Faux Networks

In my daily routine, I get the opportunity to chat with college students.  They are both undergrads and graduate students.  Usually, they are business school students but sometimes they are engineering students and sometimes they are just liberal arts students.  I enjoy meeting them.  I get to learn about things as much as they do so really, it is a two way street.

I always ask them how their school’s network is.

When I went on college tours with my children, every single college that we toured said they had a great network that would help your kids.  It might be possible but I doubt it.  Some networks are better than others.  In the Midwest, Notre Dame has a tremendous network.  So does Michigan.  They hew to the “blood is thicker than water” ethos.  No questions asked.

The Ivy League schools have legendary networks.  The service academies are called “ring Continue reading "Faux Networks"

Are You Smart or Lucky?

One of the hardest things to do is when good fortune happens to you is if you were smart or lucky.  When I was trading everyday, sometimes I was lucky. Sometimes I was smart.  Sometimes, I just had an edge that not too many other people could exploit.

It’s really hard to predict the future with any accuracy.  The global warming folks are finding that out.  Back when I was a kid, scientists predicted we’d run out of oil, food, and the world would be overpopulated.  None of those predictions panned out either.  All of us tend to think we are smarter and more prescient than we really are.  By the way, those that are writing about how Bitcoin will die because it consumes too much energy are probably wrong.  If it’s valuable enough, humans will figure out a solution to the problem.

As Bitcoin makes it’s precipitous Continue reading "Are You Smart or Lucky?"

When The Profile Gets Ahead Of The Proof

I heard this line this past week, and it’s been like a catchy lyric playing over and over again inside my head: “Their profile is ahead of their proof.”

Written another way, when Profile > Proof.

It could apply to a company, a startup, a venture fund, and of course, an individual. And it reminded me the profile of any of these entities can be built up, pumped up, and broadcast widely for not much money or effort. The age of social media is in full-swing, as we all know too well — entirely digital brands are going direct to consumers, disrupting traditional brick and mortar stores; traditional media outlets such as newspapers and cable television are being replaced by celebrity- and influencer-driven “channels”; and “startup culture” is now defacto corporate culture, with early-stage, well-funded startups executives on the coasts commanding compensation packages at many multiples of what Continue reading "When The Profile Gets Ahead Of The Proof"

Ways to think about machine learning

We're now four or five years into the current explosion of machine learning, and pretty much everyone has heard of it. It's not just that startups are forming every day or that the big tech platform companies are rebuilding themselves around it - everyone outside tech has read the Economist or BusinessWeek cover story, and many big companies have some projects underway. We know this is a Next Big Thing.

Going a step further, we mostly understand what neural networks might be, in theory, and we get that this might be about patterns and data. Machine learning lets us find patterns or structures in data that are implicit and probabilistic (hence ‘inferred’) rather than explicit, that previously only people and not computers could find. They address a class of questions that were previously ‘hard for computers and easy for people’, or, perhaps more usefully, ‘hard for people to describe to computers’.

Screen Shot 2017-11-02 at 4.44.52 PM.png
Continue reading "Ways to think about machine learning"

Be Careful Not to Lose Twice

There are times to fight.

No great startup has been built without getting one’s knuckles bloody at times. This is especially true because incumbents now know how much is at stake when they let a startup get a huge head start in a market.

So if you’re in a battle, if you’re right, if you feel confident you can win and importantly if the prize for winning is worth the fight — then go for it. But you should feel confident that all of these conditions are met before fighting and you should try hard to make your fight as unemotional as possible.

There are times to give in and compromise — even when you feel you’re right.

Perhaps the costs of “winning” the battle aren’t worth the consequences. This happens sometimes in lawsuits where as unpleasant as it sometimes is you have to chalk up some situations as “not worth fighting.” I have seen this in cases where a fight would take the CEO’s time & attention away from important business dealings or where the cost of not settling is huge (as in, inability to raise more capital until the dispute is resolved).

It might be that you assess the situation and realize you can’t win if you were to carry on the fight. This sucks because even when you feel “wronged” — there are times where you still aren’t going to win if you engage in battle. I’ve had this at times in dealing with big companies like Facebook and Apple where we realized that going against the machine was going to be counter-productive. It’s a Hobbesian world and the sooner you realize this the better equipped you are to know how you fit into it.

The key in life and business is to know the difference of when to fight and when not to and not to confuse situations due to emotions or self-righteousness.

