Cynic or Optimist?

There will be a downturn. It might be in a day. It might be in a year. It might be in a decade. We have no idea when it will come, but it will come.

I was talking to a VC yesterday who was an entrepreneur in the late 1990s, which we now commonly referred to as the Internet bubble. He was very successful as an entrepreneur and has continued to be very successful as a VC. A VC who has been around for a long time recently told him that you aren’t a real VC until you’ve been through at least one downturn. He commented that while knowing this, it’s hard not to be a cynic when things are going well and he wondered out loud if there was a way to balance optimism and cynicism as a VC. I had a quick reaction about continually being deeply rational about what one encounters, but it didn’t feel very satisfying to me as an answer.

We are in a very positive part of the startup / entrepreneurship cycle. Given that, there is a regularly occurring discussion about whether or not we are in a bubble, or this is a bubble, or is a bubble forming, or some other bubble thing. The conversations devolve quickly into “yes we are” and “no we aren’t.” This is often followed by justifications of positions with a bunch of random data to support the position, where most of the data is either inaccurate, narrowly chosen with huge selection bias, or a function of what the public market guys like to call “talking your own book.”

I have no idea if we are in a bubble or not. And I don’t care since, as an early stage investor, I play a long term investing game, because I have to. I can’t control liquidity or timing, especially when I initially make an investment. The market is going to move wherever it is going to move and is completely exogenous to me so timing it is irrelevant.

I’ve lived through several severe cycles – both positive and negative – as an investor. I’ve had successful companies created and built at all stages of the cycle. I’ve had failure at all stages of the cycle. There are great strategies for success in both the positive part of the cycle and the negative part of the cycle. And you can do completely stupid things that blow up your company in both the positive and negative part of the cycle. While the stage of a cycle has impact on a company, it’s only one factor.

As I pondered the cynic vs. optimist question this morning, I landed on a synthetic view that feels right to me. I was walking around my office looking at my physical book shelves, mostly for words to try to characterize what I was thinking about, and I landed on Andy Grove’s amazing book Only The Paranoid Survive. I bought the physical copy after reading The Intel Trinity (one of the business / history books I’ve read recently) which inspired me to go back and read – slowly and on paper – each of Andy Grove’s books.

Boom – that was it – I’m a paranoid optimist in a business context. As a human, I’m optimistic. I believe in good. I like good. I hope for good. I prefer good. I am hopeful about the future. I love the work I do. I love helping create companies. I love playing with technology. I love seeing amazing new ideas come to life. I love being alive. I hope to live a long time.

But I know that there is plenty of bad out there. I’ve experienced a lot directly in business, whether it’s bad actors, stupid decisions, unintended negative consequences, self-inflicted trauma, passive aggressive behavior, or outright deceit. I’ve made assumptions about what I think will happen only to have my assumptions be completely incorrect, or correct in my parallel universe to the reality that actually ensues. Some of this has been under my control or impacted by my viewpoint while some of it has nothing to do with me in any way, but is like the proverbial elephant that accidentally steps on and crushes the ant.

When I link this to the cynic vs. optimist dichotomy, I’m definitely not a cynic. But I’m not an unbridled optimist that can only expect more positive. And I don’t vacillate between cynic and optimist based on individual situations, companies, or the macro.

Instead, I ignore the macro. I recognize that I have no control over it. I try to use the experience and lessons from the last 30 years of being in business to guide me steadily through whatever part of the cycle we are in. I know the cycle will change and the companies I’m part of will have the opportunity to be successful regardless of the situation. But I also know they have the opportunity to fail. And that’s where the paranoia comes in. It’s a powerful calibrator.

When I reflect on Andy Grove’s leadership of Intel, it was through a series of intense up and down cycles – both within the semiconductor industry as well as the global macro environment. While he leads with the idea of being intensely paranoid, there’s a thread of clear optimism through his big decisions. When faced with brutal challenges, he dealt with them. When there was daylight in front of him, he ran incredibly hard in a positive way to cover as much ground as possible. But he always knew he’d face more challenges.

