Stealing Signs - Issue 09
Strategy by Design, Tech in Baseball, Complexity, Akon, & Talent Investing
Worth Reading
Strategy by Design
Vaughn Tan
“Conventional strategy emphasizes choosing the right sets of actions to take (given resources and constraints) in order to achieve goals. Design changes the emphasis. Strategy by design emphasizes first identifying goals and developing understanding of them, before moving on to understanding what actions to take (given resources and constraints) to achieve those goals.”
A great piece deconstructing strategy, what makes for a good/bad one, and how design principles can be applied to enhance strategy development.
“Design thinking” has become a buzz term, but I think Vaughn articulates well why it can be a powerful methodology: it forces the questioning of assumptions. VCs spend most of their day looking at startups through a design thinking lens, questioning their assumptions about how the world works, how it will respond to their product/solution, and how the world will work in the future.
I also like #3 on Vaughn’s list of actions that imply good strategy: “Acting in ways that fit the context of constraints and available resources.” I recently learned that one of the Partners at Digital Intent and Founder Equity prefers an engineer or developer to be in every conversation at our company because they understand the constraints of underlying systems. They know what isn’t possible. Lucky for us, our engineers and developers also help us understand what is possible and suggest solutions within those constraints. It’s very, very helpful.
P.S. I discovered Vaughn after he was a guest on Patrick O’Shaughnessy’s podcast Invest Like the Best. He’s produced a bunch of interesting research on uncertainty, organizational design, organizational innovation, and has especially interesting work on restaurant dynamics and food.
Decentralized Social Networks
Jay Graber, Creator of Happening.net
P2p networks place users fully in control of their data and identity. The data layer is functionally separate from the application view, so users can seamlessly switch between apps while keeping all their accumulated posts and connections. The capacity of p2p networks naturally scales with demand, since new users add resources to the network and don’t just consume. P2p networks are maximally resilient and censorship-resistant.
Great comparison of two decentralized network approaches, federated protocols and peer-to-peer (p2p) protocols. Jay examines two examples in each category and how they manage user identity, moderation, and network monetization. The p2p approach is compelling. I think we’ll see more attempts to build a sustainable social network with this protocol for one reason above all others, which is that it mitigates the risk of censorship. This probably starts with lowering the burden of responsibility on users.
How to Invest in Startups
Sam Altman, Chairman of Y Combinator and OpenAI
“So how do you identify future greatness? It’s easiest if you get to meet people in person, several times. If you meet someone three times in three months, and notice detectable improvement each time, pay attention to that. The rate of improvement is often more important than the current absolute ability (in particular, younger founders can sometimes improve extremely quickly).”
How to become a good startup investor, according to Sam Altman:
get access to good deals
identify the best people (founders) building companies in large, rapidly changing markets
be a compelling choice for founders
have conviction
help founders become more ambitious and offer specific, tactical advice
Really enjoyed this piece. Sam hits on part of the reason I started this newsletter, which is to build a brand. I think a lot about why founders would take money from me and my firm, and one goal of this newsletter is to show entrepreneurs who I am and build a relationship with them so that they want to have me as an investor. The same goes for other investors, engineers, data scientists, technologists, product managers, designers, etc. If I share my brain and show my personality, I think these people will do the same. The long-term goal is to surround myself will a diverse group of extraordinary people. I think this is a good step in that direction.
Why The Gov’t Isn’t a Bigger Version of a Startup
Steve Blank, Entrepreneur and Prof. of Entrepreneurship at Stanford, Berkeley & Columbia
“Urgency and risk-taking in a startup are integral parts of the culture, felt by 100 percent of early-stage employees. The urgency servicemembers feel on the battlefield is felt by few in government agencies, and most often there are negative incentives for risk-taking. In a startup cluster (Silicon Valley, Beijing, Tel Aviv) a failed entrepreneur is known as “experienced.” In a government agency, they’re likely known as being out of a job.”
The government <> startup relationship seems to becoming more relevant as it continues to diverge from that of our biggest competitor (at least in tech), China. In the U.S., startups are very far removed from government organizations. In China, they are closely tied together. I find this to be a very interesting problem and wonder if it’s one that can ever be solved. Much like startups react and pivot to stay alive, maybe this relationship only changes when we have no other choice.
Taming Complexity
Martin Reeves, HBR & Senior Partner at Boston Consulting Group
“Nature has a bias for change, rooted in its reproductive programming; elements and connections are constantly evolving through genetic mutations and recombination. Successful mutations are favored by natural selection, and a new, superior mutation may appear at any time. This process reinforces both the fitness of species and the resilience of populations. Constant mutation ensures continuous adaptation and the existence at any time of variants that can most likely survive some external calamity. But complexity is contained, because redundant or unfavorable mutations gradually disappear through selection.
