Timothy Chen

“And so, does the destination matter? Or is it the path we take? I declare that no accomplishment has substance nearly as great as the road used to achieve it. We are not creatures of destinations. It is the journey that shapes us. Our callused feet, our backs strong from carrying the weight of our travels, our eyes open with the fresh delight of experiences lived.”

“In the end, I must proclaim that no good can be achieved of false means. For the substance of our existence is not in the achievement, but in the method. The Monarch must understand this; he must not become so focused on what he wishes to accomplish that he diverts his gaze from the path he must take to arrive there.”

The above passage is one of my favorite quotes from “The Way of Kings”, an epic fantasy novel by Brandon Sanderson. Reading it, I can’t help but pondering the question I usually ask myself: should we live in reality (the ends justify the means), or live in an ideal world (the means justify the ends). I now tend to embrace the latter. After all, it is the means we take that shapes us.

“The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors.” - Warren Buffett (source)

Many hedge-fund managers stay pinned to their computer screens day and night monitoring movements in the markets. Dalio is different. He spends most of his time trying to figure out how economic and financial events fit together in a coherent framework. “Almost everything is like a machine,” he told me one day when he was rambling on, as he often does. “Nature is a machine. The family is a machine. The life cycle is like a machine.” His constant goal, he said, was to understand how the economic machine works. “And then everything else I basically view as just a case at hand. So how does the machine work that you have a financial crisis? How does deleveraging work—what is the nature of that machine? And what is human nature, and how do you raise a community of people to run a business?” (source)

I’m re-reading Ayn Rand’s Atlas Shrugged. Rand is a champion of rational thinking. I hope I can live in a world in which every memebr is a rational being. But it is not the way the world currently works. That’s being said, sqeezing a complicated system into a machine helps me understand the causality of an issues happening within that system—just like underdtading the inputs, the processing, and the outputs of a machine.

It’s been a while since my last post. The lack of new posts is mainly because a lack of new ideas. Why there’s no idea? Because of a lack of excitement. No, you guess wrong. Actually I feel good about the fact that my mood is becoming less volatile with fewer new ideas. I’m now more objective and critical when someone says something is so “new” or so “unprecedented”. I believe my recent immersion in hedge fund study helped me approach the world (especially the entrepreneurial one) from a different perspective.

In July, I read Soros on Soros, Hedgehogging, More Money Than God, A Hedge Fund Tale of Reach and Grasp, and Ray Dalio’s “Principle” on managing Bridgewater, the world’s top hedge fund company, according to Institutional Investor’s 2011 ranking. In June, I read Too Big To Fail, The New Market Wizards, and finally finished Inside The House of Money. All these books are either about the hedge fund industry or about the people who manage the funds. Boy, what a true excitement I found while reading about great minds’ investment philosophy and life stories.

In the hedge fund world, two things are paramount for success: self-discipline and risk control. In the world of entrepreneurship, however, the opposite of these two characters are required for success. Entrepreneurs need to be adventurous and going wild from time to time. I can’t help but think about that, to some extent, all hedge fund companies must go through a starting-up period, which is a time when entrepreneurial spirit is badly needed. So how do entrepreneurial fund managers balance the two extremes, from being risk-seeking to risk-averse?

With curisoty in mind, I paid attention to early life experiences of the big time hedge fund barons who started their empires from scratch. I conclud that founding partners of successful hedge funds usually come with a suppressed desire to win and to beat the status quo. These born adventurers learned to be self-disciplined and risk-aware after experiencing failures. It’s not only about good timing and good luck. Ultimately it’s their calm judgment and mental fortitude that make them the survivor, and inevitably the king, of the hedge fund jungle. So I learn that there’s no need to distinguish the persoanlity gap between hedge fund managers and entrepreneurs. Both have to manage risk along the way to success.

That’s why I welcome my transformation. I’m learning, and I’m interested in knowing how far I can go.

I just finished reading “Too Big To Fail” last night. It changed my view to journalists and journalism. I used to despise journalists in Taiwan because the industry overall is trapped in “irresponsible reporting” practices. Journalism here has been degraded into a form of entertainment.

