Essays

The Power Of Personification

The cover image for "The Best We could Do" comes from ABRAMS, www.abramsbooks.com

The cover image for "The Best We could Do" comes from ABRAMS, www.abramsbooks.com

I've recently finished reading The Best We Could Do, a graphic novel by Thi Bui. In this book, Bui writes about the story of her family, originally from Vietnam, who came to the U.S. after the fall of Saigon.

When I started it, my knowledge of the history of Vietnam and Vietnamese people was, to my embarrassment, quite limited. And yet from the first pages this book felt so personal and intimate. For the most part, Thi Bui focuses about her own experiences, and those of her family. However, in doing so, she also manages to introduce the readers to the complex history of Vietnam of the 20th century, and gives us a glimpse into how much it affected its people.

What also struck me is how similar the story Thi Bui tells is to the stories I grew up hearing and learning about from my own family and others around me: the complex and often sad history of the Jews in Eastern Europe, the rocky history of the Russians under the communist rule, and so many others. Most of us probably have the stories of their own they grew up hearing and find it easy to emphasize with. One doesn't need to know anything about the history of Vietnam to see the reflection of her own stories in the one Bui tells us in The Best We Could Do. And once you recognize that, it becomes so much harder to remain blind and unmoved by the struggles of others, no matter where they come from, what cultures they belong to, or what languages they speak.

I really wish we'd focus more on telling those personal stories - there is a tremendous power in the idea of personification of history -  something that can never be achieved if we treat the history of the living people just as collections of facts and numbers.

Mastering The New Mindset

It's no secret that among a lot of people, it's a fairly common sentiment to regard the managers as overly ambitious people who require to get paid a lot for no reason and at the same time are of questionable value to the organization (as opposed to, say, engineers, that are doing the actual work). I don't have any desire to argue for or against this position tonight. Rather, as someone who's currently (gradually) transitioning from being being purely an individual contributor to the more leadership oriented roles, I've found that there are a few skills that seem to be very difficult to truly master for a lot of managers. I feel that it might explain, at least to a certain extent, why the (good) managers are so much in demand, and are often worth a lot to the organizations they lead.

1. Learning to let go. Most of us start their careers as individual contributors, which often means that it falls onto us to do the work on the ground and focus on getting all the details right. It also provides us with a reasonable degree of control of the final output (at least for the specific piece we're in charge of). As we advance in our career, however, the situations when we need to rely on the results of the work done by others, be it our peers, or people who report to us, keep arising more and more frequently. Making the mental transition in order to accept and embrace that - learning how to delegate and refraining from the desire to micromanage - often turns out to be extremely hard, and the new mindset might take years to fully master.

2. Learning to control your ego. This is another core issue many people (myself included) struggle a lot with. For me personally, it's not so much about the need to force my views and ideas upon the people around me, but rather about the desire to feel that I'm contributing in a meaningful way. That, however, can be just as dangerous, and again, this is a habit that takes a long time to unlearn.

3. Dealing with the lack of immediate gratification. Finally, I feel that one of the biggest challenges for a lot of people entering management is the reduced amount of immediate gratification that comes with their new positions. I'm not saying that management can't be a rewarding career - it absolutely can and should be - rather, the emphasis here is on the word 'immediate'. This issue is, to a significant extent, tied to the previous points I've made above. When we work as individual contributors, we are often responsible for taking care of specific items on the agenda. We might not have a direct way to influence the agenda itself (and that can be at times frustrating), but at least we can feel good once we are done working on this presentation, or writing that sprint of code.

However, as we find ourselves in a setting that requires managing a team, we often discover that those achievements don't belong to us anymore, but are rather the accomplishments of our team members or subordinates. What that means is that we no longer can feel the gratification stemming from striking a specific thing off our to-do lists, as those aren't not actually our to-do lists anymore. Instead, we have to learn to give credit to the people around us (while still taking responsibility for the failure, if need be), and teach ourselves to focus on the longer-term objectives and the broader picture. This is something that can be incredibly motivating in the long run, but it definitely requires a lot of work to get into this mindset, and is by no means easy to do.

