I've been soul searching over the past few weeks in preparation for my upcoming career transition. Part of this searching has led me to define my core purpose and values (using a company-based framework that was recommended to me in The Advantage).
This exercise has already consumed a lot more than 5 minutes, but I like Adam Leipzig's framework, and found it helped stoke some ideas.
I enjoyed listening to Bill Kristol interviewing Peter Thiel on his podcast - both interviews are worth a listen. The first interview dates from 2014, around the time Zero to One was released.
Thiel has strongly held and well-publicized views on the value of higher education. The university experience is not dramatically different than it was two or three decades ago - it just costs 400% more than it did in 1980 (post inflation). The student debt curve is very steep and getting steeper:
At the same time, the nature of work is changing. Outside of a few elite programs, university is no longer the best option to learn about cutting-edge technologies that will drive the future of work. It certainly isn't the nimblest. And it's an increasingly expensive way to acquire essentially a generalist skill-set: significant re-education and retooling will be required to keep pace with change over the next 30-50 years.
I would also imagine that the value of a university degree from all but the most elite colleges is quickly eroding. Skills acquired from certification programs like the Flatiron School, cheap or free online courses, or self-education from the proliferation of content, can be immediately applied in a real world setting. ROI is nearly infinite and the cycle time is short.
We don't know what the future of work will look like, but we know with a high degree of certainty that work will be very different. According to one estimate by two Oxford researchers, 47% of US jobs will not exist by 2033.
David Perrell, The Future of Work
It was one thing to invest time or money in a college education when the employment market was relatively static - the jobs were in military, agriculture, financial services. It's another thing entirely when many jobs we now do won't exist in 30 years, and the jobs we will do don't yet exist.
This isn't to say a college degree is no longer worth it. For some it certainly is - but I don't think its such a no brainer anymore. The situation is stark enough to call into question on an individual basis whether a 4-year and six-figure expenditure will have the kind of ROI one would expect from an investment of this quantum.
What other possibilities might exist for 4 years of time and (if you are fortunate enough) that kind of money?
Today feels like the real start of the work year, back in the saddle after August. I spent two weeks on the west coast with my family - one week working in LA, and another week off in Las Vegas.
Technology - specifically smartphones and wifi - has permanently altered vacations. Our habitual checking is hard to switch off when we go away for relatively short periods of time. It’s tempting to ‘unplug’ or take an extended ‘digital sabbath’ - however practically speaking smartphones are so ingrained in how we communicate with each other, this can end up a serious inconvenience. Try meeting up with extended family different hotels without text messaging - it can actually be inconsiderate to be unplugged!
It’s tempting to vilify the iPhone and what its done to the modern family, nostalgically looking back at smartphone-less vacations. However, the same device provides unprecedented flexibility for where work can happen, which in turn can giving back us much more time with family & friends. Remote work has been normalized. Even if we don’t want it, our colleagues or stakeholders expect us to be available at short notice.
So what’s the answer? On one extreme there’s the ‘airplane mode’ holiday - I see many people do these, although they don’t work for our family. And expecting to create real value as a growth company unplugging for multiple weeks a year isn’t realistic.
On the other extreme, reflexive email creep can lead to your body on vacation while your brain is still at work. I’ve experienced starting a vacation week barely checking email, but by the end losing all discipline and falling back into normal checking patterns.
I think we’re experiencing a paradigm in what it means to really be on vacation. Being conscious about this can lead to the biggest work-related lifestyle improvement in the past 100 years - the ability to work effectively, remotely, for far more time than the typical US worker currently takes off as vacation time.
However we need common sense rules of thumb - its hard to imagine value created in a company where employees are at remote locations simply responding to each other for several weeks or months a year. And we need to shift our mind patterns - just because we can see the ocean or are deep in the mountains doesn’t mean the work stops.
Remote work is here to stay. But work means proactive work - kicking off new initiatives, selling, driving results. I can imagine personally being effective for 2 months or more in this pattern.
True vacation is something else. It’s reactive work. Whether this means its possible to unplug fully depends on many factors. Personally, I like to ensure value is building in my absence, which means responding to the occasional email or even ensuring a project stays in track.
In true vacation mode the key lies in conscious choices. If I need to check email, I do so consciously rather than reflexively. I am making a choice. I also take a few breaths before checking, to ensure that I’m centered. I also try to not engage in debates that can turn emotional and therefore spill into my subconscious throughout the time away - I stick to the basics.