However Andrew Ross Sorkin, the author of TBTF and an award-winning New York Times journalist, showed me that journalists can be historians. He unveiled what behind the scenes of the most critical weeks in September 2008. At first I wondered how could he obtain such enormous amount of information, only to surprisingly find that the majority of “facts” came from hundreds of hours of interviews with Wall Street executives and government officials involving in the meetings and decision-makings while other facts came from e-mails and personal notes deemed to be confidential. Thanks to his effort, I now read financial news with more “sympathy” in mind.

So what can we learn from here? Journalism can be serious and impactful. I no longer believe that we are living in an age that everyone could be a journalist (thanks to blogs). It is unfair to those who spend hours after hours chasing the first-hand truth. I respect hardworking journalists as I respect hardworking farmers. Still a long way to go, my dear Taiwanese journalists.

Your business model is your economic castle, and you have to build a unbreakable “moat” to protect it. This is my explanation for Mr. Buffett’s famous quote. The same idea can be applied for individuals as well. To distinguish yourself from fellow colleagues, you need to find a distinctive strength and that strength has to be developed through hours and hours of practices. Such strength is your personal moat.

Most of time, your peers are very like you. They’re as intelligent as you. They’re as passionate as you. They know what is right and what is wrong as you do. They know integrity, positive attitude, teamwork spirit, and leadership are the secret sauces of success in a business setting. They know all these principles and follow these principles accordingly.

So while your coach and mentor tell you that having the above qualities makes you outstanding, I would argue that these are basic requirements for top-tier players. I hope you are one of the top-tier players.

A few days ago, I watched a Private Equity class online, and the lecturer asked students, “If you’re joining Carlyle, or KKR, or Blackstone today, how would you really distinguish yourself?” Joining these great companies is just a beginning, the question is, how do you rise from a pool of top talents? My answer won’t be hardworking or networking, though they’re important in such competitive environments. My answer is “an unique insight that requires countless hours of learning and practicing.” The insight is the “moat” of your competitive advantage. The insight takes so much time to develop that even your genius colleagues find it’s unwise to invest time and effort to catch up.

If you studied psychology for four years in university, and you now work as an investment analyst, instead of sorely focusing on gaining all the professions directly attached to your job description, you should continue to learn everything about psychology and apply such insights to your works. Keep your foundation and further build upon it. As time goes by, the insights will become your intuition and your intuition will become your “moat”. Eventually, no one, even Mary Meeker, can pass through the moat you have built. It is you who accumulate all the knowledge and perspectives. Think about what you’ve spent most time on for the past few years. Think about how to apply them to your works and further develop them to your advantage. I believe everyone has a “moat” to be discovered.

Why should a financial engineer be paid four times to a hundred times more than a real engineer? A real engineer builds bridges; a financial engineer builds dreams. And you know, when those dreams turn out to be nightmares, other people pay for it.   — Andrew Sheng, Inside Job

Most people, including me, agree that it’s unjust to distribute wealth in this way. But in reality it’s the way our capitalist system works. I know I can come up with a million reasons to argue why it’s wrong to pay so much to financial engineers. However, this time I’d like to “deliberately” think like a capitalist, and try to explore their reasoning of justification.

1. A financial engineer gets more pay because our market rewards scarce skills. Lots of engineers know how to build bridges, but only few can build derivatives. The result of high demand for scarce skills is the astronomical paycheck.
2. A financial engineer gets more pay because he’s inside the house of money. The financial industry simply earn more than the construction industry, and very likely, more than any other industries.
3. A financial engineer gets more pay because he/she creates “value” for his/her organization. It doesn’t matter how much “value” a financial engineer creates for the society and mankind, as long as he/she creates monetary value for his/her teams, bosses, and companies. Here comes the gray area of every controversy on the merit of capitalism — two worlds, two different definitions of “value”. Here also comes the potential flaw of capitalism — the financial value overrides everything else.

So obviously it’s a design problem. It’s like a bug, an infinite loop, inside a seemingly perfect system that needs to be fixed. (remember The Matrix?) But ironically it is the bankers and capitalists who design such a flawed capitalist system. It’s very difficult to argue with the designers themselves about whether the game rules are fair. However, with questions regarding justice of wealth distribution (re)surfaced, we see, at least, some civilians start to be aware of, and care about, this issue. In addition to a group of people who are awakened from the ridiculous reality (think about Zion), we still need some abnormal events like the 2008 financial crisis, and some brave guys like Neo (or Mr. Smith if you like) to trigger the “reset” of our capitalist system.

