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.

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?

Helping People Save is a Job Worth Doing

“Every day stuff happens to us. Jobs arise in our lives that we need to get done. Some are little jobs, some are big ones. Some jobs surface unpredictably. Other times we know they’re coming. When we realize we have a job to do, we reach out and pull something into our lives to get the job done.” — Clay Christensen

In the summer of 1993, after declaring computer science as my major, I got my first high paying software development internship. Over that summer Hewlett-Packard paid me over $5,000, which seemed like an unbelievable amount at the time.

Unfortunately, like a lot of people, I was so excited by receiving this windfall that I promptly spent it. By Thanksgiving, I was shocked to find that my bank account was nearly empty. All that money, gone. It literally sickened me.

That was the moment when I decided to learn as much as I could about personal finance and I got religious about saving.

The Theory of Jobs to Be Done

For a lot of people, there is a moment they can recall when they consciously decided that they wanted to start saving.

When I attended Harvard Business School at the end of the dot-com era, I was incredibly fortunate to spend time with Clay Christensen, who at the time had just recently published the now famous book, The Innovator’s Dilemma. In his class, we studied his new theory of disruption, and how industrial giants filled with smart people would make seemingly smart decisions that would lead to their downfall.

One aspect of his theory, which later went into his book, Competing Against Luck, is the Theory of Jobs to Be Done. Quite simply, Clay believes that companies can go astray by focusing too much on the data about their customers and the features of their product. Instead, he argues they should focus on the end-to-end experience of the job that their product is being hired to do.

In the past few years, I’ve come to believe that saving is a job that a huge number of people want a product to help them do and help them do it well.

Saving Itself is a Goal

Our lives are filled with a large number of small financial decisions and problems, but there are only a few very large financial moments that warrant the creation of an entire companies to support. Spending, borrowing, investing and financial advice all certainly fit that description. I believe that saving belongs on that list as well.

Americans are in a terrible state when it comes to saving. 6 in 10 Americans don’t have $500 in savings. An estimated 66% of households have zero dollars saved. If you are cynical about small, one-off surveys, The Federal Reserve itself estimated in 2015 that 47% of households didn’t have the means to cover a $400 emergency expense.

Saving is a huge problem, so it isn’t really surprising that tens of millions of Americans seem to be looking for something to help them save. Enter Acorns.

Hiring Acorns

Over the past two years, it has been astounding to watch Acorns grow. An elegantly simple product, designed from the ground up for a mobile generation, Acorns has grown to over 2 million accounts in less than three years. In the first half of 2017 alone, Acorns added over 600,000 new customers. Their overall mission is to look after the financial best interest of the up-and-coming, something I personally care deeply about.

It isn’t really surprising to see why so many Americans have decided to use Acorns to help them save. 75% of Americans have a household income under $100K. Acorns simple features like Round Ups automate the process of making sure that as you spend, you save. Acorns has now performed over 637 million round-up transactions for their customers – each one an action designed to help people save more. I believe that on any given day, thousands of people decide to hire a product to help them save, and increasingly they are hiring Acorns.

When I met the founders of Acorns two years ago, we immediately connected over the common ground between their culture and Wealthfront’s (the company I was running at the time.) They are very different services, focused on different problems and audiences, but with a shared belief in the power of automation. This is a company worth supporting, and I feel fortunate to serve on their Board of Directors.

At a time when people continue to grow more and more frustrated with the solutions offered by incumbent banks and brokerages, I continue to be excited about the opportunities for new products that are built around automation and world-class software design.  As an industry, we can and should radically improve the financial solutions that are available to everyone. Acorns is proving that saving is a job worth doing.

Silicon Valley Home Prices, Stock Prices & Bitcoin

I’m writing this post with a bit of trepidation, because talking about Silicon Valley home prices these days is a bit dicey. The surge of the last five years has been shocking, and almost no one I know feels good about how difficult it is for people to buy a new home in Silicon Valley in 2017. Some houses are pretty bad but others arae actually at a reasonable price, because they come with furniture and some even come with shutters from plantation shutters installation Sydney. They are actually really good quality.

