Just Getting Started…

“The journey of a thousand miles begins with a single step” — Lao Tzu

As the year draws to a close, I wanted to share some good news: Alejandro Crosa & I have started a new company, and we’ve raised an initial round of funding led by Ribbit Capital.

This was one of my goals for 2020and I couldn’t be more delighted to be setting off on this adventure with Alejandro.

Alejandro is one of those rare talents that makes Silicon Valley special. When we first met, he was a contract engineer from Argentina, referred by Google to LinkedIn as we prepared for the Open Social launch back in 2007. But Alejandro had an unstoppable desire to learn, moving from platform to search to mobile. Together, we collaborated on a number of innovative prototypes, including a search engine for Twitter based on LinkedIn data (I still miss this one…)

His passion for new technologies, design, and great products is inspiring. 

Even after we both left LinkedIn, we kept in touch, and talked often about starting a company together. This is that company.

Alejandro & I believe that there is still a lot more to do in consumer fintech, and that through software we can help bring purpose to the way people approach their financial lives. 

Micky & Nick have built one of the pre-eminent firms in fintech; they risked their own money and believed in the category long before most venture firms were willing to invest. We couldn’t be more excited to partner with Ribbit on this new adventure.

I also want to thank Ross Fubini at XYZ Venture Capital for his support, as well as a humbling list of friends & angels for backing this new idea. So thank you to Gina Bianchini, Amy Chang, Walter Cruttenden, Dylan Field, Todd Goldberg, Minnie Ingersoll, Aaron Levie, John Lilly, Gokul Rajaram, Mike Schroepfer, Leonard Speiser, James Tamplin, Rahul Vohra, Liza Wang, and the rest of our investors for supporting us. 

Most importantly, we are hiring! If you are a talented engineer or designer excited about consumer fintech, and want to take a shot at building a platform that just might change the world for the better, come join us! 🦍

We’re just getting started. 🎉

 

Fintech 2025: The Next Wave

When I first joined Greylock at the end of 2011, Fintech wasn’t even a word that was commonly used in the venture capital community. Less than a decade later, however, Fintech has become almost ubiquitous. The category has not only proven that it can generate real revenues and scale, but also that it can create a large number of multi-billion dollar companies.

Unfortunately, when you are looking at seed stage opportunities, you have to think clearly about markets where there is the potential to build new multi-billion dollar product & companies.

When the bubble burst in 2000-2, there was a lot of thought put into what had worked and what hadn’t worked with Web 1.0, and those insights formed the basis of the next wave of software companies (Web 2.0 / Social). Some of those same issues have plagued Fintech 1.0, and may instruct how to think about Fintech 2.0.

As 2019 drew to a close, I took the opportunity to spend some time thinking about exciting new opportunities in consumer fintech. These continue to be areas that I’m investing against both as an angel and as a founder.

Beyond Millennials

For the last decade, a vast majority of consumer fintech startups have focused on millennial customers. This really isn’t surprising because the traditional financial services industry is so heavily invested in their older customers. By the numbers, households tend to build income and assets as they age, and the incumbents have spent decades servicing this customer base.

Young people, on the other hand, were the perfect market for new, unproven products and services. Young people are less tied to existing brands and services, more likely to be technophilic, and have simpler financial needs.

As we enter the next decade, however, consumer acceptance of new financial products & services will continue to grow, leaving new demographics open to new products & services. This would have been true regardless, but it seems clear that the COVID-19 pandemic has accelerated this opportunity.

These customer segments will be more competitive, but also potentially more valuable, as they collectively are much larger than the millennial market.

Single Player to Multiplayer

Traditional financial products & services are single player, which makes sense since people tend to expect a high degree of privacy around their finances, and products built for individuals are much simpler to design, market, and activate.

However, many new fintech services are built around a subscription-model, where three numbers tend to dominate: acquisition costs, average revenue per user, and churn rate. The last, of course, is a heavy determinate of lifetime value.

Multiplayer products & services have a number of advantages. Multiplayer products are inherently viral, pulling more people into the system and lowering average acquisition costs. More importantly, multiplayer products are fundamentally stickier, leading to lower churn rates and higher lifetime values.

One of the big shifts from Web 1.0 to Web 2.0 was designing products & services to be intrinsically multiplayer. This was one of the fundamental differences between the design of LinkedIn (Web 2.0) and Monster.com (Web 1.0).

Novel Products & Services

When web development began in earnest in the 1990s, most initial product concepts were just moving existing products & services online. Mail order catalogs already existed, but we put them online. Yellow pages already existed, but we put them online. There were a few novel products (eBay), but for the most part, we collectively just moved a lot of products into the cloud, with all the advantages that global reach & distribution brought.

Fintech 1.0 has also mostly replicated existing products, put them on modern technology platforms, and made them broadly available to customers (like young adults) who have been mostly underserved.

However, one of the great opportunities in Fintech long-term is leveraging technology platforms and distribution to create products & services that were not viable, or even possible, in the physical world. With Web 2.0, we saw a large number of products & services that just couldn’t have existed offline.

2020 Examples

Not surprisingly, ambitious founders have already started building products & services along these new dimensions.

Carefull is a novel service that connects Millennial & Gen X adults with the finances of their aging parents. Once connected, it provides peace of mind for customers that if anything unexpected happens with their parents’ or grandparents’ finances, they will be alerted.

PaceIt, led by Prof. Shlomo Benartzi, is working to tackle the problem of retirement income directly by building a service designed with retirees (or near retirees) in mind. This is one of the most challenging and potentially valuable financial services, and PaceIt believes they can deliver a highly differentiated service based on sound insights from behavioral economics.

Braid is a novel debit card designed from the ground-up for households and small groups (e.g. roommates), providing a standard way to transparently share expenses between groups of people.

Pillar Life is a digital platform that helps people protect and care for their aging loved ones. Pillar replaces outdated & messy physical files with a secure online vault where you can easily store, organize, and share all your family’s most important information like financial accounts, legal documents, medical records, and more.

2020 may have been a terrible year on most dimensions, but as an angel investor for over nine years, it turned out to be my most active one yet. Hopefully, this bodes well for the future of Fintech, and for the financial products & services we’ll all be able to enjoy in the coming years.

 

Joining the Board of Directors at Shift

ShiftToday, I’m happy to announce that I’ve joined the Board of Directors of Shift, a company that has spent the last 6 years reimagining the used car experience. Shift is a marketplace that buys and sells cars directly from consumers without all the usual shady tactics that run rampant in the industry. With Shift, buying & selling a used car is  simple.