What will happen after the “reset/reboot”? Will everything return to the status quo? We may find the answer from watching the final conversation between the Oracle and the Architect in The Matrix Revolutions.

I believe you guys can learn something from Digg’s story (here and here). Hot startups, hot ideas, hot entrepreneurs come and go. So it’s very important to think about the long-term. Don’t just think about the next 6 months (even though pundits may tell you a startup should always focus on the present), but think about the next 3 to 6 years.

Digg reached its hay-day roughly 3 years following its founding, hit a plateau soon afterwards, and went south for the next 3 years. I won’t say Digg’s cycle is typical, but when you look at Facebook or Twitter, they all seem to hit the tipping point 3 years after founding. I know it’s not scientific to make such a generalization from only one example, but I’m pretty sure that, for Internet startups, 3 years alone is enough for one to measure success and 6 years for sustainable success. Also 3 years is a reasonable period to test whether a technology disruption could develop into a commercial trend.

If you are a techie, please place a symbol or anything on your desk to remind yourself of the importance of building a solid (& profitable) business model. Too often I find that my entrepreneur friends are mostly driven by excitement of new technologies instead of rational reasons. On the other hand, if you are a motivated business person, please be aware of the “seduction” of those successful stories reported on magazines and blogs. Make sure what you really want. Do you really want to change the world? Or on the in side you just want to 1) be as admirable as Mark Zuckerberg or 2) earn as much money as Mark Zuckerberg?

Are you going to commit your time and energy to your startup for the next 3 or 6 years? How can you be so sure that 3 or 6 years later you can still be so passionate about the products or services you’re building? Stop doing what you’re doing now for a moment, take a deep breath, and start to think about these questions. I believe you’ll find your way!

Last night, when I was taking a bath, I was thinking about 3 simple words, “how”, “what”, and “why”. Which one matters most in these days? My conclusion is that learning the “how’s” gives you the short-term advantages, learning the “what’s” gives you the directions, and leaning the “why’s” gives you the long-term advantages.

I’ll give you an example. Supposed that I’m learning to trade stock options. I can quickly grab a book like “stock options for dummies” and learn all the steps necessaries for a successful trade. I’ll be doing okay if everything goes fine, like the current bull market. But when the black swan (system risk) hits, like the 921 earth quake or the 911 attack, I’ll suddenly get lost. This is the time we need the “what’s”. “What” is not about playbooks, but independent decisions. If I have the knowledge of “what to do” in a reversing bull market, I’ll immediately know that opt to quickly short the market and follow the trend is the profitable solution (though it’s kind of evil). Anyway, I’ll make the most out of the adversity if I know possible solutions and steps to carry that out. Finally,I’d say that although knowing “how’s” and “what’s” is enough for common people to survive and lead a decent life in these days, knowing the “why’s” is what really makes you different. If I really want to get ahead, I’ll need to learn the “why’s”. Questions like “why the strangle strategy works better than the straddle strategy in a volatile market?” “why the value of options goes up and down?” and even “why I have to trade options in the very first place?” force me to think hard and dig out general principles for future applications. The knowledge of “how’s” and “what’s” often go outdated, but the answers of the “why’s” won’t. The “why” questions are difficult ones but thinking about them thoroughly gives you additional edge in your professional life.

Now let me tell you a good news: most of your peers care only about the “how’s” (remember the how-to lists?) and your bosses all about the “what’s” (remember the so-called directions, strategic decisions?). If you know the “why’s”, you’re already ahead of them.

Facebook, founded in 2004, would reach $2 billion faster than Yahoo and at almost the same pace as Google. Yahoo, founded in 1994, posted revenue of $1.6 billion in 2003 and $3.6 billion in 2004. Google, founded in 1998, reached $1.5 billion in 2003 and then $3.2 billion in 2004. (source)

Google’s IPO was on August 19, 2004.  In that year, according to the Bloomberg data, Google posted more than $3 billion revenue.  If Facebook’s current growth rate (~167% yoy) continues in a reasonable way, its revenue should hit the $3 billion milestone sometime in 2011.  So, why not IPO?  Yes, I ask on behalf of shareholders and i-bankers.