So if you need a trigger warning, this is it. Stop reading now.

The truth is, as shocking as the rise in Silicon Valley home prices has been, there has also been an asset boom in other dimensions as well. Total compensation for engineers is up considerably and stock prices at the big tech companies continue to rise.

To visualize this, I thought I’d put together a few charts based on real market data. As a proxy for Silicon Valley, I pulled the last 5 years of home prices from Zillow, and monthly stock price data from Yahoo.

Palo Alto Home Prices

Two days ago, the Mercury News reported that a home in Palo Alto sold for $30 million.  A quick check on Zillow seems to confirm this.

I chose Palo Alto as a proxy for Silicon Valley home prices because it is historically “ground zero” for Silicon Valley tech companies, and it has relatively close proximity to all of the massive tech giants (Apple, Google, Facebook).

I picked June 2012 – June 2017, not only because it is roughly five years, but also it also happens to mirror the time that Facebook has spent as a public company. For many in the local real estate market or online sites as SafeguardProperty.com, correctly or incorrectly, the Facebook IPO still looms as a transformational event.

As you can see, in June 2012 the average Palo Alto home cost $1.38 million. Five years later, the estimate for June 2017 is up 84.6% to $2.55 million.

Apple (AAPL)

Apple is the most valuable company in the world, as measured either by market capitalization ($810B as of 6/7/2017) or by profitability ($45.7B in 2016).  Thanks in part to this exception financial performance, Apple stock (AAPL) has risen 84.5% in the last five years, from $83.43 per share to $153.93 per share.

84.5%? Where have I heard that number before?

That’s right, the increase in Apple stock over the last five years is almost exactly the same increase as the average home price in Palo Alto over the same time period.

In June 2012, it took 16,555 shares of Apple stock to purchase the average Palo Alto home. In June 2017, it took 16,566 shares. (Of course, with dividends, you’re actually doing a little better if you are a shareholder.)

If you look at the chart, the pink line shows clearly the large rise in price for the average Palo Alto home. The blue line is the number of AAPL shares it would take to by the average Palo Alto home in that month. As you can see, AAPL stock is volatile, but five years later, that ratio has ended up in almost the exact same place.

Alphabet / Google (GOOG)

Alphabet, the company formerly known as Google, may not be as large as Apple in market capitalization ($686B), but it has seen far more share appreciation in the past five years. Since June 2012, Alphabet has seen its stock price rise 240.4%, from $288.95 in June 2012 to $983.66 per share.

What does this mean? Well, it means that if you have been fortunate enough to hold Google equity, the rise in Palo Alto home prices doesn’t look as ominous. It took 4,780 shares of Google to purchase the average Palo Alto home in June 2012, but it only took 2,592 to purchase the average Palo Alto home in June 2017.

Facebook (FB)

Facebook, the youngest of the massive tech giants, already has one of the largest market capitalizations in the world. As of today, Facebook is valued at $443B. Facebook stock has risen 394% in the past five years, from $31.10 in June 2012 to $153.63 in June 2017.

To state the obvious, it has been a good five years for owners of Facebook stock. Not many assets could make owning Palo Alto real estate look slow, but 394% growth in five years is unbelievable. In June 2012, you would have needed 44,412 shares to buy the average Palo Alto home. In June 2017, that number had dropped significantly to just 16,598 shares.

Bitcoin (BTC)

While I realize that Bitcoin is not a stock, the original idea for this post came from a joke I made on Twitter recently given all of the buzz about Bitcoin, Ethereum and ICOs over the past few weeks.

I couldn’t resist running the numbers.

For the small number of readers of this blog that haven’t been following the price of Bitcoin, the increase in value over the past five years has been unbelievable.The total value of all Bitcoin outstanding is currently about $44.5B. Since June 2012, Bitcoin has risen approximately 4,257%, from $6.70 per Bitcoin to a current value of $2,858.90.

You can see why there has been so much buzz.