I think solving the remote work / vacation / office time equation can allow us to live better lives, with more time experiencing and bonding with loved ones and friends. But if we’re not careful, we can sleepwalk into never really being on vacation, or potentially worse, work for companies where no real work is getting done.
I saw a LinkedIn post this morning that resurfaced a recurring debate that startups have: how early on do you bring in a recruiter to the team to accelerate hiring? The recruiter example can be replaced with other specialists.
More broadly, in the early stages of evolution everyone in the company is stretched so thin - what’s the right strategy to get help?
There are two distinct strategies that a company can pursue:
1) We are under-resouced in x, and x is a critical activity. So lets go hire a specialist in x.
OR
2) We are under-resourced in x, and x is a critical activity. Recognize that great talent is scarce, and figure out how to get leverage within the foundational team so that we can focus more on x.
1) is tempting and what most companies go for. And its true - in an ideal world you’d always bring in a functional specialist. This will allow expand the organization’s capabilities, and bring in an individual who can help grow the function as the company scales.
Unfortunately, startups typically don’t benefit from the good fortune of the right hire at the right time. So an expedient hiring decision is made, and focus moves to the next fire. When trying to create value over the long term, short-term relief causes pain down the line.
When it comes to talent, done is never better than perfect.
Here’s how it plays out, using the example of hiring a recruiter. The hire is made. The best salespeople in organization - founders, early employees, whoever played an important role in foundationally getting the business off the ground and the first few hires in the door - shift focus. A unique capability is replaced by a ‘good enough’ capability. And as a result, quality suffers.
If this happened quickly, recourse would be obvious. Fire the recruiter and find a new one. In practice its rarely that obvious unless performance is egregiously bad. The company’s brand, early employee reputation, etc. creates a multi-month or multi-year overhang that give the appearance of the new hire doing a good or great job. We’ve hit our hiring target, what’s the problem?
Every unique individual who comes in early on in the evolution of an organization has the potential to change its future course. If you are not the highly-engaged, context-deep ‘whisperer’ that can be found in early startup teams, you may not be sensitive or aware enough to see this potential. Or have the moral authority within the organization to take a flier on a high beta candidate.
And the person who could have driven inflection point outcomes in the business comes and goes, just another stat that gets reported on.
Marc Andreessen shared a quote from The Black Swan in one of his blog posts:
Seize any opportunity, or anything that looks like opportunity. They are rare, much rarer than you think…
The same goes for hires. The ones that can change outcomes are much rarer than you think.
So how do you create leverage for yourself in the event you want to wait for the best?
The rule I follow: Every full time hire made should have the potential to change the outcome for the company, and not dilute the existing talent level.
Leaving hours in the day to the side, is this person going to extend our capability in a new direction? Are they going to be better at ‘x’ than the best person in the company is today? If not, don’t make the hire.
This doesn’t mean companies don’t need to hire to scale. It does mean that scaling is hard because hiring is hard, but this is what creates long-term value. Which is a hard thing to do!
Can this drive the early team a little crazy, and welcome sneers from investors about not moving quickly enough? Maybe. But its also how the game is won.
I was introduced to the teachings of Josh Waitzkin originally in Tools of Titans, and subsequently in 3 Tim Ferriss podcasts where Josh was interviewed (my notes on two of these interviews here).
Josh is the most versatile learner I’ve ever read about or listened to, applying learning principles to master three seemingly disparate disciplines: chess (International Master); Tai Chi Push Hands (World Champion); and Brazilian Jiu-Jitsu (black belt training under Marcelo Garcia). The Art of Learning, published in 2008, covers Josh's process through the first of those two. A lot of ground is covered - my book notes are below.
The learning principle that resonated with me the most is that of total and complete presence. Josh’s chess game stepped up when he learned to successfully cultivate mindfulness to stay at the razor’s edge of the present moment and to be one with flow of the game.
Within competitive dynamics, one example of a common challenge is 'sunk cost fallacy': you have an advantage over an opponent, but then lose your ground & the playing field levels. Human tendency is to cling to the comfort of the former position and seek to regain it, but the way we do this is often by employing increasingly reckless maneuvers. I distinctly remember tennis games of my youth slipping away from me when I exhibited this behavior. Of course the best response is to let go completely & stay in the flow of the game.
Here’s Josh describing this phenomenon in one of his interviews:
Let’s say the position changes, you move from having a slight advantage to a slight disadvantage. But you’re emotionally still connected...attached to having the slight advantage. Then what’s sort of happening is you’re stopping. Your dynamic quality is becoming static. But the timeline of the position is continuing, the game is continuing. And what’s going to happen then is you’re going to subtly reject positions that you should accept. And you’re going to stretch for positions or evaluations that you can’t really reach. And you’re going to fall into a downward spiral. So that’s the onset of a cognitive bias. In that case, the cognitive bias would relate to, the emotional clinging to a past evaluation.
