the larger the deal, but at the Series A/B stage I do not see a need. The singular largest pro of a banker that I see is that they can help shop you around in their network. Some leads are better than none, but if these leads are not coming organic via your network - they may not be qualified high value leads. The downside is that a banker will be one more resource to manage. Notice that I am not bringing up fees. I don’t think that fees is a good enough reason to pass on a banker. We are talking about selling your life’s work, creating liquidity for the team that you love, and doing it right. If we think someone can help - it is worth their X%, but I simply do not think they add value net of the cost of managing them. What are the banker fees? There is generally a retainer in the $XX thousand range and a deal fee of 2-5% if the deal closes. By the way - what does this mean in terms of banker’s #1 incentive?

The lawyer is standard and +EV. A good law firm that will fight for you is gold. I would highly recommend. I did not do legal justice here because it beyond the scope of this email, but it matters.

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That’s it for now. We did not spend any time on negotiation strategy. We did not spend any time discussing how to integrate in the most healthy way for your team or how to reset deal expectations (common). Important!

We did not spend any time on the POV of the buyer. There are many nuances there ranging from internal team dynamics to key buyer fears to acquisition scorecard to deal cost components etc. This also matters and while all buyers differ, there are patterns.

A walk through the course to help you see around corners. Not a substitute for a proper training plan.

Good luck!

Today at a glance:

• Book = “White Fragility” by Robin Diangelo. Diangelo is a professor, writer, and antiracist educator. In 2011 she coined the expression white fragility. This expression refers to the defensive behaviors that white people engage in when confronted with racism. These behaviors support current racial in-equilibrium and prevent meaningful dialogue.

• No links from the web. Suspect all of us are consumed by similar things (ex. FTX, China, Twitter/Elon). And while there are many implications from each of these - unpacking each properly will take time and will take away oxygen from this book.

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Brief thoughts:

• Why did I read this? I wanted to learn more after the murder of George Floyd. To attempt to understand I read several books (this was one of them) and went to many protests in San Francisco. I started to understand my ignorance and privilege.

• So what? I am sitting here writing and rewriting this section for over an hour. This is a difficult and important matter. I won’t have the right words, but it is precisely because it is difficult and important that I need to share. If you read one section in this email - let it be the quotes from the book rather than my notes below.

Raw notes from the book:

• Individualism and objectivity are western ideologies that make it difficult for people to come to terms with socialization of racism

• Racism is a system. It is prejudice and oppression that is backed by institutions (see photo below). It is a system that: (1) becomes a societal default, (2) is reproduced automatically, (3) continuously creates advantages for whites and disadvantages for people of color.

• Children are conditioned early that it is taboo to talk about race. All of us are socialized into this system. How can I do better?

• I have blind spots on racism

• Systems of oppression are hyper adaptive. They evolve with our time/societal changes and still maintain inequality.

• Whiteness has psychological advantages that translate into returns (automatic self perpetuating system). I have to spend zero cognitive or emotional energy thinking about this problem because it’s not my problem, which means I get to spend more energy on other things. Energy is zero-sum.

• Multiple patterns at the core of white fragility. These stand out: (1) i am an individual, exempt from the forces of racial socialization, (2) failure to understand that history matters, (3) assuming that everyone can have my experience, (4) lack of racial humility, (5) guilt that allows inaction, (6) defensiveness about suggestions that we are connected to racism, (7) focus on intentions over impact

• Reductive thinking (definition of racism is extreme acts of prejudice and so if I am not that - then I am not racist) leads to inaction, exempts people from responsibility, and protects status quo. So what is the solve? Think of myself on a range and think deeper

• Our system → racial insulation → reduced psychological stamina to have constructive difficult conversations → status quo

• Select mental models to adopt: (1) i am not free of racism or i can be a good person and still be racist, (2) my learning is never finished, (3) i am not entitled to remain comfortable

• There is a long set of implied rules for how we “should” have a conversation about race and for how we “should” give feedback about racism. These rules are nonsense and their function is to protect the broken status quo. Only 1 rule matters: give the feedback and if someone can’t handle it - it’s on them.

• It takes courage to break white solidarity - how can I support those who do?

• I am never finished with my learning on this topic. I regret that I started on this journey at 35 years old.

