Narratives
What Elon Musk got wrong about Twitter, journalists and VCs got wrong about FTX, and Peter Thiel got wrong about crypto and AI — and why I made many of the same mistakes along the way.
Board
On Launching
Mighty App had an ambitious goal – streaming your browser from the cloud. They built out custom infrastructure to reduce the latency. After 3.5 years in beta, they are essentially starting a new business around generative AI. I have a lot of respect for what they were building, and I think that a product like that will eventually be ubiquitous. But could things have gone differently? I don't know. I've thought about what an MVP looks like in 2022 and cited two other companies with long betas (
What is a Token? A Technical Explanation
OpenView 2022 SaaS Benchmarks is Here!
The 2022 SaaS Benchmarks report enables founders to compare themselves against their peers across metrics that matter. Download the report for more insights.
Speaker Kit Lightning Talk · sandstorm-io/sandstorm Wiki
Sandboxing for Developers and Operators | Lunatic
Why doesn't Sandstorm just run Docker apps?
Take control of your web by running your own personal cloud server with Sandstorm.
Sandstorm is returning to its community roots
Take control of your web by running your own personal cloud server with Sandstorm.
The Sandstorm Team is joining Cloudflare
Take control of your web by running your own personal cloud server with Sandstorm.
Sandstorm Oasis is Shutting Down
Take control of your web by running your own personal cloud server with Sandstorm.
Containers are chroot with a Marketing Budget
Every explanation is a simplification.There are many ways to understand how containers work, but most useful explanations are actually simplificati...
RECONSIDER
About 12 years ago, I co-founded a startup called Basecamp: A simple project collaboration tool that helps people make progress together, sold on a monthly subscription. It took a part of some people’s work life and made it a little better. A little nicer than trying to manage a project over…
Rust Atomics and Locks: Low-Level Concurrency in Practice: Bos, Mara: 9781098119447: Amazon.com: Books
Why the World's Most Confident People Create Alter Egos
Beyoncé, Adele, LeBron James, and Rowan Atkinson have all done it.
Is Ethereum a Dumb Pipe?
Commoditized protocols (especially decentralized ones) often create value but have a different entity capture most of it. See examples of email (Gmail) or git (GitHub). Who captures the value? Scaling layers? On-ramps/off-ramps? Regulated exchanges?
Telcos vs. the internet, SaaS vs. cloud providers – when can platform-owners compete with applications on their platforms? When are platform providers subject to only becoming dumb pipes that move bits instead of offering high-level services?
thinking from the bottleneck perspective, any startup can start from bottleneck in the dev loop cycles and then expand it from there, given they have a broad enough vision.
Free Compute and Replit
I don't think these are the most compelling business models, but I think a company that figures out how to give away free compute in exchange for demand has a chance of being a generational company in the next cycle. Even with a slowdown in Moore's law, skate where the puck is going.
Dev-Productivity-Metrics-Guide.pdf
Five Pillars of PLG with Carilu Dietrich
Venture Capital Is Ripe for Disruption
A world where a billion is a drop in the bucket
To understand how this is possible, we first need to understand how it occurred. If you want to win at something as complex as startups, you have to understand the game behind the game—in this case, the funding dynamics.
Everyone working in venture capital is smart. You don’t get to play the game of high finance without having some amount of capability. The VC product becoming subpar isn’t the result of stupid decisions or people ignoring obvious data. It’s the result of multiple parties making individually rational choices that have resulted in systemic levels of risk.
This is never how it actually happens, but you get the idea. Startups should receive risk capital to literally derisk certain aspects of the business.
It’s tempting to subscribe to the heroic stereotype of venture capital: the lone contrarian, bucking social convention, and investing in entrepreneurs when no one else believes in them is the mythos of the VC. Unfortunately, this tale wildly diverges from reality.
If you want to build anything less than a $50B company, this product is not meant for you. To be fair, this venture product does work for some! It is still a good way to make money if you’re building or funding enormous companies. But the product continues to move upmarket and is abandoning significant fiscal opportunity. What is more important is that it doesn’t work for most companies.
If you have accepted venture capital you only have two options: shut down the business or pivot. This is the case even if you have a solid business that would comfortably be a $20 million-plus revenue enterprise. Again we are left looking for an alternative to traditional venture capital because these businesses deserve more options.
The original name for venture capital was adventure capital. Technology’s life-giving veins used to be lined with copper and silicon. It was the spark of the soldering gun, the ring of the hammer that were the sensory signals of Silicon Valley. In dilapidated workshops and musty garages, tinkerers tried to make cool stuff and see where that took them.
The Evolution of Infrastructure Markets — Cloud Computing
unpacking how new markets evolved around AWS
Battery-Ventures-OpenCloud-Report__2022.pdf
On Corporate VC | Reaction Wheel
I know I’m a bit late to this, but I just ran across Fred Wilson’s comments about corporate VC from two months ago. “I am never, ever, ever, ever, ever going to do that again,” he…
On his blog Wilson clarifies a bit: corporate VCs are of two types, passive or active. If they are passive, they can be good, because they act like VCs; if they are active they are bad, “The corporate strategic investor’s objectives are generally at odds with the objectives of the entrepreneur, the company, and the financial investors.” And, “I strongly advise against entering into these kinds of relationships.”
But this cuts both ways. Because a corporate VC does not need to exit their investments in a relatively short time-frame, they can be more supportive than a VC firm. Since corporates are not necessarily in it to make money, they can put money and time into a company for strategic reasons, even if it doesn’t increase the market value of the company in the short-term.