This phenomenon has broad applicability in everyday interactions as well.
Last week I attended a group discussion with about 20 people. Someone made a remark that I thought in my head ‘I have a great response to this!’, and was suddenly snapped out of the present moment looking for the space to slot in my thought. I was clinging to the past - the discussion had moved on - rather than staying in the flow, and as a result became distracted & missed a few minutes of dialogue. In that moment I was less present, & less effective.
This can occur in interactions all the time - we spend time thinking about rebuttals or points to make to satisfy our egos, rather than staying in the flow of the moment and listening.
Cognitive biases around ego and sunk costs affect us in so many aspects of our lives. So often spoken or written words are influenced by what I feel I should be saying, rather than what is in its purest sense authentically flowing out of me. Learning to be present and unraveling these biases is a crucial step in harmonizing the external and the internal.
"In every discipline, the ability to be clearheaded, present, cool under fire is much of what separates the best from the mediocre"
Top performance in any discipline ends up more about mental training than physical or intellectual. This is where games are won and lost, where elite performers shine. Staying present is the ultimate tool at the top of any game, as Josh says, to "cultivate the ability to sense the most subtle ripples of human experience”.
The key to pursuing excellence is to embrace an organic, long-term learning process, and not to live in a shell of static, safe mediocrity. Usually, growth comes at the expense of previous comfort or safety.
The lessons learned from the pursuit of excellence mean much more than the immediate trophies and glory.
The fact of the matter is that there will be nothing learned from any challenge in which we don’t try our hardest. Growth comes at the point of resistance. We learn by pushing ourselves and finding what really lies at the outer reaches of our abilities.
I believe that one of the most critical factors in the transition to becoming a conscious high performer is the degree to which your relationship to your pursuit stays in harmony with your unique disposition. There will inevitably be times when we need to try new ideas, release our current knowledge to take in new information - but it is critical to integrate this new information in a manner that does not violate who we are. By taking away our natural voice, we leave ourselves without a center of gravity to balance us as we navigate the countless obstacles along our way.
The great Abstract Expressionist painters…came to their revolutionary ideas through precise realist training. Jackson Pollock could draw like a camera, but instead he chose to splatter paint in a wild manner that pulsed with emotion. He studied form to leave form.
Just as the yin-yang symbol possesses a kernel of light in the dark, and of dark in the light, creative leaps are grounded in a technical foundation.
There is the careful balance of pushing yourself relentlessly, but not so hard that you melt down.
Phaedrus liberates the girl from her writer’s block by changing the assignment. He asks her to write about the front of the opera house outside her classroom on a small street in a small neighborhood of that same dull town.
The theme is depth over breadth. The learning principle is to plunge into the detailed mystery of the micro in order to understand what makes the macro tick.
You start with the fundamentals, get a solid foundation fueled by understanding the principles of your discipline, then you expand and refine your repertoire, guided by your individual predispositions, while keeping in touch, however abstractly, with what you feel to be the essential core of the art.
Armed with an understanding of how intuition operates, we can train ourselves to have remarkably potent perceptual and physical abilities in our disciplines of focus. The key, of course, is practice.
In every discipline, the ability to be clearheaded, present, cool under fire is much of what separates the best from the mediocre.
Those who excel are those who maximize each moment’s creative potential—for these masters of living, presence to the day-to-day learning process is akin to that purity of focus others dream of achieving in rare climactic moments when everything is on the line.
The more present we are at practice, the more present we will be in competition, in the boardroom, at the exam, the operating table, the big stage. If we have any hope of attaining excellence, let alone of showing what we’ve got under pressure, we have to be prepared by a lifestyle of reinforcement. Presence must be like breathing.
At LGE they had discovered that there is a clear physiological connection when it comes to recovery—cardiovascular interval training can have a profound effect on your ability to quickly release tension and recover from mental exhaustion. What is more, physical flushing and mental clarity are very much intertwined.
Interconnectedness - all experiences become richly intertwined by our new vision, and then new connections begin to emerge. Rainwater streaming on a city pavement will teach a pianist how to flow. A leaf gliding easily with the wind will teach a controller how to let go. A housecat will teach me how to move. All moments become each moment. This book is about learning and performance, but it is also about my life. Presence has taught me how to live.