Select quotes from the book:

• Socialized into a deeply internalized sense of superiority…we become highly fragile in conversations about race. We consider a challenge to our racial worldview as a challenge to our very identities as good, moral people. Thus, we perceive any attempt to connect us to the system of racism as unsettling and unfair moral offense

• The racial status quo is comfortable for white people, and we will not move forward in race relations if we remain comfortable

• Today we have a cultural norm that insists that we hide our racism from people of color and deny it among ourselves

• The call to Make America Great Again worked powerfully in service of the racial manipulation of white people, diverting blame away from the white elite and toward various peoples of color - for example undocumented workers, immigrants, and the Chinese

• A racist free upbringing is not possible, because racism is a social system embedded in the culture and its institutions

• To put it bluntly, I believe that white collective fundamentally hates blackness for what it reminds us of: that we are capable and guilty of perpetrating immeasurable harm and that our gains come through the subjugation of others

• White fragility is a cocoon of racial comfort

• White fragility is a form of bullying; I am going to make it so miserable for you to confront me…that you will simply back off, give up, and never raise the issue again.

• Stopping our racist patterns must be more important than working to convince others that we don’t have them. We do have them.

• We must continue to ask how our racism manifests, not if

• Niceness is not courageous

Here’s a link where to buy Diangelo’s book and here’s another book that I found eye-opening.

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• results-oriented vs. expected value (EV) thinking

• intellectual honesty and ownership

• discipline and emotional awareness

• learning and adjusting our belief system (bayesian thinking)

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Here we looked at why we can learn a lot from poker (patterns are everywhere) and 4 lessons from poker that apply to business, product, teams.

Let’s do 4 more:

#1 Results-oriented thinking vs. expected value (EV) thinking:

• Business and life is often about results. What did you get? How much did we make here? What was the outcome of this action? Did you fail or succeed? That’s good. Results matter, but there is not enough attention on the work that led to the outcome. Not enough appreciation for the process.

• What is the problem with results-oriented thinking?

  • It rewards events outside of our control. Life is fickle. We talked about how humans are bad at estimating black swan events. Shit happens. So we can make the best product, miss the timing window and the market closes around us. Or we work really had to find/close our dream candidate and an immigration issue ruins it all. Obstacles outside of our control are everywhere around us. The 2 things we can control are our actions and our attitude. This is the work leading up to the results.

  • It can bring us down. Because shit happens, we can’t be deterred by issues. We need grit and we need to keep moving. We need to find a way to derive positive momentum from failure. Stuff will fail. That is okay. If we gave 10/10 effort and thought deeply about the problem, but it didn’t work out - I think it’s worth celebrating. This is especially important for cultures that values speed and innovation.

  • It is short-term. Long-term thinking will reward those who keep pushing.

• In poker the result in each hand is a composite of our actions and of probability. Let’s take an extreme example:

  each player has $1K USD
  assume this is an unknown player and we have no reads 
  
  our hand: K10
  our opponent: AA  
  
  pre-flop: we raise, our opponent re-raises, we go all-in, they call
  
  board runs out: 10X10,Y,Z where XYZ are random cards irrelevant for this example 
  
  result = we win $2K pot with 101010KX vs their AA1010X  
  
  our equity before the flop vs. AA was ~12.5%, meaning if we run this scenario 1M times - we are losing money ~87% of the time. A -EV move. 
  
  our equity before the flop vs. a range of hands that this opponent may go all-in with was also low. We are also losing $. Again -EV, even though we won

  What happened here? We made a move and won. The result is that we won. Did we make the best expected value play? No. Our expected value was 12.5%. Did we win because we played well? No - we got lucky. Luck is part of life. Black swan events can be both positive and negative, but the larger point is that luck is not within our control. We can play our best, maximize expected value in each of our actions, and still lose in the short-run. After we think through the problem and we put the chips in the middle - we need to let go. Let go and let variance/probability decide the outcome.

• Let’s ditch results-oriented thinking and start thinking of things in terms of expected value.

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#2 Intellectual honesty and ownership:

• In the example above what are the consequences of attributing this win to our actions? What happens to us long-term if we go to play higher-stakes against smarter opponents and keep going all in with K10? What if we are the guy with the AA and we put in the money with the best starting hand and loose? In fact, we played our A-game all night vs. this opponent - thinking deeply about each scenario, adjusting, and making moves and we still lost. Probability was on his side that night. What does it mean for our psyche if we attribute our loss that night 100% to our actions?