In 1991, when I turned 16, I had my first used car buying experience. My father took me to several different lots where we looked at the almost random assortment of cars in our price range. As it turns out, my father is a surprisingly good negotiator and had no trouble walking away from a bad deal. Unfortunately, that meant we walked off each and every lot we visited that day empty handed.

Fortunately for me, my uncle saved us from having to do another day of traditional used car shopping, and I drove his used Toyota pick-up all through college and grad school. But for millions of people, buying & selling a used car is still too painful, expensive, and complicated.

A Better Way to Buy & Sell Used Cars

When George Arison & Minnie Ingersoll came to visit me to talk about the new company they had started, I was immediately impressed with their excitement for a truly mobile-first approach to buying & selling used cars. Over the years, I’ve been phenomenally impressed with the way the team iterated and expanded on their original vision. In 2017, I had the opportunity to sell a used car on the platform, and it was transformationally better than my previous experiences trading in cars to dealerships or selling the car directly through classified ads.

As a product leader & angel investor, I try to focus on products & companies that are working to reinvent a key customer experience. In 2014, I invested in just six companies; they included Gusto, OpenDoor, and Shift.

For many people, buying and selling a car is one of the largest transactions they make in their financial lives. The system has long been littered with opaque practices, overblown loans, and sleazy sales tactics. Taking the high road, Shift has made transparency their hallmark, listing out any fees, doing away with haggling, and making financing more user-friendly and easier to understand. They even built out a loan term predictor so customers can know for certain what they can afford before they even start shopping. 

The company is now slated to go public in the coming weeks, and has grown considerably on the West Coast, aided by its  first-class operations and Silicon Valley culture. Customers finally have a way to buy or sell a car for a fair price without leaving their driveway.

Joining the Board of Directors at Shift

I’ve spent my professional life working to build products that truly improve the lives of ordinary people: whether a working mom who uses eBay to earn a little extra income on the side, a young college grad beginning to build their professional reputation, or the up-and-coming eager to start saving & investing.

I felt fortunate to have been one of the original angel investors in Shift. I was delighted when we sold our car through the service. I’m now grateful for the opportunity to join George, Toby, and their team as they make the transition to being a public company.

If you are looking to buy or sell a used car, please get Shift a try. Reach out, and let me know about your experience. We’re excited about the road ahead.

A New Year & A New Adventure

Some personal news to share today.  After a great tour of duty at Dropbox, I’ve decided to take the leap into something new.

Having a January birthday has always added a little weight to my New Year’s resolutions, and as it turns out, 2020 was a big one for me. 45 might not be the biggest milestone birthday, but combined with the weight of a new decade, it had me thinking deeply over the holidays. Fortunately, I was able to spend a good deal of time with friends & family, and by New Year’s Eve I felt comfortable with a simple, but important, decision.

2020 will be different. This will be the year that I go off on my own.

The hardest part of this process was telling my team at Dropbox. I feel so very fortunate to have had the opportunity to lead such an amazing group of professionals. And as proud as I am of what we accomplished in 2018 & 2019, I’m even more excited about what this team will deliver for their customers in 2020 & beyond. 

For me, I’ll be spending the next few months preparing for the long road ahead founding a company. As one of the growing number of “operator-angels,” I’ll continue to advise and support the talented teams at the companies where I’ve invested over the past 8 years. Primarily, though, I’ll be spending time on a couple of specific fintech ideas that I think have the potential to be great companies. 

I have spent over 20 years learning to build & design great products and great companies, but somehow never my own. As an angel investor, I’ve now helped fund and advise over fifty amazing founding teams, and have had a front row seat to their struggles and successes. It’s time to take the plunge.

And who knows? I hear 45 is the best time to start.

Be A Great Product Leader – Amplify 2019

On October 8, 2019, I was asked to give my talk, “Be A Great Product Leader” to a huge audience at Amplify 2019, the product management conference organized by Amplitude.*

The talk is named after possibly my most famous blog post on the topic of product leadership from 2011, Be A Great Product Leader.

For those of you who have seen earlier renditions of this talk, this version was cut down to thirty minutes, and as a result has a subset of topics. All of the lessons in this talk started as blog posts:

  1. The Secret to Product Prioritization. Three Buckets
  2. Find the Heat. Don’t Be Afraid to Talk About Emotion.
  3. Einstein’s Razor. Make Things As Simple As Possible, But Not Simpler.
  4. Obsess About Your Non-Users. Growth Comes from Them.
  5. Solve the Product Maze Backwards. Think Back from the Future.
  6. Know Your Superpower. Product. Design. Engineering.

Over the past ten years, I’ve given versions of this talk at over twenty different companies and conferences, but there has never been shareable video of it. Fortunately, Amplitude captured the video and  posted full video of all of their talks, including mine.

Product leadership continues to be a hot topic in the industry, and I hope that these lessons will help inspire more people to become great product leaders.

 


* Special thank you to Melinda Byerley for making the introduction!

How Will You Measure Your Life?

Source: Deseret News, Jan 24, 2020

On January 23, 2020, Clayton Christensen passed away at the age of 67.

I found out about his passing during my commute home from work on Friday, and it left me reflecting deeply on my experiences with Clay. I enrolled in his class back in 2000 at HBS, and was fortunate enough to have him agree to be an advisor to me on an independent project on the topic of disruption. Over the years, when I would visit HBS for recruiting or for a case study, I would always try to stop by to see him. Ever gracious and thoughtful, he may have been the most influential professor in my life.

There have been some wonderful pieces written about Clay in the past couple of days, mostly reflecting on his impact on management theory or his lifelong dedication to his family and his church. The list of his accomplishments is appropriately long. However, there are a few personal details I’d like to add to the story.

First Meeting

Many people are familiar with Clay’s work on innovation and disruption, made famous by his 1997 book, The Innovators Dilemma. It’s always shocking to me when I meet people in Silicon Valley who haven’t read it – that’s how fundamental it has been in shaping my thinking about business & strategy.

However, the professor I met at Harvard twenty years ago didn’t talk about innovation, disruption or how to build a successful business. He talked about the morality of business, the ethics of leadership and about his own personal journey.

Clay was a warm and friendly person, but when I first saw in him walk into our class, it was hard to ignore just how tall he was. At Harvard, the third row of seating is known as the “Power Deck” because when seated you are eye-level with the professor. I used to joke that in Clay’s class, it was the fourth row that was the Power Deck.

In some ways, Clay’s height made his approachability and humility even more surprising and authentic.

Clay’s class was supposed to be about strategy, but he opened his first lecture with a discussion of people. He spoke about how we spend most of the hours of our adult lives  at work, and how impactful those hours are on the emotional wellbeing of people even outside of work. He asked us to think about great managers we’d had in the past who supported us and gave us energy, and terrible managers who had drained us of it.