To answer this, we need to take a look at their revenue growth history.  Below are GOOG’s yoy revenue growth numbers quoted from its IR site:

Below are Facebook’s rumored revenue numbers quoted from Kara Swisher, Bloomberg, and Business Insider:

Roughly comparing the yoy numbers, you will find Facebook was actually growing slower than Google during their infant stages.

Now let’s turn to the big guessing game.  What will be the likely fate of Facebook once its stock is publicly traded in NASDAQ.  As you can see from the charts, one year after GOOG’s IPO, its revenue growth rate decreased from 3 digits to 2 digits (118%->92%); meanwhile, its stock price skyrocketed 229.41% ($85->$280) on the anniversary of IPO (chart below).

(GOOG Stock Price, from 27 Aug. 2004 to 26 Aug. 2005. )

Will it be a wise choice to buy FB’s post-IPO stock?  I don’t want to be a pundit, so I won’t say I have the right answer.  However, most of time, the history does repeat itself.  So if you really buy the FB stock immediately after its offering, and hold it for one year, you may reap a 200%+ return as the early Google stockholders did.  Who knows?  If Mr. Market feels good, he will tell you , “Of course, the 2-digits revenue growth rates worth a yoy 200%+ market cap rise because it’s the hottest Internet company on earth.”

That’s being said, I’m more conservative about FB’s revenue growth potential, as it has already reached a near peak amount of users.  And don’t forget it’s already the No.1 trafficked site.  How far can it go?  Most importantly, despite its 500 million active users, 250 million daily users, and 700 billion monthly minutes to be monetized, Facebook only harvests $2B as of fiscal year 2010.

(The above is Facebook’s traffic.  It looks like a peak has been reached.)

The conclusion: Facebook will be mature enough to file an IPO at the end of 2011 or early 2012.  But since its revenue growth rate may not be as stellar as Google’s, I won’t value its post-IPO price as high as Google, unless there are some great breakthrough in gross digital marketing spending or in its virtual credits business.  Boy oh boy, social networking is so fun but so hard to monetize.

Just heard this exciting news from Mark Zuckerberg’s personal FB wall.  He is the youngest person ever selected as the Time Person of the year.  However, as the Chinese saying goes, I wonder whether it’s “Heroes create the times” or “The times produce their heroes.” (no pun, indeed.)

Lucky or not, genius or not, hard-working or not, at least, this year, Time and Mark deliver one strong message to the world — Be aware of the young guys, the next one is ready to shake the world.  Really.  Take care of your future careers, dear beneficiaries of the good old times.

Also, kudos to those who have helped the social movement, but couldn’t make it to the list: Tom Anderson of MySpace, Jonathan Abrams of Friendster, Ramu Yalamanchi of Hi5, Michael Birch of Bebo, Orkut Büyükkökten of Orkut, Wretch Chien of Wretch, Far Tzeng and Jay Liu of Pixnet, and more…

Are the majority of billionaires signed Giving Pledge entrepreneurs?  I’d like to do a quick study on the backgrounds of the billionaires-turned-philanthropists.  It would be interesting to know how their families, businesses, and personal values lead to such generous decision.

And I hope to find more Internet entrepreneurs from the list.

Those pledging are part of a broader shift in philanthropy, in which successful business people—often entrepreneurs—are giving more of their money to charity far earlier than their predecessors. It was a trend that was helped along by Mr. Gates, who started his foundation while still leading Microsoft Corp. (source)

Ms. Case said Internet entrepreneurs have a unique interest in philanthropy. "The folks that helped bring AOL to life were out to change the world," she said. "It seems a natural thing that as they look at the role they want to play, they are giving back in big ways." (source)

The most important thing is that we are all thinking about where things are going and making bets about the future. Because betting that things will stay the same is a bad bet. I am sure of that. (source)

You assume your CIO’s, IT pros, developers, and general users will want the same thing 2, 5, or 10 years from now?  People don’t like change, or more specifically, they’re afraid of change.  But at the same time, they all welcome and are excited about the release of new products.  What a paradox.

I’m sided with Fred Wilson.  Things won’t stay the same.  If your business model is betting on the assumption that customers will use your products under the same scenario in the future, your stock price is destined to underperform.

