Never, ever settle

Why no team is better than the wrong team, public vs private thoughts, and why it pays to go all-in

Apply to the next Entrepreneur First cohort, and completely disregard the UTM tracking code, it has nothing to do with me 🙃

Y’all are familiar with the trash/meat format at this point, so lessgo:

🗑️ Trash

EF bingo

If you find yourself scoring particularly high on this, go ahead and drop a screenshot on the thread in #global-cohort-h1-2022. I’ll drum up some kind of worthless prize for you, like an LOI 🤣

“Women in tech”

Collision, Toronto’s self-proclaimed biggest tech conference happening June 20-23, released a batch of…wait for it….women tickets! 🤣

But they also made sure not to release too many, lest we disturb the delicate equilibrium of virtue signaling without actually sacrificing profit:

Fortunately for those of us who didn’t apply on time, there is still the developer ticket option. This rewards valuable contributions to open source projects, including:

• one-line documentation changes in the Serverless Stack tutorial

• Corsair mechanical keyboard driver fixes on Ubuntu that later get overwritten, because they are completely wrong.

I got excited when I thought my developer discount code would get me infinite tickets. Unfortunately the bug was limited to the UI, and the actual http request failed: 🥲

Ah well. C’est la vie. See you there!

*Speaking of which, my second ticket is currently unassigned, and apparently everyone and their dog is qualifying through the developer program if they’ve ever forked a repo. So ping me if you wanna go.

(Anybody who paid full price must be feeling like a real sucker rn 🙃)

“fEmAle fOunDer”

Marika Tedroff and I commiserate over the inanity of the phrase “female founder”, mostly because nobody ever says “male founder”, so the qualifier seems rather idiotic:

It’s true. Life is pretty fucking great¹.

“But they are good for fundraising”

That said, I also received the following advice from one founder on a two-female team who just finished her MBA at Columbia, and was fed up trying to fundraise for her parent-tech startup. So ladies, choose your player carefully:

🥩 Meat

In all seriousness, week 8 - the end of the “Form” period - has come to a close and I am sans company, sans co-founder, fcking jetlagged, and at a complete loss for what to do with my life.

I also have much love for the EF Toronto 🦝 💖 team, have precisely zero ragrets, and may actually do all this again in TO4. (Maybe you should too?)

A couple of things that I have learned:

Go all-in; do not half-ass things

There are times when it makes sense to follow the 80-20 rule, or recognize that “perfect is the enemy of the good”. But there are also those who rest on these "clever” mental heuristics as a…crutch for half-assing things in life. To them I say -

Settling is the birthplace of mediocrity, and mediocrity is just slow death:

S01E01 - Super Pumped

Here’s why I shouldn’t half-ass anything: because I am flawed.

If I give 100% via a flawed, noisy system (my own brain), I’ll end up landing at 80% by virtue of the fact that my intelligence, my perspective, and my knowledge of the world is full of holes. 🧀 I need to give 100% effort to get 80% results as a simple result of the fact that I will be wrong and I will make mistakes.

If you’re not even giving full effort in the first place, then you’re adding noise upon noise. All of us have been on the receiving end of a distracted conversation where the other party wasn’t fully present, a teacher who hated teaching, or…a lead at a tech company who didn’t actually care about the product or the customers. We’d rather they weren’t there at all.

Establishing trust, public vs private conversations, and the intimacy gradient

Our favourite mathematician-turned-architect, Christoper Alexander, has a chapter in A Pattern Language called 127. Intimacy Gradient. Long story short, different people are let into different parts of your house over time - and most people never make it to the bedroom.

One of the things I’ve struggled with the most at EF is how to establish enough trust with someone to feel comfortable co-creating an entity that is meant to shape your financial and professional future for the next 5-10 years, if not for life.

In typically over-engineered, slightly autist fashion, my chosen strategy thus far has been…to be insanely open and transparent, to a fault. I call this running the usual human trust-building exercise, on overclock.

…and like most over-engineered things, it doesn’t actually work.

