Progress, Open Debate, Disagreement, Diversity, Tolerance of Difference, Tolerance of Being Offended. Live and Let live?
This week, 'That Was The Week' leads with Paul Graham's essay - The Four Quadrants of Conformism. Paul has been very busy on Twitter, leading the way on issues related to free thinking and open debate, opposing cancel culture. This essay focuses in on non-conformism and intellectual rule breaking as a key to progress. He argues
There are two reasons why we need to be able to discuss even "bad" ideas.
The first is that any process for deciding which ideas to ban is bound to make mistakes. All the more so because no one intelligent wants to undertake that kind of work, so it ends up being done by the stupid. And when a process makes a lot of mistakes, you need to leave a margin for error. Which in this case means you need to ban fewer ideas than you'd like to. But that's hard for the aggressively conventional-minded to do, partly because they enjoy seeing people punished, as they have since they were children, and partly because they compete with one another. Enforcers of orthodoxy can't allow a borderline idea to exist, because that gives other enforcers an opportunity to one-up them in the moral purity department, and perhaps even to turn enforcer upon them. So instead of getting the margin for error we need, we get the opposite: a race to the bottom in which any idea that seems at all bannable ends up being banned.
The second reason it's dangerous to ban the discussion of ideas is that ideas are more closely related than they look. Which means if you restrict the discussion of some topics, it doesn't only affect those topics. The restrictions propagate back into any topic that yields implications in the forbidden ones. And that is not an edge case. The best ideas do exactly that: they have consequences in fields far removed from their origins. Having ideas in a world where some ideas are banned is like playing soccer on a pitch that has a minefield in one corner. You don't just play the same game you would have, but on a different shaped pitch. You play a much more subdued game even on the ground that's safe.
It seems obvious, but it clearly is no longer universally understood, that Independent thought in society is really very important to progress.
Second up is an essay by Chunka Mui about 'the six laws of zero'. He writes about progress through innovation and economics.
six key drivers of humanity’s progress—computing, communications, information, energy, water and transportation—are headed toward zero cost. That means we can plan on being able to throw as much of these resources as we need to smartly address any problem. Success in doing so would bring us closer to the Future Perfect. Alternatively, like gluttons at an all-you-can-eat buffet, we could binge in ways that exacerbate societal issues such as health, equity, civility, privacy and human rights.
Our Future Perfect approach, which builds on an approach developed by Alan Kay for inventing the future, projects the Laws of Zero into the future to imagine how vast resources could address important needs in key pillars of society, such as electricity, food, manufacturing, transportation, shelter, climate, education and healthcare. We’ve chosen 2050 as a marker because 30 years is far enough in the future that one isn’t immediately trapped by incremental thinking. Instead, we can explore how exponential resource improvements might radically alter the range of possible approaches. The question becomes “Wouldn’t it be ridiculous if we didn’t have this?”
The big reads of the week focus on the positive elements of the current situation that point to a new enlightenment. Open discussion, free debate, tolerance for being offended combined with transformative innovation leading to widespread ability to deliver the needs of life, freely, to everybody. It is in stark contrast to the greed-based obsession with personal wealth and the fear of the opinions of others leading to a cancel culture. These views are also here this week. See Roger McNamee and Scott Galloway on their attutude to Facebook, Apple, Amazon and Google for examples of the opposite.
The Tweet of the Week this week is from an African American early stage VC emerging from his role in Philadelphia to become a solo VC. Mac Conwell announces he has won a scholarship to take the next step.
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This week's video is here:
Reads of the Week
- The Four Quadrants of Conformism - Paul Graham
- 6 Laws Of Zero Will Shape Our Future. For The Better Or Worse Is Up To Us. - Forbes
- Cancelling The Opinions Of Those You Don’t Agree With Is A Slippery Slope—Here’s A Better Option - Forbes
- SoftBank May Be Selling Arm, But Apple Isn't Interested - MacRumors
- Some Thoughts on GPT-3 - Albert Wenger
- The SPAC hack - The Economist
- Why SPACs Are the New IPO - Marker
- The TechCrunch Exchange: What’s an IPO to a SPAC?
