Build Series: Frameworks for Effort

In April, Marc Andreessen put out the call to build. It was in response to our failure to control and mitigate the effects of Covid-19 — institutions on every level were unprepared for the pandemic, and have continued to show their inability to quickly find and scale solutions.

But more than anything it was in response to our failure to build in general. We chose not to build, he claims. “You see it throughout Western life, and specifically throughout American life.” The problem isn’t a lack of resources or technical ability — it’s with supply and demand of desire. Demand is limited by our ambition and will to build. Supply is limited by the people and organizations holding it back.

Andreessen is generally an optimist, which is why I see his essay as positive in overall tone. But it was also somewhat of a mea culpa. Andreessen has for years been on the other side of Peter Thiel’s view of modern technical stagnation.

Thiel’s view may be too pessimistic, but there’s a kernel of truth to it. If you’re familiar with the history of tech and innovation, something feels different. The late-1800s to mid-1900s had explosions of innovation in fields from medicine to consumer products, transportation, energy, communication, computing, food, and more.1

This is the introduction to a series of ongoing essays centered around the question:

What frameworks can help us build more, better?

And further attempting to investigate the answers to the following:

  • What are the best ways to approach solving big, complex problems?
  • Why are certain efforts so much harder to achieve than others?
  • How are these efforts best managed at every level?
  • How do we build things faster? (Without sacrificing quality or safety.)
  • What is holding us back from building more?
  • How do we overcome these barriers?

Many of these lessons apply not just to “building” in the physical sense, but for solving problems, scientific discoveries, improving systems, and making progress overall. Building in a way is symbolic. It represents making big, necessary changes to move humanity and our planet forward. This can be building something physical or digital, pushing the boundaries of fundamental research, or trying new uncertain ways to solve problems.

It doesn’t even have to be anything new or innovative per se. Andreessen gives many examples of expanding existing tech: housing, infrastructure, education, manufacturing. Even preservation and restoration — in many ways opposites of building — can still apply. In the early 1900s, President Teddy Roosevelt established over 230 million acres of public lands and parks. This added an incalculable amount of value to future generations. I would love to see E.O. Wilson’s Half-Earth Project executed at scale. This is in the spirit of building: making progress and pushing humanity toward a better future.

Here’s a preview of some of the specific topics I want to explore in the series: Ladders of Abstraction (why/how chains), Oblique vs. direct approaches, Modes of effort (why/how quadrants), traversing fitness landscapes, the explore vs. exploit tradeoff, the role of trust in building things fast, forcing functions, and the specific methods we used to accomplish large-scale collaborative efforts such as the Apollo program, the Manhattan Project, etc.

Table of Contents

  • Intro — Build Series: Frameworks for Effort
  • Part I: Lay of the Land
    • Wayfinding Through the Web of Efforts [8 minutes] — Putting goals on a ladder or hierarchy of abstraction. Defining efforts and their multi-scale nature. Determining the hierarchy of efforts using a why/how chain. The difference between making progress directly and obliquely, and the consequences of misplaced directness.
    • Managing Modes of Effort [10 minutes] — A framework for understanding how managing progress differs across scales of effort. Classifying efforts into four modes on the how/what quadrants. Defining the modes and how they fit on the hierarchy of abstraction. A Covid-19 case study. How to manage an effort based on its mode.

Footnotes

  1. What was different about this era? The following is a good rundown from Vaclav Smil’s book “Creating the Twentieth Century” on the remarkable attributes of the pre-WWI technical era:
    • The impact of the late 19th and early 20th century advances was almost instantaneous, as their commercial adoption and widespread diffusion were very rapid. A great deal of useful scientific input that could be used to open some remarkable innovation gates was accumulating during the first half of the 19th century. But it was only after the mid-1860s when so many input parameters began to come together that a flow of new instructions surged through Western society.
    • The extraordinary concentration of a large number of scientific and technical advances.
    • The rate with which all kinds of innovations were promptly improved after their introduction—made more efficient, more convenient to use, less expensive, and hence available on truly mass scales.
    • The imagination and boldness of new proposals. So many of its inventors were eager to bring to life practical applications of devices and processes that seemed utterly impractical, even impossible, to so many of their contemporaries.
    • The epoch-making nature of these technical advances. Most of them are still with us not just as inconsequential survivors or marginal accoutrements from a bygone age but as the very foundation of modern civilizations. ↩︎

Book Notes: Whole Earth Discipline

The following are my notes from 2014 on the book “Whole Earth Discipline” by Stewart Brand. This book was recently recommended by Marc Andreessen along with a handful of other great books related to progress and building the future.

