Max Levchin on intelligence vs cultural fit.
On making hiring decisions easy (at PayPal) by hiring from your network.
Vanity Fair Magazine ran President Obama’s interview to the writer Doris Kearns Goodwin. It’s more an easy conversation than an interview, on decision-making, the change in the political environment over the last half century, and presidents past.
Some bits caught my interest in how they contrasted with Indian political norms:
– The idea of the ‘office of citizen’ ingrained in American democracy, that fundamentally the president is a citizen who has assumed office for a period, as opposed to a different class of human being, as many countries tend to treat their senior politicians. This is more significant when you consider that the American president is the head of state and the commander of the armed forces, not the seniormost administrator like a prime minister. This is an office where, during the course of an interview, a senior journalist like Goodwin can get in a line like ‘… I’m teasing you!’, a line that can still make it to print.
– The political neutrality of presidents’ legacy after they remit office. Presidents are judged almost exclusively as an individual and an office holder; their political affiliation is just one attribute. This may be changing in very recent years, the most common example being appropriating Reagan as the forerunner of today’s extreme conservatism. However, most presidents have been examined, criticized, written about and learnt from across the political divide. There are no holy cows. This is remarkably egalitarian. It’s also an important factor in maintaining perspective; that the past wasn’t entirely better or worse than today, and that not one single individual was responsible for any phase in history. Politics and policy making is complex with enormous externalities, and viewing leaders of nations in that context is critical. India has mostly failed here.
– The idea of a presidential library, the idea of all presidential communication being archived and made available for the public, save classified information. The progression of the idea of public availability of presidential information is, to me, fascinating: and doing a road trip of the US connecting the Presidential Libraries is something I’ve wanted to do for a long time now.
I would also love for India to have this put in place as soon as possible. I can imagine the throng of historians, politicians, lawmakers, policymakers, publishers and bloggers at these centers (think libraries of the papers and correspondence and photographs of Vajpayee, Narasimha Rao, Modi) and what works they could produce out of this information.
– A hint of what Barack Obama’s post-presidential passion (currently) is: “creating a platform for the next generation of young leaders across disciplines to work together”, and what a wonderful thing that would be if it were done right; a variation of the United Nations where people that mattered met for the sole purpose of getting things done as opposed to a warren of bureaucrats periodically hosting leaders for displays of pomp and theatre, where driven people from science and engineering and philosophy and marketing and business and politics and the arts learnt, prioritized, traded, synthesized and solved issues that matter in the long term, require the application of multiple areas of human discipline and needed to be packaged & sold to the public.
Microsoft is buying the company that makes the smart keyboard app SwiftKey.
I’ve grown very fond of SwiftKey and use it on the iPhone, iPad and the Xiaomi. Over time it’s gotten better at prediction even on iOS (with the limited flexibility available to it there). It now autocompletes common email addresses, phone numbers, postal addresses, common search phrases and even entire sentences.
Longevity is a risk with any independent service, and SwiftKey wasn’t any different (even though they have a revenue stream via paid themes). Some of the best independent apps in recent times have sold themselves to larger firms – Tweetie to Twitter (became the official Twitter app), Beluga to Facebook (which became FB Messenger), WhatsApp, Instagram to Facebook again, Flickr to Yahoo, Accompli to Microsoft (became Outlook for iOS & Mac); WunderList and Sunrise to Microsoft again; Mailbox to Dropbox, and on.
Microsoft has a good buyer’s eye for quality independent apps with a loyal user base. I use all of their acquisitions – Outlook for iOS/Android, WunderList, Sunrise and SwiftKey (though I gave up Sunrise for the excellent – and independent – Fantastical). The question is how long, if at all, these apps will live on independently, in the form and with the, well, independence that attracted their fans in the first place. Sunrise has already been discontinued and folded into the calendar within Outlook. If Microsoft’s bought SwiftKey less for the keyboard itself and more for the AI smarts behind it (and they’ve worked on and trialled some impressive stuff), then the app as we know it is not long for the world.
Some of this churn is a mere inconvenience for the app’s ‘early adopters’; some of it could be more serious (for those who’ve ‘put their life into’, say, Evernote. In any case, it’s a sign of the incredible ferment in the app space (one that is barely 7 years old), with incredible advances in mobile hardware and software platform capabilities; of how easy it is now to make an app and get it in the hands of people who like, no, love it; of how many ways there are to scratch an itch digitally. What is less clear is how to build a sustainable business around this. The dilemma between giving your app away for free to make it as easy to get started with as possible, and charging enough to cover the costs of making and running it. The dilemma between focusing on a single software platform (iOS or Android) to make the best of what it offers, and building for both (with its attendant compromises and overheads) so everyone who wants to can try it out (and pay!).
We haven’t had an app-first, mobile-era business that’s sustainable at scale. All of the biggies – Apple, Google, Facebook, Amazon and (doggedly) Microsoft – are all of web vintage, or earlier. Uber likely has the best shot among the mobile-era upstarts.
