Are You A Pirate?
techcrunch.com
techcrunch.com
Well, now I realise, that dumb kid is me!
Sweet metaphor. Thanks.
For a little while, say a couple of weeks it's ok to push yourself like that it if it is actual work, and something you do not enjoy.
If your work is play to you you might get away with it. But anybody that pushes themselves like that is going to find out a few things:
- there is a price
- the price includes an interest
- your 90 hour workweek is on a per-hour basis not as
productive as a 50 hour workweek would be
Then measure your effciency and act accordingly.
I work at the second largest investment bank in the world and have not seen anyone work 90 hour weeks. The traders may work 7am-6pm, but that's only 55 hours. Everyone else works somewhere around 40 hours.
My friend says that when he hires, his first thought to himself is "Can we work with this guy at 2am with a deadline tomorrow?".
You can build the experience you want out of a job by 1) finding the right place 2) building the role that rewards you.
For some people, that requires running your own company, for most I don't think it does.
But surely hours worked correlates with output, doesn't it? There might be a point of diminishing returns and there might be burnout risk (though the latter can-- and often is-- solved with fresh bodies to throw onto the pyre).
I agree that it's objectively pretty daft for a person to bleed out of their eyes for 90 hours/week for a startup (other than short bursts that are sometimes necessary). But is it daft for a startup, in its first 3ish years, to encourage that behavior? And, does that that behavior meaningfully improve the startup's chances?
Personal health aside, it seems pretty clear that excessive work hours correlates with startup success. I've never met a founder who has hit a financial homerun that did it working healthy hours.
see points 2&3 here: http://www.paulgraham.com/really.html
Completely flawed. Every sane person seeks to reduce risk. What entrepreneurs also seek is to maximize gains. Increased risk is merely often required to do so.
Let's say you need to get drinking water from the river, but there are crocodiles down there too. If you minimize your risk, you'll get just enough water for yourself. On the other hand, if you get more than enough water, you'll be able to share your surplus, increase your social standing, find a more attractive mate, etc.
Ah! you say - but the "minimizing risk" here isn't actually minimizing risk, but increasing another risk, a risk that you'll never get anywhere in life, won't raise a family and pass on your genes, etc.
But that's an intellectual risk. It's not likely to dawn on you unless you're quite introspected, or perhaps until it's too late and you're in relative middle age.
What if there was a different mechanism? What if exploring the boundaries of your capability, your talents, was its own reward? You can't explore those boundaries without risk of failure, even where failure might include death. A simple mechanism for that could be risk homeostasis, whereby a certain manageable amount of risk becomes its own visceral reward, attracting you to those boundaries and encouraging you to expand them.
In other words, getting utility out of risk itself - "liking adventure".
Then you're gaining something (discovery of new assets, freedom, happiness, sense of accomplishment, self-actualization, etc.) and seeking to maximize gains. Risk does not magically become utility. If gains are held constant, nearly everyone chooses the one with less risk because it has a higher expected value. Entrepreneurs are gain maximizers. Risk is only _ utility _ in the case of masochism.
I'm pointing to the rewards of manageable risk as a mechanism - probably an evolutionary mechanism - for exploring boundaries and thereby gaining things, even if you didn't know they existed.
It's all very well to talk about the rewards of new assets, freedom etc., but the reward from a risky venture isn't necessarily obvious; it may even be utterly unknown in the history of human kind. But if the risk itself being rewarding is a mechanism, it may encourage the discovery of such rewards.
The key misunderstanding problem here is the overloading of language. We have this talk of rationality, of evolutionary psychology, of emotions and drives. The key thing to understand, though, is that all may simply be different ways talking about the same things.
I'm saying that both things can be true: that it's rational consideration of long-term goals that cause us to risk things; and that it's the intrinsic utility of risk itself as encoded in the genome and proteome for the self-directed organisms we call humans. What I think is wrong is to take only a single terminology, and use it to say the other terminology is mistaken.