Unfortunately, mutation doesn’t happen automatically in businesses. In fact, organizational dynamics tend to resist change. Structures and processes become ossified as employees adapt to them. To prevent this ossification, organizations need to embed a behavioral bias for change.”
As it turns out, nature is extremely complex and provides a very useful framework for leveraging and managing complexity in business. Jon includes phenomenal examples of complexity management in this piece, including Alibaba’s “embrace change” policy and Toyota’s commitment to freedom and relaxed controls, and Amazon’s focus on company purpose and ultimate goals rather than proxies for success.
It think recognizing and harnessing complexity are critical steps in transitioning from a ‘startup’ to an ‘organization’ — moving from organized chaos and things that don’t scale to intentional complexity that drives adaptability, innovation, and efficiency. Jon points out that this way of thinking and managing requires a view of the whole picture and understanding of how each component works together. I think many founders struggle with the journey to a view of the whole picture — the transition from a 500ft view at the beginning of their company to a 30k ft view as it matures.
<stuff> Weekly!
LOL Weekly - Akon Crypto City
Chris DeVille, Sterogum
Akon has been talking about launching his own cryptocurrency, Akoin, for a good year and a half now. His plan also involved launching an “Akon Crypto City” on a 2,000-acre plot of land in his native Senegal
This is so awesome lol — Akoin rolls of the tongue. Seriously, though, this is pretty cool. It’s clear he’s committed to giving back to Senegal and being a driver of change.
Funding Weekly - Host
“Host provides an application that allows corporate businesses to secure trusted bartenders for their events on-demand. The company launched in 2018 with a multi-sided platform application, which allows corporations to post details about their event and secure a bartender.”
Host raised $450k in seed funding from angels. We spend a lot of time thinking about and evaluating marketplaces. Service industry labor is a very difficult problem to solve. Specifically, there’s a huge shortage of food service service workers, turnover is very high, and it’s difficult to assess employ qualifications — yet, these jobs are in high demand. Bartenders appear to be growing segment of the food service employment pool, but I imagine they’ll experience many of the same dynamics that food service employment marketplaces do: ratings/reviews, quality supply, employee evaluation, employer evaluation, etc. That said, the certification and insurance features of the marketplace are compelling - they help mitigate the risk of “bad” supply (bartenders) and incentivize demand (event hosts).
I think a massive food service employment marketplace will be built over the next 5 years because the problem affects a large percentage of the population and current state is extremely inefficient and ineffective.
Baseball Weekly - Fighting Tech with Tech
David Brandt, AP News
“A partial model is already in place: The NCAA’s Southeastern Conference has used electronic communication between coaches and catchers during league games for the past two seasons, which allows the coach to talk strategy with the catcher through an earpiece…No hand signals needed.”
Important context: The Houston Astro’s were proven to have illegally stolen signs using electronics (think tv monitor, video taping), which is strictly prohibited in MLB. Recently, the Red Sox were accused of the same. The MLB punished the Astro’s, but many feel it was not enough and that the Astro’s got off easy. No players were punished and their 2017 WS title remains in tact. So, many people in the sport are pushing MLB to implement a solution.
I think electronic sign relaying is a very legitimate solution to this problem. It’s similar to NFL coaches giving plays to QB’s and the NFL even cuts communication to the QB when there are 15 seconds left on the play clock. So we have at least two working models — NCAA Baseball and the NFL. MLB isn’t particularly quick to adopt change, but the Astro’s scandal is the biggest black eye for the game since Pete Roses’s gambling scandal, so maybe they’ll respond swiftly.
Art Weekly - Dogon V
Sam Gilliam
“Ever the innovator, [Sam] took his color-stained canvases off of the stretcher in the late 1960s and presented them in radical new ways: draped across walls and hung from the ceiling in generous, folding layers. These sculpture-painting hybrids have become a defining part of Gilliam’s practice and inflect all of his work with an ongoing exploration of the depth, physicality, and resonance of color.”
Listen Weekly - Talent Investing & The History of Ambition
Patrick O’Shaughnessy & Matt Clifford
“[Matt Clifford] is co-founder of Entrepreneur First, the world’s leading talent investor. They invest pre-company b helping the best people in cities around the world find a co-founder, develop an idea, and start a company.”
The best podcast I’ve listened to in 2020. By far. Matt discusses an interesting concept, ambition, which directly impacts his business and entrepreneurship more broadly. Why don’t many of the best and brightest people start companies? Well, in the UK, the top undergrads view financial services as the best jobs. In Singapore, this mindset has resulted in an extremely effective civil service. Matt has done extensive research on what the most ambitious people do and he’s built Entrepreneur First as an outlet for those people to start companies.