On Communication Style: Pushing The Limits Of Discussion

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Lately, I’ve been finding myself thinking a lot on what would be the most productive way to run meetings that involve possible conflicts and require pushing the boundaries. The exact nature of the meeting doesn't matter that much - it could be an informal discussion, a brainstorming session or a heated public debate - the question on how to best handle it to get the most out of it still remains.

My inclination in the past was almost always to focus on getting to the core of the argument as fast as possible, and than to relentlessly push the discussion forward. This often meant that was it's all right to shoot down the ideas, and the conflict was to be welcomed, not shied away from.

And for a while, this approach worked fine for me - at least as long as I continued to work in venture capital. However, when I started venturing outside of that world, it turned out that many things that worked fine in VC didn't necessarily yield the same results in the different kinds of environments I started finding myself in. I believe that it had a lot to do with some of the specifics of the setting I grew accustomed to: in VC, you typically have to deal with relatively strict hierarchy, and a lot of ambiguity, coupled with time and resource constraints, plus you're constantly surrounded by A-type personality people.

Other environments, however, are not necessarily like that. In business school, big tech or even at many startups, you might not have a clear hierarchy, instead collaborating with a lot of people who are your peers, not your bosses or subordinates. You also often have more resources (and time) to explore different areas, but at the same time have to make longer commitments once you decide to go with a particular idea. Next, not everyone around you has an A-type personality (and not everyone lives to work either), which means you have to be a bit more cognizant of other people's needs and priorities. Finally, it's important to remember that your conduct can sometimes actually offend people - something that is a bit less of an issue if you work in an high stakes environment like venture capital, where many people develop thicker skin over time.

For me, getting accustomed to this new environment turned out to be somewhat challenging. Interestingly enough, I actually do appreciate many of the things I highlighted above - as an INTJ, strongly skewed towards introversion, I didn't always feel comfortable in the heated discussions of the VC world. At the same time, over the years I had learned to appreciate the benefits that often came with having intense, frank, ‘cut to the heart of the issue’ discussions, and didn't want to give those benefits up, unless I could see for myself how adopting a different communication approach would allow me to achieve even better results.

In my previous post, I touched on one example of a situation when being inclusive and open to new ideas, even if you believe that you already know they won't work, might benefit you and your team in the long run: if your goal is to bring in new and unconventional ideas, it makes a lot of sense to ensure that you're creating a safe environment for everyone to feel comfortable sharing their insights in; and then you can always revisit the viability of those ideas later.

Another example of a situation where focusing on having a nicer, calmer discussion can be critical I can think of is working cross-functionally, something that is extremely common in the tech world. If, say, you are a Product Manager at a tech company, you have to interact with software developers, designers, as well as sales and marketing people on the daily basis. However, in most cases, none of those people report to you directly, which means that often the only way to make them co-operate with you is by gaining their trust and respect first, something that would be extremely hard to do if you have a harsh and authoritative communication style, no matter how smart you are.

This is something I've witnessed at Microsoft over the summer: in a company of 100,000+ people your networks and the reputation you’ve built for yourself are no less important that the skills or ideas that you bring to the table. You can't hope to lead any kind of meaningful change without winning the people's trust first, and you won't be able to achieve that unless you first learn to have inclusive discussions, and to attract people instead of alienating them.

The same goes for the business school environment: while you might consider yourself the smartest person in the room, others most definitely won't take it for granted, plus, for that matter, a lot of people might not even care. Therefore, it's essential to figure out how to become more open-minded and inclusive, otherwise, the impact you'd have would most likely remain very limited (plus, you'd risk gaining a nasty reputation among your peers).

At the same time, I continue to believe that we shouldn't shy away from the conflict just because they make people feel uncomfortable. Some of the best ideas were born in the most heated discussions; by arguing, we can often uncover the insights that would otherwise stay hidden, generate exciting new ideas or even simply express our views better. This isn't limited to one's workplace - arguments represent an extremely important and useful tool in practically every sphere of our lives. What I’m learning to appreciate more these days, though, is the importance of remaining polite, listening hard and being ready to change my mind if the other side’s ideas prove to be sound. Whether we intimidate others by arguing with them - or elevate them - is entirely up to us.