In June of 2012, it would have taken 260,149 Bitcoin to buy the average home in Palo Alto. In June of 2017, that number is now down to 892.

Needless to say, anyone who sold Bitcoin to buy a house in 2012 is likely not loving these numbers. But to people who have held Bitcoin for the past five years, Palo Alto is looking cheaper by the day.

Silicon Valley Is Seeing Significant Asset Inflation

To be clear, I’m not attempting to attribute causality to these charts. I believe the real driver of home prices in Silicon Valley is the lack of sufficient building of new supply at pace with the economy, combined with a significant increase in compensation for technology employees and historically low interest rates.

But the fact is, if you are fortunate enough to have equity in one of the tech giants (or in Bitcoin), houses might actually be looking cheaper now relatively than they did five years ago.

I always find it enlightening to look at real data and compare it to intuition. Hope you find this data and these charts as interesting as I did.

Spend Time Thinking About The People Who Don’t Use Your Product

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This is an extension to my original three post series on user acquisition.

Today, AirBnB announced that it had reached a settlement with the city of San Francisco on how to effectively register and monitor legal listings in the city. I am a huge fan of the company, and it seems like a positive outcome for both San Francisco and AirBnB.

For many, the issues around many of the sharing economy companies, including AirBnB, are examples of regulators trying to find a way to both control and incorporate rapid, disruptive innovation.  There is, of course, some truth to this point of view.

However, as a product leader, there is another important takeaway that seems to be too often forgotten. Most of us spend too little time thinking carefully about the people who don’t use our products. 

The people who don’t use your product often won’t show up in your core metrics. But if you don’t spend time understanding them, you will eventually feel the negative effects in your growth and your brand.

It’s Natural for Companies to Obsess About Their Users

When a startup launches a new product, it is natural to obsess with every user it touches. Every click, every tap, every piece of data is precious feedback about your features. The data is one of the most objective sources of information about what your users are doing with your product and when they are doing it. In the early days, before finding product/market fit, a huge amount of time tends to be spent on the people you touch but who don’t convert. In fact, that may be where most people at the company spend their time.

As consumer products find product/market fit and hit escape velocity, more and more engineers and designers spend a disproportionate amount of time on users. The people who work on growth & marketing will still often continue to look at the data on leads, trying to find ways of converting those non-users to users. However, as a percentage of the company, fewer and fewer engineers, designers & product managers will be looking at data from non-users.

This makes sense, of course, because as your product grows, almost all feature development is focused on your users. In 2008, when we established the Growth team at LinkedIn, we discovered that of the hundreds of features on linkedin.com, only three features reliably touched non-users. (For those of you who are curious, those features were the guest invitation (email), the public homepage (linkedin.com), and the public profile (in search.))

Customer obsession, of course, is generally a good thing. But as we learned at LinkedIn, if you want to grow a viral product, you have to spend a considerable amount of time thinking about the non-user, where they touch your brand and your service, and find ways to both reach them and convert them to users.

You Have More Non-Users Than Users

Few brands and products could ever claim that their conversion rate for everyone they touch is over 50%. It is even possible that Facebook, with nearly 2 billion users, still has more people in the world who have heard of the company than who use it.

In 2011, I remember talking to the great founders at CardMunch about a new email they were proposing to add to their service. CardMunch was a wonderful app that made it effortless to scan a business card and then have it automatically entered into your address book, with almost no errors. The proposal was to add an email so that the person whose business card you scanned (non-user) received an email from the CardMunch user with their business card in electronic form.

The team was ready to whip something together quickly and test the idea, and the concept was good in principle. But given some of the experience of Plaxo a decade before, it was prudent to ask the simple question: “How many people will see this new email?” Within a few minutes, we figured out that the number of people who would receive this email within the first three months would be 30 to 50 times the total user base of the application.

Some of you are probably thinking, “sounds like a great growth feature!” Others are likely venting about why we have so many emails cluttering our inboxes. Both reactions are fair.