And that’s when he told us that he believed that being a great manager was one of great moral responsibility, because your leadership would either make the people who worked for you miserable, or they could bring those people joy & accomplishment.

When Clay talked about leadership, he talked about it with a clarity and conviction that is rare. To this day, when I take on a new leadership position, I talk to my teams about the responsibility I feel to them based on Clay’s words.

Professional Journey

Clay’s professional journey also resonated with me. Most people don’t know that Clay himself was a founder, starting a company focused on advanced ceramics back in the 1980s material science boom. It’s a bit of personal trivia, but my first love at Stanford  wasn’t Computer Science. It was the Introduction to Material Science that made me decide to major in Engineering.

But after that experience, Clay had decided to go back to school. It is unusual for an MBA to go back to get a PhD, but he went back because he wanted to study management and teach. His passion for a more rigorous framework on how managers make decisions led him to the insights that became The Innovator’s Dilemma, and the career that we all know him for. His fundamental belief that managers were intelligent and capable led him to frame an incredible problem: how do large companies continue to fail when they have access to so many smart people and almost unlimited strategic resources?

However, his choice wasn’t purely motivated by academic or professional interest. He talked openly about his family, his wife and his children, and the life he wanted to create for them. He talked about his faith, and how he wanted to be judged in the end.

Not everyone who is religious leads an exemplary life, but for Clay, his faith seemed to amplify and enforce his ethical rigor. In his later work, he would argue that it was easier to hold the line ethically 100% of the time than 98% of the time, because one compromise leads to another, then another.

How Will You Measure Your Life?

Over the years, when I would visit Clay at HBS, he was always warm and encouraging. We would discuss each career move I made: eBay, LinkedIn, Greylock, Wealthfront. The clarity of his strategic thinking was always a gift, and his willingness to engage and debate when we disagreed was always a bit surprising to me. But Clay loved to sharpen his thinking, and had seemingly no ego tied to defending ideas or business strategies. He just loved finding more insight; a twinkle in his eye in the pursuit of a clearer glimpse of the truth. I always left of our conversations feeling amplified by both his support and his energy.

In 2010, Clay published a piece based on these ideas that became a book by the same name, How Will You Measure Your Life.  It is worth reading, and even re-reading.

I have a pretty clear idea of how my ideas have generated enormous revenue for companies that have used my research; I know I’ve had a substantial impact. But as I’ve confronted this disease, it’s been interesting to see how unimportant that impact is to me now. I’ve concluded that the metric by which God will assess my life isn’t dollars but the individual people whose lives I’ve touched.

I think that’s the way it will work for us all. Don’t worry about the level of individual prominence you have achieved; worry about the individuals you have helped become better people. This is my final recommendation: Think about the metric by which your life will be judged, and make a resolution to live every day so that in the end, your life will be judged a success.

Rest in Peace, Clay.

Three Types of Risk: Making Decisions in the Face of Uncertainty

Image result for risk

One of the fond memories I have of my first two years at LinkedIn was coming into the office almost every Sunday to spend a couple of hours with Reid Hoffman.

Our conversations covered a wide range of topics, but the time ensured that we were fully aligned on the strategy of the company and the priorities we were pursuing.

One of the topics that I was most fond of discussing was the nature of risk, and how to best lead teams when facing the various types of risk that are commonplace at hypergrowth startups.

Here, Reid never varied, and I quickly adopted his framework as my own. In the end, most of our productive discussion involved deciding which of three types of risk a particular decision involved.

Three Types of Risk

Categorizing the type of risk you face is incredibly useful in helping teams understand how much effort and consideration to spending on making various types of decision in the face of uncertainty.

For hypergrowth startups, risk can be categorized as one of the following types:

  1. Fatal Risk
  2. Painful Risk
  3. Embarrassment Risk

Fatal risks are true bet-the-company issues. They are not that common, but they deserve clarity and focus. If you get the answer wrong here, the company is dead. These risks are unavoidable in early-stage startups, but as companies grow they become more and more uncommon. In fact, most large companies lose the ability or even recognition of these type of risks as they age.

Painful risks involve decisions that have significant repercussions if they go the wrong way. You might miss a key goal, or lose key people. They are recoverable, but there are real ramifications to getting the answer wrong.

Embarrassment risks have no significant impact if they are missed. All that is necessary is to acknowledge the mistake, change course, and move on.

Embarrassment risks are particularly difficult for smart & ambitious people, largely due to insecurity and ego. People want to be perceived as intelligent and successful, and they incorrectly map that to always being correct.

Unfortunately, most people at hypergrowth startups spend far too much time debating embarrassment risk, and they don’t take enough painful risks.

What About Type 1 & Type 2 Decisions?

Jeff Bezos has more recently popularized a different framework, based on two types of decision. This framework is often described in the context of the decision to move forward with Amazon Prime, which at the time was mostly a judgment call versus a data-driven decision.

In his framework:

  • Type 1 decisions are irreversible. Spend time on them.
  • Type 2 decisions are reversible, like walking through a door. Make them quickly and move on.

Overall, this framework is helpful. Thinking through the reversibility of decisions helps prioritize speed vs. perfection. When it comes to execution, the perfect truly can be the enemy of the good enough.

The problem is that almost every decision at a company is reversible, so it tends to not provide that much insight into why some risks feel harder to take than others.

Lessons in Execution

In some ways, you could describe painful risk & embarrassment risk as two sub-categories of Type 2 decisions. The speed of execution depends on taking these type 2 decisions quickly and aggressively, framing them as risk, and clearly articulating what the team will do if it doesn’t play out as expected.

Leaders need to embody this type of decision making, to give permission to newer employees to take risks and communicate their decision making effectively.

Otherwise, a spiral of low expectations and low-risk options will quickly put you in a vice when faced with more aggressive competitors. Worse, you won’t be taking enough shots on goal to learn fast enough to have high odds of success.

Large companies trend towards this problem because decisions become increasingly about the personal positioning of individuals for their own advancement, rather than optimizing for the best results for the company or their customers.

Ironically, taking painful risks may be the only way to set yourself up for exceptional outcomes.

The next time you see your team facing a decision in the face of uncertainty, try to quickly agree on what type of risk you are facing and what type of decision you are making. In most cases, you’ll be able to make decisions more quickly and save your time for the rare, but very real, risks that you have to navigate with your product and your business.

 

The Future of Drone Safety

Every time I go to the CODE Conference, I learn something new. There is something about watching some of the most prominent technology executives and founders responding to questions from talented journalists that gets me thinking.