• In poker it’s important to be intellectually honest about the outcomes and to own every aspect of your game. Are we losing b/c we are making mistakes or b/c we are getting unlucky? Winning players think through all of this. Why do I lose vs. this specific player? Why do I keep struggling in this specific scenario? How do I end up here and how can I adjust my strategy? Winning players do not blame bad cards for bad outcomes or hope that good cards come. They shrug off the variance, think about their actions, and focus on what they can control.

• The same applies to building a product or a company. Think it’s really important to be honest about the situation. What is actually happening? What do I need to do to win and how much of this is within my control? One of the mistakes a founder can make right now is to hope that the economy will recover quickly and/or that the next funding round will bail the company out. The same goes for ownership and taking responsibility over all aspects of the business. What % of the companies during the pandemic attributed their success or rising valuations to their decisions vs. market factors?

• Taking ownership and being intellectually honest about what is happening and then making adjustments is identical in both poker and business.

#3 Discipline and emotional awareness:

• In poker there is a term called tilt. Tilt is when a player takes on a suboptimal strategy because of emotions or frustration. In the movie Rounders, Matt Damon’s character puts his opponent (red tracksuit in photo below) on tilt by letting him know that he discovered his tell. This is a movie, but the point is that Damon’s character threw him off of his game and the red tracksuit guy lost .

• So tilt is when we are emotionally off kilter. When we are not playing our A-game we start to make -EV (expected value) decisions. The worse our state, the larger the negative pay-off. Out of frustration or anger we can lose a lot. Some of the largest losses in sheer $ terms I’ve ever seen at the table happened when people were tilted - not when they were just unlucky. Understanding when someone is in a subpar state and extracting maximum value from them can be profitable. Understanding when we are not 100% and quitting can be even more profitable (loss minimization). In fact, discipline and emotional awareness is stated as the #1 source of edge among high stakes poker players. Discipline is ranked higher than hand-reading, game-theory, work ethic etc.

• How does this apply to building? So many ways. If we are cognizant about our emotional state - we can make better decisions or we can take specific actions to alter our state. If we are leading a company or a team - it is important to take active ownership over how we feel. Not feeling good? Get to the bottom of this and get back on track because the leverage of our role is high. It can lead to bad decisions and/or ripple through the company. In my late 20s I was given feedback several times that how I show up in office rubs off on others. If I appear stressed - people start to stress. I am grateful to the person that shared that with me and I’ve tried to make changes. Another obvious outcome is the quality of our decisions. Can’t make tough calls when we are not 100%.

• The point I am trying to make is not to ignore emotions. The point is to observe the emotions. Let them pass through you. Be cognizant when things are affecting our mood, exterior, and decision making ability. And then take action. An action can be a workout or outright quitting for the night (#1 solve in poker is to quit the game when tilted).

Learning and adjusting our belief system:

• Those who succeed in poker are always learning. My approach is to treat every scenario as a learning opportunity. Avoid going from hand to hand in a daze. You do not want to be a tourist at the table - just along for the ride. You want to be thinking deeply about every instance, extracting information, and adjusting your strategy.

• Why did she just win that hand? How could I have done better in that scenario? We want to approach everything with a mindset of: what can i learn from this to maximize future value. And so I imagine everything as a learning step. And every scenario is a step on an infinite staircase towards maximum pay-off. Towards mastery.

• The same mindset applies to business. There are formal retros/processes for learning after each release or after an outage. These are great. They are sometimes heavy, but they are good. Beyond retrospectives - I think it’s important to have a learning culture that transcends everything, not just select large releases and outages. This hire we all said yes to is not working out. How can we tune our interview or onboarding process to do better? We noticed XYZ development in our space - what does this mean for us and how should we adjust our strategy to win?

• In the long run you win money in poker by collecting information and using that information to adjust your strategy. Poker is an obsessive hunt for information and a never-ending process of strategy evolution. Think the same mindset applies to business. Observe → collect information → put it to use → adapt belief system → win.

• Who is Frank and what is his main point?

• Raw notes from the book

• Quotes I found most interesting

• My thoughts
  

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Who is Frank and what is his main point?

Frank led Snowflake to a massive IPO ($67B on open). Before that he led Data Domain and Service Now. He is considered as one of the best-performing CEOs. Frank’s main point is that businesses can improve by dialing up intensity and by raising standards.

Raw notes from the book:

• Set high standards

• Focus

• Pick up the pace. Leaders set the pace.