The guidance I gave the team, however, was to consider the fact that, once they launch this feature, most people who have ever heard of CardMunch will have only heard of it through this email. The product and the brand. I asked them to spend a bit more time on the design on the email, in that context, to ensure that all of their hard work on a wonderful product wouldn’t be drowned in an avalanche of poor experience.

In the end, Sid Viswanathan & team did a great job brainstorming ways that they could show the value of a connected addressbook in the email, including LinkedIn features like people you know in common. Once framed properly, it was simple to think about what they wanted non-users to think about their brand and their product.

Non-Users Matter

Marketers, of course, have known this for decades. It is a brand marketing staple that it takes at least three touches of a brand before it will stick with a potential customer.

Somewhere along the way, software companies lost touch with the basic idea that every piece of content that contains their brand is a potential touch. It is not just the users of the core product that matter for long term growth.

Market research and customer development are often essential for discovering and understanding new potential users for your product. The case can be made that viral systems can, in fact, spread to these new pockets automatically. However, truly viral products are few and far between, and in most cases these new markets will not be in the data sets that your product & engineering teams are focused on.

Brand will also impact your company well beyond new user acquisition. With AirBnB, we now know the many ways in which their service and brand touch non-users. Neighbors, for example, have natural questions and concerns when a house or a unit near by is available on the platform.

Software companies, especially successful ones, tend to have passionate and talented designers and product leaders who are eager to find clever solutions to real user problems. Given the right data and focus, there is no question that these teams can also design and build features that address non-user concerns.

Tesla spends time thinking both about the feeling a driver has in the car, as well as the experience of a non-Tesla owner who is watching that car drive by.

Spend more time thinking about all of the people who touch your product & your brand, not just your users.

 

Forget the Turing Test. The Key to Conversational Engagement Might Be Trampoline Moments

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In 2016, voice-based interfaces exploded into the imagination of the startup community as a potential new consumer platform. Amazon deserves much of the credit for this radical shift, as the Amazon Echo seemed to jump the chasm from early adopters to a more mainstream market. Of course, voice has been a hot topic now for years, as Apple & Google both leveraged their ubiquitous mobile platforms to launch Siri & Google Now, and Microsoft & Amazon have demonstrated incredible technical progress with Cortana & Alexa.

Unfortunately, as the excitement around voice shifts into practical execution, there is an uncomfortable consensus growing that there is something amiss with these new conversational platforms. The issue? The engagement numbers just aren’t as strong as expected, or even as strong as engagement numbers for traditional web or app-based interactions. One of the biggest issues? Retention.

I believe the issue is real, and will be a persistent problem for developers and designers looking to create the next generation of conversational interfaces. But if I had to give one piece of advice to those creative professionals, it would be this:

Deliver trampoline moments.

Lessons from PullString

Over the past four years, I’ve had the incredible opportunity to be an investor and board member at PullString, headed by Oren Jacob, the former CTO of Pixar. This company set out with the audacious goal of reimagining conversational interfaces designed for entertainment, rather than for utility. With a bit of that unique Pixar magic, this incredible team believed in two things that even to this day seem quite at odds with the conventional wisdom of Silicon Valley:

  1. Conversation is a fundamentally new medium for creative content, and would expand beyond the pure utility of a search engine interface to a platform for engagement & entertainment.
  2. A platform to deliver truly engaging entertainment through conversation would require the combination of both technical and creative contributors to the content creation process.

Over the past few years, Pullstring has delivered a wide range of industry-firsts for voice-based engagement for a wide variety of audiences, ranging from young children to adults. Large brands, like Activision’s Call of Duty, Disney’s Marvel and Mattel’s Barbie trust Pullstring’s platform because of its unparalleled scalability and its unique ability to integrate content from creative professionals with expertise in sound, voice, character and dialogue. Even Amazon counts on Pullstring when they want to deliver high quality conversational content.

However, one of the key insights about conversational engagement came early on, during one of their rigorous rounds of user testing & prototyping. After session after session with children, who would use, but not deeply engage with a conversational application, they found it. A trampoline moment.  

