Jacob Robinson's Blog, page 24
December 21, 2020
Building a Startup with Anxiety
Photo by Priscilla Du Preez on UnsplashAfter I started my company and began building products, a curious thought appeared in my mind. Is building a startup while having high anxiety even possible?
I’ll give you some background. I’m not a generally anxious person, but I did have social anxiety disorder for a number of years. At this point the effects of the disorder have for the most part subsided, though I still occasionally do get anxious in meetings with those of a higher authority.
But this context towards myself got me curious towards the context of others. If I were still in a stage of high social anxiety, could my business suffer as a result?
For example, think about the feedback cycle. In modern startup theory, the feedback cycle is considered to be vital for success. You must constantly be broaching others for feedback, whether they be mentors, customers, friends, etc.
But if you’re socially anxious, I can tell you for certain you’ll want no part of that. Not only will you have to engage in the conversation yourself, but you’ll have to ask for someone’s honest opinion of your very personal work. Easily a socially anxious person’s worst nightmare.
And of course, there’s more practical things. Like sales for a B2B firm. Or community engagement. Customer service. The list goes on. Now you can hopefully see why I considered this to be such a big deal — anxiety doesn’t just seem to be correlated to a bad mood. It may also be correlated to perpetual entrepreneurial failure.
But that’s when I realized something. When I was deep into my social anxiety, I did have a business. It wasn’t a business per say — I wasn’t selling anything — but it was a blog, with a brand, and with followers. Really, all that was missing was a dollar value to the work.
And when I look back at that time, I realize that I wasn’t really worried too much with what people say. Negative comments hurt, but they always do. For feedback, I mostly just used my own. And I never tried to reach out — I grew organically.
Is that a harder way to do things? Probably. But is it impossible? I don’t know — I don’t think so. I never really got super big when I was doing all that in high school, but there was at least some people who followed my work. So if it’s something that you’re passionate in, something you really want to work on — I think life finds a way.
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December 14, 2020
Uncertainty Principle
Photo by Riho Kroll on UnsplashMost of life is inherently uncertain. How can we predict these events — and should we even bother trying?
As humans, we naturally think of chance in a normal distribution. This is probably because, out of all probability distributions, normal is by fair the easiest to calculate given brainpower.
Of course, chance never takes on such a simple concept. It is rife with heteroskedasticity, fat tails, black swans… all sorts of events which allude our natural heuristics.
So, we built models. We drove forecasts with all these things in mind — building bigger, more complex probability distributions, with more variables and a higher success rate. To some extent, these models are valuable — for example, robustness factors can help us better understand data, and make logical conclusions based on correlation or even causation. However, this doesn’t predict. Just because we know X follows Y doesn’t mean we know that X will follow Y tomorrow, or will instead follow Z.
A great example of this is with financial crisis. Obviously, we cannot predict financial crisis — otherwise, it would not happen! Instead, risk managers look at their models and see that smooth sailing (X) follows current conditions (Y), though the reality is that current conditions lead to economic collapse (Z).
I have spoken about this before, and my opinion stays the same: I think forecasting is possible, but we are a long, long ways off. At this point, we can only pretend to know the complexities of chance. It is, like emotion, an abstract concept, fully protected in a fog of war until we mine closer to its deposit. And so, why should we pretend that we know about the uncertainty principle?
A good risk manager does not build a model, then listen to that model to tell whether they’re safe. A good risk manager simply plans for the worst. If you have a plan for the worst uncertainty, then you are safe. You can do all the cost-benefit analysis and probability distributions you want, but nothing is going to protect you from a naturally unforecastable event. The best way to protect against an unforecastable event, is to assume that it will happen. Because some day, it will.
Of course, the question then is how we get to perfect forecasting. I mentioned why we should pretend to know about the uncertainty principle — in reality, that’s a pretty farce question. After all, we have to pay all those forecasters somehow! If we one day decide to say we won’t forecast because it’s irresponsible, all those people down below will look up, scratch their heads, and say “So you are telling us you just made all that shit up?”. Some might even demand to have their forecasts back, even if they are faulty. Either way, people won’t be very happy.