- Return of the SPAC - Medium
- SPAC Man Begins - Alex Danco
- ‘Blank-cheque’ blitz: Michael Klein leads Wall St charge into Spacs - Financial Times
Politics & Technology
- Roger McNamee: ‘Facebook is a threat to whatever remains of democracy in the US'
- Why Tech CEOs in DC is a waste of time - Om Malik
- Big Tech Won the Antitrust Hearings Before They Even Started - Scott Galloway
- Fire & Fawning - Scott Galloway
- Do the U.S.’s Big Four Tech Companies Have a Vision for the Future? - Harvard Business Review
- TikTok, the Facebook Competitor?
- A Legislative Path to an Interoperable Internet - Deeplinks
- Google commits to vast London office despite rise of remote working
- DeepMind and Oxford University researchers on how to 'decolonize' AI - Engadget
- Biden's path to the White House could hit a dead end on Facebook - The Guardian
- Structural Problems In The European Venture Capital LP Landscape And Why It Matters - Forbes
- YC’s Series A Diligence Checklist - Y Combinator
- Six leading investors assess the remote-work startup landscape - TechCrunch
- SaaS Valuations as a Rule of 40 Multiple
- Understanding the Disconnect Between Consumers and the Stock Market - Visual capitalist
- The Venture Capital Flowchart - Next Big Thing
- Fintech unicorn TransferWise sees valuation climb to $5 billion - CNBC
- How to time your Series A fundraise - TechCrunch
- Facebook Seeks Insights Into Startups by Investing in VC Funds - The Information
- Follow The Money - Albert Wenger on Brad Feld's Book
Podcasts of the Week
- How Venture Capitalists can Reshape Communities For The Better - Andrew Keen & Brad Feld
- Starting Up In A Downturn with Cloudflare COO and Co-Founder Michelle Zatelyn (Video + Transcript)
- 241. Finding Markets with Long-Term Tailwinds; Macro Impacts on Venture; and Robust vs. Fragile Data (Niki Pezeshki) - The Full Ratchet
- Tim Ferriss Podcast: The Art of Unplugging, Carving Your Own Path, and Riding the Entrepreneurial Rollercoaster with Brad Feld
Tweet of the Week
- @MacConwell - Mac The VC
--Reads of the Week
The Four Quadrants of Conformism
One of the most revealing ways to classify people is by the degree and aggressiveness of their conformism. Imagine a Cartesian coordinate system whose horizontal axis runs from conventional-minded on the left to independent-minded on the right, and whose vertical axis runs from passive at the bottom to aggressive at the top. The resulting four quadrants define four types of people. Starting in the upper left and going counter-clockwise: aggressively conventional-minded, passively conventional-minded, passively independent-minded, and aggressively independent-minded.
I think that you'll find all four types in most societies, and that which quadrant people fall into depends more on their own personality than the beliefs prevalent in their society.
6 Laws Of Zero Will Shape Our Future. For The Better Or Worse Is Up To Us.
- Our Future Perfect approach, which builds on an approach developed by Alan Kay for inventing the future, projects the Laws of Zero into the future to imagine how vast resources could address important needs in key pillars of society, such as electricity, food, manufacturing, transportation, shelter, climate, education and healthcare.
- The basic idea is that six key drivers of humanity’s progress—computing, communications, information, energy, water and transportation—are headed toward zero cost.
Cancelling The Opinions Of Those You Don’t Agree With Is A Slippery Slope—Here’s A Better Option
- We also need to acknowledge that while some of our opinions are guided by our non-negotiable principles, all of us have beliefs that we could be persuaded to change, assuming we are open to having our views challenged.
- If a person is sharing hate speech online or inciting violence with their words, it’s understandable to want to silence or shame them.
SoftBank May Be Selling Arm, But Apple Isn't Interested
- In a report on Nvidia's possible interest in Arm, Bloomberg says that SoftBank approached Apple to see if Apple might want to buy Arm. The two companies reportedly had preliminary discussions, but Apple does not plan to pursue a bid because of Arm's licensing requirements and possible regulatory concerns.
- A potential sale to Nvidia or another company would not likely have a major impact on Apple or Apple's licensing of Arm technology because of the regulatory oversight and requirements that would accompany such a deal.
Some Thoughts on GPT-3
- By now, if you are in tech and haven’t been on an extended Techmeme and Twitter break you have heard about GPT-3 a new and massive language model developed by OpenAI.
- All of this is to say that objections around intelligence and creativity are rooted in definitional problems and also obscure the extraordinary potential of this technology to change the need for human labor.
