Velocity

Last year, I set out to write daily on this blog.

My batting average is ~66% / 200 posts in 300 days – I don't even watch baseball but it's the best analogy I can think of because everyday I feel a perfect ball is coming at me and I can bat it or not.

The good thing is that I'm pretty sure I'll easily bat 100% next year.

It's now harder for me NOT TO write than to write.

Velocity is a powerful thing.

Thinking & Doing

Are you thinking too much or doing too little? Are you thinking too little and doing too much? Find time and space to do both. And mix them fiercely,

Leonardo [da Vinci] was the artist but he also mixed all his own paints. He also was a fairly good chemist. He knew about pigments, knew about human anatomy. And combining all of those skills together, the art and the science, the thinking and the doing, was what resulted in the exceptional result.
— Steve Jobs

Lucky People

Wiseman found that lucky people score significantly higher on extroversion. They smile twice as often and engage in more eye contact. Their sociability, Wiseman explains, helps them increase their likelihood of a lucky opportunity because they meet more people, connect better, and maintain relationships.

Universal Basic Income

Universal Basic Income is a theme I associate with Union Square Ventures and Albert Wenger. His book on the topic is titled World After Capital and it looks quite good. When I heard about this concept first, I thought it was a dystopian idea from a truly smart but let's be honest, optimistic and idealistic venture capital guy. Universal Basic Inc-what?

A basic income, also called basic income guarantee, universal basic income (UBI), basic living stipend (BLS) or universal demogrant, is a type of program in which citizens (or permanent residents) of a country may receive a regular sum of money from the government.
— Wikipedia

I then learned the concept was not that new – quite the opposite – it's over 50 years old. Then, this week, Ray Dalio (from Bridgewater Associates) shared a well-written primer his team prepared for him. You can read the whole post here.

Here's how they define the concept:

What is Universal Basic Income (UBI)? In general, UBI is a type of cash transfer that is: 

  • Universal: every citizen receives the transfer regardless of employment status or income.
  • Unconditional: recipients have no restrictions on how they can spend the cash.
  • Basic: the amount will cover “basic needs” and will constitute a “living wage.” 
  • Long-Term: the cash transfers will last for the long term, e.g. entirety of the receipt’s life.

Hungry for more? If you're interested in reading about the pros, the cons and all the research was done on the topic, I suggest you read Primer On Universal Basic Income.

Free Cash Flow

This tweet sent my back in the Amazon shareholders letters archive:

Disclaimer: my finance and accounting classes are far behind me. This is not financial advice. Just a marketing guy figuring things out. The businesses I'm involved with do not have complexe financial statements and do not operate at Amazon's size. But it's always a pleasure to expand our horizons by learning a few things directly from the boss, Jeff Bezos. In his 2004 annual report, Bezos makes a point about Free Cash Flow. 

In overly simple terms, Bezos prefers Free Cash Flow over net income as a metric. Instead of looking at the top line growth (earnings), he'll look at how much cash he has on hand at any given time. And at the growth rate of that pile of cash. His argument is that growing earnings will not necessarily mean that you're growing the pile of cash you need to re-invest in the business.  Let's think about this for a while. Growing earnings (monies) doesn't mean I'll have the additional investment opportunities in the future.

Though some may find it counterintuitive, a company can actually impair shareholder value in certain circumstances by growing earnings. This happens when the capital investments required for growth exceed the present value of the cash flow derived from those investments.

There's a good example in his letter that illustrates this point. Then, he explains why Amazon.com’s financial focus is on long-term growth in free cash flow (per share) over everything else and how they achieve this goal.

Amazon.com’s free cash flow is driven primarily by increasing operating profit dollars and efficiently managing both working capital and capital expenditures. We work to increase operating profit by focusing on improving all aspects of the customer experience to grow sales and by maintaining a lean cost structure. We have a cash generative operating cycle1 because we turn our inventory quickly, collecting payments from our customers before payments are due to suppliers

Why is he so obsessed with cash? We know the guy takes in a nominal salary and that the business barely turns a profit each year. Well it seems like having cash on hand gives him optionality in the long run – additional optional investment opportunities.