To quote from Bret Stephens' lecture delivered at the Lowy Institute Media Award dinner (the full text of the lecture can be found here):

"To say the words, “I agree” — whether it’s agreeing to join an organization, or submit to a political authority, or subscribe to a religious faith — may be the basis of every community.

But to say, I disagree; I refuse; you’re wrong; etiam si omnes — ego non — these are the words that define our individuality, give us our freedom, enjoin our tolerance, enlarge our perspectives, seize our attention, energize our progress, make our democracies real, and give hope and courage to oppressed people everywhere. Galileo and Darwin; Mandela, Havel, and Liu Xiaobo; Rosa Parks and Natan Sharansky — such are the ranks of those who disagree."

Invisible.

The day is absolutely gorgeous. It’s end of June now, and the summer is finally here. There is not a single cloud in the sky; the Seattle skyline as seen from Kerry Park is now augmented with a clearly visible mount Rainier in the background, and every street is flooded with people who got out to enjoy the great weather, meet friends and just hang out outside.

And yet, there is something wrong with this picture. As people leave nearby movie theater in downtown Seattle after finishing watching a movie that unfolded the story centered around the importance of believing in the best in others, there is a guy sitting on the sideline of the road. He’s in his 30s, or maybe 40s, very thin, poorly but quite cleanly dressed. He’s wearing glasses. Before him lies a baseball cap with a few coins in it. In his hands, he holds a pice of cardboard that says: “That’s what invisible looks like”.

What’s the story of this man? Why is he asking for help? How badly does he need the money? Will he have a place to sleep at tonight? Does he have a job? a family? anyone who cares about him?

To tell the truth, we’ll probably never know. He’s not the only one out there either: if you go one block further, you’ll see another person like him, and then another, and another. Leave Seattle, and drive to the next city, you’ll see the same picture. Ditto for the next state. Cross the Pacific Ocean, and nothing will change. Drive across the U.S., cross the Atlantic, and again, nothing changes.

One might argue that this is just how the world’s always been. In fact, today it’s better that ever before: we have safety nets in place now, and we try to do our best. And this will be true. Maybe we are not yet rich enough as a society to take care of everyone. Or maybe some people are too difficult to deal with, and can’t help but blow up their lives again and again, and thus just require too many resources to take care of. Or, one can argue that even the most underprivileged people in the developed countries are often much better off than hundreds of millions in the poorest places of the world, and that’s where everyone should focus.

All of this might be true. And yet, this isn’t about that. It is about that cardboard in the hands of the man. “That’s what invisible looks like”. This simple phrase is as heart-breaking, as it is true. Sure, some people might give him a couple bucks, or somebody kind enough might buy him some food. But that is probably it, and so this man is still largely ignored, remaining on the sidelines of this nice, warm and cloudless summer day.

Nobody has the resources or emotional capacity to help everyone, and for most people, this is too much of a weight to carry anyway. Still, as a society, we are rich as never before today, and this is especially true for the developed world. That’s why, every time we decide to dismantle any part of the safety net to drive our costs down, it is so crucial to stop and think about what we are doing. To think if those changes will contribute to the number of invisible people we pass by on the streets. And if it will, to ask ourselves whether it is truly worth it.

After all, we have one too many invisible people already.

The Unicorn Club: Revisited

The Unicorn Club: Revisited

In 2013, when Aileen Lee of Cowboy Ventures first coined the “unicorns” term describing startups valued at $1 billion or more, she named 39 companies in the U.S fitting the definition.

In the spring of 2014, when I first set to compile a list of unicorns from around the globe as part of my work at InVenture Partners, the final list consisted of 83 companies, 56 of them in the U.S.