Utility is a basic textbook economics term and the context of Arrington's article. Also, Arrington was an economics major. I think sticking to one terminology is highly preferable over acontextual obscurism.
Economics is about the study of choice; but we can split that up into at least two broad categories, the most efficient choices, and the actual choices made by people. You can stay strictly within a so-called rational model for the first - and you must, in order to justify the inputs to your utility function - but the second is experimental, and relies on observed inputs necessarily defined by disciplines other than economics.
The insight of behavioural economics is that it's not so much rational maximization of gains that drives us, but rather imperfect mechanisms implemented in the organism, whose outcomes have been tuned by evolution to approach rational maximization. Leaving out the behavioural aspect means your model won't correspond as well with the real world, the only thing worth talking about. And I'm asserting that seeking a certain amount of risk is just one of those mechanisms.
I don't think appetite for risk is sufficient for entrepreneurial activity; but I do think it's necessary. So I don't think it's a red herring.
This is a useful insight, that minimising risk at one level can mean maximising it at another.
That's simply not true (or else your definition of sane is very limited)
Just as a random example, the death rate for climbing Mount Everest is 10% (!) If sane people always seek to reduce risk then only insane people would climb Everest.
or else your definition of gain is very limited.
You seem to be implying a mountain climber makes no gains by tackling Mt. Everest. The risk is not what is preferred, the sense of accomplishment and fulfillment is what is preferred. Without gains to be had, the mountain climber would cease to choose decreased lifespan unless they intrinsically enjoyed suffering.
But I'd argue that "gain" is quite similar to the utility a entrepreneur gains from doing a risky company.
- defining anyone who likes adventure as "not sane" in your book
- including "risk of regret over having had an unadventurous life" into your risk calculation
- just run an analogy with casinos, where the gamblers are purchasing 'fun'
Or you could explore the idea that rational choice theory isn't a set of fundamental axioms of human behavior but a (mostly successful) attempt at a descriptive theory.
More importantly, distinguishing gains from risk is only meaningful if gains are entirely decoupled from risk. I claim that many entrepreneurs seek non-monetary gains like prestige or autonomy, and pursue strategies that maximize prestige or autonomy at the expense of their risk-adjusted financial gain.
A taste for risk and/or a taste for the pure satisfaction of managing risk is a non-monetary gain. If we accept my claim that some entrepreneurs seek some non-monetary gains, how can we be certain that no entrepreneur seeks risk as its own reward?
My unprofessional opinion is that some entrepreneurs seek risk and rationalize their risk-seeking behaviour as a quest for maximal financial gains. I'd extend that risk-seeking and rationalizing behavior to explain why many people join early-stage startups. When you look at the average risk-adjusted return of being a startup employee, a great deal of rationalization is necessary to claim that you're in it for the money.
"Gains" obviously did not refer to strictly cash. Gains refers to anything you value. Cash is just a tool. I would go further than you and say the vast majority of entrepreneurs seek autonomy. Use occam's razor when interpreting the statements of others.
I don't seek to reduce risk all the time. Sometimes I actually enjoy taking a risk. For instance, when given the opportunity to leave this house to go shopping I take a risk that I don't need to take. After all, I could get mugged, driven over or any other one of a thousand things that could go wrong on a trip to the shopping mall. It would be much safer to mail order everything in.
And that's not counting my decision to maybe do it on a bicylce, which we all know is less safe than my car (but I enjoy being out there). And I might not even wear UV protection risking skin cancer. And not wear a breathing mask to enjoy the not-so-fresh air.
Life is risk. Sane people (or at least I hope they are the sane ones, if not I'll be off to the funny farm tomorrow) will balance the risks they take against the upsides and will not seek to reduce risk per se.
Entrepreneurs are not unique in this respect, everybody does it, all the time.
Increased risk and knowing how to balance risk is a requirement for a normal life.
And that's not getting in to things like skydiving and bungee-jumping yet.
