Category: Everything else

Compare purchases to put them in context

We think of money differently depending on the context. For example, we may fight for a three hundred dollar discount when buying a new car. But, the same discount when buying a house would feel ridiculous. It is still the same three hundred dollars, isn’t it?

The downside of this approach is that we may be biased toward making certain kinds of investments over others. And, one tool I’ve begun to find helpful is to compare purchases to put them in context.

Let’s imagine you want to spend $100 on a hobby. It is tempting to think you’re rationally evaluating the cost/benefit of the $100. But, we’re not rationally evaluating anything – instead, we have a certain dollar amount threshold tagged to hobbies. So, I begin asking myself – what are other areas where I’m spending $100 or more? Let’s say I’ve got a vacation coming that’s got a budget of $1000. How would I think about adding $100 to the vacation with a new, cool add on? How much does that compare with the added benefit from the hobby?

Or, what about that gadget you’re considering buying?

After two or three such comparisons, it becomes obvious as to how much you value the expense you’re considering. In my case, for example, I found myself biased against making a couple of expenses that had some short term hassle and longer term benefit. I also realized I had a bias against annual subscriptions over one time payments.

My goal with expenses is to do so consciously. And, comparing purchases helps with that.

I hope it helps you too.

Vacuuming and how work becomes meaningful

Vacuuming the home has been an ever present on my list of chores over the past few years. I cared about doing a decent job as I understand why it matters. But, it was never fun.

Until I started strapping our 6 month old baby and vacuuming the home with her.

At first, she mostly watched in silence. Then, she grew to enjoy it. And, twelve months later, it wouldn’t be the same without her. The issue is that she’s reached that point when the carrier isn’t comfortable anymore. I know it isn’t going to last for much longer – but, boy, was it a blast while it lasted.

This experience with vacuuming speaks to how work becomes meaningful. The first step is for folks to understand the “why.” Why does what they do matter? Once they understand that, merging the “why” with “who” they care about makes important work feel both meaningful and playful at once. It is these sorts of environments that make for incredible laboratories to grow, learn, and experiment.

And, in environments where people combine learning, meaning and fun, they do the work (the “how”) with great care.

This is the reason powerful visions need to co-exist with a great culture. It is the culture that ensures that people feel the kind of belonging to continue to find meaning in what they do. A vision is useless without strategy. And, culture is strategy in the long run.

PS: Getting back to vacuuming for a moment – it is another one of those reminders that the days are long but the years are short.

High standards and writing great memos

Jeff Bezos, in his latest letter to shareholders, had a great note on what he’s learnt about great memos.

Often, when a memo isn’t great, it’s not the writer’s inability to recognize the high standard, but instead a wrong expectation on scope: they mistakenly believe a  high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more! They’re trying to perfect a handstand in just two weeks, and we’re not coaching them right. The great memos are written and re-written, shared with colleagues who are asked to improve the work, set aside for a couple of days, and then edited again with a fresh mind. They simply can’t be done in a day or two. The key point here is that you can improve results through the simple act of teaching scope – that a great memo probably should take a week or more.

There are two things I took away from this excerpt and the letter. First, it is fascinating to see the parallels between delivering high standards and approaching learning like a chef. To develop high standards, we must first learn to break things down to first principles, understand what “good” is and develop realistic expectations for what it takes to achieve them. For example, once we approach build new habits from a first principles perspective, we realize that the expectation that we can build a new habit that matters in 21 days automatically sets us up for failure.

The second lesson is about the difficulty of writing well. As Bezos notes, writing well is a product of revisiting and rewriting. In that sense, writing well is a lot like building a new habit – committing to something matters a lot less than constantly re-committing to it.

Sweating versus watching others sweat

Prof Scott Galloway of NYU has an interesting weekly newsletter where he talks about the state of big technology and his thoughts on life. On Friday last week, he had a fascinating edition summing up his approach to life strategy. While I’m sure I’ll share a couple of the nuggets that resonated in coming weeks, my favorite was “Sweating vs. Watching Other Sweat.”

The ratio of time you spend sweating to watching others sweat is a forward-looking indicator of your success. Show me a guy who watches ESPN every night, spends all day Sunday watching football, and doesn’t work out, and I’ll show you a future of anger and failed relationships. Show me someone who sweats every day, and spends as much time at events as watching them on TV, and I’ll show you someone who is good at life.

Very true.

The hunter gatherer within

As hunter gatherers, we spent time in jungles facing enemies, predators and diseases. This setting rewarded safety. You were better off staying away from a bush with a suspected snake than veering close to it.

Most of the world’s population hasn’t lived in such an environment since we transitioned to an agrarian society. But, if we compressed 4 million years of human evolution into 24 hours, agriculture made its appearance at 23 hours 55 minutes.

(H/T Seeking Wisdom by Peter Bevelin for this insight)

This dichotomy is what makes understanding human – why, even our own – behavior hard. We assume rationality and logic to be drivers of action when insecurity and fear turn out to be better predictors of action.

Behaving like hunter gatherers is counter productive in a world where the fundamental assumptions are different. However, we cannot change if we don’t understand how entrenched these behaviors are.

Acceptance follows understanding. And, change comes with acceptance.

Mashpi Reserve

At the end of his book “Things a Little Bird Told Me,” Twitter Co-Founder Biz Stone made a profound comment about wealth. He said money amplifies who you are as a person. I think about that from time to time when I see/hear about extraordinary displays of wealth. There are those who use it to buy incredible private jets and boats and then there are others who find different uses for their money that amplify who they are in ways that can be very inspiring. Mashpi Lodge is one such fascinating project.