The SPAC hack
An empty vessel can accommodate all manner of dreams. This trait helps explain the growing allure of the “special purpose acquisition company” (spac), a shell company listed on the stock exchange with a view to merging it with a real business. Ventures such as Virgin Galactic, in space tourism, and Nikola, in electric vehicles, have become listed companies by this route. Silicon Valley’s dream factory spies a way to sidestep the trials of an initial public offering (ipo). Bill Ackman, a shrewd hedge-fund manager, has just raised a $4bn mega-spac. He is looking for a unicorn to make a home in his empty store.
Why SPACs Are the New IPO
- Nikola, DraftKings, and Virgin Galactic all went public through SPACs. There’s been a recent blizzard of SPAC deals: Earlier this month, a rare-earth miner announced plans to go public via SPAC , with an expected market value of $1.5 billion.
- The traditional route to going public is too slow for companies that want to cash in on hype Special purpose acquisition companies (or SPACs) have raised record amounts in the last few years.
The TechCrunch Exchange: What’s an IPO to a SPAC?
- According to the CEO, a Coinbase debut would be “very good for the [crypto] industry,” which makes sense; if Coinbase can go public it would lend credibility to its market in a way that few other business transactions can.
- We’ll also run through key startup-related news from the public and private markets.
Return of the SPAC
- Over the past 12 months we’ve seen companies like Virgin Galactic (SPCE), DraftKings (DKNG), and Nikola (NKLA) all go public with a SPAC; and as the quality of sponsors continues to improve (e.g., Bill Foley, Bill Ackman, Chamath Palihapitiya, Chinh Chu/Neuberger Berman, etc….) and market receptivity has been strong “blue chip unicorns” are now considering this as a liquidity option which was unfathomable 18–24 months ago, let alone 12–15 years ago during the last “SPAC bubble.”
- · IPO investors receive their pro rata share of the trust value in exchange for their common shares if: o They vote to participate in a business combination, or o The business combination fails to close, insufficient time remains to identify another target and the SPAC is liquidated, or · If a deal is not consummated sponsors lose their risk capital.
SPAC Man Begins
- The way an IPO works is you hire an investment bank, and say “we think we’d like to go public, we need to raise around X many dollars, do you think you could help us with that” and the bank says “why yes, that’s what we do, we will find buyers for your stock.”
- The way a greenshoe works is that the bank actually commits to sell more shares than the company issues; in other words, it oversells the offering, and is therefore effectively short the stock on day one.
‘Blank-cheque’ blitz: Michael Klein leads Wall St charge into Spacs
- The former Citigroup banker is now turning to his extensive Rolodex for his latest act: creating shell companies, listing them on the stock market and then using the money raised to merge with real businesses.
- Long confined to the periphery of finance, special purpose acquisition companies, or Spacs as the shells are known, have emerged as one of the hottest trends on the US equity market in a year defined by the coronavirus crisis.
--Politics & Technology
Roger McNamee: ‘Facebook is a threat to whatever remains of democracy in the US'
The scale of internet platforms such as Google and Facebook is unprecedented in the tech world and, I would argue, unprecedented since the Dutch East India Company. They are ubiquitous in almost every country that has an economy. And when you are ubiquitous, the political imperative is to align with power.
And that is why in countries such as the Philippines Facebook has been used to marshal public opinion in support of death squads. In Cambodia, it is being used to suppress dissent. In Myanmar it was used to incite ethnic cleansing. That’s what happens in authoritarian regimes.
In democratic regimes, these companies are actually more powerful than the government. Because they are so ubiquitous, that they can use their users as a human shield politically, to prevent any kind of change. So what you see is the defiance of subpoenas in the UK and Canada. And pre-Trump, and even early into Trump’s reign, they defied Congress.
Why Tech CEOs in DC is a waste of time
In a few hours, the chief executives of four major technology companies — Amazon, Apple, Facebook, and Google are going to be hauled up in front of our politicians. I am surprised to see Microsoft omitted from this list, though they should be in here with the big four. They will have to defend themselves from the charges that they stifle competition as a result of their market dominance.
What do I think about the whole brouhaha? The short version (in case you want to skip reading the piece) — all sizzle no steak. In other words, you could (and should) avoid even thinking about it. You are not going to see the four chieftains say anything that damages their business or upsets the status quo. It is not going to impact the employees or the stocks of these companies. Hell, it is not even a photo-op: the whole non-drama is going to play out on Zoom.
Big Tech Won the Antitrust Hearings Before They Even Started
- Why should someone invest in a search engine right now, or a music streaming business, or a social media platform, or an e-commerce firm, given the sizes of your companies?