Whole Earth Discipline: An Ecopragmatist Manifesto

Ecological balance is too important for sentiment. It requires science. The health of natural infrastructure is too compromised for passivity. It requires engineering. What we call natural and what we call human are inseparable. We live one life.

We are forced to learn planet craft — in both senses of the word: craft as a skill and craft as cunning. The forces in play in the Earth system are astronomically massive and unimaginably complex. Our participation has to be subtle and tentative, and then cumulative in a stabilizing direction. If we make the right moves at the right time, all may yet be well.

“Find (a) simple solutions (b) to overlooked problems (c) that actually need to be solved, and (d) deliver them as informally as possible, (e) starting with a very crude version 1.0, then (f) iterating rapidly.” — Paul Graham

For sensitive ecosystem engineering at planet scale, what we need most is better knowledge of how the Earth system works. We are model-rich and data-poor. We need to monitor in detail and map in detail what’s really going on, and the measuring has to be sustained and consistent. Donella Meadows laid down the commandment: “Thou shalt not distort, delay, or sequester information.” You can drive a system crazy by muddying its information streams. You can make a system work better with surprising ease if you can give it more timely, accurate, and complete information. We must build a digital Gaia.

“A project is sustainable if it is cheap enough to be the first of a series continuing indefinitely into the future. A project is unsustainable if it is so expensive that it cannot be repeated without major political battles. A sustainable project marks the beginning of a new era. An unsustainable project marks the end of an old era.” — Freeman Dyson

Climate change

One important negative feedback may be operative. The world’s land areas are absorbing more carbon dioxide than they’re releasing lately. “Believe it or not, plant life is growing faster than it’s dying. This means land is a net sink for carbon dioxide, rather than a net source.” This might be due to simple CO2 fertilization–additional CO2 stimulates plant growth.

In Jim Lovelock’s worst-case climate scenario, Earth stabilizes at 9°F warmer; a fraction of the present human population survives. But the exact outcome in such a complex system is unpredictable. Threshold effects are sneaky. At some point, though, a threshold is reached. Then in an unstoppable cascade the rain forests melt like Arctic ice, leaving savannah, scrub, and desert in their place.

Humanity currently runs on about 16 terawatts of power. We have to cut our fossil fuel use to around 3 terawatts a year, and we have to do it in about 25 years.

On the old astronomical schedule, a new ice age should have begun a couple thousand years ago. “A glaciation is now overdue, and we are the reason.”

Our terraforming thus far has been unintentional. Now that we have the curse and blessing of knowing what’s going on, unintentional is no longer an option. We finesse climate, or climate finesses us.

Continue reading “Book Notes: Whole Earth Discipline” →

Pandemic Memo

The following are my thoughts taken from a memo to family office investors I sent out today regarding the pandemic.

These are unprecedented times in modern history. Not since World War II has there been such a large disruption in daily lives across the world at such a quick pace.

The pandemic we’ve entered is a classic Black Swan — an unpredicted event that has extreme consequences. Of course, Black Swan events are relative. A surprise to you or I may have been wholly anticipated by others. And in this case, it very much was.

To epidemiologists and people who had seriously thought it through, a global pandemic quickly sweeping humanity was an inevitability. It was a matter of when, not if. In 2018 Bill Gates gave a short TED Talk about the dangers of a global flu-like pandemic and the measures we could take to help prevent or reduce it. As we’re now aware, the advice was unheeded.

