Author: jitha

The Power Law, or why working hard is not enough

jitha 19 Comments

hard work

Throughout your academic life, you’re told, variously, “There’s no substitute for hard work”, “Work hard and don’t think about the results. They’ll take care of themselves”, “It doesn’t matter what you do, as long as you do it well”, and so on. Mildly put, that’s completely false.

I read Peter Thiel’s Zero to One a couple of months ago. In this book, Thiel, who founded Paypal and has backed many successful startups (including Facebook), talks about startups and how to create value in the world. The book itself has many highs and lows, but I found his discussion of power laws very thought provoking.

 

So, what is a power law? A power law describes an exponential distribution – where a few individual points account for a majority of the value in the population. Simply put, it’s the Pareto principle (80:20) on steroids:

random-vs-power-law-distribution-2

Normal distributions assume that the entire population will be distributed across, with a huge majority of people around the average. For example, if you were to plot a distribution of the weights of a country’s entire adult population, it would probably resemble a normal distribution – a large proportion of people near the average, and the no. of people going down as you moved away from the average on either side.

On the other hand, populations that obey a power law are completely skewed to one side. Think about wealth distribution – you know how they bandy around the statistic that 1% of people account for 50% of the world’s wealth? That’s a power law. I read somewhere that whenever a book from Chetan Bhagat is released, it almost outsells the next 500 best-selling books combined. I was quite surprised, but I shouldn’t have been – book sales also follow a power law.

Why is this important? Power laws have always played a huge part in nature. For example, a vast majority of earthquakes are relatively minor, but a tiny proportion cause almost all the damage – that’s a power law. They also explain a lot of our societal context – language (a few words dominate usage), city populations (the largest cities account for an inordinate proportion of urban population), and so on. And more and more, entire industries are beginning to resemble power laws – especially in the Internet era. Think Search (Google accounts for 88% of the market), Social Media (Facebook has 33x the no. of visits as Twitter, its nearest competitor) and so on. This phenomenon, where the winner takes (almost) all, is becoming more and more pervasive. You dominate or you die (separate post on this later).

But coming back to the main focus of this post, what does this mean for you as an individual? A few things, actually:

  1. What you work on matters, and matters far, far more than how hard you work. Till the early 1900s, there were people called ‘knocker-uppers’ who would help people wake up every morning, by walking down the street with a long stick and tapping windows till people woke up. Many of them worked very hard; but lost their living in a jiffy once alarm clocks started being mass-produced around 1920. As Thiel says, by all means work very hard on what you’re good at, but first think hard about whether it will be valuable in the future. In a world where the returns on your efforts follow a power law, you must think hard about where you stand on the curve.
    [Tweet “What you work on matters, and matters far, far more than how hard you work”]
  2. If you want to start up, seriously consider working for another one (with stake / options). One of the corollaries of the power law is that very few startups will succeed, but they will succeed hugely, enormously. So, being at the right startup is far more important than your role in the startup and how much stock you own. A little simplistically, 0.01% of Google is probably worth a lot, lot more (35 million dollars) than 100% of a startup that you’ll start. And most startups fail, in which case you’ll own 100% of nothing. So if there’s another startup / early stage company that you think is promising, it may actually be a better bet to join it with stock / options than starting your own.
  3. If you have a startup already, don’t hoard stake. Many startup founders are very miserly with stake. I’ve heard many say “Your company’s stock is the most valuable thing at your company.” While technically true, many take this to mean that you should give away as little stake as possible. Rather, I’d read this as meaning that you should do whatever you can to raise its value. And if a particular investor can actually help you succeed and raise the value of your company significantly, then giving them slightly higher stake (within limits, of course) is worth it. This is especially the case early on, when the growth in the pie will affect your personal shareholding’s value far more than the proportion of the pie that you own.
  4. Realize that the power law will permeate all your decisions. Whether the markets you choose to play in, your distribution channels, your product features or your decisions themselves, few or one will dominate in terms of creating value for you.

Now, you can’t predict the future, and so you don’t know which of your choices will matter. The only way to set yourself up for breakout success in an uncertain world is to go for the big prize – where even if chances of success may be low, the value created (for you and others) in the event of success is immense.

 

These are the different ways in which power laws affect us as individuals. I would love your feedback – how else do you think power laws affect our daily lives and work?

And yes, please subscribe on the right for regular updates from this blog – I blog roughly once a week on startups, growth hacking, consumer behavior, books, etc.

How to Supercharge your Productivity – Part 2

jitha 5 Comments

Hey! I’m back with Part 2 of my post on productivity.