The next time I get asked the question, “How can you avoid turning into a cynic when things are going well and you know it won’t last forever” I now have an answer. Be a paranoid optimist.

Recalibrating For The Summer

Even though I haven’t been in school for a long time, I still have some tenuous link to the idea of summer vacation. Well, not some much vacation, but a mode shift from going to class every day to doing other stuff, such as playing tennis at least eight hours a day (age 10 – 14) or writing software products (age 17 – 21).

A few summers ago I did a hard shift to maker mode. I did some of my most creative work in a while that summer, including writing Startup Communities and getting started with Amy on the book Startup Life. It was also a powerful summer for some of the companies in my portfolio and I was able to spend deep time with several of them on their product rather than just reacting to all the inbound stuff that was flying at me. I also got in the best physical shape of my life. I worked out – mostly running and biking – almost every day. I slept plenty. I ate well. I spend a lot of time reading and hanging out with my beloved.

At the end of the summer, I blew it as I shifted out of this mode. The fall started with a bike accident in Slovenia and ended with surgery to remove an 8mm kidney stone. But that was only the beginning of a slide into a very deep, six month depression which finally ended in the summer. I didn’t plan for an annual cycle, but that’s what happened on that one.

While I feel mentally healthy right now, I realize that I’m extremely tired. Amy and I slept an enormous amount of the time we were in Paris. While we usually have an epic Parisian meal two or three times during the week, we only had one at the beginning of the week and then cancelled the others because we just didn’t feel like it. We had an amazing visit to the Picasso Museum, but then spent a lot of time laying in bed reading or just wandering around aimlessly, and then heading back to the hotel to take a nap. The heavy fog of fatigue, which settled in on the trip, hasn’t lifted. I’m sure the endless rain in Boulder isn’t helping, but I’m aware that it’s time to shift gears again.

On top of that, I’m pretty tired by the noise in the system. I was tired of it all spring and wrote a few things about it, but the gap between real signal in the entrepreneurial world and the endless noise is at a volume that is very high. I filter much of it out so when it eventually breaks through I know I need to add a new filter, or recalibrate my filter.

At the same time, I’m extremely interested in many of the companies we are investors in. So, I know I’m not reacting to the work, or the types of companies I get to work with, but the systemic noise that isn’t about creating, doing, building, and thinking.

I’m using Memorial Day to Labor Day as my marker for recalibrating for this summer. I’m not going to use the 2012 Maker Mode summer approach but I’m going to design something else. I’m going to let this week roll over me without fighting it as I think about what the recalibration for the summer is, but the new mode will start in a week.

The Human Router

Amy and I had a wonderful week off the grid in Paris. No phone, no email from Friday night 5/8 when I boarded the British Airlines flight in DIA until Friday morning 5/15 when we decided to turn stuff on and just lay around the hotel all day getting reading to go home.

I’m always fascinated by the email patterns I have when I’m off the grid for a week. I almost always go off the grid late Friday or Saturday morning so there’s the weekend lull followed by an intense flurry on Monday. By Tuesday my regular emailers have seen that I’m off the grid and their pattern of copying me slows down, but doesn’t stop completely. The emails then become more random.

By Wednesday, I’m getting three kinds of email.

  1. #Important: Important stuff from people I know that I’m being copied on.
  2. #New-Known: Stuff from people I know who didn’t email me earlier in the week.
  3. #Random: Stuff from people I don’t know.

#Important and #New-Known tend to have similar tones. They are things for me to respond to, send to someone, make a decision around, or acknowledge receipt of information. Occasionally they require me to do something, but the action requested rarely takes more than five minutes.