The human lives lost from the virus will be a tragedy of epic proportions. The current and upcoming economic malaise may be nearly as bad — particularly affecting those without the means to ride it out. Recent wide-ranging government stimulus and intervention can soften the blow, but ultimately the only solution is getting rid of the virus.

This is another reminder that we live on the thin veneer of civilization — modern society is very fragile if we’re not constantly vigilant about it.

We will get through this, as humanity has always done in the past. When the entire world has a common enemy, people get creative. Everyone should expect the world to look different after. Especially in areas like healthcare, biotech, and government.

These differences will all be for the better. Humanity is always searching for higher peaks of “fitness”, and on the rough landscape of possibilities sometimes you have to go down to eventually go up. Life getting worse before it gets better has always been a common theme. From the shift to agricultural societies, to world wars, to global pandemics.

We just need to work together to get through it first.

Book Notes: Why We Get Sick

Back in December I read the book “Why We Get Sick” (1992) by Randolph Nesse and George Williams. While some of the information was outdated due to its age, overall I loved the book as it took a more wholistic, evolutionary approach to explaining sickness.

Given the global pandemic of 2019-nCoV (novel coronavirus) underway and the timely nature of my read, here are my brief notes I took from the book.

Why We Get Sick

Two kinds of explanations for disease:

  1. Proximate explanations — Answer “what” and “how” questions about structure and mechanism. Address how the body works and why some people get a disease and other’s don’t. A proximate explanation describes a trait — its anatomy, physiology, and biochemistry, as well as its development from the genetic instructions provided by DNA.
  2. Evolutionary explanations — Answer “why” questions about origins and functions. Show why humans, in general, are susceptible to some diseases and not to others. (Or why some parts of the body are so prone to failure.) An evolutionary explanation is about why the DNA encodes for one kind of structure and not some other.

Defenses. Mechanisms our body and immune systems designed specifically to combat an issue. A protective response to a problem. Coughing is a defense. The distinction between defenses and defects is important — defects are not preprogrammed responses, they are results of a problem. Skin turning blue from lack of oxygen is a defect.

Causes of disease:

  • Infection. External agents such as bacteria and viruses.
  • Novel environments. Environments our evolved bodies aren’t used to handling. A mismatch between our design and our environment.
  • Genes. Some of our genes are perpetuated despite the fact the cause disease. In the environments we evolved in, they didn’t harm us enough not to be selected out. DNA can also be mutated and create new bad genes.
  • Design compromises. There are costs associated with every major structural change preserved by natural selection.
  • Evolutionary legacies. Evolution is incremental and can’t make major changes quickly. Many of the design choices are not optimal and carry on anyway.

Signs and symptoms of infectious diseases

Symptoms of colds and other sicknesses and diseases can be unpleasant. But most of them are useful. It is an adaptation shaped by natural selection specifically to fight infection.

Fever is an adaptation to raise body temperature enough to assist with fighting infection. Body temperature is carefully regulated even during fever; the thermostat is just set a bit higher. Children who take Acetaminophen take about a day longer to recover from chicken pox. There are costs of a fever, of course. Otherwise the body would just always stay at 103F at all times. It depletes nutrient reserves 20% faster and causes temporary male sterility. Still higher fevers can cause delirium and lasting tissue damage. And because regulatory precision is limited, fever will sometimes rise too much and at other times not enough.

Continue reading “Book Notes: Why We Get Sick” →

Advantage Flywheels

Competitive advantage can be represented visually as 1 or more feedback loops. These create the advantage “flywheel” that maintain and grow a moat over time. Think of a big, heavy wheel that takes some effort to get started but then coasts off its own momentum.

Before continuing, check out Eric Jorgenson’s primer on the flywheel mental model here.

Flywheel archetypes

Here are 6 simple examples of common advantages represented as flywheels (or “causal loops” in systems terminology). These loops are generalized — they’ll be expressed uniquely in every company that has them.