Four years ago, I wrote about the transition technology CEOs needed to make from economics to politics. Coming back from this year’s gathering, there  is no question in my mind that this insight turned out to be true. Responsibility was a significant theme this year. As the technology industry continues to grow and mature,  more and more people are looking to investors and technology leaders to think ahead about potential issues that will happen when their creations become ubiquitous.

It got me thinking about drones.

The Problem with Drones

The FAA projects that the number of drones will reach 7 million in just the US alone by 2020. The growth rates for both consumer and commercial drones continue to grow at a rapid rate. The FAA estimates that there will be over 3.5 million hobbyist drones in the US by 2012.

Over the past few years, I’ve made a few investments in startups in the drone space. But until last year, I hadn’t given significant consideration to all of the safety issues around drones, particularly as they fly over large crowds or critical infrastructure.

The problem is fairly simple. Large venues, like sports stadiums, and critical infrastructure are largely defenseless against drones. Whether it’s a music festival, a weekend football game or anything of that sort, most people don’t realize that event managers really have no solution to protect a crowd. Whether accidental or intentional, there is a real risk that a malfunction or crash could harm people.

The Need for Active Measures

Long term, of course, we can imagine a world where drones can be programmed to avoid these spaces, (Airmap is a great example of a company making this happen). However, We can’t just assume or depend on this to be universally true – that risks the mistake of being overly idealistic. There needs to be an active solution to protect critical areas.

There are a number of companies working on solutions that involve intercepting and disabling drones that enter space that needs to be protected. In fact, there are solutions like drone on drone capture (with nets) 🕷, projectile solutions (shoot it down) 🔫, even flamethrowers! 🔥

Unfortunately, these kinetic measures make little sense in cases where the drones are flying over areas that need protection. If the concern is a drone crashing into a crowd or important infrastructure, these solutions run significant additional risk of the drone or pieces of the drone causing damage on impact. While there is definitely a market for kinetic solutions in the military and related markets, but it seems like a bad fit for the majority of the simple but real threats out there.

A Software-Based Solution for Drone Protection

Last year, as the co-chairman of ICON, I had the good fortune to meet Gilad Sahar, the co-founder and CEO of Convexum. With the unique insight that comes from military experience with both the costs & benefits of active solutions, they have developed a non-violent, software-based active measure to help automate perimeter protection from drones.

The concept is fairly simple.

Convexum has developed a device that allows companies & governments to detect when a drone is entering a restricted space, take control of the drone, and land it safely. A cloud-based service ensures that all Convexum devices have up-to-date signatures for known drones.

Initially, they are seeing significant demand for this solution around critical infrastructure, like energy development, and sporting venues. Long term, I can easily imagine a future where a non-violent solution for drone protection would be highly desirable anywhere we don’t want to bear the safety risk (like schools).

Working with Government

Europe has already provided a clear path for companies and government entities to receive the permits & exemptions needed to deploy this type of solution. (In fact, Enel has already deployed a solution to protect power plants.) Congress & Senate debating this now in the US, but seems to be one of the few remaining areas of true bi-partisan alignment.

I’ve personally been so impressed with Gilad & Convexum, I’ve decided to help them by becoming an advisor to the company.

Let’s hope this is part of an increasing pattern of entrepreneurs and investors thinking ahead about safety and regulation, and supporting technologies early that can help solve these eventual problems.

 

 

Every Function Has a Superpower. What’s Yours?

Over the course of my career, I’ve been fortunate enough to work in a variety of different functions.  No matter whether it is engineering, design, product, or service, every role has its own unique set of requirements and challenges.

Maybe that’s why I have always believed strongly that software is a team sport. If you want to build exceptional products, you have to find a way to harness the unique and diverse viewpoints of a team of professionals across a wide variety of functions.

Unfortunately, even at great companies, there is a repeated pattern where people in some functions feel disempowered. This doesn’t need to be the case.

Every function has a superpower. Make sure you know what yours is.

Every Function Has Value

Hypergrowth software companies are relentless in their pursuit of efficiency. Everyone who joins a new company dreams of building something new, something better than the companies that came before it. As a result, startups are always questioning the breakdown of functions in older, more established companies. In addition, resources are always tight, as companies stretch to make every dollar of funding count.

Unfortunately, this also means that many startups repeat the same mistakes over and over again when it comes to recognizing the value of different functions in a modern software company. This can be compounded by having a founding team or early employees who have never worked in those functions before.

You don’t really know a function until you know someone who is exceptional at it.

Inevitably, most startups, even when they have grown to hundreds of people, have gaps in their understanding and appreciation of some functions.

Avoiding Decision By Committee

Besides the lumpy build-out of different functions at fast-growing companies, the need for fast decision making also tends to bias the product process.

Great companies tend to be opinionated in their decision-making process around product, and those processes can vary significantly. Some companies may overweight decisions from engineering, others might look to a strong product function. There are companies that are largely sales-driven, and others that rely on general managers. There are companies where decision-making is hierarchical, deferring to the CEO or founder for key product calls, and others where decision-making is distributed broadly to the teams.

This isn’t surprising, however, because there is a direct tension at companies between the speed of execution and the exhaustiveness of a process. As a result, almost every product-centric company seeks to avoid “decision by committee” by assigning decision responsibility to a function or a hierarchy.

No matter what system exists, there are always people and functions that feel disempowered by the process.

Know Your Superpower

While you may not be the one to make the final product decision, it is a mistake to feel disempowered. Your function has unique value, and you can dramatically shape any product decision through your efforts.

The key is to know your superpower.

Every function has one. Here are just a few examples:

  • Engineering. Every engineer has the ability to take what is and isn’t possible off the table. I’ve seen product strategy discussions completely changed in a single weekend by engineers building something that no one else had even considered. The power to create is an awesome one, and the best engineers use this power to open the eyes of their teammates to what can be accomplished.
  • Design. Most people can’t visualize the different options that are possible around a given feature or product, and design has the power to reshape discussions completely based on visualization. Design can eliminate theoretical options, define the choices available, and most importantly trigger a deep, emotional response to certain choices in decision makers.
  • Product. At some companies, product managers have procedural power to make decisions. However, the most effective product managers use their power to frame the discussion with strategy and metrics to help drive decisions. The power to define the framework for a decision often is the power to control the decision.
  • Client Service. If you spend your day talking to real customers about real problems every day, you have amazing power to bring issues to the fore. Sometimes a decision is swayed by the scale of the problem, other times by the severity. Never underestimate the power of narrative, driven by real customer stories, to shape decisions on product and prioritization.