#Random is completely different. Almost 100% of the #Random email has a specific request for me. These requests are often for meetings, phone calls, interviews, or speaking engagements. Some of them are specific sets of questions about a topic while others are long essays that never really get to the punch line, but clearly are begging to get to a question of some sort. Some are requests for introductions. And others are direct asks for financing.

This trip, when I went through my email upon my return, I left all the #Random ones for last to process. I had over 200 of these. This time I responded to all of them, but it wasn’t very satisfying. It took about four hours on Sunday and when I was done, I felt relief to be done, but when I reflected on it, I didn’t feel like I ended up with any new knowledge. That was disappointing as processing four hours of email to result in zero learning mostly just sucks, at least for me.

In this case, I packetized appropriately. Rather than getting bogged down in the stuff I needed to do while getting worn out by stuff that wasn’t that important to do, I only responded to stuff in #Important and #New-Known, ignoring the rest until I was completely finished with these categories. I think took a break and dealt with the rest later when my headspace was clearer.

As I sit here, I wonder why I responded to the other 200 #Random emails. I have a long-standing self-identity of responding to all emails that I get. For some reason, that’s important to me, but I’m no longer really sure why. It’s not satisfying in any way and the signal to noise ratio, or at least the value to non-value ratio, is way out of control at this point.

I guess I have something new to ponder in therapy. At least something good came out of responding to the 200 emails.

Build Your Life Where You Want To Live

Amy and I just got back from a great week off the grid in Paris. We were both exhausted and badly needed a break. When we want to get away from humans, we go to our place in Homer. When we want to lose ourselves in a big city, we go to Paris. We both are incredibly refreshed feeling and happy to be home with the rapidly growing puppy Super Cooper and his friend Brooks the Wonder Dog.

Before I left I did 15 minute interview on WGBH’s Innovation Hub program. I’m happy to do an interview with WGBH anytime they call given the number of hours of my life I spent listening to them during my twelve years living in Boston.

I listened to it on the ride home from the airport yesterday and thought it was one of the better short interviews I’ve done in a while. Enjoy!

Feeling Old(er) at Big Omaha

For many years I was often the youngest person in the room. I started my first company at 19 and had already had several bizarre “too young” experiences by the time I was 21. I vividly remember almost losing our largest client at the time because they had taken my partner Dave out for drinks (he is three years older than me) and they somehow pried out of him that I was only 21. That generated a lot of anxiety for a week or so.

I’m at the Big Omaha Conference today for the first time. I’m a big fan of Jeff Slobotski and have been semi-gracefully dodging his invites for years. This year I thought I’d come hang out for a day. So here I am.

Last night I went to the VIP pre-opening party. I hung out and talked to some folks and then realized I was hungry. They only food at the party was meaty stuff (other than some creamy artichoke dip) so I went for a walk around the part of downtown Omaha we were at (11th Street-ish) looking for dinner. I found a Mexican place and sat down for a nice quiet meal before the event started. About half way through I was joined by two others – both locals – who are at the conference and recognized me. Both are younger VCs so we had a nice conversation that was hopefully helpful and interesting to them. I learned a little about the scene in Omaha, so that was useful to me. And I enjoy small dinners a lot, so three people was perfect. And the cheese enchilada was exactly what I wanted.

We wandered over to the opening party around 8:30. I was already tired but I figured I’d give it a try. The entryway was subdued and pleasant as people were checking in and getting name badges. They were all a lot younger than me.

We then walked down a long hall and up some stairs into a huge room throbbing with music. Over the next 30 minutes, I said hello to a few folks I recognized, had a few others introduce themselves to me, and noticed that the room had filled up a lot. The music must have gotten louder because I could no longer hear anything anyone was saying to me without leaning over and putting my ear next to their mouth.

At one point I looked around and noticed that I was one of the oldest people in the room. It was 9:30 and I was tired. So I went home, did email for a little while, and went to sleep.

I’m heading out to the conference now and I’m looking forward to it. But I’m very aware of the age shift today for some reason. Interesting …