Cognitive Distortions Among People in Silicon Valley

According to Michael Dearing’s lecture from Stanford’s Leadership for Strategic Execution course, there are five recurring thought patterns among the people who get extraordinary stuff done in Silicon Valley. E’s notes as follows.

1. Personal Exceptionalism. “I am special.” And I am running a billion-dollar company.

    A macro sense that you are in the top of your cohort, your work is snowflake-special, or that you are destined to have experiences well outside the bounds of “normal”; not to be confused with arrogance or high self-esteem.

    Benefits: Resilience, stamina, charisma

    Deadly risk: Assuming macro-exceptionalism means micro-exceptionalism, brittleness.

2. Dichotomous Thinking. “X is sh*t. Y is genius.”

    Being extremely judgmental of people, experiences, things; highly opinionated at the extremes; sees black and white, little grey.

    Benefits: Achieves excellence frequently

    Deadly risk: Perfectionism, closed to criticism and contrary opinions

3. Correct Overgeneralization. “I see two dots and draw the right line.”

    Making universal judgments from limited observations and being right a lot of the time. Not necessarily “correct”, but executed in such a way that it becomes correct.

    Benefits: Saves time

    Deadly risk: Addiction to instinct and indifference to data

4. Blank-Canvas Thinking. “Painting by numbers isn’t art. And I want to make art.”

    Sees own life as a blank canvas, not a paint-by-numbers. People who make cool stuff for the sake of making cool stuff. Think Elon Musk.

    Benefits: No sense of coloring outside the lines, creates surprises

    Deadly risk: “Ars gratia artis,” failure to launch, failure to scale

5. Schumpeterianism. “I am a creative destruction machine.”

    Sees creative destruction as natural, necessary, and as their vocation. Here we have the tech companies pricing out the lower-income locals who made the Bay Area an inviting place for startups in the first place.

    Benefits: Fearlessness, tolerance for destruction and pain

    Deadly risk: Heartless ambition, alienation

Remember, kids, correlation does not imply causation. Some of these attributes are borderline antisocial and may be a byproduct of the quest for achievement, not contributing factors to excellence.

Full lecture notes here.

Facebook Employees Will Never Go Home

FacebookTown!
FacebookTown!

The average job tenure is now just 4.4 years. In Silicon Valley, that number is closer to 2. Facebook’s answer to the employee retention problem is to build a housing community connected to its main offices.

It’s hard to change jobs when your employer owns your home.

The development conjures up memories of so-called “company towns” at the turn of the 20th century, where American factory workers lived in communities owned by their employer and were provided housing, health care, law enforcement, church and just about every other service necessary.

Facebook claims in its corporate goals that it wants to take care of its employees lives. Sure. That’s what the government said about Japanese internment camps during WWII.

See Also:
Facebook’s Company Town –wsj.com

Revisiting the Rhino Principle

Charging-Rhino-800x529

Rhinos have poor eyesight, and they aren’t terribly bright. What makes them formidable creatures is their ability to Charge. Because their eyesight is so poor, and because they are so stupid, they often charge at tour buses or small animals, nonthreatening objects that they can neither eat nor mate with.

The remarkability of this creature lies in its ability to make decisions and then execute with resolution. Rhinoceroses don’t waste time worrying about incomplete information. Rhinoceroses can kill elephants.

The opposite of a rhinoceros is a squirrel. Squirrels have excellent vision and are extremely intelligent. They operate on a more complete set of information than the rhino. But they exhibit so much indecision when they try to cross street that they are frequently squished by cars*.

lucky-squirrel-lamborghini

A good leader doesn’t always have to make the right decision. Oftentimes, there really is no correct decision. But a good leader must make a decision and execute it decisively. Otherwise the organization gets squished.

*The real reason why squirrels dash erratically across the road is because this is how they instinctively confuse predators. But still, far fewer squirrels would become roadkill if they took a few rhinoceros lessons.

See Also:
The Rhino Principle –Forbes

Stealth Economic Trends

Things that are happening that don’t get enough attention:

1. Old Trend: Expensive solar, surviving only on subsidies.
New Trend: Cheap solar, disrupting old industries.

2. Old Trend: The Latinization of America.
New Trend: The Asiafication of America.

3. Old Trend: The Chinese population bomb.
New Trend: The Chinese population bust.

4. Old Trend: Soaring U.S. CO2 emissions.
New Trend: Plummeting U.S. CO2 emissions.

5. Old Trend: College is becoming more and more important.
New Trend: College is no more important than before.

6. Old Trend: Americans drive more and more.
New Trend: Americans drive less and less.

7. Old Trend: Skyrocketing health care costs, skyrocketing deficits.
New Trend: Creeping health care costs, creeping deficits.

8. Old Trend: The BRICs are conquering the world.
New Trend: China is the only BRIC in the wall.

9. Old Trend: Active management rules the finance universe.
New Trend: Passive investment rules the finance universe.

10. Old Trend: China is buying up all our debt.
New Trend: China is selling off our debt.

Source:
The 10 Stealth Economic Trends That Rule the World Today –the Atlantic

Crowdsourcing the Race to the Bottom

postmates flowers

I just received this email from Postmates advertising flower delivery in San Francisco. Within the hour. For $19.95. Delivery and tip included. That’s pretty darn cheap.

Yesterday, Warren told me about another startup, BloomThat, that also delivers flowers. Ridiculously fast.

You should really be wearing a helmet, sir.
You should really be wearing a helmet, sir.

Why are they doing this? What problem are they trying to solve? Did your wife come home from work in the middle of the day and catch you in bed with the housekeeper, and now you need to send flowers, Ridiculously Fast, before she storms back to the office?

Exactly how big is this market, anyway?

As for the $19.95 flower delivery, they can’t possibly be turning a profit, or even breaking even. Operating at a loss to build hype is the same strategy employed by every failed business that ever patronized Groupon.

As of Monday, startups can publicly solicit funds from investors. You can gauge the quality of these crowdsourced startups for yourself on sites like AngelList. Yes, investors are actually putting money into these things.

You see, this is what half a decade of Zero Interest-Rate Policy does to the country. Thanks to Bernanke, we now have USB-powered sex-toy startups closing multimillion-dollar rounds.

crap2

These are all real listings on AngelList. BillMeLater for subprime credit? That’s a winner!