Instead of running from our emotions or being swept away by their initial gusts, we should learn to sit with them, become at peace with their unique flavors, and ultimately discover deep pools of inspiration.
Triggering flow
First, we cultivate The Soft Zone, we sit with our emotions, observe them, work with them, learn how to let them float away if they are rocking our boat, and how to use them when they are fueling our creativity.
Then we turn our weaknesses into strengths until there is no denial of our natural eruptions and nerves sharpen our game, fear alerts us, anger funnels into focus. Next we discover what emotional states trigger our greatest performances. This is truly a personal question.
Then Make Sandals, become your own earthquake, Spike Lee, or tailing fastball.
In Making Smaller Circles we take a single technique or idea and practice it until we feel its essence. Then we gradually condense the movements while maintaining their power, until we are left with an extremely potent and nearly invisible arsenal. In Slowing Down Time, we again focus on a select group of techniques and internalize them until the mind perceives them in tremendous detail. After training in this manner, we can see more frames in an equal amount of time, so things feel slowed down. In The Illusion of the Mystical, we use our cultivation of the last two principles to control the intention of the opponent—and again, we do this by zooming in on very small details to which others are completely oblivious.
Champions are specialists whose styles emerge from profound awareness of their unique strengths
We have our knowledge. It becomes deeply internalized until we can access it without thinking about it. Then we have a leap that uses what we know to go one or two steps further.
Imagine that you are building a pyramid of knowledge. Every level is constructed of technical information and principles that explain that information and condense it into chunks.
At a high level, principles can be internalized to the point that they are barely recognizable even to the most skilled observers.
Key definitions
Investing in Loss - giving up your current mindset & advantage, losing to win, getting pushed around for a little while so you can learn new lessons
Soft Zone - learning to flow with whatever comes
Making Sandals - to walk a thorny road, we may cover every inch with leather or we can make sandals. learning to recreate ideal settings for inspiration internally, not dependent on the external environment
Slowing Down Time - if your unconscious understanding of a discipline of choice has become sufficiently advanced, and you have learned to trust your physical and intuitive intelligence to handle the technical components of the moment, then your conscious mind can zoom in on very small amounts of data
Making Smaller Circles - condensing complex information into smaller and smaller chunks
Illusion of the Mystical - using slowing down time and making smaller circles to control the intention of the opponent by zooming in on very small details to which others are completely oblivious
What to call an incoming member of the team causes much heartache in growth organizations, both at the onset as well as years down the line. I’ve seen organizations where titles convey very little about the experience or responsibilities of the person who holds it, and organizations where titles have been carefully crafted with precision and carry much signaling weight.
There’s no one right answer, and even the Silicon Valley elite debate the point. Ben Horowitz details the philosophies of the Marc Andreessen and Mark Zuckerberg in The Hard Thing About Hard Things:
Andreessen argues that people ask for many things from a company: salary, bonus, stock options, span of control, and titles. Of those, title is by far the cheapest, so it makes sense to give the highest titles possible. The hierarchy should have Presidents, Chiefs, and Senior Executive Vice Presidents. If it makes people feel better, let them feel better. Titles cost nothing.
At Facebook, by contrast, Mark Zuckerberg purposely deploys titles that are significantly lower than the industry standard. Senior Vice Presidents at other companies must take title haircuts down to Directors or Managers at Facebook. Why does he do this? First, he guarantees that every new employee gets releveled as they enter his company. In this way, he avoids accidentally giving new employees higher titles and positions than better-performing existing employees. This boosts morale and increases fairness.
I like clean org structures as its a great tool to create the right accountability within an organization, as well as identify any mismatch in expectations between the employer and the employee at the onset. It also creates a milestone based framing to revisit at future review periods.
It’s too easy not to invest the time upfront in setting the right expectation about layering, future promotions, and responsibility spans. This inevitably leads to organizational function and disappointment a year or two down the line.
What is a co-founder?
Early on in a company’s evolution, there’s a hazy line between who is called a founder and who isn’t (e.g. the ‘first employee’, etc.). I myself was a ‘first employee’ at onefinestay, not upgraded to the founding team until several months after joining.
Founders need not be the most senior people in the organization, but they do need to be the most emotionally vested, and the most committed for the long haul. Unless something goes wrong founders are expected to see the company through - even if it takes 10+ years. This is not the same expectation for everyone else.
Founders are also the ultimate embodiment of the company in human form - the standard of of conduct and behavior internally and externally. They set the tone and culture and live the company values.
Companies survive and fail due to trust issues in the founding team.