Never underestimate the tribal drive in humans.
Most people will not choose an outcome distribution which is highly concentrated on one spot, even if that has the highest expected return. People who are highly motivated are even less likely to choose it.
Most people will choose less expected return (sacrifice gains), and more risk by buying a lottery ticket.
I think the notion of lower risk being good comes from the financial world where you can use leverage on a lower risk position to create a higher return one.
I think people choose outcome distributions that are quite different than a low risk one.
It seems unlikely that anyone would get utility out of risk itself, independently of the reward. But many people, given the choice of two scenarios with equal risk/reward ratios, tend to choose the scenario with the higher risk numerator. "Bet big or go home".
Instead, it mostly has to do with their expected costs and benefits, just like any other choice. If one comes from a poor background and lives in a society with poor upward mobility, your quality of life as well as life expectancy is low anyway, so the risk of crime is less severe compared to the expected gains.
No wealthy people became pirates. If risk aversion/attraction was all there was to it, they would.
There were also (I would say the majority) private ships operating under a government licence, the letter of marque, where they could do anything to the enemy's shipping to "take, burn or destroy". That was mostly in the Channel and the south americas.
And there was a big grey area where a ship might be thieving on one occasion and operating under a letter of marque on another. As with most history, it all depends on who was telling the story afterwards.
Is Iraq with our Army and Blackwater mercs really any different?
http://books.google.com/books?id=sPHP4uUFQgEC&lpg=PP1...
* * *
Anyway, how do you decide who is the thief when we’re talking about stealing from boats trading in plunder, slaves, or products produced by slave labor, as was the case for an awful lot of what got shipped around the Atlantic for many centuries?
This message brought to you by the Thief Anti-Defamation League.
(Personally, I'd say that robbers are a subclass of thieves.)
I like the analogy, and I can relate to the attraction of spending your life "at sea". The prospect of striking gold is not what attracted me to work for myself, it is the lifestyle.
The unknown nature of startup life is also attractive. At my previous job I knew I would be at my desk every day doing the same thing - now I have no idea where I will be or what exactly I will be doing from week to week, and that is very appealing to me.
And risk/reward? Who cares, just enjoy the adventure!
However, I wonder if all entrepreneurs are like he describes. In fact his description is almost at odds with what Zuckerberg said at Startup School, about simply building things because you like building things.
I think at the end of the day there's many motivations for doing something as bold as building a company, and everybody has a different mix of those motivations.
"What if..." is a sign of curiosity, exploration, creativity, imagination and a modest disregard for the risk.
- "What if I climb down that cliff... will I find a beautiful and isolated beach?" (Versus: fall to death)
- "What if I sail this ship a bit further? Will the next island be more bountiful than the last?" (Versus: crash on rocks)
- "What if I replace this diode with an LED? Will the effects circuit sound better?" (Versus: break the effects pedal)
And so on.
"Their argument/story/point of view is not valid because they don't understand that you can just build things because you like building things" - 100% crowdpleaser. He is not addressing the issues, he is completely reframing it.
If you look for more examples check out the movie "Thank you for smoking": The question is not whether smoking is good or bad for you or whether we knew about that. The argument is whether we should make decisions for the people of this country or if it is their freedom to make their own decisions.
I do appreciate the risks pirates take, this however, does not devalue the role of a peasant or a cobbler or a prime minister or a soldier to the society. Its narrow minded to establish one work to be better than the other.
Be pirate, if you think, you are best suited for it. There is NO shame in doing something else, for which you are better suited either.
There are a lot of bloggers and self-proclaimed experts who are posers.
(Disclaimer: former tc employee)
I've come to believe that people who create startups must be, by definition, entirely unqualified for the job. If they were truly qualified they would have some idea of what they were getting themselves into and they would avoid it. Hence, only unqualified people embark on the adventure.