- Bezos, Cook, Pichai, Zuckerberg, your firms have added greater market capitalization in the last five years than the largest retailers and CPG firms have in total.
Fire & Fawning
The CEOs of Apple, Amazon, Facebook, and Google are scheduled to testify in front of the US House Judiciary Antitrust Subcommittee. Some thoughts…
Big tech has won before the hearing starts. Agreeing to let all four testify concurrently inhibits the committee’s ability to go deep on any one issue, and will leave the American public with a sentiment instead of a viewpoint on big tech, much less any conclusions (such as, that the Obama DOJ was asleep at the switch, and Instagram and Whatsapp should be divested). The Covid-inspired remote format dramatically lessens the likelihood of an unscripted moment that reveals something the American public didn’t previously know. Fabric softener for tough questioning is the deep pockets that keep members in power.
Do the U.S.’s Big Four Tech Companies Have a Vision for the Future?
- Imagine this: an Amazon that uses its capabilities in technology and logistics to reduce want; an Apple that develops wearable medical technology that measurably improves health outcomes; a Facebook that helps people bridge their differences rather than provide them with cognitive and ideological bubbles; and a Google that lives up to its stated goal of democratizing the world’s knowledge are all inspiring.
- The CEOs can expect to be grilled about their companies’ alleged monopoly powers and unfair trade practices, but I hope at least one member of the committee will press them on a different (but closely related) set of issues: I want to hear these leaders explain their vision of what their companies could become in the next decade — if they are not broken up — and why Americans should care one way or the other about what happens to them.
TikTok, the Facebook Competitor?
Adam Connor, The Margins - Substack
- In order to try and compete in the U.S. market, TikTok had no choice but to pay its future competitors billions of dollars in ads, giving up critical data on their targeting and successful installs along the way.
- App Install Ads Looking at TikTok’s rise in the U.S. starts with the November 2017 purchase of the Musical.ly app by ByteDance for a billion dollars (after Facebook attempts to purchase it reportedly failed ).
A Legislative Path to an Interoperable Internet
- Each one provides a piece of the puzzle: portability allows users to take their data and move to another platform; back-end interoperability lets users of upstart competitors interact with users of large platforms; and delegability allows users to interact with content from the big platforms through an interface of their choosing.
- In this post, we’ll discuss how to bring about a more interoperable ecosystem in two ways: first, by creating minimum standards for interoperability that the tech giants must support; and second, by removing the legal moat that incumbents use to stave off innovative, competitive interoperators.
Google commits to vast London office despite rise of remote working
- However, up to 7,000 workers, more than the number currently employed by the company in the UK, could be housed in the area, with up to 4,000 in the landscraper, with the others in Google’s existing Kings Cross office, and a third building nearby, which the company plans to move into.
- This is despite the tech firm’s decision to allow all of its global employees to work from home until July 2021.
DeepMind and Oxford University researchers on how to 'decolonize
- “This discourse has now been legitimized and you can now talk about race in these spaces without people completely dismissing you, or you putting your whole career on the line or your whole authority as a technologist,” said Png.
- “My hope is that this renewal of interest and reception to understanding how to advance racial equity both within the industry and in broader society will be sustained for the long run,” said co-author Isaac.
Biden's path to the White House could hit a dead end on Facebook
- And if Facebook were suddenly to decide that it would not allow its platform to be used by either campaign in the period from now until 3 November, Trump would be a one-term president, free to spend even more time with his golf buggy – and perhaps his lawyers.
- And there is another, contemporary dimension to the puzzle, namely that the company Zuckerberg controls seems to have the power to influence people’s behaviour in politically relevant ways.
Structural Problems In The European Venture Capital LP Landscape And Why It Matters
- Second, financially-incentivized pan-European LPs often prioritize allocations to mature venture ecosystems with sufficient access to talent, capital, mentorship and customers rather than investing in less developed local ones.
- In my conversations with emerging venture fund managers , I am often asked about the Limited Partner (LP) landscape in Europe.
YC’s Series A Diligence Checklist
- A list of the Company’s trademarks, patents, copyrights and domain names (or any applications therefore) including documentation of filing or registration with the appropriate governmental entities.
- Any correspondence or documents relating to any pending or threatened action, suit or proceeding or investigation, including, without limitation, (i) those involving the Company’s employees in connection with their prior or present employment or use of technology and (ii) those being conducted by or before any governmental entity or regulatory agency.