 

I’d given three tips in my previous post:

  1. Lose your TV, and minimize distractions
  2. Create a schedule, and stick to it
  3. Establish a routine

I’ve found all three of these incredibly useful, and I’m sure you will too. However, there are a few other things that you can do, to boost your productivity without using too much of your will power.

 

4. Save your will power – Make it hard to do the things you shouldn’t

According to B J Fogg’s Behavioral Model, ‘ability’ is a key driver of behaviors. How easy it is to do something affects how frequently or consistently you do it. Conversely, if you make a task hard to do, would that reduce your proclivity to do it?

From time to time, I get into a habit of checking Facebook regularly. On the hour, every hour. Sometimes even more frequently. I know it’s often just a waste of time, but I can’t stop myself. So I decided to test this theory a few weeks ago. All I did was uncheck the “Keep me logged in” box while logging into Facebook. And the effect was immediate – adding just one step to my Facebook checking routine made it much less likely to occur! Now, unless there’s a specific reason for me to go to Facebook, I open the browser, realize I’ll have to type in a password, and change my mind – why bother with the hassle? Here’s another example: Nir Eyal controlled his urges to check email regularly by just removing the app icon from his home screen! Note to self: I should try that too.

Such small changes to increase the no. of steps involved can help control a bad habit tremendously well.

[Tweet “Make something even slightly harder to do, and you can control it.”]

 

5. Don’t multi-task. It’s a myth.

Throughout our studying and working lives, we’ve been trying to multi-task. And we’ve all found it difficult to be productive while multi-tasking for one simple reason – we’re all doing it wrong. Except for my wife Shilpa – she’s a multi-task-master.

The best way to multi-task is to single-task on different tasks – focus on the task at hand, excluding everything else. If you’re writing a blog post, don’t look at your emails till you’re taking a break / moving to your next task. Accept only interruptions that are 2 min or less.

As I mentioned in Part 1, I try to schedule email for a few time slots, and try not to look at it when I’m working on other things. Establishing a schedule / routine helps here – you can make sure that your tasks don’t overlap with each other, so you can focus better.

 

6. Stop relying on your memory. Use a note-taking software.

Your brain capacity, while incredibly large, is still finite. And given the information explosion that’s currently underway, there’s only so many new things you can put in your brain without pushing something out.

In such a scenario, I’ve found note taking software incredibly useful. Whenever you think of something interesting or see a great article (say with tips to supercharge your productivity), just jot it down somewhere so you can refer to it later. Just like using a calendar instead of remembering meetings or using a task manager to plan your day, not having to remember every brainwave you had for later is a huge relief – capturing all the open loops in your head somewhere frees your mind to concentrate on the now.

I am a OneNote junkie – it has a deep organizing structure, which is particularly useful in compartmentalizing the different types of notes you want to take. I have been using it for over 2 years now, and I love it. If you use Microsoft Office, you should definitely give it a try. The only problem with OneNote is that its apps for tablets, phones, etc. are not great. So, for notes that I want to take while traveling, I use Google Keep (simplistic, but adequate for short bursts) or an even simpler, good old notepad (the physical version). It’s a complicated system, I know, but hey, I’m worth it!

Evernote is another great (and far simpler) option, for people who spend more time on Mobile, or use a Mac.

So what are you waiting for – download your brain today!

 

7. Keep a time diary – track it till you crack it.

Studies have shown that one of the best things you can do to instill a habit is to track it. If you want to eat better, start tracking your food habits. Want to get more exercise into your day – get a step-counter. In the same vein, if you want to become more productive, start tracking how you spend your time.

And again, you don’t have to do this in a physical notebook or excel file – that’s too inefficient a way to track, of all things, your efficiency. There are two tools that I use, which are incredibly useful.

Rescuetime is a desktop tool / browser plugin that automatically tracks where you spend your time. At the end of the week, you get a nice email saying you used your computer for XX hours, and only 55% of your time was spent on productive work (hey!). It also tells you how much time you spent on different websites, so you know the exact behavior that needs changing.

Toggl is also a good option to track your time. Its only disadvantage (esp. vs. Rescuetime) is that you have to track your activities manually.

 

That’s it! Those are the seven ways in which I have been able to get more done every day. Again, would love your thoughts – have any other things worked for you? Please comment / email me at [email protected] / tweet at me (@jithamithra). And yes, do sign up for email updates – you’ll get a new blog post approximately once a week.

Bonus: Check out A Life of Productivity, for many more tips on managing your time, energy and attention better. I’ve tried many of the techniques discussed here to manage time better, but the 7 above have had the most impact for me.

How to Supercharge your Productivity – Part 1

jitha 3 Comments

Do you feel like you’re doing too much? Working 7 days a week, and still scrambling to catch up? Finding it difficult to cope with the multiple things you’re doing, while maintaining a semblance of work-life balance?

