Commitment and risk

July 20, 2018

Commitment is a word I used to hear a lot when I was young. "Do things with commitment", "Commit, don't quit"; the stuff of pithy posters hung up on elementary school walls in "middle America".

It would be easy to make fun of those posters, except I'm in my 30s now, and if there's one thing I see time and again that separates successful people from everyone else, it's the tendency to commit. I'm not just talking about career/money success either, it's the same with health, marriage, even kids. "Entrepreneurs" who float from one thing to the next, parents who barely know their kids—there's a word for people who don't commit, and that word is: loser.

I know because I've known a lot of these guys, I've even been that guy myself, and I've seen how self-defeating it can be.

An observation about markets: they reward commitment. Founders have more upside than employees; general partners, more than limited ones. That was a surprise because I've always thought of markets as pricing risk, not commitment.

But the more I think about it, they're really one and the same, risk and commitment. Commitment, by definition, entails substantial investment of resources, whether money, time, or attention; there's always risk. So if you believe it's true, "nothing ventured, nothing gained", it may also be true: "nothing committed, nothing gained".

Happy Friday.


Disruption: a front-row seat

July 19, 2018

My first time living outside of Illinois was in 2005, as a Microsoft intern. I was sitting there, as a college student in 2005, trying my damndest to understand "current sheets", while the beer-swilling apes I lived with played "banana baseball" at 2AM. I took a full-time job at Microsoft after that internship, in 2009. In retrospect, this whole story feels inevitable; that internship was the first time I was with my people, the nerds, out in Seattle; of course I was headed back after college.

I started full-time in August 2009. I look back on this job fondly for the people I met—guys like Omar—economic migrants from all corners of the world [1], gathered together to invent the future. It was awesome.

This isn't a happy story, though; the people were the redeeming grace of a chaotic, awful job. And while I could've handled it better—I was young, and arrogant—I was nothing but a speck of dust in a tornado that's still tearing through the industry, more than 10 years later.

For a long time, Microsoft was an enterprise technology company; it made money selling software to businesses. Everybody has heard of Windows and Office, but even SQL Server—a product with less name recognition—was an independent billion-dollar/quarter business by 2009. SQL Server was my home at Microsoft.

From the day I arrived, I had little idea what I was doing. Nobody does at their first job, but my manager seemed, to put it nicely, elsewhere. She took little interest in my work, spending her time in meeting after meeting with some guy named Bob Muglia, trying to convince him to fund her vision, that the group's strategy was sound. What little time she spent with my direct group, I spent as her secretary, writing page after page of notes chock-full of some bizarre foreign language. I already had a bit of experience developing software and yet all of it seemed so foreign, words like "stovepipe system", "repository", and "illities".

What the hell were these people talking about?

Throughout my time at Microsoft, I felt like my colleagues lived on some strange island, cut off from the rest of the world. I was reading about Heroku, AWS, and Postgres on Hacker News; they'd never even heard of any of these things, let alone used them. At first I wasn't sure whether I just had a lot to learn, but as the weeks wore on, it dawned on me that they really were clueless. Having spent years in the comfortable ivory tower of Redmond, a chasm had opened between my group's understanding of customer needs, versus the on-the-ground reality. My inquiries when my manager had last got out of the building, were met with hemming, hawing, and nothing concrete. I'm increasingly convinced this is how so many tech giants die: they lose touch, becoming so inwardly focused on their own politics, processes, and turf battles, that they lose sight of what's important: customers, and their needs. [2] Had any of my colleagues opened an IDE, or spent a month with a midmarket IT manager, I think their perspective would've been different—more accurate. They thought they still "made their own gravity", even though by 2009, it was clear the clock had run out.

Only later did it become clear what I'd stepped into: a fight, at the highest levels of the company, over the future of SQL Server. SQL Server had always been positioned as a low-cost alternative to expensive databases like Oracle, DB2, etc., but Postgres and mySQL on the public cloud were starting to rack up "design wins", as Microsoft called them. It was textbook low-end disruption: SQL Server was licensed for $10-20k/processor, and the thought of putting a crown jewel—SQL Server—on offer through Azure for mere pennies/hour to be price-competitive with Heroku Postgres or RDS, was unthinkable. It turned their stomachs. There was just no way a decision that would significantly cut the performance of Microsoft's #3 revenue product was going to get green-lighted, though it was increasingly clear that doing nothing would hasten their slide into irrelevance.