• Think long-term as leader

• Hire for aptitude/character 1st. Experience 2nd.

• Be decisive. Do not wait.

• Declare war on competition and on incrementalism (be bold). If you fail, at least you went for it.

• One of the biggest responsibilities as a leader is to be a beacon of ambition/drive

• Execution > strategy

• Be intellectually honest. Try to see things for what they really are

• Hire driven people. Get good at recruiting and firing.

• Culture doesn’t just happen because a leader said so. It is a function of subcultures, consequences from good and bad, tough calls, rituals and more

• Everybody has permission to speak to anybody. Go direct. No going through managers. No managers in ivory tower. Also watch out for too many managers/empire builders

• Acknowledge your mistakes in public

• Sales team must be supported by good product, market, lead gen, incentives. Engine without a car is useless

• Own your distribution. Try not to delegate to 3rd party

• Companies get less scrappy as they get bigger. Not enough hard-core doers

• It is easier to go after existing market then to make a new new one

• Think hard about architecture (irreversible decision)

• Think ahead of the current market dynamic. Only the paranoid survive

• Your mission is to win. Not to be popular

• Board dynamics: do not be board-compliant and instead lead your board - have a POV

Quotes I found most interesting:

• In troubled organization there’s no rush, no urgency. Why?

• People sometimes ask to get back to me in a week, and I ask, why not tomorrow? Apply pressure. Be impatient.

• If I knew that something or someone wasn’t working, why wait? As the saying goes, when there is doubt, there is no doubt.

• But as far as Snowflake is concerned, this is nonnegotiable: we expect everyone to embrace the Snowflake mission with everything they’ve got…All hands on deck, at all times

• Hire drivers, not passengers and get the wrong people off the bus. Passengers are people who don’t mind simply being carried along by the company’s momentum…seemingly not caring about the direction chosen by management

• In many companies, when things are going well…people become more tolerant of bad behavior because, well, why mess with a good thing?

• People trust a straight shooter

• Challenge people: “If you could do just one thing for remainder of the year, what would that be and why?

My thoughts:

• Why did I read this? I read it in January 2019 because Bill Gurley mentioned him as a high-performing leader. I looked up Frank, was impressed, and pre-ordered the book to learn more.

• So what? Bluntly, I enjoyed this book because I agree with a lot of what Frank says. Self confirmation bias is powerful. This newsletter isn’t the place for this, but I’ve struggled with managing my relationship with work. In one case I’ve worked with a coach to dial things back strategically so that the team can “breath” (especially, outside work hours). At the time I had reason to believe this was net best, but looking back I think I handled that poorly. Other times I’ve felt anxious and insecure about my relationship with work/intensity based on what I think others think is normal. Frank’s outlook makes me feel more at ease. This is a loaded topic that I am still exploring and I’d love to know how others approach.

The book is ~175 pages. If you are interested in getting your team in hyper-growth gear - check it out!

Today at a glance:

• thoughts on the Twitter challenge

• few things before we get into the growth plan

• a simple 4-state tree of how I see this playing out

• the plan: a set of ideas for how to get this done, focused on product & ops

• what not to do right away

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Thoughts on the Twitter challenge

Twitter is both the #1 western discourse platform and the tool for shaping culture/public opinion. Twitter is the multi-player information layer of today (YT/Snap/Insta are single-player and FB feed is a walking corpse).

Twitter has immense potential.

Whoever leads Twitter has one of the toughest (the toughest?) challenges in product/business for 2 reasons:

1. foster open dialogue and information sharing in a society that is more polarized than ever

2. achieve #1 while running a sustainable and growing business

#1 is hard. We may think we want this open network, but there is a % chance that we play out all the scenarios and we learn that we are unable to handle an open network given how we are wired as a species. Many said that #1 is not an engineering-first problem. I think they are right.

#2 is hard because Wall Street is insatiable, short-sighted, and tends to reason by analogy (i.e. why can’t Twitter circa 2015-2020 be more like FB).

Think Musk is right in taking the company private to solve #2.

All tough problems are worth solving. There are many hot takes on how to run Twitter so here is another one.

Few things before we get into the growth plan

1. Saying that Twitter has immense potential does not mean that Twitter is weak today. There is a lot of strength and there are positive trends (ex. shipped things in 2022).

2. You can make tough calls, build fast, AND be human. It’s more important than ever to be human and to treat people with kindness (i.e. fair landing for the current team).