So perhaps there are some less consequential places to test and build up forecasts in the meantime. While financial institutions certainly shouldn’t try it, perhaps sports betters could. Perhaps an individual trader could set a (small!) portion of their portfolio to try out some new forecasting techniques. Or an amateur meteorologist sets up a model to see if it will rain tomorrow. Obviously, if we’re wanting to break the uncertainty principle, we’re going to have to develop the research somehow. It’s just best not to stress too much about it.
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December 7, 2020
Emotional Equivalent Salary
We all know money is relative. A thousand dollars in Montana is going to do you a lot better than a thousand dollars in Manhattan. But here’s a question: is it not just relative location-wise, but emotion-wise as well?
An investment banking analyst at a large firm makes about $83,000 starting and works 100 hours a week. In contrast, a technical sales associate at a tech company makes $75,000 and works 40 hours a week. Now, you can say that the associate makes more than the analyst hourly, and that’s true — it’s roughly $36 versus $16. But I think this is simplifying things. After all, the analyst still makes a larger fixed amount of money, and that money comes with a bigger level of prestige than someone in technical sales. But I think our sales engineer has a lot more benefit than just an hourly advantage.
If you were to take the 100 hour a week, stressful and variable investment banking environment, it likely causes a lot more damage to mental health than working a perhaps similarly demanding yet fixed 40 hour week job. And if you build that out over time, the investment banker is going to deteriorate faster than the salesman. It is, in other words, not emotionally sustainable.
Now let me bring to the table something else. Say you make $40,000 a year; but it’s on your own. That meaning, you made that $40,000 — you didn’t have a sales manager breathing down your back, or a large investment bank to impress. You simply performed for yourself, using your time as you saw best.
Now making $40,000 a year all by your lonesome is a lot harder than being an investment banker or a sales engineer — but that’s not my point. My point is that the $40,000 a year as an income generator is emotionally equivalent to the $83,000 as an investment banker. Starting something on your own is a lot better for you in the long run… so why not try it out?
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November 30, 2020
Up Shit Creek
I once overheard a saying from an old proprietor of some local store in rural Arizona: “Sometimes, life takes you up Shit Creek.”
A year ago I wrote What the Book of Job Really Means, my interpretation of the classic story of suffering mentioned in the Bible. Since then I’ve had a few other experiences that make me further believe in this interpretation.
I believe that sometimes life gives you tests. I don’t know if this is caused by some ultimate deity, and honestly I don’t think it matters either way. All I think is that these tests are real.
I think, when it comes to these tests, these seemingly purely chance events that take you up Shit Creek, there are two answers. Answer one, you endure. The event stops, and you move on with your life. Answer two, you submit. Answer two is when the long term detrimental effects start happening.
I believe endurance, grit, adaptability, whatever you wish to call it, is vital. I believe these tests build up over time; the more you endure, the easier they become. On the opposite end, if you fail, it can trap you into a hole. And I believe the only way to avoid the hole is to remember what it’s all really there for.
When I had a near nervous breakdown sometime in March over a Shit Creek moment, there was a sudden realization — it was all a test. I got up from the ground, took a deep breath in, and moved forward.
So I want you to remember this: Sometimes, life takes you up Shit Creek. And you’re just going to have to swim through it.
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November 23, 2020
Niche Monopolies
In order for startups to thrive, they must quickly accumulate monopoly positions in massive emerging markets. But what if you aren’t a startup? What if… you’re just a person?
I’m going to take you through a quick thought experiment in this post. It won’t be terribly scientific, but I think it will get the job done in terms of letting you know what exactly I mean by the niche monopoly.
Let’s say we have a $1 billion dollar service market with ten competitors. Overall, if we say it’s split evenly (it likely be Pareto instead, but that won’t affect our experiment), we have around $100 million a year. If you’re a startup trying to run up a $1 billion market cap, then that’s a good deal. If the competition is still small, it makes sense to go forth and conquer with a strong growth strategy.