Every function has a superpower and everyone has the ability to do the extra work necessary to tap the unique capabilities and resources of their function to use that power to shape decisions. It requires work, but no matter what your function or role is, you can heavily influence critical decisions.

You just need to find your superpower.

 

Joining Dropbox

“You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something – your gut, destiny, life, karma, whatever. Because believing that the dots will connect down the road will give you the confidence to follow your heart even when it leads you off the well worn path; and that will make all the difference.”

Steve Jobs, Stanford University, June 2005

In 2012, I was seriously considering becoming a full time investor.

I’ve always loved startups and venture capital, and I had been fortunate enough after leaving LinkedIn to have a chance to work for Greylock Partners, one of the most successful firms in the industry.

In May of 2012, my daughter was born. While on parental leave, I remember receiving a note about a Greylock company that was looking to add to its executive team. I had visited that company just the month before, to help advise on strategies for organizing and executing on viral growth.

The role itself wasn’t the right fit, but for some reason that company stuck in my head. Did I really want to become a full time investor? Or did I want to go help build a company?

As it turns out, the company that I couldn’t get out of my head was Dropbox.

First moments after the birth of my daughter, May 2012.

Opportunity at Scale

Over my career, I’ve had the good fortune to work at three companies that grew to reach over 100 million users. After spending the past six years focused on building new companies, I’m excited about jumping back into the challenges of designing and shipping features for the more than 500 million people who use Dropbox to get things done.

With the proliferation of devices and ubiquitous connectivity of the modern workplace, I think there is a unique opportunity, right now, to help teams unleash their creative energy and find more enlightened ways of working together.

Drew has done a great job of sharing the high level vision for Dropbox, and I’m excited to dive into a space that has so much product potential.  The era of walled gardens is over, and there has been an explosion of new applications and content types in the past few years. The challenge is to design an open ecosystem that helps bring all of those capabilities together in a way that doesn’t sacrifice simplicity in design.

Connecting the Dots

For now, I just want to say thank you John Lilly for reconnecting me to the Dropbox team, and thank you to QuentinDrew, and the entire Dropbox team for this opportunity. It is truly amazing how life connects the dots.

Index Funds: Good for Corporate Governance & Good for Crypto

On March 8th, Dick Weil, co-CEO of London-based Janus Henderson Investors,wrote an op-ed in the Wall Street Journal arguing that the SEC should prevent index-funds from voting on shareholder proxies. In it, he argues that index funds “have no interest in the performance of particular companies” and that index funds “lack a strong incentive to cast informed votes.”

Unfortunately, Mr. Weil misses some of the most important incentives that drive long-term equity holders, including index funds. In fact, index funds are likely to be superior to active funds for effecting good long-term corporate governance.

Index Funds Are Long-Term Owners

In October 2017, Jack Bogle gave an interview with Morningstar that addressed this exact issue. His argument, as usual, was clear and compelling:

Benz: How about on the governance front. I know you and I have talked about this over the years, about whether passive products are more limited than active managers from the standpoint of influencing corporate governance of the companies they own. What do you say to that assertion that passive products because they can’t walk away from some of these companies altogether don’t have that ultimate weapon that active managers do have?

Bogle: I’d say traditional index funds are the last, best hope for corporate governance.

Benz: And why is that?

Bogle: That’s because they’re the only true, long-term investors. Corporate governance should be based on long-term factors affecting the corporation, not a bunch of traders who want you to report higher earnings, gonna try and get on your board for a minute, and in a moment … I don’t know how they’re this smart to do it, but realign the entire company and then all will be well. It just doesn’t happen. In fact, the reverse is more likely to happen.

So, I don’t see … The old Wall Street rule was if you don’t like the management, sell the stock. The new index fund rule is if you don’t like the management, fix the management because you can’t sell the stock.

The critique of index funds and corporate governance comes from the mistaken idea that it is only by buying and/or selling a security that you can influence management and the allocation of capital. While there is no doubt that individual actions in the secondary market affect the price of a security, and the price of a security can affect capital allocation decisions, it is a relatively indirect link. Activist shareholders typically use these actions, but as a means to more direct control, either influence or direct membership on the board of directors.

Unfortunately, because discretionary investors have the power to walk away and sell a security, there is a weakness in their commitment to fixing a company. While some of the best activist private equity funds might spend years working to improve the returns of a company, most active investors show no such patience.

Index funds effectively operate as permanent owners of the business, so their incentive is to work to improve the performance of each and every company in proportion to their market capitalization.

Patient Capital Has Value

Perhaps one of the most compelling aspects of index funds as investors is their reliability as a patient source of capital. There is no doubt that the short-term focus of current capital markets is a problem for public companies looking to optimize their performance for the long term. Very often, significant changes in corporate strategy take years to implement, and can often result in negative short-term performance in exchange for the potential for significant long-term upside. Unfortunately, if most investors hold securities for short periods of time, management can be pushed for making decisions that are optimized for long-term value creation.

In fact, this problem is the focus of Eric Ries’ new startup, the Long-Term Stock Exchange.

For example, as of 2013, the average active mutual fund had a turnover of over 85% (according to Morningstar). This means their average holding period for a stock was barely over one year! They are not long-term investors, and their financial interest is incredibly biased towards short-term performance. They are not going to support any solution to a corporate problem that might hurt short-term performance.

This is not just a problem for active mutual funds. Private equity buyout funds, based on their structure, predominantly look for returns often within a relatively short number of years. Because they often use debt to leverage their buying power and maximize return on capital, their playbook also includes damaging short-term actions like the payoff of significant one-time dividends that can starve a business of long-term capital.

Index funds provide long-term, patient capital that is well aligned with the desire to see companies optimize their corporate governance for maximum shareholder value. The time frames of active investors are just too short to align with management changes and strategic choices that may not pay off for years, if not decades.

This Applies to Crypto, Too

One of the most exciting developments in cryptocurrencies has been credible initiatives around index investing. Bitwise Investments (currently available) and Coinbase (available soon) have both announced crypto index products and platforms. (disclosure: I am a private investor in both.)

Over the past few years, more and more investors are convinced there is an incredible opportunity for blockchain-based products and platforms. Though cryptocurrencies have the same liquidity as public companies, they are based on far younger organizations and will take time to develop. Index funds can act as a stabilizing force amidst the volatility, especially if index funds see continued net-positive inflows like their brethren in equity and debt assets.

Amidst all of the volatility, index funds will likely also have a role to play as aggregators of long-term holders of cryptocurrency. Index funds, given their incredibly long time implicit frames, are aligned to advocate for governance and development that will maximize the long-term value of the ecosystem.