Child: Hey
Pullstring: Quick! Name three things you like that are outside.
Child: I think please I’m Chris taxes and jumping on trampolines
Pullstring: W-w-w-w-w-w-wait…you mean like, a real trampoline?
Child: Yeah
Pullstring: Do you think I could go on it sometime? I’ve been using your bed up until now and I think the springs are worn out…
Child: Are you really able to
Pullstring: My oh my, what a day I’ve had…It was so strenuous I can barely remember what I did…Ellington? What have we got in the log?
Pullstring: Right. We sat on the bed. Ellington needed a little rest time from our usual forays.

A couple things you’ll note here:

  1. Speech recognition for children’s speech was very imprecise at the time. The text is not actually what the child said, but the text fed back from the best speech recognition engine of that time.
  2. The child’s willingness to “believe” in Winston (the virtual character, with his friend Ellington) changes dramatically when he demonstrates active listening around one of her favorite things, the trampoline.

This session went on not just for a minute, not just ten minutes, but over 30 minutes. The child had clearly decided to engage, and continued to engage, despite a huge number of imperfections in the interaction.

Why? The trampoline moment.

Turing Test or Trampoline Moment?

For decades, the high bar in artificial intelligence has been the Turing Test, invented by Alan Turing in 1950. The test was fairly simple: an evaluator (human) would have a conversation with two entities, one human and one artificial. If the evaluator could not reliably tell the human from the computer, the machine would “pass” the test.

While there are a number of criticisms of the Turing Test, there is no question that it has profoundly affected the way many evaluate machine-generated conversation.

The insight from the trampoline moment was different, and takes more of its heritage from the world of fiction. The question can be reframed not whether or not the consumer believes the character is human, but instead are they willing to suspend their disbelief long enough to immerse themselves in the experience.

Most people don’t believe that Iron Man is real, or that they are witnessing an accurate portrayal of Alexander Hamilton. They know that the actors in their favorite romantic comedy aren’t really in love, and they forgive plot holes and shallow character development. Even highly critical audiences of science fiction often can and will forgive obvious scientific flaws in the technology presented. (Well, not all of them)

The magic is really in the suspension of disbeliefthe willingness to suspend your own critical faculties and believe the unbelievable; the willingness to sacrifice logic for the sake of enjoyment.

Is it really surprising that a critical insight to human engagement might stem from the arts, where creative geniuses have spent thousands of years attempting to engage and entertain notoriously fickle humans?

Focus on Trampoline Moments, not Intelligence

The progress in artificial intelligence, voice recognition and conversational interfaces has been astounding in the past few years. There is no question that these technologies will reshape almost every facet of our economy and daily lives in the coming decade.

That being said, in Silicon Valley, it is sometimes too easy to focus on the hardest technical problem, rather than the one that will bring the consumer the most delight.

The reason Pullstring spends time talking about finding “trampoline moments” is likely the same reason talented product leaders talk about finding “magic moments” in their product experience. If you can connect with your customer emotionally, you will inevitably find that engagement and retention increase.

Trigger their suspension of disbelief. Find your trampoline moments.

The Decade of Gen X Wish Fulfillment

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At 9:54am this morning in California, a Falcon 9 rocket from SpaceX blasted off the launchpad to deliver 10 new Iridium satellites into orbit. 9 minutes later, the jettisoned first stage of that rocket ship self-navigated back down, landing perfectly and without damage. The dream of self-landing, reusable rockets, abandoned 50 years ago, has become a reality.

If you are a science & technology enthusiast, it is an unbelievable time to be alive.

Everywhere you look, there are signs that all of the science-fiction dreams of the 20th century are rapidly coming to life. Boom Aero is ready to bring economically viable supersonic jets (Mach 2.2) to commercial air travel, and several competitors are now racing to bring their own to market. In just a few years years, Tesla has reshaped the global automative industry by executing on their audacious plan to accelerate the transition to clean energy by proving the market-viability of electric cars. Google has not only brought self-driving cars to the tipping point of commercial viability, but it is sparked a global race to bring them to market by the end of this decade , and even though they are self-driving, having an insurance like lorry insurance is still important.