But let’s say it isn’t $1 billion — let’s say, instead, it’s $1 million. That leads to $100,000 of revenue a year — one thousandth of the revenue! A startup would be silly to go into a market that size.
So, here’s what happens: the big fish migrate to the big pond, and leave the small pond open. So instead of 10 competitors in a $1bil market and 10 competitors in a $1mil market, you see 100 competitors in the billion and only a handful in the million.
Now, think about this other fact: there are many more million markets than there are billion markets. Billion markets are typically massive, revolutionary solutions to problems — problems which there may only be five of any given year. However, million markets are more likely to be smaller annoyances that people in a certain niche would definitely pay to have fixed, but wouldn’t pay enough for the larger corps to give any attention to.
Now, let’s flip the script. Let’s not focus this on startups — 100+ person teams — but rather, small 1-3 person groups, something I refer to as income generators. In this case, an income generator has a lot lower of a need; you aren’t paying the mouth of an entire company, but rather the mouth of one person. From this angle, that $100,000 a year in revenue is beginning to look a lot more attractive. Not only that, but since the bigger fish have left, there’s less competition — in which case, this might be a winner-take-all market of $1 million a year!
Combine this with the fact that micro-problem markets can come in the dozens per year, and you finally reach the concept of the niche monopoly. For a person who is trying to change the world, these micro-markets probably aren’t very helpful. But for those who just want to make an independent living, they can be life-changing.
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November 16, 2020
Everything You Do Sucks
Everything you do sucks. So why worry so much about it?
Before I started publishing, before I worked on making my own products, I was worried about one thing: quality. To be fair, it’s a valid thing to worry about; releasing something that’s absolute dog shit is going to do nothing but the laugh of the town.
However, as I went on, I began to notice something: no matter how many times I built, worked on design, edited an re-edited… it never stopped looking like dog shit to me. There was always something to be improved.
This is the endless hamster wheel of perfectionism. It’s what keeps all your ideas locked up inside, never to see the light of day.
So I decided on something else. I decided to take my idea of incremental improvement to heart. In this case, it meant to move fast and break things.
Do you think the MVP of Facebook looked good? Do you think Neil Gaiman’s first story was a masterpiece? If you keep expecting the first thing you make to be your masterwork, you’re going to be crushed with disappointment — especially since chances are barely anyone will see it anyway.
True; there is a chance someone will see it, and there is a chance they’ll criticize you about it. But what do you care? You take whatever semblance of good critique they happen to have, and use it to build the next, better thing.
If you expect that everything you do sucks, you no longer have to worry about making something that’s good. You just need to worry about making something better. The goal isn’t to not suck. The goal is to suck less.
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November 9, 2020
The Quest to be Kinder
Kindness is something that is preached to us a lot in childhood, but slowly falls off as we become older. However, I’d argue that kindness is truly an essential skill — and for some very practical reasons.
In my theory of social games (which should have a book coming out about it fairly soon, as of this article’s publication date), people wish for two things: to be respected and have positive feelings. This makes the function for making someone like you very easy: if you’re nice to them, they like you. If you’re mean to them, they don’t like you.
Of course, there’s other environmental factors at play. For example, that person might start off being mean to you — in which case the short term reward of returning the favor if niceties is pretty low. Despite this, however, the function stays the same. If you continue being nice to that person, nine times out of ten they’ll slowly amorph back into being nice to you — because you helped them feel respected.
There are also sometimes where being kind isn’t the easy answer. For example, if everyone in a room is making fun of someone who’s not there, you’re going to look pretty bad if you stop everyone and tell them they’re being mean. You’re reducing the moods of many in an attempt to increase the mood of someone who isn’t there. Not a smart move.
But kindness is more subtle than that. In this case, you can simply choose to not play the game — not reducing the mood of those around you — then later be kind to the person at the hands of the criticism, allowing that person to be uplifted themselves. In this case, the net is positive.
So while kindness doesn’t work in quite the same ways we imagined it to in childhood, there’s still a whole lot of validity in the concept — and a whole lot of reasons why you should be nicer to the people you meet.