I like to tell people …

“If somebody has wronged you AND you let it eat you up then YOU LOSE TWICE.”

If you decide that your current situation isn’t worth fighting then I recommend you come to emotional peace with that and move on. When you decide give in, do so graciously. Take the high road. Act and feel zen.

Back when I ran my first company I fought a lot. It seemed the world was always on fire and there was some skirmish to be had. I fought with landlords (when the real estate market crashed), venture debt providers (who wouldn’t take a hair cut when everybody else had to), the board (over compensation), our competitors (over everything) and any service provider who didn’t live up to our perceived contract (recruiters, accountants, sales lead companies, web hosting companies).

The longer I was

Continue reading "Be Careful Not to Lose Twice"

a16z Podcast: All Things Compensation

Compensation is a topic near and dear to most everyone’s heart… but what does compensation actually mean? What does it include, and what does it not? How do you compete in an intensely competitive environment, while balancing your company’s real …

Why Network Effects Matter Less Than They Used To

Nisian Hughes/Getty Images

When we teach strategy to MBA students, our student want magic bullets, things they can do to make their companies thrive forever. For a long time we emphasized “network effects” as a potential secret sauce for business models. Economists use “network effects” to describe contexts where a good or service offers increasing benefits the more users it has. Network effects can be direct: for example, Slack becomes more useful as other people also use Slack. Network effects can also be indirect, meaning that one set of users benefits as more of another type of users joins a platform. For example, AirBnB would not be useful for travelers if there were no apartment-owners using the platform. Similarly, home-owners would not want to use AirBnB if travelers weren’t using it to find a place to stay.

We have long taught that network effects can provide market power and sustained

Continue reading "Why Network Effects Matter Less Than They Used To"

Did The Supreme Court Just Save Brick and Mortar Retail?

Yesterday in a momentous 5-4 decision, the Supreme Court of the United States overturned a precedent and made new law.  It will have reverberations around the country.  It could help Megalytics, a startup our fund is invested.

The precedent they overturned was known as the “Quill” case.  Ironically, it involved a good friend of mine Steve Miller.  Steve started and runs Origin VC here in Chicago.  His family had started Quill and states wanted them to collect local and state sales taxes from customers when they sold in areas where they didn’t have a physical presence.  At the time it was really arduous to collect those sorts of taxes and would have increased the costs to the company making it extremely difficult even to execute the business.  Quill’s case paved the way for internet ecommerce.

Back then, the nascent internet technology hadn’t taken hold.  Most over the border commerce Continue reading "Did The Supreme Court Just Save Brick and Mortar Retail?"

Is This the Hospital That Will Finally Push the Expensive U.S. Health Care System to Innovate?

Tim Robberts/Getty Images

There was a time when the American steel industry seemed invincible. The American automotive industry looked rock-solid. American consumer electronics industry seemed untouchable. In every one of these cases, global competition changed the game forever. Will the same happen to health care in the United States?

By almost any measure, American health care costs are out of control but the system refuses to change. What if you could provide excellent care at ultra-low prices at a location close to the U.S.? That’s what Narayana Health (NH) did in 2014 by opening a hospital in the Cayman Islands — Health City Cayman Islands (HCCI) — which was close to America but outside its regulatory ambit.

As we explain in Reverse Innovation in Health Care, Narayana Health’s founder, Dr. Devi Shetty, wanted to disrupt U.S. health care with this venture, set up in partnership with America’s largest

Continue reading "Is This the Hospital That Will Finally Push the Expensive U.S. Health Care System to Innovate?"

What Subscription Business Models Mean for Sales Teams


Across the technology industry, subscription sales models are growing in popularity. The trend is having a big impact on sales forces. For example, an enterprise software company recently transitioned from selling custom software as a one-time product to selling monthly SaaS  (software as a service) subscriptions. The company’s salespeople were used to seeking out new customers, closing big deals, and then moving on to the next prospect. Now, they also had to cultivate ongoing customer relationships to ensure contracts got renewed, in addition to seeking out opportunities to expand business. As ongoing account management activities consumed more and more sales time, new customer acquisition slowed down–and the company’s revenue growth began slowing, too.

The subscription sales trend in cloud computing (and many other industries) means more companies are facing a classic sales management dilemma: Should the same salesperson be responsible for both account acquisition and account management?