A few examples of how each advantage flywheel can vary:

archetypes.jpg
  • In the Economies of Scale flywheel above, the primary driver of more volume is low prices. This fits for most consumer businesses, but lower prices aren’t always the outcome of lower unit costs. If prices are maintained or increase, scale will yield higher margins → more resources to spend on growth → more sales volume.
  • The Brand Habit flywheel exhibits the typical loop for habit-reinforcing association of a brand with a specific quality or job-to-be-done. Think “thirst quenching happiness” for Coca-Cola and “low prices” for Wal-Mart. Another example of brand advantage is more of a social proof effect: Product has success → the cool kids want it → improved perception of product → …

As Eric discussed in his flywheel post, each wheel needs a push to get started. Written in green on a few of the archetypes above are initial advantages to get the wheels moving. Whether it’s a better user experience, a technical breakthrough, or a bootstrapped network based off of an existing network (college campuses for FB) or a useful utility (Instagram).

Real world examples

The above archetypes can be combined to create more comprehensive flywheels modeling the driving “engines” of each company’s moat:

examples

The most successful moats have multiple flywheels that feed off of each other’s momentum. Google’s technical advantages enable stronger brand allegiance and vice versa. Coca-Cola’s marketing-driven brand feeds off of it’s distributor/bottler based network effects. Facebook’s brands have at least 3 reinforcing network effects: direct (social network), 2-sided aggregator (advertising and developers), and brand-driven social proof.

Friction and limiting factors

In systems thinking, reinforcing feedback loops are almost always slowed by a balancing loop attached to it. Growth doesn’t continue unchecked, and flywheels always run into friction.

Some of these limiting factors are overcome, others are so strong they stop or reverse the entire growth engine.

What are some typical examples?

  • Switching costs & network effects — product quality slips as the incentives to improve aren’t strong when customers can’t leave → value of a competitive offering overcomes switching cost.
  • Learning curve of proprietary tech — hitting top of the S-curve, output efficiency declines, and competitors catch up.
  • Direct network effects — any source of decreasing value to users, which could cause users to exit and turn the virtuous cycle into a vicious one.

Moats Move

Using the analogy of a feedback loop helps to think of an advantage as a moving, changing system. A system that needs catalysts to get started, and will gain momentum at first but still be slowed by friction over time.

When thinking about how a business will grow over time, ask:

  • What advantage archetypes does it fit?
  • Where are the sources of positive feedback?
  • How do you get the flywheels moving? What strategies can help get inertia? (For example, “doing things that don’t scale.”)
  • What are the current or future limiting factors?

Featured photo from Ruth Hartnup on Flickr.
Thanks to Eric Jorgenson for feedback on the final version.

Polaroid, Apple’s spiritual successor

I just finished 2 books on the history of Polaroid 🌈1. A remarkable tech company with enormous success in consumer and industrial applications for decades. It’s also remarkable just how much Apple was influenced by Polaroid.

A brief history

As a child Edwin Land found a copy of the 1911 edition of Physical Optics, a textbook by the physicist Robert W. Wood. He obsessed over its contents, lingering on one chapter in particular: the polarization of light.

In 1928, Ed Land was 19 when he invented the first thin-sheet polarizer. He cofounded Land-Wheelwright Labs with a friend in 1932 after dropping out of Harvard. Their first products were polarized versions of headlights, sunglasses, etc.

They grew slowly with mostly small industrial contracts for 6 years, then reincorporated as Polaroid Corporation. During the war sales grew an order of magnitude, 80% of which went to the military for products like polarized goggles.

In 1943 Land came up with the idea for a film camera that can process right away instead of in a lab. R&D started immediately, but it wasn’t until 1948 their first camera, the Model 95, was released. It went on to sell 900k units in 5 years.

The 95 was a classic disruptive innovation: worse quality than traditional film cams, dismissed as not “real” photography, but appealing to a new market of customers. And profitable: camera for $90, film packages with 60% gross margins.

With all the new cash flow, they could plow it back into R&D. To Land, they had “. . . created an environment where a man was expected to sit and think for two years.”