And because the world is complex, we never know where we'll need to focus on 3-5 years from now. Having cash on hand – that cash being free – puts you in a very good position to seize opportunities.

Unless they're extremely well funded, startups do not have good free cash flows. You're stretched, things barely hold together. You're rarely in a good position to reflect on what your options are and where you want to invest your time, ressources and energy.

You can think about Bezos and his obsession about Free Cash Flow. What would he do to make sure that cash is never a problem? And that growth, over time, makes cash even less a problem.

Of course, this applies if you're in it for the long run. If you're not, and you don't mind suffocating your business, take your dividends each year and run. Or pay yourself an exorbitant salary. But if you care about being in a good position in the future, think about freeing your cash flow.

Culture & Customer Development

Culture doesn't come later. That's what NOBL argues in this essay.

Yes, you’re building a product, but you’re actually foremost building a group of people that can work together to produce a product. You can’t afford to ignore the most fundamental thing to your business: your people and their relationships.

Culture doesn't come later because at the end of the day, any organization is simply a bunch of people working together. There are desks, machines, tools, computers, processes, paperwork, titles, etc. but it's just a bunch of people figuring things out together. So if you haven't discussed or explicitly worked on your internal culture -- it's not that there's non, it's that there's already one and you don't know it. And from my readings, it seems that cultures are hard to revert.

The text hits home when it talks about customers. I spent most of days working with entrepreneurs and marketing managers. As an entrepreneur and a marketer myself, I try to spend as much time in the real world - wherever that is - where rubber hits the road. But it's hard. And we get trapped thinking inside our little bubble. We forget to talk with and take feedback of people who actually pay us to do work. Hint: you VP is not your customer, even if she/he might responsible for your next promotion.

It amazes me that people who are creating new services, building new products, brainstorming about new things to market, etc. spend so little time hanging out with their customers and talking to them. Honestly talking with them. Or just listening if you're really shy.

In bigger organizations (or organizations where you're not interacting with your client all day), it goes back to the culture that is in place. So here's the hard question and a few answers from NOBL's essay:

How can you grow toward your customer, not your ego or a bureaucracy?
  1. You can give them a literal seat at the table.
  2. You can recreate their experience for your employees.
  3. You can obsess over the customer experience like Pixar obsesses over their stories.
  4. You can hold your employees to actually interacting with your customers.

Source: Culture Doesn't Come Later

How vinyl records work

YouTube is a special place (see this). Here's a very cool slow-motion video of a vinyl LP and all the explanations on how it was achieved.

I describe how I made a stop motion animation of a phonograph needle in an LP groove using an electron microscope. I also show electron micrographs of other recording media. Support Applied Science: https://www.patreon.com/AppliedScience

Marketplaces

What makes marketplace business models so attractive, especially as compared to classic ecommerce and retail? (Hint: network effects.) From the classic unbundling of Craigslist to entirely new marketplaces enabled by smartphones and mobile, a16z general partner Jeff Jordan - a veteran of numerous marketplace businesses and currently on the boards of many such a16z companies - shares examples, drivers of profitability/margins/moats, and what makes marketplaces superior for consumers as well: identity, reputation, payments, trust and safety, frictionlessness, and transparency.

Annual retreat

This weekend was our annual retreat with @GosuNYC / @jackallenh.

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  • Steaks from Boucherie Lawrence
  • A bottle of Coureur des Bois (thanks @lebucktr)
  • A crash course on product mgmt
  • A review of the games avail. on Steam
  • A review of #rekt crypto portfolios
  • Some rap music I had not heard since 2006

When Dylan Went Electric

I love The Band. I Love Bob Dylan. And I love reading Bud Caddell's blog. This is a re-post from his blog. It's about creating something new. It's about being violently rejected at first.

When Dylan went electric, the world turned against him. I love hearing what that was like from the inside. If you’ve ever felt like you’d been pursuing a new creative path and the world was ignoring you or against you, this is a must watch.