Over the next few years, this number continued to increase at an alarming pace, with CB Insights now highlighting 186 companies, and CrunchBase Unicorn Leaderboards listing 224 unicorns and 43 exited unicorns as of February 25th, 2017.

Still, those lists, while highly interesting, don’t necessarily provide the depth of insight offered in the original article by Aileen Lee. I thought it might be interesting to revisit the topic today, and explore what unicorns from around the world have in common and what differentiates them from each other.

To do that, I set to compile a list of companies that qualify to be called “unicorns” that carries as much information as possible. This list includes all startups co-founded since...

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The Benefits Of Integrated Offering Model

A few days ago, TechCrunch published a list of 10 largest Series B rounds of 2016. The 10th place on the list went to Juicero, a juice making machine company, which raised $70 million in Series B. I’ve missed this deal earlier this year, but it still seems worth digging into, as I believe it provides some food for thought on the topic of building businesses that have hardware at their core.

An important note here is that I’m less interested in trying to predict whether or not Juicero will be a success, or defending the company’s strategy, and more interested to try to see the logic behind certain strategic decisions the company made so far.

Introducing Juicero

Juicero was founded in 2013 by Doug Evans, the founder and former CEO of Organic Avenue, a chain of stores selling organic juices. Until 2016, the startup remained in stealth mode, raising over $20 million of funding in Series A and Seed rounds. Shortly after closing $70 million round in March this year, the company announced another cash injection of $28 million, bringing its total funding close to $120 million.

Juicero sells a cold-press juicer of its own design, that fits the countertop and costs $699. Yes, you heard that right, it costs 700 hundred bucks. Sure, it looks nice, is small enough, and even has wi-fi for some reason (what device in 2016 doesn’t have it, after all?) It’s still a lot of money for a juicer, though. But that’s not all. After you buy the device itself...

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E-Commerce Is Dead, Long Live E-Commerce: Part 2 (Bonobos Case)

This is the second post in the series. In the first part, I talked about how the dominance of one player on the eyewear market led to unjustifiably high prices for the consumers, thus creating an opportunity for a massive disruption.

This time, I wanted to focus on an entirely different kind of market: much more diversified, often characterized by cutthroat competition and therefore low margins. This space, however, still offers room for a significant innovation in terms of product, customer service and operations.

Clothing Industry: Huge But Competitive

Apparel market in the U.S. alone reached $208 billion in 2014, according to NPD Group estimates. Footwear and accessories accounted for another $62 and $52.7 billion, respectively. Online apparel sales reached $52 billion. What’s even more interesting is that the space remained quite fragmented: top-9 retailers accounted only for 35% of the market, with Macy’s, Wal-Mart and Target being the largest ones with 9%, 7% and 5.4% shares.

Putting all those numbers aside, the main question is whether there still is a significant opportunity for innovation in this market. Granted, the market is huge, which creates strong incentives to look for untapped opportunities. However, unlike the eyewear market discussed in the first part of this post, this is also a very efficient market (in terms of competition), with a huge amount of players operating in the space: for example, apparel retailers’ net profit margins are usually lower than all-industry retail averages of around 8%. E-commerce apparrel retailers lack high margins as well because, while having significant advantages in terms of operations, they are usually forced to accept lower gross margins due to intense competition, lack of differentiation and a number of other issues (e.g. high percentage of returns), and also often have to engage in...

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E-Commerce Is Dead, Long Live E-Commerce: Part 1 (Warby Parker Case)

In 2015, e-commerce sales in the U.S. accounted for $341.7 billion, with 14.6% growth rate over the previous year, and there are no signs of this growth slowing down in the future. Still, while the revenues of online retailers are soaring, very few of those are actually profitable or have a decent chance of turning profitable in the near future.

The reason why it is so difficult to build a sustainable business in the e-commerce space is simple: the vast majority of online retailers look too much alike. Sure, there are some differences, but most of those are still selling the same products to the same customers, thus creating a fertile ground for perfect competition. As a result, the gross margins become depressed, the marketing and operating costs soar, and ultimately the profits are competed away. Even Amazon, famously known for its brutal efficiency, was never really been profitable until a couple years ago (and those profits now come from AWS services, not its online retail business).