And even if not organizationally senior, founders should be part of strategy setting and decision making for the duration of the company’s life.
Proceed accordingly.
The location of founders
Perhaps I am old school, but I think founders need to be co-located for a significant amount of time. This is because the business you end up building is rarely the business you intend to build at the onset (see Fred Wilson’s recent post about this topic), and defining the product and operating model is typically a multi-year affair.
Before the operating model is 90%+ set, cycle time & speed of execution is hugely important. The problem with remote working relationships is inevitably cycle time for iteration increases, and humans are conditioned to have these breakthroughs by the ‘water cooler’, not the Slack channel.
That’s not to say remote co-founders can’t work, but a ton of proactive work needs to be done to offset this effect. Co-location is also the easiest way for norms around values and behaviors to solidify.
Over time, founders based in different locations can become an asset rather than a liability, as a foundational, deeply trusted member of the team is on point to help with expansion, business development, etc.
Companies are hierarchies
As an old boss once told me, everyone has a boss. I would add that all companies need one CEO. Co-founders should have reporting relationships between them.
I personally love the Fred Wilson / Jerry Colonna framework for what a CEO’s job is - here’s a video of Jerry describing it
C-level
The top level functional leader for a number of conventional functions and critical component of steering the strategic direction of the overall business. If the functional org below the executive isn’t performing, the buck stops with them (and the CEO).
I prefer to keep C-titles as conventional as possible (e.g. CEO, COO, CFO, CTO), although given the importance of the broader sales & marketing function a CMO / CRO / CCO could also make sense.
Beyond this, we’re inventing C-level roles. In edge cases this may make sense to land a world-class individual, or due to the specific context of what the company does (e.g. a company where HR strategy is a critical strategic piece of the offering may want to have a CHRO or chief talent officer). However its ideally to be avoided as it sets a precedent for other senior members of the team to feel slighted and/or argue for their own diluted C-titles.
Your C-levels should also be your executive team.
SVP
I don’t like this title for the same reason as I don’t like less conventional C-titles. Suddenly a critical layer of the team (VP) feels slighted once there’s an SVP in the room.
VPs
The leader of a function of great importance to overall business impact. This can be either because a large number of people work within the function (e.g. operations), or because the function greatly influences the strategic direction of the business (e.g. product). The intention and expectation at the onset is that this individual will not be layered if things go as planned - they are expected to be the most senior representative of a function.
Your VPs & C-levels should be your broader leadership team. This may include the director/head of layer depending on its absolute size and company stage.
Is it a C-level or a VP?
I have a simple construct for settling this debate that’s most easily illustrated with the common ‘is this person a CTO or a VP engineering’? CTOs drive the strategic technology vision for the organization, VP engineering contribute to the direction but the vision is originating elsewhere. CTOs tell the company ‘here are the new strategic opportunities we can pursue with technology’, whereas the VP Eng role tilts more to execution.
Number of VPs / C-levels
As companies scale, after the founding period, they should be pyramids, otherwise not enough work gets done and the environment becomes overly political. Limit the number of Cs or VP after the establishment of the foundational leadership team. Too many Cs or VPs in a small organization is a red flag for org dysfunction somewhere.
Directors / Head of
The leader of a sub-function - common cross company examples are PR, e-commerce, regional sales. They may roll in to a VP, or have a line straight into a C-level.
It’s critical to set expectations when hiring at this level. Are the individuals expected to rise to VP within x years? Is the organizational ideally looking for a VP to lead the function? What experience is necessary for the next step up in the organization?
It shouldn’t come as a surprise that a director or head of is layered in the future with a VP - however this relates to the expectation setting exercise at the beginning and on an ongoing basis.
Managers
The leader of a small to midsize team (4+), OR an individual contributor with an outsized impact on company results.
Team leads
The leader of a small team (as little as one direct report)
Everyone else
Over time, most employees will fit in this group. I’ve seen many titles for entry level staff or individual contributors. My only advice would be not to use any of the above titles due to signaling.
And finally I would offer a disclaimer. Your organization may not fit into the above mold, or perhaps you have a different view of titles & roles. That’s all fine - however make sure that you have an explicit view. All organizations face challenges as they scale - title drift, politics, accountability gaps. Setting up a clean organization from the beginning helps mitigate these effects to set the company up for maximum output and a higher probability of success.