Dealing with Hard Problems

Thanks to Josh Wolfe (more of him here) for tweeting this great essay about problem-solving. The article offers a few strategies for dealing with hard problems and the frustration that comes with them. I don't pretend to work on hard problems. But I get stuck at work all the time. Here are two quotes I liked.

Do something. Yeah, the problem is hard. Yeah, you have no idea what to do to solve it. At some point you have to stop staring and start trying stuff. Most of it won’t work. Our lead curriculum developer wrote 100-200 pages of content, dreaming up lots of different styles and approaches we might use. Not a one of those pages will be in the final work, but they spurred a great many ideas for content we will use.
Don’t wait until the last minute — hard problems are hard enough without having to deal with time pressure. Moreover, complex ideas take a long time to understand fully. The people you know who seem wicked smart, and who seem to come up with ideas much faster than you possibly could, are often people who have simply thought about the issues for much longer than you have.

PackItUp

I tip my hat to a friend, strategist and teacher at HEC Montréal, Sylvain Letellier, for putting into action his business project, http://packitup.co 👏

Pack It Up offers high quality product kits for specific activities. They select the right products from well-known brands – if possible ecologically and socially responsible – at a very good price. Ideal for gifts, the boxes come with samples from partners such as Dinette or Beside magazines, Naak bars, etc.

Feel free to write to him to give your opinion or ask questions, he would really like that. And go for a ride on http://packitup.co 🎣

(Actual) progress in #Ai

What a big word. Artificial intelligence. I decided to do a bit of digging today to find interesting and insightful ways to think about it.

'Ways to think about Machine Learning'

First I suggest you read 'Way to think about machine learning' by Ben Evans. It unpacks machine learning and help you think beyond the big word (AI). Here are a few quotes that resonated:

About the 'Ai will fix our problems' part...

the most common misconception that comes up in talking about ML - that it is in some way a single, general purpose thing, on a path to HAL 9000, and that Google or Microsoft have each built *one*, or that Google ‘has all the data’, or that IBM has an actual thing called ‘Watson’.

About the 'Ai will steal our jobs' part...

this is what automation always does; Excel didn’t give us artificial accountants, Photoshop and Indesign didn’t give us artificial graphic designers and indeed steam engines didn’t give us artificial horses. Rather, we automated one discrete task, at massive scale.

 

The State of AI

The State of AI is yearly report. It goes in depth into the subject considering 4 key dimensions (research, talent, industry, politics). I think it's a must read if if you 'get paid' to talk to/educate people regarding AI (I'm looking at you, advertising agencies, media agencies and consultants). There's a lot of meat and it's super interesting. I'll need to re-read a few times to begin to understand all of this.

Keep Going

I used to do a lot of video editing. My old Vimeo account is a relic of that era. I've been wanting to get back to video making/editing. It's a really good feeling to dive into a project for a few hours. You truly get in the zone. I suggested to my band The Moonlight Club that I make a light and fun lyrics video for one of our songs. So here's 'Keep Going'. Have a great summer.

"Keep Goin", from our self-titled debut album. SPOTIFY: http://spoti.fi/2rZMa85 SOUNDCLOUD: http://bit.ly/2nvOi2Q APPLE: https://apple.co/2ELuHC2 GOOGLE: http://bit.ly/2nEVf0S YOUTUBE: http://bit.ly/2nEuRns http://instagram.com/TheMoonlightClub http://facebook.com/TheMoonlightClub http://themoonlightclub.com Footage from Encyclopedia Of Surf under CC https://vimeo.com/eos4u

Focus

It's hard to focus when you're a starting a company. It is easier to say yes than to say no. Saying no will give you the feeling that you turned down an opportunity. Saying yes will give you the feeling that you're making progress. But it's important to distinguish being active and making progress. Yes helps you stay active. No frees up time and ressources to allow you to make progress. Anyways, the following tweet made me laugh. I think it is a nice way of highlighting the importance  of staying focused on a few things when you're just starting out:

Startup Brand Marketing

Andrew Chen, one of my favorite marketer and essayist, argued yesterday in a Tweetstorm that startup brand marketing is almost useless. You can read the entire story (around 15 tweets) here:

With the Cannes festival going on right now there's a lot of discussion on the value of brand marketing and the incentives in the industry. I agree with Andrew directionally. I think he hit the nail on the head with this:

If this seems contrarian to you, it’s because there’s a vast ecosystem of consultants, agencies, and other middlemen who are highly incentivized to have you spend $ and effort on non-ROI/non-performant activities.