Polaroid’s growth lasted decades longer, peaking in the ’80s right when, ironically, they won an historic years-long lawsuit against Kodak for patent infringement.

Apple, the spiritual successor

Poloroid-Apple.jpg

Back to the Apple comparison. The similarities are clear: from values, to marketing, to org structure, to product launches and demos.

Just like Jobs, Land was at the top of every invisible organizational chart. An anonymous former colleague: “Don’t kid yourself, Polaroid is a one-man company.”

When faced with scientific illiteracy or lack of imagination, Land resorted to a restrained bit of showbiz. As it turned out, he was strikingly good at explaining his work to people, and powerfully persuasive.

Ed Land was one of Jobs’ childhood heroes. Jobs met with him later and connected when when Land said his products have always existed, they were just invisible: waiting to be discovered. Apple exemplified Land’s motto “Don’t do anything that someone else can do.“

Polaroid’s downfall started long before the digital apocalypse with their sidelining of Land in the ’80s. His final mistake was giving little thought to his own succession and the future of the company in the new generation. When they all but kicked Land out, Jobs met with and scolded management, saying Polaroid would turn into “a vanilla corporation”.

And it did. Jobs would take this lesson to heart many years later with his own succession plan.

Snapshot

Evan Spiegel is also heavily influenced by Land and Polaroid. But alas, Snap is not a camera company—they’re a communication company. And I think they’d do better in the future remembering that.

Inspiration, not imitation.

snap.jpg
Polaroid Variable Day Glasses; Snap Glasses.

I’ll finish with a Land quote from 1970: “We are still a long way from the… camera that would be, oh, like the telephone: something that you use all day long … a camera that you would use as often as your pencil or your eyeglasses.”

  1. “Instant: The Story of Polaroid” by Christopher Bonanos (2012). “Land’s Polaroid: A company and the man who invented it” by Peter Wensberg (1987) ↩︎

The Scale of Large Projects

$100 million +

  • Midsize commercial airplane — $120m ^
  • Big budget video game — $150m ^
  • F-22 Raptor jet — $157m ^
  • iPhone R&D (2007) — $185m ^
  • Titanic (1912) — $190m ^
  • Big budget movie — $250m ^
  • SpaceX Falcon 9 v1 R&D — $350m ^
  • Empire State Building (1931) — $400m ^
  • Modern cruise ship — $750m ^
  • Hoover Dam (1936) — $863m ^

$1 billion +

  • Modern sports stadium — $1.3b ^
  • Modern skyscraper — $1.5b ^
  • Space Shuttle launch — $1.5b ^
  • Erie Canal (1825) — $4b ^
  • Human Genome Project (2003) — $5b ^
  • Panama Canal (1912) — $9b ^
  • Hubble Space Telescope (1990) — $9b ^

$10 billion +

  • Global Positioning System (1989) — $10b ^
  • Large Hadron Collider (2009) — $13b ^
  • Great Pyramid of Giza (~2500 BCE) — $20b ^
  • Three Gorges Dam (2009) — $25b ^
  • Transcontinental railroad (1863) — $30b ^
  • Manhattan Project (1945) — $30b ^
  • F-22 Raptor development (1997) — $42b ^
  • Great Wall of China (220 BCE) — $50b ^
  • SR-71 Blackbird development (1964) — $90b ^

$100 billion +

  • International Space Station — $150b ^
  • Apollo program (1969) — $200b ^
  • U.S. Interstate Highway System (~1980) — $500b ^

Many of these numbers are rough estimates. Figures adjusted for inflation after 1900 that weren’t already. Any figure before 1900 was adjusted via per capita GDP to more accurately reflect the scale of the undertaking.

If it were possible, the best metric to compare the scale of projects would be something like “Man-years + Value of Raw Materials (possibly in ounces of gold)“. This is especially true for projects like the Great Pyramid, the Suez Canal, the Great Wall of China, or the Manhattan Project which used mostly unpaid or low-paid labor.