These things are the same, no? Except they’re not, because corporates and VC firms define success differently. For a VC firm success is selling their equity to someone else for a lot more money in a relatively short time frame. For a corporate VC success is having a company become powerful and entrenched so they can learn many things from them (and prevent competitors from dominating a market.
Power Laws in Venture | Reaction Wheel
…The more rightward-skewed the distribution is, whether Pareto-Levy, log normal, or some related form, the more difficult it is to hedge against risk by supporting sizable portfolios of innov…
Normal distributions are well-understood, and easy to work with. Almost all of modern finance theory is built around the assumption that things like prices and returns are normally distributed (or lognormally distributed: a lognormal distribution becomes a normal distribution if you take the logarithm of the x-axis, useful when an increase in x is multiplicative rather than arithmetic.) Normal distributions underlie insurance and allow investors to minimize risk using modern portfolio theory
Power laws have a property that normal distributions do not: they have “fat tails.” Normal curves fall off much more quickly the further out the x-axis you get
The most important thing about a power law distribution is the alpha. The smaller the alpha, the heavier the right tail of the curve is.
Similarly, a very small number of days accounts for the bulk of stock market movements: Just ten trading days can represent half the returns of a decade.
Venture capitalists hold investments for an average of 4 years. They expect year over year growth of about 30%, meaning a continuously compounded growth rate of 26%. With these the model gives us an alpha of (1/(.26 * 4)) + 1 = 1.96. How does this compare to the real world?
Power Law distributions must have an alpha greater than one54. They do not have a standard deviation if alpha is less than three. They do not have an average if alpha is less than two.
Thiel thinks this is not possible. Venture capitalists have always faced this tension: the average growth rate of all small businesses in the US is closer to 7.5% than 30%. The pool of companies that can grow fast enough is limited. How many companies can you find that will grow fast enough, knowing that when you’re wrong about the growth rate, you’re probably wildly wrong?
The best explanation is supply and demand. When alphas of less than two are available–the supply of fast-growth companies has increased–venture capitalists have an incentive to make more investments, so they raise more money and start more funds, increasing the demand for these companies until the alpha returns to 259.
Strategies Against Systems | Reaction Wheel
There is one other circumstance, peculiar to human conduct, which stands in the way of successful social prediction and planning. Public predictions of future social developments are frequently not…
I want to explain myself. I don’t usually feel the need to. I can’t say I don’t try to persuade you when I write, but I dislike persuading. I dislike pretending that somehow I have thought of things you cannot. I prefer to think that by providing you with the ideas that have caused me to believe certain things, you will persuade yourselves.
Naturally, this often goes astonishingly awry.
Perez’ answer is that there is always fear and greed. And for the past 250 years, at least, capital has been controlled by them.
I align myself chaotic good, as most of you probably do. I do not want to live in the 1950s as a company man in a grey flannel suit. I did that, I worked at IBM as an engineer for several years out of college. My colleagues loved the freedom from fear of a bi-weekly paycheck. I found I could not fit in2. This world, where I can benefit society by finding rules to break, was a godsend. The last thing I want is to lose it.
One Process | Reaction Wheel
This is completely irrelevant to the current moment. Enjoy. We build models to see what the future will hold and then tailor our actions to what the models tell us. If the models are accurately pre…
This post is about a specific model that we believe because we want to believe there are two ways of existing in our workaday lives: the heroic and the ordinary.
He says that scientific progress happens in one of two ways: slowly and smoothly, or in sudden leaps of change. The former he called normal science, the latter scientific revolution.
If you only reward innovators for results, the results you get will be anemic. If you support them for potential, your results might be spectacular
Most new technology comes about by combining existing technologies in a new way. For instance, the microprocessor was invented by combining the integrated circuit with a Von Neumann computer architecture. The integrated circuit was a combination of transistor-transistor logic with single-wafer silicon lithography. And so on, down to the more fundamental phenomena of quantum physics and Boolean algebra (and beyond, but you get the picture).
Power Laws in Venture Portfolio Construction | Reaction Wheel
Every article that has ever given advice on investing in venture capital has said that you need to invest in a portfolio of companies, because each investment on its own is probably going to be wor…
There’s a 40% chance any single company returns nothing, a 30% chance it returns what you invested, a 20% chance it returns three times what you invested, and a 10% chance it returns ten times. Call this the Basic Model. Note that its expected value is \(30\%*1 + 20\%*3 + 10\%*10=1.9\).
Fred’s post says: “If you make just one investment, you are likely going to lose everything. If you make two, you are still likely to lose money. If you make five, you might get all your money back across all five investments. If you make ten, you might start making money on the aggregate set of investments.”
Why do VCs insist on only investing in high-risk, high-return companies? | Reaction Wheel
Sorry this is so short. It’s an interesting topic that I don’t have time right now to do justice. Last week I updated my “am I going to run out of money before I die” spread…
Electric Sheep Blog: The future doesn't need you: 8 pieces of advice to myself as a new graduate
A couple of weeks ago, the engineering college I graduated from invited me to join an industry panel to give the graduating batch some advi...
Electric Sheep Blog: From programming to business: Lesson 0
When you ask people for tips in their area of expertise, they often gloss over the most basic things they do because, you know, it's obviou...
Electric Sheep Blog: No virtuous circle, or how India's Silicon Valley is... different
I've lived in Bangalore since I was three - we moved here in 1987 after my father retired from the public sector that year. Bangalore, the...