Transparency and relentless openness, even at the expense of conflict, is a strategy to address lack of trust in situations where you lack the time to build it organically (i.e. when you’re trying to find a co-founder in 8 weeks).

In case this seems bad, other strategies for addressing lack of trust in open markets are:

• Seeking reputational badges (hiring people who went to Oxbridge/Ivy Leagues, worked at McKinsey/Google, etc)

• Nepotism (hiring family / people you know. This is also why marriage used to be an economic contract between families. It was a show of commitment…of a very different nature 😛💣⚔️🏰)

• Mafias (using muscle to enforce contracts)

Someone at EF said a very smart thing, which is that all technology has cultural imperialism built in. In an effort to avoid committing this error, I spoke to two folks at ReForm in London (who were happy to have their words used, but asked not to be named) to ask what the downside of transparency was. Their response?

Inappropriate levels of intimacy too early in a relationship tend to flag a person as being untrustworthy, and a potential liability. And it’s true - nobody really likes the cat that rolls over onto its belly for literally every stranger that passes on the side walk. Indeed, an inability to manage appropriate amounts of openness and emotional investment in any given situation is one of the hallmarks of insecure attachment.

I once asked Alice how we were meant to manage the difficulty of building trust in 8 weeks, given that she must have known Matt for a few years from their time at McKinsey. The answer I got was that EF is a very different environment, with a highly curated pool of individuals who are already de-risked in some way (screened for ability, willingness to found, currently unemployed, etc etc). But that leads me to my next point…

Founders are spiky people…

…and companies are just wrappers around the idiosyncrasies of their founders.

I think there are two categories of people who fancy themselves founders:

• People who are genuinely and deeply obsessed with solving a certain problem;

• People who are too spiky to ever feel at home within somebody else’s constraints (i.e. a job).

To get through 8 weeks of EF and not find a cofounder is to wonder whether:

• You’re in the first category and simply didn’t find the right person within the local pool of 50…

• …Or whether you’re in the second category, and care more about existing without constraints than you do about starting a company.

For folks in category two there are actually many other options, depending on how much food you need to keep on the table. Freelance and contract work. Day trading. A lifestyle business. A successful brick and mortar store.

Remember when starting a business to solve a market need used to mean buying $20 worth of lemons and sugar, and setting up a cardboard stand near a baseball game on a sunny day? 🍋☀️

Since when did it become shopping slide decks around, burning cash on ponzinomics in the name of grabbing market share, and refusing to fund anything that won’t yield 100x returns because most of your baby turtles aren’t going to make it to the ocean? 🐢

Speaking of which….

Is VC is the right vehicle to solve pressing human problems?

More specifically:

• What types of problems should not be solved by VC?

• What types of people shouldn’t be raising VC money?

A VC-backable product will not solve any problem that is local, specific, or complex. In the best case, it will broker interactions between humans who can.

VC seeks scale and massive markets: make a thing once, and sell it to a bajillion people. The problem, of course, is that humans are infinitely idiosyncratic; we deeply resent the suggestion that we’re all the same as each other. (This is why we create countries and cultures and governments, and are constantly breaking and reforming them from within.)

I liked Matt Clifford’s answer to this question, which is that VC seems particularly well-positioned for setting up infrastructure that then allows for deeply idiosyncratic interactions between people who may not have otherwise met (Airbnb, Uber, Etsy, TikTok). Note that in these cases, the product being consumed is still created in an unscalable manner by a human being: a home, a ride, a piece of art, a dance video.

The VC fundable thing is the clever brokering of an interaction which breaks pre-existing boundaries (geographical proximity, language, reputation and trust, sometimes laws 😛).

Anyone mimetic will not solve problems via a VC-funded company, because they will play wealth/status games instead.

In any industry where there is no tight coupling between incentives and outcomes, people start playing games - and VC is a hell of a game.