Here's the punchline. Great brand is a lagging indicator of success. But it is confusing for founders and early-stage entrepreneurs because, on top of badly incentivized actors who want to "help you with marketing for X$", you see a lot of successful companies who have great brands. I've blogged about imitating consequences before. It's a very tempting thing to do.

It’s easy to confuse correlation and causation: If you’re starting a consumer startup, you see successful late stage cos with fawning media coverage, amazing conference speaking slots, celebrities on the cap table, etc., and think that’s what caused their success: Great brand. But great brand is the lagging indicator of success. The buzz is created by the hard work that the entrepreneurs put in: Finding product/market fit, hiring a great core team, finding acquisition channels that scale.

If anything, brand marketing is more about everyone else than your customers. 

Where brand marketing does matter, especially outside of consumer: Recruiting a great team. Raising money. Partnerships.

I'm adding a tweet by a fellow planner (Stefano Augello) that I think is extremely on point. Let's not confuse everything here. Brand > Brand Identity > Brand Advertising, etc. There are different components in a brand – not matter what lingo you use. And not all parts should be treated equally.

The takeaway here is that if you're startup and you're still looking for product/market fit, you should not overspend of brand marketing.

Hiring a PR agency for 5K to get 2 press mentions in a niche media won't help you survive the next quarter. Spending 75K for a rebranding by the top design agency in town won't help you in the short term either. Spending 45K for a series of events that reach influencers that will never engage in consider buying your products is also a bad idea.

But you can take a day with your team/co-founder to think about the kind of organization you want to build – and what the brand should stand for. You can do the 3-hour brand sprint developed by Google. It can be a straightforward Vision / Mission / Values / Strategy statement. It can be a paragraph or a 2 pager. You can develop a brand identity around that with an affordable designer/agency. But do the 20% that covers 80% of your needs. Not the other way around. Because you'll run out of money real quick otherwise.

Blue Ocean Shift

Many books could be blog posts. Especially business books. So when my girlfriend told me she had to read Blue Ocean Shift, the follow up to Blue Ocean Strategy, my first thought was to look for a good summary. I found one on YouExec.com (PDF). Here's an expert of the summary:

In 2005, the book Blue Ocean Strategy described how some organizations across many industries have successfully made the leap from a “red ocean,” where competitors are trapped in a blood- red fight for customers, into a wide-open “blue ocean” of uncontested market space. Blue Ocean Shift is the recipe book to help organizations shift from red oceans to blue oceans.

Whether the head of a large bureaucratic corporation, a small non-profit, or a government department, organization leaders tend to assume that the conditions of their industry are a given, a set of constraints that form the boundaries of the red ocean in which they must compete. Focused on competing over customers, leaders assume that there is always a trade-off between value and differentiation. But that assumption is wrong.

Organizations can break out of red oceans and move into a blue ocean with a Blue Ocean Shift. Breaking out of the red ocean starts by swapping market-competing moves in favor of market-creating moves. There are three overall components to a successful Blue Ocean Shift.

  1. Adopting a blue ocean perspective: looking to the far horizon, recognizing that different questions have to be asked, and pondering what could be;
  2. Having practical tools that guide the process: these will translate a blue ocean perspective into a whole new offering;
  3. Embracing the concept of humanness: inspire people and build their confidence, so that they drive the process forward and can successfully implement the shift to a blue ocean.

My rule of thumb is that if that you should read summaries of books you don't want to read but you think might contain useful information. And it should free up enough time to re-read multiple times the books you truly want to read. Knowledge builds up. You have to be careful