There is, however, an up-side to being unqualified:
The young do not know enough to be prudent, and therefore they attempt the impossible, and achieve it, generation after generation. -- Pearl S. Buck
The young and foolish change the world.
I had to choose "other" and write in "I can't not do this."
It is an almost uncontrollable urge. I think it could be safe to say that kind of compulsion limits my ability to do a really good risk assessment. So far it works for me though :)
- Part A: Seeing a distant island full of fruit and thinking "Wow, I'm totally going there - screw everyone else who's just eating potatoes around here."
- Part B: Choosing to make a boat rather than jumping straight in the sea and risking drowning or death by shark.
So the goal itself is risky and/or unknown, but it doesn't mean you have to do stupid or excessively risky things to get there.
There's a lot of overlap between scouting/explorer/pirate behaviour and entrepreneurship - certainly for me. The very same thing that keeps me going as an entrepreneur sees me exploring/climbing and hiking in dangerous but beautiful places. It's an odd personality trait, but one that's evolutionarily advantageous (now the islanders have all the fruit they need) :)
For me, the risk-taking comes partly from a confidence (that could sometimes be characterized as over-optimism) and partly from the feeling that my gains from the risk are worth it.
I like adventure, but I don't fall into the category of "They don’t need to be rewarded for risk, because they actually get utility out of risk itself." people.
Taking a risk (e.g. quitting my (Principal Dev manager) job at Microsoft and creating a startup) is rewarding in itself (regardless of how well the company does financially). However, for me, the primary reward is not the risk. The reward is what I get from taking the risk (e.g. work on more interesting stuff)
edit 2: these are specialized, refined tests that construct risk preference from a number of decisions from hypothetical situations. Assessing risk preference is not a simple manner of direct question (ex: "Hi, are you risk tolerant or risk averse?") or introspection.
I have constructed preference profiles with conjoint and other "complicated" methods many times for big companies and believe me: they only scratch the surface of human behavior, most of it is not valid.
Everybody may have his/her own reason for being an entrepreneur. I see this discussion and Arrington's article as well (besides maybe preparing the ground to quit:) more as an emotional discourse to justify why we do what we do. I have these discussions with my friend and bus. partner all the time and I really enjoy feeling superior to employees, but I know in the back of my brain that it's somewhat unfair.
Anyhow, as for myself, I love to do it because of the lifestyle, because I love to create something, because I can wake up late and work during the night, because I am in control of my professional life and decisions and perhaps most importantly because I hate to know what's gonna happen the next day, next month which is inevitable with a normal job.
My life is over as soon as I am locked in a job + family + everyday routines + stop being curious and open. I would die. I would know how it is going to end, just wouldn't know when.
Just to avoid the latter and achieve the former I am risking right now nearly everything stable I have had in life (friends, family, nice job ($1M in 5-6 years), house, perspective of a relaxed long life)
(don't misunderstand the family part, i believe that is the most important element of a happy life, but it decreases your "degrees of freedom", if you see what i mean)
Ah, that was the word I was looking for, freedom :)
Here's a followup question your freshman econ professor would have asked:
> Should we create incentives to reward entrepreneurs for their risk aversion? Or should we leave it exclusively up to the free markets to offer the reward?
In other words, if an idea fails should society step in and help the entrepreneur out (thus creating an incentive for him to further innovate)?
For entrepreneurship there is already enough reward for the risk. It's not just monetary gains we're talking about. For one, you get to call the shots and that's worth more to some people than money. (http://www.paulgraham.com/boss.html)
Maybe that's true now, but it isn't a tautology. For example, pg has mentioned that a few centuries ago, people didn't keep the wealth they made (it was handed over to royalty), which made it so there were no incentives, which severely lowered entrepreneurship.
Society has to work at making sure the balance of incentives is "correct" (correct in the sense that that's what that society wants.) So asking about one potential way society can help increase risk-taking is perfectly valid and reasonable.
To build something that other people use is an ego boost.
To build something that other people _pay for_ is even better.