Related: The Tallest Skyscrapers in the World, Pyramids vs. Skyscrapers

Tokenized Securities and the Future of Ownership

In the coming years, Tokenized Securities are poised to take over existing financial markets and create many where they didn’t exist before. This is only now possible due to the invention of decentralized blockchains along with the recent influx of interest and capital.

So what are they? Here are a few good resources to start with:

token_types.png
A breakdown of token types from The Token Handbook. Tokens will have many uses but I think the biggest will be on the Securities and Asset side — not currencies as many believe.

There’s plenty of related buzzwords like blockchain, crypto, ICOs, colored coins, etc., but forget all of those for now. Tokenized Securities are digitized, programmable ownership. Legal ownership requires enforceable scarcity. Normally anything digital isn’t scarce, but they can be thanks to decentralized ledgers (blockchains).

Continue reading “Tokenized Securities and the Future of Ownership” →

Books: 2017 Reading List

Competing Against Luck — finally a full writeup on “Jobs Theory”, and required reading for anyone involved in product strategy & UX design (i.e. all startups).

The Change Function — good, simple model to think about how valuable a new innovation is (all about UX, or if (perceived crisis > cost of adoption)).

Marketing High Technology — best book on distribution you can find, for technology or otherwise.

Shoe Dog — Great story; wish he would have spent more time in the later years of Nike’s growth.

Doing the Impossible — too dense overall, but I loved hearing the story of the moon mission from the inside, especially from such a talented project manager that made it happen.

Scale — not as good as hoped, but a good “skim” with lots of interesting ideas around a theme.

21 Irrefutable Laws of Leadership — great leadership advice + stories to go along with, Dale Carnegie style (but could have been much shorter).

Hard Drive — 3rd reading of the best bio of Bill Gates & Microsoft’s early years.

The Elements of Computing Systems — I never had formal CS education so this was a great practical explainer, from translating binary to assembly, to how an OS works.

A Mind at Play — always been a huge fan of Claude Shannon’s work, mind, and humility.

Turing’s Cathedral — a little long in places, but great overall history of computing & early people who shaped it.

Softwar — Reading now. Interesting insights about early Oracle, also gives me new appreciation for Ellison. [Update: I would not recommend this book. First part is good but last half rambles on, fawning over Ellison with random stories. “The Difference Between God and Larry Ellison” is much better.]

Product Study: Falcon 9

Last week I was outside of Vandenberg Air Force Base to watch the launch of SpaceX’s Falcon 9 rocket. (It was perfect weather and an amazing experience for my first launch!) To commemorate it, this is another one of a handful of product case studies I wrote to help understand successful product launches.

Falcon 9 was finished in early 2010, and had been in development since 2005. Its first flight occurred on June 4, 2010, a demonstration flight to orbit where it circled Earth over 300 times before reentry.

  • 1st flight to ISS: May 22, 2012
  • 1st cargo resupply (CRS-1): October 7, 2012
  • 1st successful commercial flight: September 29, 2013

Development costs for v1.0 were estimated at $300M. NASA estimated that under traditional cost-plus contracts costs would have been over $3.6B. Total combined costs for F9 and Dragon up to 2014 were ~$850M, $400M of that provided by NASA. 

By September 2013, the SpaceX production line was manufacturing 1 F9 every month.

(1) Value created — Simply describe the innovation. How did it create value? 

The Falcon 9 is a two-stage rocket that delivers payloads to Earth orbit or beyond. It’s a transportation vehicle to space. F9 drastically reduced launch costs, allowing NASA and small satellite companies to send payloads at a fraction of the cost.

(2) Value captured — Competitive advantages, barriers to entry. Why didn’t incumbents have a reason to fight them?

  • Ahead on the learning curve — highly advanced, experiential, expert knowledge
  • Capital and time barriers — lots of money and time needed to get to scale
  • F9 was a disruptive innovation, built from the ground up at low cost. Incumbent launch companies had no reason to start from scratch and lower their profits when they had strong (mainly cost-plus) contracts with existing customers. Industry was viewed as very inelastic and that little demand existed at low end.

Continue reading “Product Study: Falcon 9” →