Some lessons learned

Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting conference and I got a chance to meet a lot of people I admire. For my talk, I decided to use material from some of my blog posts over the years that I thought might appeal to a broader audience. Unfortunately, I was still recovering from a nastly cold/flu so I didn’t deliver the talk as well as I’d like.  Below is the text.

Today, I wanted to talk about some of the most important lessons I’ve learned over the years from my experiences as an investor and entrepreneur.

1. If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough

My most humbling and educational career experience was when I was starting out in the tech world.  I applied to literally hundreds of jobs:  low-level VC roles, startup jobs, and various positions at big tech companies.  I had an unusual background: I was a philosophy undergrad and a self-taught programmer. I got rejected from every single job I applied to.

The reason this experience was so useful was that it helped me to develop a thick skin.  I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume.  As the process became depersonalized, I became bolder in my tactics. Eventually, I landed a job that led to my first startup getting funded.

One of the great things about looking for a job is that your payoff is almost entirely a max function – the best of all outcomes – not an average. This is also generally true for lots of activities startups do: raising money, creating partnerships, hiring, marketing and so on.

So, every day – to this day – I make it a point of trying something new and ambitious and getting rejected.

2. Don’t climb the wrong hill

I spend a lot of time trying to recruit people to startups, and I’m surprised how often I see smart, ambitious people who get stuck in fields they don’t like because they sense they are making incremental, day-to-day progress.

I think a good analogy for escaping this trap can be found in computer science, in what are known as hill climbing algorithms. Imagine a landscape with hills of varying heights.  You are dropped randomly somewhere on the landscape. How do you find the highest point?

The lure of the current hill is strong.  There is a natural human tendency to make the next step an upward one.  People fall for a common trap highlighted by behavioral economists:  they tend to systematically overvalue near term over long term rewards.

This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.

The lesson from computer science is: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.

3. The next big thing will start out looking like a toy

A majority of the top internet companies a decade ago are barely in existence today.  How did this happen?  These companies weren’t complacent – they were run by smart executives who were constantly aware that they could lose their lead.

The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a toy.  This is one of the main insights of Clay Christensen’s “disruptive technology” theory, which has been widely studied but I think is still rarely applied because it is so counter-intuitive to conventional management practices.

Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” their users’ needs. The first telephone could only carry voices a mile or two. The leading incumbent of the time, Western Union, chose not to acquire telephone technology because they didn’t see how it could be useful to businesses and railroads – their best customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. The same was true of how mainframe companies viewed the PC, and how modern telecom companies viewed Skype.

The list of top internet companies in 10 years will look very different than that same list does today. And the new ones on the list will be companies that snuck by the incumbents because people dismissed them as toys.

4. Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.

The Internet has gone through fits and starts – a bubble, a crash, and now a revival.  Pundits are speculating that another crash is coming. Regardless of what happens in the near term, what we do know is that every year we will continue to see more and more industries succumb to the transformational power of the Internet.

Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV & movies, real estate, politics & government. Soon to be transformed: healthcare, education, and energy, among others.

Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: exporting the entrepreneurial ethos of Silicon Valley to the rest of the country, and allowing talented people to go where their skills are most needed – for example by changing US immigration policies.

Most importantly, we have too many people pursuing careers in banking, law and consulting. I personally encounter this bias all the time when I go to college campuses to recruit for startups. We need to convince the upcoming generation to innovate and take risks in sectors that have a direct impact on the quality of peoples’ lives.

So my advice is:
1) get rejected more
2) climb the right hill
3) create an amazing toy
4) grow that toy into something big that transforms an important industry

46 thoughts on “Some lessons learned

  1. Hey Chris – good post.  You might like this one on expecting & embracing rejection:

  2. I like the hill climbing algorithm because there’s no correct answer to finding the highest hill 100% of the time. There are better or more efficient ways but there’s always a certain amount of luck involved.

  3. joeagliozzo says:

    I especially agree with your view that whatever the internet hasn’t changed it will.  There are so many opportunities for ‘real world” businesses on the net (as shown by Groupon) and lots of benefits for the service provider and the “groupons” of the world.

  4. Matthew Berman says:

    Excellent article. The fact that you were rejected so many times before becoming successful makes the daily rejections I receive easier to swallow. Thanks.