3. To save time, I will skip the how behind each move. I’ll also skip culture, incentives, and team dynamics. Last, I’ll skip win conditions/what has to be true for us to go back to public markets (if ever) and if we do go public, how do we align with investors on what is reality for the business.

4. How we got here (i.e. act of taking Twitter private, growing political importance of twitter, 5 CEO shuffles since 2006, law suits) was “expensive”. We said that Twitter is a difficult problem and that Twitter is worth fighting for so expensive is implied. The point is that it cost us a lot to get here. Twitter is private. Now is not the time to be timid or reckless.

   1. Poker analogy would be that we are 300+BB deep and we are running a 3-street bluff b/c we think our opponent is weak. We bet turn with the intention of betting most rivers. Once river hits (Twitter’s crucible moment) - it is not the time to be timid. We must follow through. That’s part of the reason why I recommend path D below.

5. Most of my ideas are around product and ops. Solving policy is probably the toughest question and beyond a few suggestions, I don’t know enough about this to have a strong POV.

A simple 4-state tree of how I see this playing out

I believe that leadership has to be bold and thoughtful (not reckless). Twitter has some time to get things right because there isn’t a clear alternative yet and everyone’s social graph is tied up on Twitter.

There are 4 paths:

A = torch it. Do not just fail to handle current moderation/policy/bot issues, but exacerbate them, leading to an exodus of users and advertisers. Fail to build the team. Fail to get the P&L under control while facing declining revenue from advertisers and dealing with interest payments on $20B of debt. A nuke would be a tragic bad act that spawns from Twitter hate mob and leads to further loss of trust. Twitter ends up like Tumblr.

B = high variance moves with a neglected core. Make bold product and policy moves without addressing the core experience. For example, this would be going after ideas #5-6 in the bigger idea list below head first. There is a X% chance some of them work, but there is a higher % chance that they fail, especially when layered on a subpar core - hence the spread.

C = upgrade the core. Address the core experience, find a reasonable solve to moderation/policy, take care of the bots, reduce reliance on advertising revenue, and straddle the middle in a way that is healthy for society. This will lead to higher EV vs. status quo.

D = moonshot turnaround. This is (C) + ship and find product market fit for all V2+ ideas around payments and social. Sequencing matters. Go for bold bets without the core and we end up in state B. This is a max EV scenario.

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The plan

TLDR:

• build lean team + get P&L under control

• generate cash flow via cost cuts + blue v2 service to pay down debt

• make nice with advertisers while diversifying away from ads with an on-platform service (blue v2)

• handle the core (ex. policy, what behaviors get rewarded, bots) before going into bigger bets

• ship a # of quick product wins

• ship bolder bets (i.e. choose your own adventure, payments, social) and expand

People

• let go of X% → listen to trusted top performers. Do it in one cut, do it now, and if on the fence - cut more than necessary. Those leaving - treat them with kindness. #1 reason for cutting is speed of execution. Nothing more.

• fill leadership team → help needed

P&L

• G&A is 46% of R&D → figure out why so high and cut to ~10%

• Sales & Marketing is 94% of R&D → figure out why so high and cut to ~25%

• make a plan to pay down $20B in debt and to reduce interest payments → renegotiate if X milestones hit

Product: quick wins + derivative ideas

• unbury muted words from settings UX, rename to filters, make it accessible from timeline and grow adoption. Easy client change.

• outright disable quote + reply → high % are hate/negative

• beef up Twitter blue + raise price to $9.99: (1) better follower mgmt (search followers, mass actions), (2) better DM management, (3) auto-blue checkmark if verified ID, (4) analytics on followers, (5) better tools for writers - many ideas from hemingway clone to UX to auto-thread maker to preview etc., (6) post boost to followers, (7) ad free, (8) themes, (9) edit button and much more

• allow to mark every item in #explore/#discover as not interested/spam + blacklist all fortune/hollywood reporter/empty media. High ROI real-estate and 50% of this is noise today.

• dial in <content you might like> → ~20% seems random/spam

• reward positive contributors with low follower count w/ profile icon or free Twitter blue for X months. Today a user with low count brings a meme or a trend forward → it gets picked up by popular accounts → user X fades. Need a better feedback loop.

Bigger/harder ideas (prioritized list)

1. re-eval core loop: today vitriol/dunking on others drives the discussion and gets rewarded by likes. Figure out how to flip the model and reward +EV behaviors/reasonable people. Maybe it’s equivalent of reddit karma that can be cashed out for $USD or spent on boosting your posts OR posts of others you think add value to discourse?