But while e-commerce in general might be a tough space to succeed, it doesn’t mean that the opportunities to build successful companies making huge impact on the customers aren’t there. One just needs to know to look hard enough to uncover those.

***

Imagine going to the mall to buy some clothes. You look around and see all the usual brands: Gap, J.Crew, Banana Republic, H&M, Levi’s and many others, all of them there. But as you enter the first store and start checking the items, you notice a strange pattern. Everything costs $200. You check a few pairs of jeans, a jacket, several tees — everything costs the same. Bewildered, you move to the next store, but there...

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The Benefits Of Being Agile

There are five items in the top menu of Starbucks mobile app. Four of those allow you to place the order, reload your Starbucks card and find nearby shops. The last and the most noticeable one, however, has nothing to do with coffee. Instead, it allows Starbucks customers to connect their Spotify accounts into Starbucks app in order to be able to track music played at local Starbucks stores, listen to it from their smartphones and organize their favorite songs into playlists. The integration is done in both directions, which means that the users can not only enjoy the music through their Starbucks app, but also access Starbucks playlists from Spotify application.

Spotify struck a deal with Starbucks in 2015, making it public just a month before the launch of Apple Music. The timing was rather peculiar considering that Starbucks has already had an exclusive partnership with iTunes for almost 8 years by then. Still, Starbucks chose to go with an independent player rather than expand further expand its long-existing partnership with arguably the most influential company in the music industry in the U.S. Starbucks and Spotify announced that the roll-out of the service was to start in the U.S. in the fall of 2015, followed by Canada and the United Kingdom.

Spotify Rise to Dominance

Today, Spotify is the largest music streaming service in the world, sporting over 100 million active users and 30 million users on its monthly subscription plans as of June 2016. This is a pretty impressive result for 10-year old company that was started in 2006 in Stockholm, and until 2011 wasn’t even present in the U.S. market.

Those numbers didn’t come easy, though. Over its history, Spotify has raised over $2.5 billion in funding, including $1 billion in convertible debt from TPG, Dragoneer, and clients of Goldman Sachs in a round closed in March this year. While Spotify sported a huge valuation of...

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Why Microsoft’s Acquisition Of LinkedIn Might Be A Great Thing After All

When Microsoft and LinkedIn announced the acquisition on Monday, the Web literally exploded. Most publishers went with the articles that were either neutral or questioning of the deal. Bloggers and regular users were much less forgiving. Many voiced concerns that the price Microsoft had agreed to pay was unreasonably high, that Microsoft had had very little success integrating acquired businesses into the wider offering of their products before, or that combining LinkedIn social graph with Microsoft productivity tools would mean that the users would enjoy even less privacy. While most of these concerns could turn out true, I personally have a more positive outlook of this acquisition.

The Opportunities

Most M&A deals in tech can be broadly attributed to one of two distinct categories: product acquisitions and business acquisitions. In case of product acquisition, the acquirer is typically going after the product/technology, and the team behind it, with the ultimate goal of either strengthening some of its already existing products, or integrating this new product in their broad ecosystem, thus offering their customers additional services. In case of business acquisition, the objectives can be less obvious. As such deals typically happen at the later stages, the business of the company being acquired may already be successful on its own. This means that while the acquirer may still go after that company hoping to use it to strengthen its own business lines, it is also possible that the main goal is to use the vast resources of the parent company to help the company being acquired grow its own business further.

Most articles covering the acquisition of LinkedIn were primarily focused on the ways LinkedIn’s extensive userbase and social graph might be used to augment certain Microsoft products. While Microsoft indeed draws very significant revenues from a number of products that might benefit from the deeper integration with LinkedIn, many wondered (e.g. Peter Bright from Ars Technica http://arstechnica.com/information-technology/2016/06/nope-i-still-cant-make-sense-of-microsoft-buying-linkedin/) if it would make more sense for Microsoft to try and enter some form of extensive partnership with LinkedIn instead of going forward with...

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