Over the last two years, I’ve been doing a lot of things – running my startup, doing a few experiments on the side, etc. It’s not been easy, of course. But the worst is when some of the things you’re doing are time-sensitive, and others are open-ended. It’s very difficult, when faced with a barrage of urgent tasks, to look at other important tasks before they become urgent.

The result – Earliest Deadline First scheduling, which will start like this:

maniac-typing

But soon become this:

drinking-from-a-firehose-300x198

Let’s face it – I’m sure there are better ways to journey through life.

Here are seven things that have worked for me. Start doing them today, to supercharge your productivity. (OK, that’s a little aggressive. But I’m sure they’ll help). My plan was to discuss all of them here, but then the post would become too long and dampen your productivity! So I’ve discussed three of them below, and will cover the rest in a separate post.

 

1. Lose your TV. And your TV Shows.

Essentially, minimize distractions. Whatever’s your poison – be it television, Facebook, Twitter or Cricinfo (see point 3 below). This is especially important if you work from home, like I occasionally do. I don’t have a TV at home. I also don’t watch TV shows – I love movies and I know there’s a lot of very good TV programming out there, but I don’t want to watch one episode of Breaking Bad and commit myself to watching 5 seasons. That’s way too much of a time sink that you’d lock yourself into right at the beginning.

Of course, there’s a downside to this. Whenever I go to my parents’ house and the TV is on, I’m like this. Even during ads.

kids-tv-300x183

 

2. Create a schedule, and stick to it

This is obvious at one level – I’m sure you keep a to-do list (if you don’t, start now!) or compile one every morning. Of course it’s incredibly useful to see what needs to be done when you get to work, but it’s only half the story. Personally, I’ve found it far more useful to schedule the tasks as well, i.e., put a time to them. Every day at the end of my workday, I take 15 minutes to review my tasks for the next day, and schedule them – I block time slots on my calendar for specific tasks through the day.

This way, you don’t come in to work in the morning wondering what to do, and then make a list. Scheduling your workday is a cognitively intensive task – trust me, you’ll want to check Facebook after that! The other advantage of this approach is that when you complete one task, you don’t spend time choosing what to do next – you already know what to do! Studies have shown that will power is a finite resource and any decision making drains it – reduce the no. of decisions you have to make on your schedule, and the more will power you can devote to getting your tasks done!

There are many task manager tools out there for organizing your schedule. I’ve tried a bunch of them, and I’ve found Todoist very useful – the free version is nearly full-feature, and they have apps for everything so you’re synced on all your devices.

A couple of other things you should do:

  1. Every evening, while planning the next day, jot down the three high-priority tasks you absolutely NEED to complete the next day – that’s your definition of victory. Thus, even when some task takes longer than anticipated and your schedule is thrown off, you know what tasks you cannot postpone – another decision saved (and another earned).
  2. Another important thing is to stick to the schedule, but reduce scope if required. Let’s say you plan to exercise in the evening from 7-8 pm, but a meeting runs to 7:30 pm. Now, you have two choices: (i) cancel the exercise plan; and (ii) do a shorter stint at the gym. It’s always better to stick to plan and start your task – even if you can’t complete it and have to revisit it the next day. You don’t want perfect to be the enemy of good.

 

3. Establish a routine

Apart from planning your day, try to establish a daily routine. Man is a creature of habit – if you do something at a certain time every day, then you don’t waste any precious brain cycles in making decisions.

Yes, I know. Your job / business / startup is way too unpredictable, and you don’t know where you’ll be during the day. And yes, that’s why it’s all the more important that you bring some predictability in, especially in more mundane tasks.

Mark Zuckerberg has, of course, taken this to another level, with a wardrobe of only grey T-shirts, so he can concentrate on running Facebook (brilliantly parodied by Scott Adams in this series of strips). But the more fashion-conscious of us (and those who don’t run Facebook) can do a little of this too.

For example, I have been experimenting with a new routine since Diwali (about 3 months). I get up at 5 every day, and do my best to maintain a fixed schedule – read for an hour in the morning, do a few remote tasks, then a little exercise. So when I get to work at 9am, I’ve already done at least 1 of my high-priority tasks for the day (see point 2). I also try and check my email only at a few pre-determined slots in the day – much easier than forcing myself to react every time there’s a ping on my phone. I’m now trying to do the same with phone calls – let’s see how it goes.

An important part of being able to stick to a routine is to have something to look forward to. Reading some articles / a book in the peace and quiet of the wee hours is something I genuinely look forward to, and, as I’m sure you agree, every small motivation helps in getting out of bed, especially in the winter months!