Over the past year I’ve started to focus on diet as a means to optimize energy levels and mental clarity throughout the day. I started off with the Slow Carb diet as described in the Four Hour Body. Somewhere in my consciousness I was aware of people putting butter in their morning coffee, but everything gelled after I saw a Bulletproof promotion at my local Whole Foods. This led to me drinking Bulletproof coffee in the morning (Bulletproof brand coffee, 1 tbsp grass fed butter, 1 tbsp Brain Octane Oil).
Bulletproof has a wealth of blog content, & its founder, Dave Asprey, has an amazing growth mindset applied to personal nutrition and wellness. So I knew that his book, Head Strong, would be right up my alley.
Here’s a summary of tweaks to my routine I’m testing as a result of the Bulletproof method and Head Strong:
I probably should have done a blood panel before dramatically increasing my saturated fat intake, but I figured I would dive in and see how things go over the next 60 days.
There’s something for everyone in Head Strong, but these were the highlights most relevant to me (italics direct quotes from the book):
Brain Weakness: forgetfulness - I exhibit many symptoms of forgetfulness as described in the book. Forgetting important dates, pausing while speaking to think of the right word, losing track of regularly used items, etc. So this means I need to pay extra attention to (all covered in the book): mitochondria function, oxygen delivery systems, myelination, neurogenesis, and nutrition.
Make the most important decisions first every day, before you can experience decision fatigue.
If you feel that you’re experiencing decreased motivation, procrastination, forgetfulness, and mood swings, it’s worth trying a tyrosine supplement.
You’ll want to eat your yolks runny, as in sunny-side up, soft-boiled, or poached, so you don’t damage the valuable cholesterol and phospholipids found in yolks.
How to select coffee with the lowest probability of mold accumulation:
Flouride damages mitochondria. There is no scientific evidence to support the commonly held belief that adding fluoride to drinking water is safe. Same goes for Flouride toothpaste - link to cavity reduction unclear.
Dairy protein, gluten, trans fats, and vegetable oils cause inflammation in everyone
Mold toxins are particularly toxic to your mitochondria and are commonly found in grains, coffee, dried fruit, wine, beer, chocolate, nuts, and corn
Stop using artificial sweeteners (Stevia, Xylitol excluded). They are toxic to your mitochondria even in small amounts. While you’re at it, cut down on your sugar intake, particularly the fructose that is found in fruit juice and high-fructose corn syrup.
Never eat fried food! Frying damages fats and makes them toxic.
All rice contains some naturally occurring arsenic, but brown rice contains eighty times more arsenic than white rice.
If you sit in an office with junk light all day long, I highly encourage you to invest in some simple LED red lights to place in your environment, switch to halogen lights if possible, and get some quality outdoor light exposure throughout the day.
For UV exposure, walk outside with as much skin exposed as possible every day
Check out Wim Hof’s breathing technique to increase oxygen intake
Life goal: spend a week at 40 years of Zen
Hack your computer [blue] light first by installing f.lux software from getflux.com.
Three to five times a week, move your body meaningfully but not super-strenuously, for twenty to forty minutes. Bonus points for doing it outdoors in the morning without sunglasses to get a full spectrum of natural light at the same time.
Once a week, sprint like crazy for four hundred yards, then lie on your back for ninety seconds. Do it twice.
Phones emit radiation. Keep your phone as far away from your front pocket as possible. I also have been sleeping with my phone outside of my bedroom for about a year (an Arianna Huffington tip) which has had tremendous benefits for sleep.
Since the very beginning of onefinestay, we’ve always used NPS as our primary measure of guest satisfaction. NPS has become industry standard over the past 10 years - 2/3 of Fortune 100 companies measure NPS.
NPS measures the likelihood of a future referral - hence, the primary NPS question of ‘how likely are you to recommend x product or service to a friend’.
At onefinestay, we tend to be pretty hard on ourselves if our NPS dips below +60 - +70. As we should be - we’re a hospitality company, and still relatively young, so should always be striving for the highest scores possible. Any small business should view NPS both the cheapest sales and marketing channel, as well as evidence of product market fit.
But to put things in perspective: any NPS above +50 is already excellent by industry standards. This is deceiving, because we tend to anchor to a ‘exam’ scoring system of 0-100, whereas NPS is on a -100 to +100 scale:
(per wikipedia)
NPS can be as low as −100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive (i.e., higher than zero) is felt to be good, and an NPS of +50 is excellent.
Netflix's NPS score is +68 (as of early 2016).
Apple’s NPS score is +72.
These businesses are generally perceived to have industry-leading products.