Index funds may not control the marginal price of these assets, but they can provide a structure for a large pool of investors to have a long-term influence on the direction of these platforms. Whether the future belongs to proof-of-work systems, proof-of-stake, or other alternatives, my guess is that we’ll find that, over time, that access to long-term, patient capital is a huge benefit to products and platforms in crypto.

Long-Term Ownership Will Improve Governance

While there is no question that active investors can have a positive impact on the governance of corporations, it would be foolish not to see the additional advantages that index funds bring to the financial ecosystem.

Index funds may actually be the missing form of long-term, patient capital that we’ve needed in corporate governance to better align companies with the creation of long-term value for all of their stakeholders.

Ikigai: How to Find Professional Success

On December 25, 2017, I tweeted out a page from the World Economic Forum about Ikigai and was shocked at how broadly it spread. This post elaborates on the concept.

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Over the last twenty years, I’ve been asked by hundreds of students for advice on how to think about their careers post-graduation. Inevitably, I’ve always responded with a simple framework to help structure their thinking around picking a profession:

  1. What are you exceptional at?
  2. What do you love to do?
  3. What does the world value?

As it turns out, there is a Japanese concept for this framework. Ikigai.

The Reason You Get Up in the Morning

Dan Buettner gave a TED Talk called, “How to Live to Be 100+.” He focuses quite a bit of his lecture on the island of Okinawa and their extraordinary number of centenarians. He identifies several diet and lifestyle habits that seem to correlate with a long and healthy life. Ikigai is one of those concepts. He recently gave an interview in the Telegraph:

They all have an ikigai. “In the Okinawan language,” said Dan, “there is not even a word for retirement. Instead, there is one word that imbues your entire life, and that word is ‘ikigai’. And, roughly translated, it means ‘the reason for which you get up in the morning.’”

He talked of a 102-year-old karate master who still practised, a 100-year-old fisherman who loved to bring the catch to his family, and a 102-year-old who, asked what her ikigai was, said that holding her great-great-great-granddaughter, a century her junior, felt like “leaping into heaven.”
In Buettner’s framework, Ikigai is not just something you think about when you are picking majors. It’s a form of balance that you seek through your entire life.

What Are You Optimizing For?

When I was in college, my mother constantly reflected on the bad advice she felt students were given as they attempted to pick a career. “Everyone tells students to follow their passion. It’s not that simple. There is a big difference between a hobby and a career.”

My father tended to be more direct. “The world doesn’t owe you a living,” he would often say, “Find something that people value.”

Our popular culture has become saturated with the idea that if you just find your passion, something you love doing, then your career will magically present itself. If only success were so simple. Finding something you love to do is critical, and if you are fortunate, you’ll find several. As it turns out, that’s just one piece of the puzzle.

The fact is, you may love something that the world doesn’t value highly. The world may value things that you aren’t very good at. And of course, you may be good at something that you don’t want to do.

The benefit of Ikigai is that it helps separate out the dimensions you can optimize your professional efforts around, in attempt to help you find a combination that will result in professional success and fulfillment.

Four simple questions.

  1. What do you love? Find something that you really enjoy doing. It’s simple to say that the journey is the reward, but when you love to do something, work can be something you look forward to.
  2. What are you good at? We all have different talents and aptitudes. With practice and determination, you can develop mastery in a wide variety of areas. However, if you have a natural (or hard-earned) talent in an area, that’s worth identifying.\
  3. What can you be paid for? Just because you can do something, doesn’t mean that the other humans around you will value it. Looking for something that the market will reward financially is a critical piece of this puzzle if for no other reason than to set expectations realistically.
  4. What does the world need? Being the unabashed capitalist, I originally assumed that anything the world needed would also be something the world would pay for. Stepping away from the theoretical argument, there is significant value in transparency from separating out this requirement.

Imperfect Combinations of Three

One of the most insightful aspects of Ikigai is the imperfect combinations of three of the four dimensions that are represented in the chart by different colors.

If you find work that you are good at, that you can be paid for, and that the world needs, you may find yourself feeling comfortable but unfulfilled. In this case, you aren’t working on something you love, but likely being compensated for your work and seeing its valuable impact on others.

If you find work that you love, you are good at, and that you are being paid for, you may find yourself feeling satisfied but useless. In this case, you aren’t working on something the world needs, but likely being compensated for your work and enjoying what you do.

If you find work that you love, you are good at, and that the world needs, you may find yourself feeling delighted but uncompensated. In this case, you aren’t working on something that world pays for, but you enjoy what you do and do it well. Fulfillment without wealth.

If you find work that you love, you can be paid for, and that the world needs, you may find yourself feeling excited but uncertain. In this case, you aren’t good at what you do, but you are being paid for something useful, and you love it. Purpose without proficiency.

It is not difficult to think of situations and phases in your life where you might not need to optimize for every dimension. For example, after a financially successful career, it is fairly easy to imagine why a person might optimize around work that ignores the need to be paid. For a retiree, the space between passion and mission might look ideal.

Finding Balance

Ikigai might sound like the right way to talk to students or young professionals in your life about their professional focus. But I would argue that no matter where you are in your career, you should take the time to be intentional about your professional choices and ask yourself these four questions.

Ikigai. It might be the key to a long & healthy life.

Stanford CS 007: Personal Finance for Engineers (Reviews & Reflection)

For those looking for the course material, I’ve posted the slides for all 10 sessions on a parallel site: http://cs007.blog

On September 26th, I had the great pleasure of officially kicking off a brand new course at Stanford University, “Personal Finance for Engineers“.  The course was offered through the Computer Science department (CS 007), but was also open to undergraduate & graduate students of any major.

How quickly the quarter went. On December 6th, I gave the 10th and final lecture of the seminar. Grades were submitted by December 18th, and course evaluations were summarized and provided to lecturers by December 20th.

In the interest of learning & transparency, I thought I’d post some of the feedback here, as well as summarize a few of my own reflections on the seminar.

Summary Results: Learning Goals

Out of the 93 students who took the course, it looks like 69% (64) left feedback on the course.  The following charts and material are provided anonymously by Stanford University.

The learning goals for the course were as follows:

  1. Expose students to a wide range of personal finance topics.
  2. Provide students with both practical & theoretical frameworks to make financial decisions.
  3. Build confidence in students on how to approach real life financial decisions.
  4. Provide students with content that will encourage discussions with family and / or friends.

Overall, the student feedback on these four areas were fairly consistent. A majority felt the course achieved these goals “extremely well” (highest ranking), with a large minority giving the course “very well” for these goals.The individual comments left by students seemed to confirm these results. A few samples:

Q: What skills or knowledge did you learn or improve?