 

That’s it for now – I was planning to talk about all 7 of the productivity themes that have worked for me, but then this post would become too long. So, now to just add ‘Part 1’ in the title.

Would love your thoughts on the above – have any other things worked for you? Please comment / tweet at me (@jithamithra) / email me at [email protected]. And yes, do sign up for email updates – you’ll get a new blog post approximately once a week.

Update: Part 2 of this post is now up, here.

PS. I just signed up for an email course on ‘How to Become a Morning Person’. I’m already pretty much a morning person (can’t wake up much earlier than 5!), but seems like it’ll be useful to see the process that has worked for others as well. Expect a post on that soon!

Why, really, do startups fail?

jitha

Madhu

Why, indeed? This is a question I’ve thought about a lot over the last 2 years (sure, it is a popular thing to mull over), since I took the plunge, so to speak. It’s obviously of deep importance to entrepreneurs – it’s critical to know what failure looks like and try and avert it, whether with a new alpha feature, a marketing campaign, or your startup as a whole. If failure isn’t bad enough, the opportunity cost – what you could have been doing instead – is all too real.

Which is why, when I came across this report from CB Insights on ‘The Top 20 Reasons Startups Fail‘, I was more than mildly interested. The report is based on post-mortems of 101 startups by their founders – a very courageous act. I’ve always found it tough to look back at a failed endeavor, much less deconstruct it as these guys did.

Here’s the key chart from the report:

Startups_Fail

Now, at the trivial level, startups fail when the cash runs out. Or when the founders decide to call it quits, i.e., the commitment runs out. As Brett Martin wrote of his failed startup, Sonar, last year: “Startups don’t die when they run out of money, they die when their founders let go.” Maybe it’s when both commitment and cash run out.

But I have always had a feeling that these are just symptoms, and not the disease itself (and Brett agrees in his post). Put another way, is it the last straw that breaks the camel’s back, or is it that the camel was carrying too much straw anyway?

Back to the Top 20 reasons report – the top 2 reasons are:

  1. Not targeting a market need – 42%
  2. Ran out of cash – 29%

The first one makes complete sense – a solution in search of a problem rarely finds one. I would extend this a little bit though, and say that startups fail when they’re not targeting a market need that’s big enough. For all that the law of large numbers postulates, sometimes there may be only three people that suffer from a problem. Worse, if you’re not from the sector that you’re starting up in, you run a risk that the problem doesn’t exist at all. As Paul Graham said, the key to building a successful startup isn’t necessarily having a brilliant idea, but to make something people actually want.

But I have a problem with the second – I would think running out of cash would, in most cases, be an indicator of some more structural problem at the startup. Indeed, the example used in the report, Flud (a social news reader), ultimately failed when it ran out of cash, but not before trying different approaches to find the elusive product-market fit. And as this blog shows, there’s a lot more going on when you’re running out of cash.

In fact, I would have guessed that reasons 2 and 3 would be poor product and poor marketing, but they come in at no. 6 and 8, as you can see in the chart. I’m sure most people would also agree that the product itself needs to be good, but not enough realize the importance of marketing.

As Peter Thiel says in Zero to One, entrepreneurs learnt from the dot-com crash of the early 2000s to focus on product and not sales, but unfortunately sales and marketing are as important as the product itself. A product itself is worthless unless you get it in front of the customer. And unless you’re building a product for all people at all times (like WeChat and the other South East Asian messaging apps for example), getting your product in front of the customer is a significant challenge. And what’s more, it will remain a significant challenge for a long time, as each strategy you employ to get traction works excellently for a while, and then fails to move the needle as your user growth targets increase, and you have to  jettison it, rinse and repeat (more on that in a separate blog post).

If you’ve invented something new but you haven’t invented an effective way to sell it, you have a bad business—no matter how good the product. – Peter Thiel, Zero to One

And looking at all the other reasons on the chart, you can see how they relate to these three primary factors – (a) product, (b) market and (c) product-market fit. For example, you get outcompeted when your competitor has a better product, or is able to reach the customers more efficiently than you (maybe he can spend more money on marketing than you). The only other element missing in this world-view is time and opportunity cost – without time constraints you could, at least theoretically, continue trying different things cheaply till you get it right. But then, the race against time is what makes this exciting!

What do you guys think? Do you agree with the reasons in the report?

 

PS. Asking founders why their startups failed may not be the best idea – they’re too close to the wheel to go beyond the symptoms. Would asking their investors have yielded a different result?

PPS. Would love your feedback on the post. if you like it, do subscribe over email. I plan to write approximately once a week, on startups, consumer behavior, books, and sometimes nothing in particular (ignore the last part, I didn’t want to put an ‘etc.’).