Uber is talking about flying cars. Amazon is patenting airship warehouses for drone for commercial delivery, and has delivered ambient voice control to our homes. Facebook is bringing us true virtual reality. Apple is delivering the equivalent of a crystal-in-our-ears to connect to the cloud. Moon Express will land on the moon in 2017.

 

What has changed so dramatically? Why are so many of our collective dreams, many of which predicted over 50 years ago, suddenly tumbling to market in an avalanche of advancement?

I have a simple hypothesis. We are living in a decade of Gen X wish fulfillment.

The Ascendent Economic Power of Gen X

ft_16_04-25_generations2050Poor Gen X. You can’t go ten minutes without seeing some political or economic framing around the political and economic tensions between the Baby Boom generation, the 70 million Americans born between 1946-1965, and the 90 million Millennials, born between 1981-2000. Sure, Gen X got a few TV sitcoms & movies in the 90s, but it was a brief time in the sun before the cultural handoff.

As of 2017, most members of Gen X now range from their late 30s to their early 50s. They have found careers, started families. More importantly, they have hit the economic sweet spot of the US economy. Wealth accumulation is highly correlated with age, and career success is as well. You can see it clearly in the numbers: Gen X is wealth is accelerating rapidly, faster than the Millennial generation, and over a smaller base of people, while Baby Boomers begin their inevitable asset decline as their retire.

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The Influence of Gen X Leadership

Like every generation, Gen X has produced a set of exceptional leaders, and many of them are now concentrated in technology, where the industry rewards founders and executives at a younger age than other industries. Larry Page & Sergey Brin at Google. Elon Musk at Tesla & SpaceX. Travis Kalanick at Uber. Jeff Bezos misses the cut off by a matter of months, but clearly fits the profile as well.

Demographers have always projected the window for Gen X would be hard: Baby Boomers are determined to hold on to power as long as possible, and Millennials have the political strength to force transition more quickly on their terms.

Still, we are clearly in a window of time where a fairly large number of Gen X leaders have accumulated significant economic power.

So what are they doing with that power?

Gen X Wish Fulfillment

Five years ago, Peter Thiel lamented that we were promised spaceships and flying cars, but all we got were 140 characters. The sentiment, in various forms, became common place. Why wasn’t Silicon Valley investing in hard problems?

Not surprisingly, it seems as if the peak of that disenchantment actually coincided with an incredible resurgence in investment in deep technology.

Gen X is, in the aggregate, almost canonically described as cynical and disenchanted. But with the ascendence of science fiction into Hollywood in the 1970s, they grew up seeing the future through the lens of technology. The boom in personal computing, followed by the internet, filled their formative years. True, huge initiatives of the 1970s around space and clean energy faltered and almost expired. But while there were disappointments, like the Space Shuttle, they also saw the end of the Cold War, and the phenomenal growth in the technology industry.

Is it really so surprising that a subset of this generation, in this brief window, has decided to invest its economic power into tackling the problems the previous generations failed to deliver?

Electric cars. Clean Energy. Gene Editing. Space Travel. Drones. Artificial Intelligence. Man-made diamonds. Robots.

Even our comic book movies have become phenomenal, mostly thanks to Jon Favreau.

Dreams transformed into reality.

Can Gen X Inspire?

Make no mistake, Gen X stands on the shoulders of giants. The previous generation gave us the economic and technology platforms to make these dreams become reality. Gen X deserves credit for not giving up on those dreams, and finding innovative ways to push through old barriers and find new solutions.

After winning World War II, the Greatest Generation inspired a whole new generation of scientists and engineers with their audacious efforts in technology in the 1950s & 60s. We may be witnessing a similar era, a decade where the technological achievements of this generation ripple through the children of today, and play out in second half of this century.

So many of the technical dreams I discussed eagerly with friends in high school and college are now actively being delivered to market, just twenty years later. It is an incredibly exciting time to be in technology.

Personally, I hope this generation will not only hand off and even better set of opportunities to the next, but we’ll use this brief window of time to inspire an even younger generation to reach for the stars.