  5. Mogens_Nielsen says:

    1) Very good advice
    2) Best Software Developer I know is in that situation and sadly I can’t talk him out of it.
    3) True, but I think in todays economy people are more alert to potential so it will remain a toy for a lost less time compared to the past.
    4) I am a strong believer in this which is why I started FlatLeaf (eBooks).  Though I don’t consider my self a disrupter just leveling the playing field a little 😉

  6. Although I agree with much of this, I have some caveats. If something will have a direct impact on the quality of people’s life than it’s not too risky. Pursuing a career in tech is not very risky, there are many opportunities in the tech space.

  7. to the point(s) and on the money. my favorite is #2. very difficult to implement as “moving to a higher hill” and “quitting” look/feel the same when taking that very next step. we have “take the hill” ingrained in us, as you point out, and that press on feeling is strong indeed. it is very challenging to meander around sizing up other hills while simultaneously giving what is required in order to take the hill you’re on. sounds like you’ve written more about this elsewhere – I’ll go look for it.

  8. Awesome post!  The world is almost exclusively, NO. I like hearing no.  I get up in the morning and eat a bowl of “No’s” for breakfast just to prep for the day.  Eventually, it’s like white noise.

  9. Lida Tang says:

    Point 2 is very interesting since I just made a similar observation yesterday with my friend in regards to becoming great at a skill.

    Suppose that for every unit of time you put into a skill gets you better at it, so the function is monotonically increasing. If that is the case, then you would expect to see a lot of people become great at something. Since the number of people with great skill is low, therefore the function isn’t monotonically increasing. 

    I believe there is a point where you hit a wall and become worse even though you put more effort into it, and that’s when most people quit.

  10. JamesHRH says:

    Chris – I have enjoyed the vast majority of your posts. I would like to give you an alternate perspective on your talk:

    1) Really unbalanced advice – awfully self serving / self centred. Everyone, even people new to the world of work can be enough of a pro to only ask people things that the asker thinks the askee should do. If I was on the other end of a delusional self serving request, I would politely make sure you knew that you were wasting my time and yours. And the second time, not so politely. IF you get a no, then you are genuinely able to say “but I would do this if I were you, what am I missing……’ which resets you for the next ask.

    > Prepare more; ask more; get rejected less.

    2) You don’t provide a way to define ‘the right hill’. The most important thing to know in life is which hill is your hill. Too many people try to climb the biggest hill or the most difficult hill, because they think that’s what you should do in life.

    > Understand yourself; understand the hills you could climb; pick a hill that you think is your hill; if you find you are not enjoying the climb; pick another hill. Keep thinking about hills and keep climbing.

    3) The iPad never started out looking like a toy. It started out looking like the end point of consumer media delivery. Which it likely is.

    > Think of something you would use. Figure out the one thing that would make it something that people would talk about. Focus on that. Build to that focus. Try to know if you are building something that customers don’t know they want, but will want OR if you are building something that customers can define for you. It makes a big difference. Learn where your idea fits in the world. Talk to people who understand that area, not everyone.

    4) Couldn’t agree more.

    Hope you find this thought provoking – that is the intent and nothing more.

  11. comex says:

    The iPad definitely started out looking like a toy – Google ‘iPad toy’, or more generally, the countless arguments (which are still made) that the iPad isn’t useful because it isn’t a “real computer” or doesn’t run a “full operating system”.

  12. I’m not a technical programmer – so I interpreted #2 a little differently than perhaps many readers of this blog.

     when I see a question like that – my own inclination is to take myself out of the set of hills and get perspective – or communicate with someone I trust outside of the hills and get their perspective.

    (Of course, now I see the programming aspect of it)

    Happened last weekend. A good friend quit a grim job and was wondering about a few different options. I asked him to describe each – and it was painfully obvious to me which one he should go with – and why.

    Took him a week – but he’s there now – and happy!.

    #3 – everyone should read all of Clay Christensen – Innovators Dilema, Innovators Solution, etc… excellent books.

    #4 –
    Clarke’s Three Laws are three “laws” of prediction formulated by the British writer and scientist Arthur C. Clarke. They are:

    1. When a distinguished but
    elderly scientist states that something is possible, he is almost
    certainly right. When he states that something is impossible, he is very
    probably wrong.
    2. The only way of discovering the limits of the possible is to venture a little way past them into the impossible.
    3. Any sufficiently advanced technology is indistinguishable from magic.

  13. JamesHRH says:

    No worries – my PoV is part of an idea that might dovetail with your mission to convince bright 20-somethings to forego finance for a more meaningful business career.

