I have been writing a lot about wealth and income inequality and I am readingThomas Piketty's Capital in the 21st Century (review forthcoming as soon as I am finished). So it seems appropriate to ask how I feel about the wealth being created by tech startups for entrepreneurs, early employees and investors (which of course includes VCs like myself). I have hinted at this here on Continuations in the past in a post about Twitter but it is worth clarifying. I believe that a large component of this wealth is random — or if you so want: luck.
Maybe the perfect illustration of that random component is Brian Acton, the co-founder of Whatsapp. He famously tweeted about being turned down by both Twitter and then Facebook as an engineer in 2009. If either one of those jobs had come through it seems highly unlikely that Brian would have joined Jan Koum in the fall of 2009 to work on Whatsapp. Which in turn would have made it pretty unlikely that Brian would have made hundreds of millions of dollars when Facebook acquired WhatsApp.
My personal story is similarly full of randomness. I spent all of 2003 trying to buy a traditional software company with the goal of then Internet enabling it. Together with a friend and partner we got super close to buying the leading trucking software company in the US which was headquartered in Cleveland. The deal fell apart at the 12th hour over a sales tax liability (that later turned out to be trivial — I will at some point blog about the details). In any case, had that deal happened I would have been in Cleveland instead of teaming up withJoshua for the wild ride that was delicious and subsequently joining USV.
If you want to argue that this entrepreneurial or investor wealth creation is not random to a large degree, then you would have to believe that people like Brian (or myself) have some skill or ability that is thousands or even millions of times larger than that of others. I personally find that preposterous. Just to be clear, I am not denying an element of risk taking, smarts, etc. — clearly you have to work for a startup or become and investor to begin with if you want to have a shot at this (as in the joke of the person praying for years to win the lottery only to finally hear God speak “buy a lottery ticket”). Beyond that though much depends on being in the right place at the right time.
At the moment randomness is amplified significantly by the winner-take-all characteristic of many markets. The leading service or app in a category with network effects can be an order of magnitude or more larger than the next competitor and can do so on a global scale. Or put differently, the potential size of the lottery tickets has increased substantially. We have had a similar period in history during early industrialization.
PS Some further clarification on the randomness aspect. I am not arguing that the emergence of a company such as WhatsApp is unlikely (in fact the opposite). I am talking about the probability of a particular startup becoming that and of a particular person to be a founder of or investor in that startup.
Had this same discussion over Easter dinner yesterday and we came to the conclusion that generally people who acknowledge that at least a portion of their great success is the result of a “lucky break” somewhere along the way are much more tolerable/humble/fun to hang out with than people who attribute 100% of their success to their hard work/smarts/genius. Those people tend to be assholes.
Not to say the girl or guy with the lucky break didn’t work their ass off to make the best of it, and of course they did, but there are also a heck of a lot of smart, hard-working people who haven’t had the same kind of success, however they define it.
It’s funny how when you get on a “kick” for something, all of a sudden the whole universe seems to be talking about exactly that topic. There are two explanations to this phenomenon. Either there is some sort of cosmic alignment of ideas where everyone magically starts thinking and writing and talking about the same thing simultaneously and without prompting, or you see what you want to see and find what you want to find. The past week, I’ve been obsessed with “product-driven” strategies, and started digging into the philosophies of a few notable startups/founders using this methodology. All of a sudden, the resources on this topic opened up, and not just things from the past. New articles, written in the past few days, about that exact topic (see “What Exactly Is A Product Manager?”, “Creating an Entrepreneurial Startup Culture”, “Minimum Viable Personality,” the list goes on…).
This is a very helpful phenomenon, it allows me to consume topics like the Cookie Monster consumes cookies: feverishly. And when the kick has passed, I’m left with a nice new set of outlooks and ideals. How productive.
This is currently what I’m staring at (or at least, before I decided to snap a screenshot and procrastinate by writing this blog post on how to not procrastinate…whatever). I just read a post on Zen Habits about procrastination, and it was some of the best advice I’ve ever read. For someone who suffers from such extreme procrastination as I do, it was mind-bending and awesome, a rush of motivation and energy just at the thought of its impact. Here’s the notable stuff:
Identify the most important thing you have to do today.Decide to do just the first little part of it — just the first minute, or even 30 seconds of it. Getting started is the only thing in the world that matters.
Clear away distractions. Turn everything off. Close all programs. There should just be you, and your task.
Sit there, and focus on getting started. Not doing the whole task, just starting.
…Get started, and the rest will flow.
That’s all I got, gonna go try this method now.
I like this little mini-meme that swept through the blog-world about listing—in stream-of-consciousness form—what things inspire you on an everyday basis. So I decided to try and create a list of my own on the bus down to Philly last saturday. Reading the lists by Caterina Fake [link], Dennis Crowley [link] and Christina Cacciopo (of Union Square Ventures) [link], I thought at first “wow, no way I can remember back my childhood like that and dig up random and powerful things/people/places/events that stuck with me.” But the exercise of trying produced an astonishing amount of stuff, stuff I hadn’t thought of in a long time but are obviously powerful enough to stick with me. It’s kind of a neat little experiment in memory, I highly recommend it.
So, here it is:
the blacksmiths at colonial williamsburg, heavy construction equipment, building blocks, eBay, MAD magazine, Vermont, Nashville thrift stores, wired magazine circa 1996, playstation cheat code message boards, municipal airports, Apple Computer, skylines, sam ash catalogs, someone else’s drum kit, 1967 stingray, tracing paper, smith optics, goosebumps, redwall, pierre omidyar, kaZaa, hardy boys, Etnies, go-gurt, pinkbikes.com, sand sculptures, North Shore BC, flag football, j.crew/Mickey Drexler, sharpies, photobooths, captain planet, south park, spaghetti westerns, the spectre computer game, mechwarrior, breathless, the beach boys, asbury park nj, svpply, dribbble, lib tech snowboard graphics, mark messier, early 2000’s snowboard movie soundtracks, my mom, avc.com, songza, songkick, Roland MC-505, reddit, deer tick (the band), jef razkin, steve jobs, independent movie theaters, new york city, muchmusic, glastonbury, tumblr, kickstarter, jeff bezos, takashi murakami, marissa mayer, jack dorsey, david heinemeier hansson, Hamdi Ulukaya, sherlock holmes (the books), industrial design, design blogs, marshall amplifiers, first snowfall, RV’s, keith richards, spreadsheets, Keynote, TextEdit, Vic Firth.