Continue reading "What Subscription Business Models Mean for Sales Teams"

The Most Productive Meetings Have Fewer Than 8 People

vgajic/Getty Images

There are many problems with the way most meetings are run. One of the most political is the invite list. Deciding who to include can be tough but too many managers default to including everyone. In an effort to not make anyone feel left out, they unknowingly decrease the quality of the meeting. Robert Sutton, a professor of organizational behavior at Stanford University, looked at the research on group size and concluded that the most productive meetings contain only five to eight people. Why? There is a tipping point beyond which the quality of the conversation begins to erode.

When well-intended managers are too inclusive with their meeting invites:

I’m Honored That I Get To Work With Ayah Bdeir At littleBits

I’ve been consistently public, for almost a decade, about my belief that we should significantly change our approach to immigration in the US, especially for entrepreneurs. As one of the original advocates of the Startup Visa, I continue to be bummed out that our government can’t seem to figure out why this is important or doing anything productive around it.

But, I’ve been appalled the past few days, as Amy and I spend time in Germany, to watch the Trump immigration enforcement that separates children from their parents and detain the children in separate locations. While we had a joyful anniversary yesterday, I felt a bitter emotional undercurrent that upset me.

I’m lucky that I was born an American citizen. Over the years, I’ve invested in many immigrant entrepreneurs. Amy and I have supported a number of organizations that help immigrants and refugees. But when I saw Ayah

Continue reading "I’m Honored That I Get To Work With Ayah Bdeir At littleBits"

If Strategy Is So Important, Why Don’t We Make Time for It?

Jonathan-Knowles/Getty Images

Almost every leader wants to make more time for strategic thinking. In one survey of 10,000 senior leaders, 97% of them said that being strategic was the leadership behavior most important to their organization’s success.

And yet in another study, a full 96% of the leaders surveyed said they lacked the time for strategic thinking. Of course, we’re all oppressed with meetings and overwhelmed with emails (an average of 126 per day, according to a Radicati Group analysis).

But leaders presumably could take at least some steps to prioritize what they claim to be an imperative. What could account for such a massive misalignment between their stated goals and their actions?

One issue is the incentives put in place — often unconsciously — by companies. Even for senior professionals, there’s frequently cultural pressure to put in long hours, which researchers have discovered often serve as a proxy

Continue reading "If Strategy Is So Important, Why Don’t We Make Time for It?"

For Love of The Product

Although it’s rather topical to mock Silicon Valley for its “elevated” housing prices, shortage of UHaul vans, and celebrity investors, there are some things that the Valley undeniably does better than anyone else. One of those unique traits is to emphasize – almost to the point of idolatry – a focus on expertly designed and thoughtful […]

How Are You Protecting Your High Performers from Burnout?

Phil Ashley/Getty Images

A little over a year ago, a high-performing specialist at one of the largest technologies companies — we’ll call him Santiago — was given an opportunity no high performer could turn down: an opportunity to play a manager role on a project he really cared about. The director told him, “You care about this; you lead it.” So he did, and all seemed to be going well — even though he was planning a significant company-wide event at the same time, a role he had volunteered for.

“We had a really important conference call I had spent a lot of time preparing for. The call went well, but when I finished the call, I realized I was feeling really sick,” Santiago recounts. “It got worse after that. I went to the doctor later that day, and he told me I had pneumonia. I ended up in the ER the next

Continue reading "How Are You Protecting Your High Performers from Burnout?"

How Do We Combat Ageism? By Valuing Wisdom as Much as Youth.

Andrew Chislett/EyeEm/Getty Images

In a San Francisco federal court, the Communication Workers of America union recently expanded the scope of the class action suit they filed last December against some of the country’s largest employers — a diverse list of companies that included Amazon, T-Mobile, Capital One, and Enterprise Rent-a-Car — accused of deliberately targeting their Facebook ads to exclude older workers. A ProPublica investigation shows that IBM has quietly pushed out upwards of 20,000 aging workers over the past five years. And, for all that has been written about the woeful lack of diversity and the “bro culture” that prevail in the tech industry, Silicon Valley’s 150 biggest tech companies have faced more accusations of age bias over the past decade than racial or gender bias.

Although the Age Discrimination Employment Act of 1967 prohibits discrimination against people 40 and older, a recent survey by AARP showed that two-thirds of

Continue reading "How Do We Combat Ageism? By Valuing Wisdom as Much as Youth."