Depending on who are its founders.

As usual, Larry and Sergey were way ahead of me on this. From my very first day at Google, they made clear that we should be in the browser business and the OS business. Not being interested in either, I said no. But they rather sneakily hired a number of brilliant computer scientists to work on the amazingly successful Firefox browser, which Google helped fund through an advertising agreement—and that core team went on to create Chrome.

- Eric Schmidt on Chrome OS (source)

If that’s true, without Larry Page and Sergey Brin’s insistence, there would be no Chrome and Chrome OS.  For a big company to innovate, a leadership team consisted of founders with strong technology background is required.  It’s not a coincidence that Eric Schmidt, Larry Page, and Sergey Brin are all tech guys.

Take a look at the senior leadership team of other enterprise software/hardware companies, and you will immediately realize why so few exciting stuff stands out from their product portfolio.  These giants are generally ruled by sales guys.

Ok, back to the original post.  In his latest post on official Google Blog, Eric Schmidt said Chrome OS is one the most important projects in his working life.  He then further elaborated why now is the prime time for a cloud-OS.  Simply put:

1. Time — We now have 1000 times faster networks and computing power than 15 years ago.  (Moore’s Law)
2. Technology — Thanks to AJAX, HTML5, LAMP, etc. that enable interesting web-based apps.

However, I don’t believe advancement of technology alone is enough for making it happen.  Execution is the key for realizing grand visions.  Eric Schmidt is too humble to miss one very important point — the culture of “let’s do it.”  As in his conclusion:

I am very proud of what a small team, effectively working as a start-up within Google, has achieved so quickly. In 20 years time, I’m certain that when we look back at history it will be clear that this was absolutely the right time to build these products.

Again, if the quote is true, then it’s a evidence that Google is still capable of preserving its “intrepreneurial” spirit.  Competition aside, I genuinely hope the reports of Google’s bureaucracy are greatly exaggerated.  The high-tech industry needs a role model.  The young talents need a pioneering company that provides them with a safe, open, and creative environment to learn and to experiment.

In college, I learned teamwork from Two sports — basketball and DOTA.  Since everyone knows what basketball is, I’ll skip this.  DOTA, or Defense Of The Ancients, is a fan-made Mod for the famous RTS (real-time strategy) game, Warcraft III.  In DOTA, you and your another 4 team members each controls a Hero (character) to defend the main fortress (Ancient) in your base.  You goal, on the other hand, is to destroy the competing team’s main fortress.  The concept is simple, but it requires seamless teamwork and flexible strategy to win.  Here is what I’ve learned:

1. Always stay together.  You can move along, but only when your mission is to ambush or distract enemies.  You can’t break the defensive towers without the fire-power of other teammates.  Don’t initiate final strike until your teammates are in the right positions.  Same in real life.

2. Always make the most out of scare resources you’re in control.  On Battle.net, you can’t select your teammates.  So always be ready to meet a new-bie player in your team.  To win, The strongest has to protect the weakest player and teach while playing.  Same in real life.

3. Be ready to change your tactics anytime, anywhere.  You don’t know the team-mix of your enemy until you first encounter them on the map.  Your and your team act according to the move of your opponents.  The pace is so fast that you must constantly make decisions one the move.  Same in real life.

DOTA has taught me more than the 3 points I made above.  They are what I think the most important lessons I learned and find useful in business contexts like negotiations and trading in equity markets.

Is playing online games bad?  I don’t think so.  I’m eager to see great leaders of our generation all come along with a solid gaming-background.

Five years from now on the web for free you’ll be able to find the best lectures in the world. It will be better than any single university.

- Bill Gates (source)

I’m a big fan of online lectures.  Currently, I have to search for lecturers’ name on YouTube and find speeches that interest me.  It doesn’t take too much time, but is not an efficient way to learn anyway.  Besides there is a prerequisite — you must know who’s lecturers you want to watch.  Somebody should come up with a service that organizes quality online lectures and makes them more accessible.  It may not be a profitable opportunity, but surely a meaningful one.

TED’s speech section is a good example, and we can do more.

Because the people who are crazy enough to think they can change the world, are the ones who do.

Here’s to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes.