I left after six months. In the months after my departure, the chaos in my department spilled into the open, its full magnitude becoming apparent: my project, "Oslo", was "obliterated", 24-year Microsoft veteran Bob Muglia's career at Microsoft met its end, and some no-name nerd named Satya Nadella was promoted to head of Server and Tools [3]. I don't know this for sure, but I suspect Bob Muglia just couldn't let go of expensive, on-premise software. Many people can't. Bob is CEO of Snowflake Computing now, another enterprise database company, but apparently it's "Build in the Cloud".

Maybe he came around? Hard to say. But the world changes, and if you're not careful, you'll get left behind.

[1] Whenever people take stock of national origin—"do we have people here from every continent?"—Omar is always the token African. He loves seeing people's shocked reactions, because his skin is very light, being from Morocco.

[2] If Google's messaging strategy is any indication, they've started to suffer from this problem in a big way.

[3] At the risk of stating the obvious, this "nerd" later became CEO, a job only two others have held in the company's 40-year history.


Ambitious friends: pros and cons

July 18, 2018

I ran into Sebastian yesterday. I only saw him for a minute but it was still nice running into him. Being an ambitious guy, he had his ear in his phone at 8am, and couldn't talk.

Ambitious friends are a mixed blessing.

On one hand, they're inspirational; they make you want to do more, to be more powerful. Their access—money, parties, social networks—can be useful. Many of them are happy to help, and they have great stories.

On the other hand, they can be insufferable, self-important, and a pain in the ass to schedule. Whatever plans you make, expect last-minute cancellation because "something came up at work". If they show up, they'll be at least an hour late; they'll say "sorry" but you both know they'll do the same thing next time, because work—their work—is always #1. I'm getting to an age where first marriages are starting to crack; without fail, one person feels their spouse isn't making them a priority. I can think of three cases of this offhand, one I just met yesterday, who lost a wife to work in his 30s (he's 46 now); he says it's one of his biggest regrets.

Those extra hours on the margin really matter. Going from 45 to 55 hours/week at work might give you an extra 10%. But the cost to your relationships and health can be enormous; just make sure whatever you're getting is worth the price.

I guess I'm not cut out for Wall Street; I want more than a dog for a friend.


Clarity vs precision

July 17, 2018

One of my biggest struggles with writing: hitting the right balance between precision and clarity.

My first drafts end up looking like this: I really enjoyed the book, with its blue cover, excellent illustrations, and four hundred twenty-one pages of suspenseful character-driven narrative. What a horrible sentence! So much detail, so much information, but it doesn't add anything.

All that detail seems like it would be useful, but it isn't; it's distracting. Be mindful that clarity is usually more important than extreme precision. The book's use of suspense enhanced the narrative.

I write a lot of text; much of it is computer code. Code, probably much like legalese, is the domain of extreme precision. Everyday English, not so much.

Another communication tip for engineers.


The Brand

July 16, 2018

Whenever I spend time around people in publishing, media, or other "New York" businesses, I'm surprised how much I hear about "The Brand". "Brands that trust us". "We love working with that brand". "Brand guidelines". "Brand development".

People in San Francisco don't talk like this. So I've been wondering whether we're ahead of the curve, or a bunch of brand ignoramuses. I think it's a bit of both.

There are some products where the brand is a proxy for quality; I think this is common in consumer packaged goods. I don't really care what name is on the label—Energizer, Pampers, Yoplait—just that it tastes good, or does what it's supposed to do.

I think these types of brands, which I'll call "functional brands", are tremendously vulnerable today. Why trust a proxy (a brand) when I can read reviews and buy based on firsthand knowledge from others? I'll gladly buy a no-name product with tons of positive reviews.

The emergence of reviews is a game-changer for private labeling. Nowadays, if a store sees something flying off its shelves, they can offer the discount version and if people like it, there goes the brand's pricing power. This is precisely Amazon's strategy with Amazon Basics, and they're executing masterfully. "Your margin is my opportunity".

Functional brands aren't the only kind of brand, though; there are other brands like Chanel, where the brand is the product. Buying a Chanel purse is as much about the name on the label as the product attributes. These types of brands are much harder to copy, and convey long-term stable pricing power, even if only in niches.

Maybe the difference is that functional brands appeal to your brain, whereas the other type appeals to your heart, or emotion.

Overall this is an area where I'm really unsure. I know data is a game-changer, and that reviews have the power to change customer behavior. But having so much choice in everything probably strengthens brands, because my time and attention is too limited to compare hundreds of items. Certain brands seem to be losing power (CPG) even as others, like Apple and Harvard, are becoming more important. I haven't figured this out yet.