In the absence of a genuine passion for solving a pressing problem, a genuine love for your customers and the lives they lead, or a complete disregard for social status, we get pathological behaviour like the following:

• Optimizing for obtaining a $100k CAD pre-seed investment instead of what will sustain a company over 5-10 years, if not forever;

• Optimizing for IPOs and exit strategies instead of producing genuine value;

• Optimizing for the next round of funding by selling sticky B2B SaaS deals where there is no product market fit, no plan to build any promised features for 2 years out on the roadmap, and letting your CS + support team take the mental and emotional fallout 🤮

There is a small circle of people for whom raising a round of funding and buying more ping-pong tables is a status symbol; it’s no wonder the rest of the world is jaded.

A bear market is coming? Good. 🐻

Maybe that means venture capital will finally stop funding bullshit for the next few years. Less Theranos🩸, more SpaceX 🚀 please.

Two things that EF is really, really good for ❤️

Yet for all of this, I still feel an enormous amount of love and admiration for the EF team in Toronto, and by extension, the global EF machinery that enables them - because they work hard to provide two extremely valuable and difficult-to-achieve things:

1 - Mimetic encouragement, for behaviours that have higher-than-average probability of resulting in successful companies

(If you don’t know what mimesis is, pick up this fun picture book about the ideas of René Girard.)

Here is an alternate description of EF: 50 unemployed people with strange hobbies gather in a room every day, ask each other deep personal questions, run a ton of interviews on people that they find interesting, ask rich people to give them money to build thing for those people, and the rich people sometimes say yes.

There is nothing in this description that you, anonymous reader, literally can’t just do tomorrow².

The problem, though, is that this is all kind of weird. It’s generally considered weird to:

• Just quit your job;

• Put out calls for random people to interview on LinkedIn / Facebook / Twitter / Slack;

• Ask rich people for money to build a thing that, looking at the odds, won’t make them any money;

• Agree to set up an entity that will define your professional and economic future with some stranger after talking to them for a week.

But this is precisely how cults work - and companies are just cults that work. Most of us, no matter how independent-minded we consider ourselves, underestimate the value of being surrounded by 50 other people who are all doing the same weird thing, because that means that it feels ok for us to do it too.

2 - Activation energy for breaking out of social norms / confining beliefs

By definition of successful startups being uncommon, the behaviours that lead to that success are uncommon too. Many of us are:

• Children of risk-averse immigrants;

• Scared by the idea of having no income;

• Uncomfortable with conflict / let poor relationships drag out past their sell-by date;

• Unduly intimidated by authority figures and social norms;

• Seeking external structure for how to manage our time / energy.

What EF provides is multiple socially-reinforced mechanisms for overcoming the friction of the above common behaviours: the basic living stipend, the culture of rapid breakups, the freedom to make your own decisions and manage your own time.

Most importantly, what the program does is treat you as if you might be a person who starts a billion dollar company - and that might actually be its greatest value add.³

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Footnotes

1. At the same time, when you get onto a bus from Eastbourne to Brighton after hiking Seven Sisters for 8 hours, hoping to take a nap - and then you hear two people say, within earshot, “a Chinese girl just got onto the bus”, look back at you, move to sit behind you (!), and start discussing the fact that you’re facing forward and therefore can’t see them, and wondering aloud about whether or not you are falling asleep, presumably because they 1) assume you can’t understand them (dumb) and 2) are planning to nick your shit (even dumber), it does have a way of making you feel quite “other” (as Simone de Beauvoir might put it). It also makes you feel very anxious, paranoid and distrustful of strangers as you clutch your bag and try not to fall asleep for an hour. It also reminds you that outside the rarefied and incredibly tolerant community of Toronto and a few other major metropolitan centres around the world, alot of people in small towns, especially in Europe, are…actually still kind of shitty and racist. Would they have tried to pull the same shit if I were a 6’3” white dude who weighed 200 lbs? That is a counterfactual we will never know. The only conclusion I can draw is that I’m much less likely now to want to go to any small UK town on my own again. Brighton tourism office, take note.

2. Excepting those who literally cannot pay rent or buy food next week if they don’t work. The fairness or lack thereof of these situations is outside the scope of this newsletter.

3. You may be familiar with various studies that demonstrate the power of a self-fulfilling prophecy: children who are treated by teachers or parents as capable of doing math, if only they try, actually become better at doing math.