NPS scores are deflationary due to its calculation methodology:
(Promoters - detractors) / Total responses
where:
9-10 = promoter
0-6 = detractor
7-8 = neutral (e.g. these scores are counted in the denominator only, which drags down overall scores)
NPS is a phenomenal way to benchmark customer satisfaction over time, and is a decent proxy for virality. But to tease out of NPS a true proxy for escape velocity, I like to go one level deeper.
Managing the customer, not the system
It’s important to remember its not the specific NPS score that matters (at least outside of a VC pitch deck), but how that score is a proxy for what it is intended to measure - likelihood of recommendations, and the virality that results from these recommendations.
Like any system, its easy to fall into the trap of managing the system - rather than managing the customer.
It’s easy to feel good with the score of ‘9’ because its a promoter - but there’s a reason the 9 isn’t a 10. It’s easy to be annoyed by an ‘8', but to a layperson unfamiliar with the NPS system, 8/10 is pretty good. Likewise, it feels bad to get a ‘5’, but its not a horrible result outside of the NPS framework. It doesn’t imply that a customer will never give the product another chance, or that a conversation couldn’t turn the situation around.
Separately, but for similar reasons, its important to pay close attention to the comments. Every piece of customer feedback provides a valuable opportunity to improve. The scoring system does not replace qualitative feedback.
Can I get a hell yes?
I’m a believer in Kevin Kelly’s 1,000 true fans concept. The foundation to a great business is a small group of people who absolutely love the product, and spread the word.
On the flip side, if enough people have a horrible experience it can kill any business.
I don’t think conventional NPS scores factor in strong emotional reactions to new products or services, often where companies need to grow to keep pace with expectations from investors & other stakeholders.
As such, I like to look at our ‘hell yes’ and ‘hell no’ scores - the extreme end of surveys to see who is saying ‘hell yes’ to the product (10/10), and who is saying ‘hell no’ (something went badly wrong, and the customer gave us a 0/10). And we make sure that the percentage of 'hell yes' is always rising.
The 'hell yes' customers also create a rich cohort that will often take the time to provide feedback on new product ideas or offerings, elements of the service that really matter to them, etc.
All new businesses need to create evangelists in order to survive. So for me, the ‘hell yes’ score is the best way to know you’re on the right track.
I read Zero to One over the Christmas weekend. It made me want to dramatically increase pace of change personally and professionally. My synapses were firing constantly.
Here are some of my key takeaways and thoughts.
Good ideas that look like bad ideas
Zero to One is about building companies that change the world. The title refers to the creation of something unique and original — when 0 becomes 1. Most new enterprises are not focused on going from zero to one, but from 1 to n — in other words, not creating unique businesses that invent or redefine industries (Uber, ebay, Google, Airbnb, Tesla are all examples of this), but enter competitive markets & deliver incremental improvements.
Starting companies that revolutionize industries requires original, contrarian thinking. If this thinking wasn’t contrarian, it would already be a feature of the industry & the domain of bigger companies with greater resources. Chris Dixon refers to this phenomenon as ‘good ideas that look like bad ideas’ (its a good talk and worth watching). Thiel frames this as a question he asks founders: What important truth do very few people agree with you on? Value is created in the grey space that consensus hasn’t yet reached.
When we started onefinestay, not many people agreed that homes would provide a suitable alternative for the 5* hotel customer. This would be our important truth.
But most new companies aren’t pursuing new ideas, and most VCs are pouring money into these companies. As a result we have lots of startups not changing the world, and lots of VCs with pedestrian returns.
How did we get here?
Thiel makes a convincing argument that our current startup climate is the result of a multi-decade hangover following boom and bust of the late 90s. 20 years ago, lots of new ideas were being introduced to the market — some good, many not so good. At this time, capital started flooding the market, too.
When the bubble burst, much of the capital remained (VC fund cycles are 10 years — performance is far less liquid than the Nasdaq) but was seeking a new breed of ‘risk averse’ startups — companies that:
However, as history has shown for the true innovators, as well as the VCs who have backed contrarian businesses over the past decade, it’s far better and more valuable to be bold (see Power-Law returns explanation by Marc Andreesen, also well covered in this book).
On not waiting
Rather than think about the future in terms of fixed number of years, Theil thinks about the future in terms of speed of progress. At the current speed of technological change, a very different ‘future’ might be 10 years away. For the best part of human existence, a different future was hundreds or thousands of years away.
For individuals on a career track, the resulting question to ask yourself is: how can you capitalize on the speed of change a fast moving environments can offer, and actualize your career ambitions much quicker? As Thiel says in Tools of Titans:
If you are planning on doing something with your life, if you have a 1o-year plan on how to get there, you should ask: why can’t you do this in 6 months?