Six leading investors assess the remote-work startup landscape
- We wanted to better understand if SaaS fatigue is real for the startups in question, where open-space still exists in the remote-work world and how the economics of the companies compare to other software shops.
- TechCrunch wanted to dig more deeply into the cohort of startups that are seeing acceleration, so we put together a list of investors who have put money to work in startups building remote-work tooling and sent them a raft of questions.
SaaS Valuations as a Rule of 40 Multiple
- So, if growth rate and profitability/cash burned combined with revenue run rate are the biggest drivers of valuation, there’s another, more nebulous factor that fluctuates called market sentiment.
- Now, we know that public SaaS companies at the Rule of 40 are worth 17x trailing 12 month recognized revenue (a lower number than revenue run-rate because there’s growth).
Understanding the Disconnect Between Consumers and the Stock Market
- Since the direction of the overall economy also affects stock markets, measures of consumer sentiment have historically moved in tandem with major indices like the S&P 500.
- The University of Michigan’s Index of Consumer Sentiment ( ICS ) is derived from a monthly survey of consumers that aims to get a snapshot of personal finances, business conditions, and buying conditions in the market.
The Venture Capital Flowchart
- The reason I like Find, Decide, Win, Help, Exit, in the form of a flowchart, is that it illuminates that venture capital investing is a process made up of these five parts, with each flowing into the next.
- My hope is that this short piece, on the flowchart I think about daily, will help founders and aspiring venture capitalists better understand the profession.
Fintech unicorn TransferWise sees valuation climb to $5 billion
- Guillaume Payen | SOPA Images | LightRocket | Getty Images Fintech start-up TransferWise is now valued at $5 billion following a secondary share sale, the company announced Wednesday, highlighting increased investor appetite for online payments amid the coronavirus pandemic.
- It's not the first time existing investors have sold shares — the company was valued at $3.5 billion last year in a $292 million secondary round .
- Finding the right time to fundraise requires a micro- and macro-level strategy, according to Jake Saper of Emergence Capital, who joined TechCrunch’s virtual Early Stage event last week.
- When founders start fundraising is as important as how they make their pitch to investors.
Facebook Seeks Insights Into Startups by Investing in VC Funds
Facebook in recent weeks has approached a handful of small venture capital firms to discuss becoming an investor in their funds, according to people familiar with the matter. The VC strategy, which also includes direct investments in startups, aims to give the social network early, valuable insight into a wider swath of companies.
Follow The Money
Brad Feld has a new book on the startup ecosystem. He wrote it with Ian Hathaway who has done a lot of very good research on startup ecosystems. Brad writes good books on startups. It’s a part of his “brand” and it is a way to attract deal flow to Boulder where he is based. Brad has been highly successful, and that success also attracts deal flows.
NY based Fred Wilson opines, “This suggests to me that we will see tech entrepreneurship and innovation move even more broadly around the US and around the world this decade”. Again, Fred has been highly successful and that success attracts a lot of deal flow.
Fred might be right. But, he might be wrong too.
I think like everything, you have to follow the money. Talk is cheap. Both Fred and Brad have invested outside of the Valley.
--Podcasts of the Week
How Venture Capitalists Can Reshape Communities For The Better - Andrew Keen and Brad Feld
On today’s episode, Brad Feld, investor, entrepreneur, and author of The Startup Community Way: Evolving an Entrepreneurial Ecosystem, discusses the shift from a hierarchical system to something more democratic and more inclusive.
Starting Up In A Downturn with Cloudflare COO and Co-Founder Michelle Zatelyn (Video + Transcript)
- And again, in a downturn like today, where money is still going to be hard to come by, that’s actually I think a really good… it can take you very far when you’re building your company.
- And the second thing that I was really proud of, and I think that if you’re a founder that can find both, it’s like, “Wow, there’s a big business here.”
241. Finding Markets with Long-Term Tailwinds; Macro Impacts on Venture; and Robust vs. Fragile Data (Niki Pezeshki)
- You’ve mentioned that you look for market tailwinds, especially tailwinds that will be lasting.
- What are you looking for in the business model that indicates to you that it is not only the correct approach but can lead to transformational changes in the industry?
Tim Ferriss Podcast: The Art of Unplugging, Carving Your Own Path, and Riding the Entrepreneurial Rollercoaster
- Tim Ferriss did one of his very long-form (150 minutes) podcast with me last week.
- It helps that Tim is particularly amazing at the long-form podcast interview.