It’s clear though that as apps are built, sold and abandoned, it’s going to be increasingly important that you be able to move all the information you put into them. It’s simple to experiment with email apps because email a well known standard, and moving from Sparrow to Mailbox to Airmail still means using your same Gmail (or other) email mailbox. Ditto with photo apps because your photo album is right on your phone. Calendar app? The same. But todo apps? Keyboard apps? Messaging apps? Read Later apps? Your Airbnb reputation? Foursquare checking history? Spotify playlists? Uber ride history? All locked in. It goes away with the app.
Your division starts off on a new project with a bang. And months later ends with a whimper. You shut the thing down, your folks are terribly frustrated but you don’t really know what went wrong. From my experience, here’s probably what happened:
First, there’s the idea.
Then, there’s the productization of that idea.
Finally, there’s the business built around that product.
But you cannot make money off an idea. You can only make money from a business. And you cannot take an idea to market. You can only take a product to market.
Too often, Management doesn’t see the difference between the three and misses asking the right questions at the stage those questions need to be asked. The result is usually a shoddy product, reactive execution, management by crisis, a demoralized team and money down the drain.
Been there before?
If you rush to build a business around nothing more than an idea, you’ll probably find that
Your audience doesn’t understand your product because you don’t understand the audience. Or you spent so much time early on thinking about monetization you didn’t think enough about adoption. Or by the time you launched, your product was a year behind its competition. Or you built your mobile app for a platform your early adopters don’t use. Or you launched without customer support or the ability to collect feedback. Or you give up on the product too quickly because it didn’t really really excite you to begin with.
Here’s what I think might help avoid these holes:
When evaluating an idea you’d ask
And then, once the idea’s passed evaluation and you’ve begun to build,
Once you’ve launched, gotten traction, feedback and momentum,
You’re likely better off asking these questions when they really matter. Not too early, not too late. #Ilearntthehardway.
… is this (at the very start of building a new product):
Assume your product’s already been built. Now think about how you’re going to get adoption and usage among your audience.
Too often you get so caught up in the excitement of building something cool, you don’t tackle the hard problem of seeding it and getting usage among early adopters until you’re very close to – or at – launch. Then you’ve got a product that’s ready and no one but yourselves using it. Your go-to-market guy’s under tremendous pressure and your developer’s twiddling his/her thumbs. Your team can run out of momentum and enthusiasm really quickly and it’s very hard to get your mojo back.
This has happened to us before. And I’m still working on that advice.
While the monstrosity is gone, we had a chance to take a gander last week:
Well one had to see it. Because it’s there. And the reports of how it didn’t miss the Bandra Worli Sea Link by much, relatively speaking. From the spot on Juhu beach where the damn thing is, you can easily see the taller pair of towers of the Sea Link.
But it’s big. Driving down Juhu Tara from Santacruz, near the Ramada curve, I told myself to Keep a Watch out; you don’t want to Miss It. I thought it’d be a hundred feet off the beach or suchlike. Watch out my ass. It’s like the Worli TV tower while coming off the BWSL – in your damn face. It’s on the sand. For something this massive to come this close to the shore it’d have to be not just crazy, but Charlie-Sheen-stark-raving-nuts-berserk-crazy. This helicopter shot is straight out of a disaster movie – the damn vessel-from-hell is headed straight for the Juhu Centaur:
So I pay-and-parked in front of the Ramada and walked towards it. Few analogies, really. Dinosaur? Gulliver? Space ship? None come close. It’s ancient. Filthy. Tired. Rusting. The last vestiges of dignity seeping out of it. And yet disinterested in its fate, just as long as there’s one in store. So there’s a massive loneliness, sadness around it:
And yet it utterly dominates the horizon around it. Standing close to it gives you a sense of creeping agoraphobia, until you just have to look away. It’s arguably smaller than the Centaur and the Ramada in front of it but unmatched in sheer presence. No shacks, palm groves, seafront bungalows, miscellaneous other construction and crumbling walls around it. It stands alone. Off to its left there’s nothing until Madh, far into the distance. On its right, the Sea-link,the only comparable superstructure, is obscured by the hump of land at Juhu Koliwada.
So it stands, despicable, unwelcome, but unchallenged as emperor of its stretch of sea-land.
Google+ is like a VCR. I know exactly what I can do with it. But I cannot figure out how. Maybe I’m slower in the head now, but I remember within minutes I was using Orkut in the same way that I would always use it. Ditto Facebook. Then again, it was probably because they’re such simple, single-textured attempts at replicating real connections. + is more ambitious.
+ is supposed to be the notFacebook network. The gentleman hero that gives back to the meanings of ‘social’ and ‘share’ the nuance they had lost for the last five years. To create social circles of people that really matter to you. To share with them pictures, plans, numbers, confessions that couldn’t make it to Facebook. To boldly go…, so to speak.
