« swipe left for tags/categories
swipe right to go back »
If you are an founder or employee of a public company, repeat after me:
This is one of my favorite Jeff Bezos quotes.
It’s easily to get bummed out when your stock price drops. I believe the emotions follow the +1/-5 rule. Each time it goes up, you get one unit of happiness. Each time it goes down, you get -5 units of happiness.
Think about that for a second. If you look at the stock price every day the market is open, you’ll look at it about 250 times a year. Let’s assume that your stock is higher at the end of the year, but that on 125 days it goes up, and 125 days it goes down. You’ll have +125 happiness for the up days and -625 happiness for the down days. Even though your stock price is higher at the end of the year, you’ll have -500 happiness points.
Now, in the above case, if you only look at your stock at the end of each month, you’ll have 6 up days and 6 down days. That’s +6 – 30 = -24 happiness points. Still unhappy, but less so.
If you look at the stock only one time at the end of the year, you’ll have +1 happiness points.
Lesson: Don’t look at your stock price. Run your business. Work in your business. Do amazing things. Build value. Derive your happiness from the amazing things you are doing for your customers, the great people you work with, and the mission that you are on. Oh – and all the great things in the rest of your life outside of work.
Remember: You are not your stock price.
There will be a lot of books written about the story of Twitter. As far as I know, there have now been two, but there are probably 71 more coming out soon.
Biz Stone’s new book, Things a Little Bird Told Me: Confessions of the Creative Mind is outstanding.
I’ve read two really awesome books in the past month that combine first person startup accounts with personal philosophy and advice. Biz’s is the second. Ben Horowitz’s book The Hard Thing About Hard Things is the other.
Ok – enough effusiveness. There is a simple reason these two books are outstanding. They both mix the author’s direct and very relevant experience with their personal philosophy and lessons learned from the experience. While moments of Ben’s book are dramatic, Biz tells the story of Twitter in an understated way. He’s fun and playful while covering enough of what happened so you have a feel for it. But it’s not overwrought with drama.
Instead, Biz focuses on highlighting critical moments, and key experiences that he had, which help the reader understand the path of a remarkable company. I’ve heard most of the stories before, although a few were new to me. Biz drills into the essence of what matters and not the noise surrounding it. As a result, I felt like I could really process the experience and understand the lessons he learned, rather than be distracted by stuff around the edges.
While I don’t know Biz, I immediately related to him. He drew me in. He’s a guy I’d like to hang out with. Someone I’d like to know, who I’d be happy to go into battle with, or just have a long playful dinner. Basically, he’s real.
If you are an entrepreneur, or a student of entrepreneurship, Things a Little Bird Told Me: Confessions of the Creative Mind is another must-read on my list.
If you haven’t yet bought Ben Horowitz’s book The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers, go get it right now. It’s one of the best books you’ll ever read on entrepreneurship and being a CEO.
If you are a CEO, read this book.
If you aspire to be a CEO read this book.
If you are on a management team and want to understand what a CEO goes through, read this book.
If you are interested in entrepreneurship and want to understand it better, read this book.
On Friday, I spent the entire day with about 50 of the CEOs of companies we are investors in. Rand Fishkin of Moz put together a full day Foundry Group CEO Summit. It used a format Rand has used before. We broke up into five different groups and has sessions on about ten total topics throughout the day. The groups were fluid – people were organized by category (alpha and beta) but then went to the topic they were interested in. There was a moderator for each session – the first five minutes was each CEO putting up one “top of mind” issue in the topic, and the then balance of the session (75 minutes) was the entire group spending between 5 and 15 minutes on each topic.
It was awesome. We finished with a fun dinner at Pizzeria Locale. I drove home with my mind buzzing and arrived around 8pm to see Amy laying on the couch reading a book. So I grabbed my iPad and looked to see what was new on it.
I’d pre-ordered Ben’s book so it was in slot number one. It felt fitting to start reading it.
At 10:30 I was finished with it. The Hard Thing About Hard Things was the perfect way to cap off a day with the CEOs of the companies we invest in.
Trust me on this one. Go buy The Hard Thing About Hard Things right now.
Ben – thanks for writing this and putting 100% of your heart into it.
I had a wonderful time interviewing Larry Gold last night at Entrepreneurs Unplugged. Larry is a special guy and someone I learn from every time I’m with him. Among the many great stories he told, including a doozy about the time he was a sophomore at Yale, he had a powerful one about how entrepreneurs assess potential outcomes. It resulted in a fun version of entrepreneurial math.
Envision a scenario where you there are 10 separate things you need to do to have a successful outcome. Each one has a 90% probability of success. What’s the probability that you will achieve a successful outcome?
I struggled with 6.041: Probabilistic Systems Analysis and Applied Probability (the probability course I took as an undergraduate) – it was one of those courses where I felt like I was a week behind for the entire semester. I did better in 15.075: Statistical Thinking and Data Analysis - maybe I was a little older, it was a little easier than 6.041, or I was more interested because I liked the professor better. If you are having trouble with a quick answer, both courses are available to you on MIT OpenCourseWare.
Back to the question. If you guessed around 35% you are correct. It’s actually 34.87%, which is (.9)^10. Now, by using the word separate, I’m implying 10 independent events, but this is the nuanced joy of theory versus practice.
Larry pointed out with glee that regardless, entrepreneurs believe when they start down the path of doing these 10 things there will be a successful outcome. Hence entrepreneurs math is (.9)^10 = 1.
Whether you agree with the math or not, it’s a great anecdote. So many things that we try as entrepreneurs and investors fail. We never make an investment thinking “this isn’t going to work”; we always invest thinking “this will work.” I don’t know any entrepreneurs who started their business thinking “this will fail” or even “this only has a 35% chance of working out.”
This shit is hard. And it’s low probability. Even if you have an ultimately successful outcome, many of the things you are going to try along the way are going to fail. But to do them, you’ve got to believe they are going to work. You’ve got to enter into the illusion that (.9)^10 = 1.
Techstars is rolling out a short video program with some of the entrepreneurs and mentors favorite quotes. I recorded a few of them recently – my first one is up.
I’m a huge Battlestar Galactica fan and think Commander William Adama has amazing leadership lessons for any entrepreneur. If you don’t know what “rolling the hard six” is, it’s a classic example of a high risk / high reward scenario. Per Urban Dictionary:
“Rolling a hard six has a probability of about 3% whereas rolling six by any other combination has about a 14% chance. A hard six pays 7 to 1 whereas a regular six pays only 7 to 6″
I’m not a craps player, but I love the metaphor. As an entrepreneur, you often have to combine luck with the right call at the right time. You can make the right call and be unlucky, or you can make the wrong call and be lucky. But when you find yourself in a jam, you often need to make the right call AND be lucky.
My imitation of Adama is pretty lame however.