Roque Sevilla, a successful businessman and the former Mayor of Quito (Ecuador), decided to buy 130 hectares of “cloud forest.” Cloud forests are fast disappearing thanks to deforestation. And, Roque purchased this forest from a logging company for less than $400,000. To put that into perspective, that is half the median price of a home in many major cities.

A picture of the Mashpi Reserve with Mashpi Lodge in the center. Source and thanks: National Geographic

In the 17 years since he purchased it, the resident Biologist has discovered multiple animal species – various amphibians, monkeys and even Puma – that had been lost to the world for decades.

He also demolished the logging mill and replaced it with an incredible 100% sustainable hotel called “Mashpi Lodge.” His goal was to share this special experience with others and, perhaps, inspire them.

I haven’t been there myself but was so glad to stumble upon an episode of Mashpi Lodge on “Amazing Hotels” on Netflix. If you are interested in learning more, there’s a 6 minute video of Roque describing the Mashpi project.

It is a very inspiring story. I’m hopeful many others follow his lead.

Giving strangers the benefit of the doubt

It is fascinating to realize how hypocritical we are when we get upset at strangers who make a mistake on the road or do something that seems inconsiderate in a public place.

I’ve definitely been that that annoying stranger for someone else from time to time. I’ve done inconsiderate things as I was rushing out of the store on a bad day. And, I’ve definitely made mistakes on the road.

Our default state is to judge ourselves by our intentions and others by their actions.

It doesn’t have to be that way.

Our life becomes a lot smoother when we habitually give strangers the benefit of the doubt. It turns out that the world becomes a happier place too.

Right in context

Most of the toughest questions life asks of us have no right answers.

There may be an answer that works best within a certain context – given the environment, constraints and personalities involved. But, there are no cookie cutter solutions for the problems that matter. To figure out the best way forward in any situation, we need to honest with ourselves about the real problem we’re attempting to solve and thoughtfully wrestle with ourselves as we figure out our path. Not “the” path, “our” path.

The tragedy, then, is that we spend so much time attempting to be right that we forget that all that matters in the long run is that we be thoughtful instead.

The blind spot check

When you learn to drive a car, you are taught to keep turning to check in on your blind spot. It is an important lesson because your rear view mirror doesn’t show you cars that are very close to you. And, since you spend a lot of your energy focused on the road ahead, you need to switch contexts as you turn and ensure you are covered on the sides as well.

As you get better, however, turning becomes less of an event. It isn’t because the blind spot became less dangerous. Instead, it is because your field of vision has expanded. As you drive, you have a map of the road around you. So, as you turn left, you know that the car behind you is a safe distance away.

The disappearance of the blind spot check event is a sign of progress on the driver learning curve. And, checks are a natural step in our journey to pick up a new skill.

For example, when we start working on a new business, it is vital that we check every number regularly. But, the purpose of studying these numbers is to develop a sense for when things are going well and when things aren’t. Similarly, the purpose of the quantifying how much you read or exercise is to build awareness on how you spend your time. Once you develop that sense, you stop doing them and move on to improving other things. We study numbers to leave numbers. We create checks to grow beyond them.

This, then, brings up two questions we need to ask ourselves from time to time –

  1. What sort of checks do we have in place today? These checks are a proxy for the skills we are trying to build.
  2. And, more importantly, are today’s checks different from the checks we had in place a year ago?

What is the average age of a successful start-up founder in the US?

45 years old.

If that surprised you, there’s more in a National Bureau of Economic Research working paper (paywall) by researchers at the US Government, MIT Sloan and the Kellogg School of management.

A few other notes from the Techcrunch article on the paper –

  • The source: A variety of administrative data sets to investigate the age of founders of new businesses, and particularly the age of founders of high-performance startups. Administrative data sets are the “gold standard” of data, because unlike surveys or other statistical sampling methods, they represent the entire population under consideration.
  • Findings point to 40+ founders: The average age of a startup founder is about 41.9 years of age among all startups that hire at least one employee, and among the top 0.1 percent of highest-growth startups, that average age moves up to 45 years old. Those ages are taken from the time of the founding of the company.
  • Findings don’t vary much by geography and industry: Some sub categories like like oil and gas can have average founder ages as high as 51.4 years old. The researchers wrote that “The only category where the mean ages appear (modestly) below age 40 is when the firm has VC-backing. The youngest category is VC-backed firms in New York, where the mean founder age was 38.7.” 
  • Older correlated to better: One interesting dynamic in the data is that older entrepreneurs appear correlated with better startup performance. “For example, the 1,700 founders of the fastest growing new ventures (1 in 1,000) in our universe of U.S. firms had an average age of 45.0 (compared to 43.7 for the top 1% and 42.1 for the top 5%),” the researchers wrote. “Overall, we see that younger founders appear strongly disadvantaged in their tendency to produce the highest-growth companies,” the researchers wrote. One reason, they argue, is that older founders tend to have more years of experience in their industries.
  • Why is the stereotype different from reality?: The authors speculate that the reason could be that younger founders are “more in need of early-stage external finance” because older founders have the connections, networks and personal wealth to fund their ventures. VCs don’t have access to those deals, so they gravitate to the kinds of deals they can potentially fund.

There are a couple of aspects of this study that are fascinating. First, it speaks to the power of narratives over data. Narratives are often shaped by outliers and most of us think of a few outliers when we think of successful start-up founders. Second, availability bias is hard to overcome when you don’t have other data. Venture capitalists write about young founders they back all the time. It is easy to forget that there are other sources of data on the subject too.

And, finally, conventional wisdom around experience is wisdom for a reason.