2. get a grip on bots

   1. reward verified accounts: validate identity-> get checkmark and appear in algo & if NOT -> downrank in feed

   2. build more resilient anti-bot system and tune it. There will be false positives and that is okay. Figure out ranking for each variable.

      1. IF [(unverified) + (high degree of amplify vs mean) + (high degree of anon in profile like alphanumerical name) + (post frequency above mean w/ gradients >50/day, >100/day) + (followers have high degree of anon in profile) + (low follower count) + (liked/RT ratio is +/- 10%)]→ take action (ban, downrank, label as bot)

      2. Use account correlation as heuristic to enable near real-time action vs bots (assuming bots act in tandem) → do not wait days to gather data on account X

   3. if bot is benign account -> add bot flag in profile

3. choose your own adventure: users can select the experience they want among algo presets (pay to tune your own or get access to presets used by XYZ person you respect) + tune your timeline based on (geo, interests, live events etc.) This can be powered by developer-first marketplace.

4. experiment with discovery/engagement ideas: (1) top 5 tweets while you were AFK (may be missing from timeline but high EV content), (2) top 5 tweets liked by X  where X is your followers, people you follow, people you follow + 1 degree removed, people from your location, (3) engage the lurkers in dialogue via preset polls or thoughts on X/link to current factual article    

5. payments + wallet: add P2P payments and focus on fiat (crypto later). Allow tipping with 85/15 rev share, simple p2p payments, and withdraw to ACH. PayPal will eat itself plus we already have the social graph. Do 50% lower chargeback fees, no extra FX fees, and add micro-payments support (higher % trnx fee, 2-3x lower flat fee on transactions <$5). Creators will appreciate this and $TPV will grow.

6. social: tear down popular messaging/social apps, starting with KaKao, WeChat, Telegram (audio as input, gifting, commerce, calendaly/schedule sharerer, shopping, share location, calls, events, draw etc.) —> Musk alluded to this being the plan. Think it’s smart, but its much more than a copy-paste. Again - need to invest in the core loop before layering any of this.

Service + Developers

• alerts on all activities/accounts outside the mean and if these alerts already exist - a strike team to take action 24/7 (ex. shirts that go hard, bot networks from region X = strike down in hours not weeks)

• drop rate limits on API, but punish project IDs who tweet (bots?) and reward IDs who help improve the platform (i.e. fight bots, improve curation, help greater good, develop end-user feed algos)

• document well (i.e. stripe)

Policy/moderation/community guidelines:

• council to decide on bans and guidelines -> seems to be WIP

• EULA in plain English: at signup click through key terms and agree (not buried in ToS) + all existing users consent

• actions on platform that incite violence/abuse lead to bans

• appeals system for bans

• 80/20 revenue share for creators/developers sliding to 90/10 if earning on twtr in year 2+

Advertisers

• this is bird in hand. Can’t let go even if we don’t love the biz model given long-term vision of the platform. So we must make it work

• go on listening/inspire tour to damage control + instill confidence

• evaluate CPMs -> twitter ad buy has been expensive vs others. Why?

• invest in targeting and look-alike audiences

• give brands control over context in which their ads show up: <IF X ad/product - never show my ad next to Y content/keyword>

Expansion

• ~55% of total adv revenue is coming from US (not NA, but US)

• twitter dominates in West among white liberals with a college degree

• expand market to market -> this is both geos (ex. LATAM/SEA) and demographic (ex. hispanic/Rep leaning) -> diff playbook for each niche

What not to do right away:

• pursue too much at once and/or attempt to clone Chinese apps (Vn) right away. Sequence product bets starting with core loop. What behaviors are rewarded? Get the core under control.

• video/streaming → will drive up costs + more moderation/policy problems. Let TikTok/Insta/YT own video for now. Must focus.

• disparaging anyone. Not a popularity contest. Be civil

• go full boar into crypto on day 1→ majority do not care yet and web3 onboarding is a pain for 99% so $TPV and platform take-rate will be minimal. Better to focus on other areas. Can lean into web3 when have policy and P&L under control. Web3 will be here, but need to deal with the core.

• stop listening/drop humility

• add the edit button unless paid = immutable is core to twtr

Oh hire Rahul Ligma for PR/Comms!

That’s it! Go Twitter!