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November 2, 2020
Building Knowledge Advantage
If companies have competitive advantages — things like financial moats, strong market share, etc. — then what do people have?
I would argue that the most important advantage a person can build up is knowledge advantage, that being the amount of skillset a person has across subjects. You can build knowledge advantage either vertically or horizontally. Vertically means building depth in a specific subject, whereas horizontally means building breadth across a wide variety of subjects.
Just like how companies scout out for new valuable product-market combinations, people have to scout for valuable knowledge combinations. The classic example of this is combining engineering and communication skills. Engineers are rarely good communicators, and communicators are rarely good engineers — combining both expands your value in the overall labor market.
Of course, just like markets, you have to watch out for product market fit. Is your knowledge combination too saturated? Is it too esoteric? Any imperfect combination can lead to your labor value’s growth staying stagnant.
Fortunately for you, it’s a lot easier to pivot a person than a company. Read widely, take new classes, learn from others — and you’ll be well on your way to finding the right knowledge advantage for you.
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October 26, 2020
If You Build It, They Will Come
In the old days of the internet, product building followed the Field of Dreams doctrine: “If you build it, they will come”. Now that the internet market is oversaturated, the phrase isn’t exactly true… at least, not for its original purpose.
Back around the early to mid 90s, there were so few internet apps being developed that anyone could just come in and build market share. This is what ended up causing the boom of the late 90s, which led to the bust of the early 2000s.
A big reason for that Internet Bust was that many people thought that their products were self-evident; that is, they bought into the facts that they were told during the early 90s age. In present times we now know that building the product, isn’t everything — but the idea of building still comes true.
You see, building is no longer about just product. It’s about marketing, and customer service, and design. It’s also about building until they come, not building until the product is finished.
You see, the main rule of the modern product market is to keep building until they come. That is, consistency is the key.
Of course, there’s a few exceptions to this rule. Obviously a product in an already saturated market isn’t going to get many sales no matter what you do. But if you’re able to adapt to a good position (you don’t have to do this at the start — you can build toward a better position), you can find a way to sell what you’re making.
Know this: the get-rich-quick days of the early 90s are over. Now, the product game is the long game. And if you’re able to play the long game, then you win.
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October 19, 2020
Stop Getting Scared By AI
Alright, perhaps I should be nice and not demand you to stop getting scared. But really, you shouldn’t be. Here’s why.
Before we can talk about why you shouldn’t be scared of AI, we need to talk about why you should be scared of AI — that is, the reasoning most people give. You see, many theorists have developed the idea of a general intelligence, an AI who can think for itself on all aspects of life. If it could think for itself, yet have all the information accessible by a computer network, it would be able to easily and swiftly take command of the rest of humanity.
There’s one big problem with this, however. In order for general intelligence to exist, someone has to be willing to develop general intelligence.
There is really no particular reason why anyone would need or want general intelligence to be produced. Good faith actors would only make AI for specific purposes, such as running a factory or driving a car. Bad faith actors, on the other hand, would have nothing to gain from developing an all powerful AI that they couldn’t control — they would need some ability to reign it in, meaning that it would not be able to think for itself and therefore not be general intelligence.
But what about crazed actors, or actors that do not understand the full weight of their actions? Well, here comes the second major problem with the general intelligence idea: in order to make general intelligence, you need to know the specifics behind creating it, and purposely implement it.
Code, ML, AI… all of it does not magically pop out of thin air. Years of research and production go into each new idea in technology, and if the wide majority of humankind does not wish to go down the route of general intelligence (beyond developing wild theories on it leading to the destruction of the earth) then it could never be made. You could make an argument that a single crazed actor with enough experience could develop the general intelligence single-handedly, but given the vast complexity of the task this seems highly unlikely (though I suppose it is worth saying that it would be a non-zero chance).
Overall, we vastly overestimate the actual ability for an AI to gain sentience. When it comes to AI, most of our worries should be attacks made by humans themselves — conflicts such as the development of deep fakes or other tools to create extremely realistic fake evidence. AI will still cause problems, but at the end of the day it will be people against people.
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