But now I find myself being ‘added’ by the same people I’d spent time weeding out of my Facebook friends in an attempt to create those private spaces that + was supposed to let me create in the first place. I herded the party out the back only to have them stagger in the front door.
And what does ‘added’ by someone mean? Would I begin seeing things they shared? Would they see what I shared? Was I part of circles I didn’t know about? Frustratingly, for a network that was supposed to let you create social connections on your terms, I couldn’t even refuse to be ‘added’. Logging in to +, for now at least, seems like walking into a party blindfolded.
But you can retreat into your own circles, can’t you? Yes and No. Maybe I’m the social weirdo here, but I can’t tell just what my today-in-real-life-circles are. I mean I can group/circle the guys from school, the folks from IBM, my first roommates, my then-close friends at IIMK. Each group corresponds to people in distinct phases of my life, people that have remained prominent as the others have faded.
The group reveals itself only after the phase has passed.
And then it also strikes me. That I can only recollect a single group for each phase should tell me something – I really _belonged_ to only one group at a time. It tells me that groups like ‘work’ and ‘family’ and ‘cousins’ and daily commute gang’ and such are really just only contexts for interactions. You can force-create + circles for them, but they’re really freeform amoeba-like shapes, and will change. Not even snap, just thin out at points and separate into other blobs without much emotional ado. Attempts to share ‘stuff’ with them on services like + will peter out in weeks. Or days. I mean what would you share with your ‘work’ circle that you wouldn’t share publicly on Facekut? And how long would you keep sharing with ‘cousins’? Google weakly suggesting ‘Acquaintances’ as a possible option demonstrates just how hard it is to find more than one meaningful, binding circle in your life.
Maybe I don’t get it. It meaning having real-life connections. Maybe + is really a move-to-the-next-curve improvement in social networks, and I’m a bottom-of-the-curve hermit.
Or maybe doing life in software really is hard.
I learnt recently that even when all indications are that your business (or life. or city. or whatever) is running fine, something could be wrong – in plain view – that those indicators can’t tell you.
The only way to discover these problems is to tinker around with data. Ask questions of it.
Here’s what happened.
Ours is a prepaid subscriptions business. You sign up, put money into your account and pick your subscriptions.
Our signups, payments and new subscriptions – the three primary indicators of our health  – were growing at expected rates relative to each other. Nothing seemed to be wrong.
Until one day, I discovered that many new signups didn’t have any subscriptions. That was unexpected. It meant that most of our new subscriptions were via older subscribers.
That meant – and this was quickly confirmed – that most of our payments were also made by older subscribers. This is a problem, and we commissioned a quick survey to find out what was wrong with our new signups.
But then we tinkered further. We plotted a histogram of (normalized) new subscriptions started (all of this is excluding renewals) versus how long ago the subscribers had signed up, and we found this:
Astonishing. The older the subscriber, the more the number of new subscriptions they started recently . We had a larger problem than we expected; our older subscribers were so active, they’d hidden how un-engaged our newer subscribers were for several months.
While we took immediate steps to fix this, we also realized that it’s hard to build a dashboard for stuff like this. You can – and should – track primary measures of success, results of specific campaigns, and suchlike. But under-the-surface stuff like this – we’d never have figured it out if we hadn’t tinkered with data.
 There’s also ARPU and churn, but they aren’t material to this discussion.
 The data for months 8 and 9 is skewed by a small set of people with a lot of subscriptions each, but they’re still much higher than any other month, and the trend is the same
A post on Fred Wilson’s excellent blog about cost of acquiring each customer versus the lifetime value of that customer. And it’s pretty simple: “LTV has to be greater than CPA or you won’t be able to scale – or, for that matter, survive.”
This seems obvious. But when you’re preparing a revenues-versus-costs estimate for a business plan, you often overlook how much you earn versus spend per customer over time. Here’s a slight variation of that from a few weeks ago:
The CEO of our firm shot down a recent plan I presented, one that involved both the mobile web and SMS working in tandem. The product was different, compelling, and the estimates said we’d be profitable in a year on the gross. But our SMS costs were 80% of the revenue we would have earned from advertising.
“Keep SMS out; figure out the mobile web part. If you’re spending 80% of your revenue on acquisition and retention, you won’t have enough to spend on content and infra and operations and product innovation – and that’s not even counting people.”
And this was true not just in the month we acquired the customer. Month on month, the SMS costs kept pace with the ad revenue per customer , so we’d never have enough money to spare. In other words, the CPA was lower than the LTV. But not nearly low enough .
 It was also likely, I realised later, that over time the customer would yield less ad revenue as he/she tired of the service, but the SMS costs would be the same. So we would have to evaluate the customer’s worth and adjust SMS quality of service constantly, making things rather complicated.
 As an aside, these costs also grew linearly not just over the lifetime of each customer, but also with the addition of every new customer – there were no economies of scale to be had. If there were, the total lifetime value of all customers would have grown faster than the total (SMS) cost of acquisition and retention, and it would’ve been viable after a point of time.