The ones who see things differently. They’re not fond of rules. And they have no respect for the status quo. You can praise them, disagree with them, quote them, disbelieve them, glorify or vilify them.

But the only thing you can’t do is ignore them. Because they change things. They invent. They imagine. They heal. They explore. They create. They inspire. They push the human race forward.

Maybe they have to be crazy.

How else can you stare at an empty canvas and see a work of art? Or sit in silence and hear a song that’s never been written? Or gaze at a red planet and see a laboratory on wheels?

While some see them as the crazy ones, we see genius. Because the people who are crazy enough to think they can change the world, are the ones who do. (source)

It was the Apple Computer in 1997.  I seldom take ads/TV commercials seriously, but this one is an exception.

There is a time when panic is the appropriate response.

- Eugene Kleiner

If you don’t go, you don’t know

- Thomas Friedman

Energy’s a 6 trillion dollar business worldwide. It is the mother of all markets. You remember that Internet? Well, I’ll tell you what. Green technologies — going green — is bigger than the Internet. It could be the biggest economic opportunity of the 21st century.

- John Doerr

 

When evaluating Windows slates, iPads, and other forms of tablets, people often ask the wrong question.  The key question you should ask is not “what this tablet can do now?” but rather “what this tablet can do in the future?”  Currently, I would say the Windows paradigm, while integrates existing consumer and commercial applications seamlessly, has reached it’s limitation of applicability, or imagination.  Developers and users long stop imaging about what can be a done in a Windows-based context.  It dose not necessarily mean that the Windows platform and architecture are inferior.  Windows is still a dominant platform and it has empowered countless people as well as businesses to succeed.  And it certainly will continue to do so in the foreseeable future.  What I’m seeing and worrying now is a dried-up pool of innovation on Windows.

On the other hand, innovation happening on other thriving apps-ecosystems will make things impossible today possible tomorrow.  For example, as of now, non-Windows tablets are simply luxury toys from the perspective of enterprises IT departments.  But what if major IT vendors like SAP, Oracle, IBM, Cisco gradually release front end apps for iPad, Android-Pads, and other whatever-Pads that connect their on-premise or Cloud LOB applications?  In fact, it’s not a what-if question, as some big names have been experimenting such scenarios since Q3 2010.

Aside from fierce competition, Windows-powered tablets still have enormous advantages like the more familiar UI, deep integration, flexible customization, strong service ecosystem, and a variety of product choices/mix.  Customers and partners should give Microsoft time to polish and deliver what it has envisioned.

NYTimes gave us insight into Eric Schmidt and Google engineers’ concerns these days:

Nevertheless, Google’s maturation worries him. “There was a time when three people at Google could build a world-class product and deliver it, and it is gone,” Mr. Schmidt said. “So I think it’s absolutely harder to get things out the door. That’s probably our biggest strategic issue.”

From the beginning, Google’s founders, Larry Page and Sergey Brin, have tried to prevent atrophy. That is one reason Google gives everyone time — called 20 percent time at the company — to work on their own

projects. The company tries to limit groups of engineers working on projects to 10.

But in reality, engineering groups quickly swell to 20 or even 40, several Google product managers said. And new products created during 20 percent time are less likely to get anywhere these days.

Popular Google products like Gmail grew out of 20 percent time, for instance. But engineers say they have been encouraged to build fewer new products and focus on building improvements to existing ones, like the terrain layer on Google Maps.

(source)

What about Microsoft, Yahoo, and Facebook…I mean the Facebook five years from now?

You know what?  I think the problem is their customers.  By customers, I mean the enterprise IT departments for Microsoft, the enterprise marketing departments for Yahoo and the like.  These are customers with deep pockets.  These are customers afraid of new tricks.  What can you do if all those paying you money don’t want something new, something threatening their jobs?  To make enterprise customers happy, you do everything but innovation. 

You think you’re a passionate, talented graduate, welcoming any big challenges?  Please, listen to me this time.  Do-not-work-for-the-old-dogs.  You deserve more, or at least, your talent deserves more.  The world needs you.

Another day, another complaint from another friend working in another big company.  The topic was familiar to me, however.  “My manager is a jerk.  How can I get along with her/him?” 