“I literally knew nothing about personal finance, but just being exposed to this material helped me ask the right questions to myself and my parents.”

“Everything — I’m a financial manager on the row and a senior, but knew next to nothing about finances. This was super super helpful.”

“I improved on a great deal in this class. From understanding behavioral finance. to deciding whether or not to rent/buy, this class truly taught me about personal finance and more.”

Summary Results: Instruction & Organization

One of the elements I underestimated when proposing this class was the amount of time it would take to prepare an 80 minute lecture every week. Converting what previously had been a 60-minute talk into a 10 seminar course proved to be a significant time commitment (one of the reasons you haven’t seen any posts on this blog since the course started).

As a result, I was particularly concerned about what the feedback would be to the course material, since most of it was new. Fortunately, the results look positive.

Individual Feedback: Student Recommendations

One of the most telling results from teaching a course at Stanford are the individual recommendations that students are asked to give about a course to future students.

Q: What would you like to say about this course to a student who is considering taking [CS 007] in the future?

These reviews confirm how much students want to learn and engage around personal finance topics. The desire is there, the fundamental problem is that few schools offer any curriculum to fulfill it.

If you are wondering, Review #12 is my Mom’s favorite.

Data: What sessions did students value most?

Stanford allows faculty to add supplementary questions to the student feedback form. I asked students specifically to name three sessions that they found most valuable, and to name a session they found least valuable.

The results were interesting. Investing was far away the seminar students found the most valuable, with compensation, real estate and debt following.

Investing 28
Compensation 16
Real Estate 12
Debt 10
Financial Planning & Goals 7
Bonus: Crypto, VC & Derivatives 6
Behavioral Finance 5
Savings & Budgeting 4
Net Worth 2

When students were asked which session was the least valuable, there were far fewer votes to count. Still, it was interesting that despite being one of the favorites, “Real Estate” was also one of the least favorites. Reading the comments, it seems as if some students felt like real estate was too far in the future to be relevant to their current situation. The students who enjoyed it clearly enjoyed the section on how to make the decision between renting & buying.

Real Estate 7
Behavioral Finance 5
Debt 3
Compensation 2
Bonus: Crypto, VC & Derivatives 2
Savings & Budgeting 2
Financial Planning & Goals 1
Net Worth 1
Investing 0

It is worth noting that 8 students actually put down that all of the sessions were valuable, so I think it is fair to say that the content was well received.

Final Thoughts & Reflections

As part of developing this course, I chose to post the slides from every seminar online within a couple of days of teaching the class. My goal was to get as many eyes as possible on the content, to ensure there were no mistakes and to get advice on places to improve it.

There was only one session that received several corrections, and that was the “Real Estate” seminar. A special thank you to those of you on Twitter who helped me improve  & correct this content.

Top requests that I received for the next time I teach the class:

  • PDF versions of the slides
  • Voice over version of the slides
  • Video of the lectures

I likely should have done all of these in 2017, but I was a bit nervous about doing this with a brand new course & course material.

The most important reflection I have on this quarter is a sincere feeling of gratitude to Stanford University for allowing me to teach this course. Mehran Sahami, the Associate Chair for Education in the Computer Science department, sponsored the course, and without him it would not have been possible. A special thank you is also due to Greylock Partners, who supported my efforts to teach this course this year.

I also would like to thank the 93 students who took the course and provided excellent feedback along the way. The course was originally opened to only 50 students, and it was incredibly gratifying to see so many students request an exception to take the class during the Fall Quarter.

If you have additional feedback or thoughts about the course, and how to broaden the reach of financial education, please feel free to reach out with comments on Twitter or LinkedIn.

Stanford CS 007: Personal Finance for Engineers (Kickoff)

Update: For those looking for full course material, I’m posting it on a parallel site:
http://cs007.blog

Yesterday, I had the great pleasure of officially kicking off a new course at Stanford University, “Personal Finance for Engineers“.  The course is offered through the Computer Science department (CS 007), but is open to undergraduate & graduate students of any major.

Personal Finance for Engineers

 

It was a packed room, and I was delighted. In fact, I was delighted for three reasons.

First, I love teaching. In an unexpected coincidence, the room my course was assigned, 200-034, is the same room that I taught CS 198 for the CS 106 Section Leaders over 20 years ago as a graduate student. It was the home of CS 198 for many years. To see it filled with students again was wonderful.

Second, the level of student engagement has been outstanding. Originally set for a maximum of 50 students, I expanded the enrollment to 75, and with waitlist interest the total number of students easily went over 100. For a new course without a track record on campus, I was delighted to see so many students interested in the topic.

Third, the topic is incredibly important to me.  Those of you who have been following my efforts around personal finance education know that I care deeply about the topic. Over the past 7 years, I’ve given talks at dozens of companies like Facebook, LinkedIn, Twitter & Dropbox, hoping to better educate and inspire employees to learn more about personal finance and make better financial decisions.

I’m hoping this class can amplify those efforts even further.

Making Personal Finance Education Open

I feel grateful to Stanford University and the Computer Science Department for supporting this effort, and I hope that by making the material public, we can help get higher quality education about personal finance to as many students as possible.

My hope is that by circulating this material, more people will engage to give feedback on the content, make suggestions for improvement and continue to improve the material and the class.

After every class, I’ll be posting the slides for the session up on Slideshare. The materials from the first class, “Introduction,” are now available.

As the introductory session, I focused the seminar on three topics:

  1. Why the topic of Personal Finance is worth studying?
  2. Real data from a survey of students enrolled in the class.
  3. Full syllabus for the topics that will be covered during the course.

Student Survey Data

The second topic is based on 10 questions I asked every student in the class to complete before the start of the first session. It is hardly a scientifically representative student survey, but I wanted to ground some of the initial discussion of financial topics with data about their own experiences & expectations.

73 students completed the survey. It’s worth sharing the results of the 10 questions here:

A few data points worth sharing:

Question 1: A little over 50% of the class are either graduating seniors or graduate students. Only 14% are freshman or sophomores.

Question 2: Approximately 3/4 of the class (76%) had a “magic number” in mind when asked about how much wealth would define success for them. While the most common answer fell between $10M-$100M, the range spread from $20,000 to $15B. It was truly a blank field in the survey, so students typed in whatever number came to mind, and it started the process of open & honest discussion on why students picked the number they did.

Question 3: 92% of the students reported that they had either “some” or “quite a bit” of knowledge about the finances of their parents or guardians. Given the selection bias inherent in who signed up for this course (or even what type of students end up at Stanford), it’s hard to assign deep meaning to this result, but this was a class of students who clearly had received some meaningful exposure to financial decisions at home.