On competition
Competition is like war — allegedly necessary, supposedly valiant, but ultimately destructive.
The trouble for companies entering a competitive market — or one where substitutes are readily available (e.g. an Indian food vs Chinese food restaurant) — is that supply and demand are efficient forces, which means profits trend to zero. Creating lasting value is predicated creating profit, which is predicated on building a meaningfully differentiated business.
Instead, Thiel suggests companies focus on micro markets, create a dominant position, and use this momentum to whip out to pursue a broader opportunity. Some examples are:
This incubation period allows the business to iron out its kinks and ripen before entering the big leagues. It’s the sequel to Kevin Kelly’s 1,000 true fans idea.
This idea applies not only to companies at formation, but as they continue to evolve (for example, the battle for the desktop and mobile environment between Microsoft and Google 10 years ago proved so distracting that Apple stepped in and ran the table).
Other applications of the competition vs monopoly paradigm
Competition breeds conformity — this starts from a young age, where getting the ‘A’ requires a certain set of behaviors, and continues often well into people’s careers. The cycle may never end. That ‘A’ leads to a top college which leads to a top grad school which leads to a career at a top law firm or bank. In order to follow this track, many people’s unique qualities are sanded down and replaced by well-roundedness. There’s nothing wrong with consciously choosing a certain career track if you’re passionate about the work, but its easy to sleepwalk your way into a career that isn’t personally fulfilling and doesn’t create impact.
Rather, people should strive to be really great at one thing, and use that to make an impact on the world. At onefinestay, a degree of well-roundedness is important but ultimately we try and hire for spikes. Its the one great thing that allows every new hire to have the future potential to transform our organization.
From an organizational design standpoint, competition can also be a destructive force. Conflict is often the result of roles within a company not being clearly defined by leadership — turf wars ensure because accountability for various tasks is not clear. Thiel gave everyone at PayPal one specific responsibility to avoid any role ambiguity — certainly the starting point is a clear job spec and an culture of continuous management so that when objectives changed these are discussed explicitly and not replicated in other areas of the organization.
The monopoly framework can also be applied to indoctrination into the company. One challenge many companies experience is what I call the ‘1st year associate / 2nd year analyst problem’ — a supposedly more experienced new hire trying enters the fray in a position of seniority, which drives the less experienced analyst with lots of context crazy.
Better to have a new management hire— regardless of level — start out in project or line roles to learn the ropes, absorb the culture, make a few mistakes, and enter a staff management position with some wins under her belt — rather than being ushered in by an enthusiastic hiring manager.
On founders, foundations & missions
Founders form the bedrock of company strategy, behaviors, and operational models — what to do, and how to do it. Once these various core elements are agreed and established, change becomes much more challenging. As Thiel mentions, our founding fathers debated the constitution for a few days in the 1790s, and we’ve amended it only 17 times since. 6 years in, onefinestay still largely cleans and prepares homes the way we initially designed it — a few days of work in 2010 has been repeated tens of thousands of times constituting 50 man-years of work. For this reason & others, choose your founders carefully.
Likewise, founders are responsible for creating a belief system that allows organizations to scale without the resources big companies have — through non-cash based value (equity, learning, culture). If the labor market didn’t place significant value on this, startups would be twice as expensive to build, which would mean even lower rates of success. As a founder, you are the chief storyteller and holder of the company mythology.
As scale continues, having a defined, written mission becomes essential. Small founding teams and early hires should know why they’re coming to work every day, & in most cases have countless hours at the grindstone in a shared space prior to hiring outsiders. Founders who know each other well from previous endeavors — a prerequisite for Thiel — have even more time together.
But with employee #10, or #100, its impossible to replicate these shared experiences. Companies can and should differentiate on learning, impact (e.g. having an empowered org structure that expects individuals to contribute), and team (the founders and previous hires all build towards the next). But the mission is the tie that binds — and is the one thing that tests whether there’s a true long term match between employer and employee. So the employer has to reveal the mission, and the employee has to want to be a part of it.
A parting thought for 2017
Christmas week is a time for reflection and resolutions. I will be taking a page out of Zero to One and making 2017 a year of impact, impatiently building the future.
I spent this morning at the Museum of the City of New York, and came across a few prints by Hugh Ferriss. Ferriss was a Gilded-age architect and futurist who imagined the future of NYC architecture in the 1920s. His work influenced many architects as well as imagined cityscapes featured in films such as Batman.