As I’ve seen, heard, and come to realized, rarely can we decide who to work with.  The thing we should do is — make the most out of it. 

If you’re a people manager who happen to lead a group of incapable subordinates, make the most out of it.  If you’re an employee who happen to be managed by incapable bosses, make the most out of it.

If you believe the rule of farming — the more you seed, the more you harvest.  Then you’ll get the most out of it.

If you want to be a hero, you need to have dreams.

Embrace you dreams.

- Zack Fair

The following paragraph is from a post written by Benchmark VC Bill Gurley on January 5, 2010. While the post didn’t predict anything, current market situation has just proved Bill’s reasoning and analysis was right and foresighted.

Some will argue that the best product will win the market and that Apple will still dominate the smartphone market. The history of the personal computer market is no omen for this thesis. If you think about it, the people that know this better than anyone are the exact Apple loyalists who have been frustrated for years at Apple’s lack of dominance in the PC market. Disruptive business strategies can and have trumped better products. And with no change to the current market, the Android leveraged position in the market could result in staggering unit share gains. This is not to say that the Google Android is better than or as good as the Apple iPhone. The key point is that it does not have to be. It only needs to be dramatically better than the current feature phone. Which it is. (source)

After reading three of his posts in a row, I have similar sentiment like what one commenter said, “One gripe Bill. Why don’t you write more often?”

Things that hamper innovation and creativity are not non-imagination, unintelligence, or the punch clock, but complexity in people’s attitudes, agendas, and relationships.

In a big company, you need to prove that you can do certain things to get a big raise. Of these certain things, the abilities to manage political relationship, to persuade politicians to support your goal, and to prevent political agendas from disabling your agility are ultimately important. Sometimes, you may wonder whether you’re working for a company or Capitol Hill. No big deal. Just prove that your can handle this with ease.

However if every venture has to prove to be able to do certain things before obtaining external support, then risky innovation will cease to exist. That’s why I like the whole idea of seed-stage investment/incubation so much. The smart money and resources go to those who are most capable of getting things done, instead of those who are most capable of managing politics.

It appears that startups are poised to disrupt a dinosaur industry, to attack inefficiency and inflexibility. But in essence, startups are poised to eliminate political complexity, to prove only one thing — that with talent, profession, and dedication nothing is impossible.

The best way to predict the future is to invent it.

–  Alan Kay

At Kleiner Perkins, we’d like to say: if you can’t invent the future, the next best thing you can do is, to fund it.

–  John Doerr

And here is the Webcast of the KPCB sFund announcement.

When John Doerr asked Mark Zuckerberg what he would like to do now if he were just abandoned in Harvard to do great new things. Mark said, “To pick any industry and rethink it in a social way."

One new inspiration I take away from this talk is — find an industry that could be disrupted in the next five or ten years, and go disrupt it.

Finance industry? Yes, I’ve been thinking about it.

An interesting read. Columbia Law School Professor Tim Wu pointed out that the root that leads to monopolies of various Internet services is: Americans’ preference for convenience. In other words, Natural human laziness feeds the power of tyrants. I actually discussed this topic on my previous post. Anyway, here is a new perspective on the consequence of long-living monopoly:

We wouldn’t fret over monopoly so much if it came with a term limit. If Facebook’s rule over social networking were somehow restricted to, say, 10 years—or better, ended the moment the firm lost its technical superiority—the very idea of monopoly might seem almost wholesome. The problem is that dominant firms are like congressional incumbents and African dictators: They rarely give up even when they are clearly past their prime. Facing decline, they do everything possible to stay in power. And that’s when the rest of us suffer. (source)

I can’t help but thinking of a number of tech giants — you know what I mean. All right, the article, be it a thought-provoking column or marketing material, has successfully convinced me to buy and read Tim Wu’s book, The Master Switch.