Question 6: 92% of students in the class do not expect to be responsible for any student loans after graduation. This was the most surprising result to me, based on both overall market data and my own personal experience .

I have two possible hypotheses to explain the result of Question 6. (1) The selection bias for enrollment in the class might explain part of the result. It is possible that the type of students who are most willing to sign up for a class on personal finance are not burdened by student loans.  (2) It is possible that the financial aid policies of the premier schools, like Stanford, have been highly effective in lowering the number of students requiring loans dramatically. For families with household income below $125,000, tuition is waived, and 71% of families with up to $245,000 receive scholarship assistance. (In fact, 34% of families making over $245,000 also get scholarship assistance.)

Since the syllabus was not shared in advance, Question 10 gave me a clear read of the expectations and hopes students had coming into the class. Not surprisingly, the students were, for the most part, very pragmatic. They are looking for information about compensation & job offers, the stock market, real estate and how to maximize their earning power during their careers.

Feedback

Throughout the next few months, I’ll be posting the course material in the hopes of receiving both corrections and ideas for improvement. If there are topics or material out there worth formalizing into the curriculum, I want to know about them.

Best way to reach me about the course will be through twitter @adamnash

Thank you in advance for your help.

 

Solve the Product Maze Backwards

As the father of young children, I can tell you that there is a special place in my heart for restaurants that provide puzzles and crayons for small children to pass the time.

On a recent trip out to The Counter in Mountain View, Jordan (who is 8)  was really struggling with a large maze puzzle on one of these activity sheets. It was a fairly large maze, and he was frustrated by his inability to see the dead ends ahead, forcing him to retrace his somewhat tortured crayon path.

I told him to try to solve the maze backwards.

As you can probably guess, he began at the end, and was able  to find a path back to the beginning in just a few seconds . He was delighted, and a bit surprised, to see how simple the puzzle looked like from a different perspective.

Surprisingly, I find that both entrepreneurs & product leaders miss this important lesson when evaluating ideas for either their company or their products.

Three Questions in Product Prioritization

In my experience, there are three common questions that often come up when product features are being debated:

  1. Should we build this?
  2. When should we build this?
  3. How should should we build this?

Unfortunately, even highly talented teams can become  get bogged down in debate and uncertainty when all of these questions become entangled. As engineers & designers are professionally trained to answer the question of “How,” the worst debates tend to happen around the questions of  “Should” and “When.”

Too often, when debating what feature to work on next, debates around timing quickly devolve into debates about whether the feature is needed at all.

Solving the maze backwards does a fantastic job of disentangling these two questions. Simply asking the question of “If we are successful, will we have this feature in 3 years?” tends to illuminate whether the debate is about “Should” or “When.”

If the answer is yes, you will have that feature, then the question is simple. You are just debating priority.

Avoid the Local Maximum

One of the well known issues with iterative processes for delivering product features is the “local maximum” problem.

The assumption is that where ever you start with your product, your team keeps working on improvements. Each improvement is measured to ensure it is “better” than the product before the change. However, you can reach a point where every change you make hurts the metrics that you measure. The fear is that there is a better version of your product (the absolute maximum), but it requires a change bigger than you can get to from the current design.

It’s called a local maximum problem because of the similarity to the concept in mathematics when you are traveling along the curve. From the local maximum, every move is down, even though the curve ends up higher eventually.

Solving the maze backwards can help.

By asking the simple question about whether or not your product in the far future has a given capability, it can unblock your thinking about what leaps and changes will be necessary. Whether the limitations are in technical architecture or product design, clarity on your long term vision can help your team visualize a future not trapped by their current constraints.

Too often, the real limitation is not related to either technical or design constraints, but rather a lack of clarity and imagination about what might be possible. Just like a maze, it is easy to get lost in the middle. Thinking backwards from the end goal can help the team escape a Zeno’s paradox of minor feature improvements.

Founders Can Solve the Maze Backwards, Too

It may seem hard to believe, but in early 2009 when I took over LinkedIn’s mobile efforts, there was still active debate within the company about whether to dedicate significant effort to mobile. Why? Well, back in 2009, the Blackberry was still hitting record sales, the  app store was a year old, and from a web metrics point of view, mobile views represented less than 1% of LinkedIn’s traffic. Like every hypergrowth startup, LinkedIn had a huge number of initiatives it wanted to pursue around growth, engagement & revenue, and it wasn’t obvious that mobile would move any of these needles for the company in the next few years.

Solving the maze backwards helped.

What was fairly obvious in 2009 was that the growth rate of mobile engagement was compounding at a phenomenal rate. LinkedIn, as a professional use case, might have been slightly behind social use cases for mobile adoption, but it was fairly clear that within 5 years (by 2014), mobile should represent a majority (over 50%) of all visits to LinkedIn.

Thinking backwards helped give us the confidence to invest in both talent and technology that had little short term payoff, but would become essential to engagement over the next five years as those predictions came true.

Fast forward to 2017. I was recently meeting with a founder who was debating whether they should hire a Vice President of Marketing. As he walked me through his thinking, the argument wandered, and became more focused on whether or not the company “needed” marketing.

I asked him if there was any way, if the company hit their numbers over the next three years, that the company would not need marketing, or an experienced marketing leader?

The CEO quickly responded that marketing would be essential to hit the numbers they were looking for in three years. All of a sudden, the conversation changed. The question wasn’t whether or not to invest in marketing, but more a question of when they need to.  Was this a 2017 or a 2018 problem? Is this something they would need to hit the milestones to raise their next round of funding, or something that they would invest in during the next cycle?

It was now a question of when.

Questions of “Should” vs. Questions of “When”

“The essence of strategy is choosing what not to do.” — Michael Porter

Being clear about what your product will and won’t do is a critical element of product strategy. However, because it is so important, even well-meaning teams can turn almost any feature into an existential debate.

Thinking backwards can help differentiate questions of “should” from questions of “when,” and that can be incredibly productive in moving the discussion to prioritization.

This is not intended to be dismissive of questions of prioritization. Phasing decisions are some of the most important decisions start ups make. Financing for startups is phased. Small teams can only work on a few projects at a time. Customers can only absorb so many new features at once. As a result, prioritization decisions are incredibly difficult to make.

Greedy algorithms are very good, but can be traps if you are working against competitors and an ecosystem that is willing to make bets that lie across the gap from your product’s current local maximum. Thinking backwards can help illuminate long term goals that are across the gap.

When you are building a product roadmap, and get stuck on debates about a short term feature that doesn’t move the numbers, I encourage founders to take a moment and try to solve the maze backwards.

It worked for Jordan, right?