  14. I like this – I pitch 20-40 times a week to do motion graphics work.  I will keep doing it forever, even after we’re the 8 figure company i envision.  Because it gins up options.  I don’t always execute – I cold call and pass on the opportunity that generates.  But options = wealth.

  15. I don’t think people necessarily get to a point where they are getting worse.  I think it’s more that people stop progressing at the same pace, maybe even to the point of no longer progressing at all.  At that point the positive feedback loop for the work they are doing is no longer motivating enough for them to keep working at the activity.

  16. I like #1.

    At the beginning of any world-changing venture, whether it’s Apple Computer or Teach for America, I can’t imagine that the founder wasn’t rejected on a daily basis.

  17. JamesHRH says:

    If you are rejected on a daily basis, you are calling on the wrong people;

    @JLM help me out here!

  18. JamesHRH says:

    Absolutely – there is a ramp and you will get rejected. There is not a perfect person to ask and I am not advocating that ( see first post – ‘ask more; get rejected less’).

    I think that a professional business person is more prepared than the person they ask, and prepared for a yes, and can provide a rationale when challenged on the ask – I think it is the right standard.

    I don’t think measuring how much you get rejected is the right metric, because it tilts you away from thinking about others and only thinking about yourself.

    As you gain knowledge ( of yourself, of industry standards and of your askees ) your hit ratio should go way up.

    There is another angle – as you gain traction your asks will likely get substantially larger and you should definitely be more prepared and get rejected way less, on big asks.

    As an aside, Steve Jobs did not get rejected a lot ( Google ‘ Steve Jobs reality distortion field ‘, but he is a special case ). Although you could say that getting <10% share of the desktop market was like getting rejected on a daily basis!

  19. Thank you I understand what you’re saying now.

    I think this goes beyond business transactions.

    With Steve Jobs, for example, I imagine the first time he went to his team of engineers and said “I want a phone that does this, this and this” he was told that it wasn’t possible yet. So there is negotiation until you find the right mix of pushing the envelope while still being just practical enough to see production.

    Since “just right” is a mathematical improbability, you should aim higher than lower. If you’re aiming higher than lower you’ll probably get rejected more often.

    If you don’t err on the side of pushing too far (and risking rejection) then you’re probably not asking for enough. That’s how I read #1, to mean push the envelope and risk rejection often, rather than to literally be rejected every single day.

  20. JamesHRH says:

    Luke: You should absolutely aim higher than lower. But, I am not sure you are getting that I am implying a reputation cost to aiming high (the strongest of business people will think less of you – not because they said ‘no’, but because you did not value their time by being reasonably prepared.

    Its not that Chris’ talk was incorrect. I just believe that many technical people who become business oriented (not talking about Chris here, at this point, just to be clear) go through several stages of ‘getting it’, when it comes to the art or discipline of conducting business professionally.

    A founder I know who watched an Investment Banker totally control the agenda of an M&A process said to me ‘I think I get the value of being good at sales.’ That’s one angle.

    Chris is talking about the internal (confidence really) angle of being a startup pro – asking, not getting stuck, believing you will evolve your core idea into a full strong business idea. That’s another angle.

    I just think that if you see yourself as part of a broader ‘guild’ of startup business professionals, your standards should be set differently – they should include more than one angle.

    Hope that helps! If not, connect via Disqus.

  21. Awesome post, I definitely agree that too many people are pursuing careers in banking, law and consulting. I am a student at Middlebury College, a liberal arts school, and it seems like 80% of seniors say they want to go into banking or consulting. I started the Middlebury Venture Community to try and show students they can use their intelligence and creativity to make something great in a sector they are actually passionate about.

    I also like all the computer science analogies. I decided to become an comp sci minor, and realized that I should have started taking it as soon as  I got here. Too many students my age are still intimidated by programming, even though it’s getting more and more accesible with languages like Python and simple IDE’s that can be run on a macbook.

    I think that once students realize that comp sci majors have an easy time finding a job (even if it’s at their own startup), especially compared to econ majors, there is going to be a surging trend for students to start taking more computer science.

    Thanks for the post Chris, I am definitely going to reference it in my next blog post on “Why College Students Should Take Comp Sci”! 

  22. rzeka says:

    How to contact with You Chris.I am from Poland and I want to show my startup.My startup describe the biggest newspaper in Poland.Where on this page is e-mail to You ? : (

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