The second book, International Development of China (1921), presented detailed proposals for the development of infrastructure in China, and attacked the ideology of laissez-faire, as well as that of Marxism adhering more to the ideas of Henry George’s, particularly land value taxation.^[14] His ideology remained flexible, however, reflecting his audience as much as his personal convictions. He presented himself as a strident nationalist to the nationalists, as a socialist to the socialists, and an anarchist to the anarchists, declaring at one point that “the goal of the Three Principles of the People is to create socialism and anarchism.” It is an open matter of debate whether this eclecticism reflected a sincere effort to incorporate ideas from the multiple competing schools of thought or was simply opportunistic posturing. In any case, his ideological flexibility allowed him to become a key figure in the Nationalist movement since he was one of very few people who had good relations with all of the movement’s factions. (source)

In this regard, I would say Dr. Sun Yat-sen acted more like a business leader than a political leader. To successfully lead and drive a group of Chinese, you need to understand the Golden Mean and stay flexible.

Today is Dr. Sun Yat-sen’ s Birthday. Perhaps few people like me care about it because it’s not a holiday anymore. However, this year the day reminds me of something different. For the past months, I’ve been observing and thinking about people’s behaviors and attitudes in the workplace. I’ve found the dark side and of course the bright side of humanity are far more impactful to the business performance than I would believe. When humanity crosses business, lots of good motivations seem to turn out to be bad results. At first, I wonder how come it happens. I couldn’t figure it out until I read Ayn Rand’s thoughts. It’s all about reality versus ideal, conformity versus rebellion, survival versus breakthrough, and doubt versus belief. People trade their belief for power on the way to the top of corporate pyramids.

Have your ever asked yourself questions like: will my company still succeed without me? Our company, like our community, our country, and our world, needs more John Galt, Howard Roark, and Dr. Sun Yat-sen. These people share one thing in common—they hold ideal on their left hands, and rebellion on their right hands.

Four years ago, I saw an article on BusinessNext debating about whether Yahoo is a technology or a media company. Now the answer is pretty clear. As Tim Armstrong and Carol Bartz took over the throne of AOL and Yahoo, both executives have made explicit statements that they are running media companies— or at least companies that focus on content monetization and advertising.

Yesterday, while studying the financials of Baidu, I came across the about section: 

About Baidu

Baidu, Inc. is the leading Chinese language Internet search provider. As a technology-based media company, Baidu aims to provide the best way for people to find information. In addition to serving individual Internet search users, Baidu provides an effective platform for businesses to reach potential customers. Baidu’s ADSs currently trade on the NASDAQ Global Select Market under the symbol "BIDU". Each of Baidu’s Class A ordinary shares is represented by 10 ADSs. (source)

 

So Baidu calls itself a technology-based media company. I think it pretty much sums up what Baidu and the likes are doing. A successful positioning strategy indeed. In fact, technology revolution is the prerequisite of media revolution. Throughout history, almost every media conglomerate was built upon intensive technology infrastructure. But none of them was positioned as a technology-related company. Twenty years later, will Baidu and the likes remove the “technology-based” tag? I don’t know, but one thing is for sure: had Baidu, Google, Yahoo, AOL, or even Facebook been categorized as media companies on job-listing websites, they won’t attract as many talented web developers, engineers, and scientists as they want.

In the era that technology changes so rapidly, one lucrative business model could be outdated in a short period of time. Wisely associating your company with an industry that fits your on-going roadmap is an important component of reputation building.

As a company is getting bigger and bigger, its process gets more complex. So software vendors like IBM, Oracle, SAP, VMware, and Microsoft sell complex tools and solutions to help business owners efficiently deal with complexity. These tools and solutions are complex in themselves. So the growing companies need to recruit more employees and design more processes to operate and maintain complex IT infrastructures and applications. As IT environments get more complex, the big companies buy more tools and solutions from software vendors like IBM, Oracle, SAP, VMware, and Microsoft. As a result, the big companies hire even more employees and make even more processes to manage the tools and solutions. In order to keep new employees and processes on the same boat, they once again buy more tools and solutions from software vendors like IBM, Oracle, SAP, VMware, and Microsoft…

And you’ve got the whole picture.

Enterprises are like a group of wealthy individuals, they profit from each other’s pockets. Do they create value during the process? Perhaps. But they undeniably cannibalize opportunities from smaller, innovative companies.

So make sure your business plan works this way if you’re jumping into the commercial software market. And that’s all. Oops, did I miss Cloud? Forget about it. Its underlying business model works in similar ways. Let’s wait and see. For squeezing more profit out of the low-margin Cloud services, the giant IT vendors will try their best to upsell you premium services and help you grow—in other word, expanding your workforce, which means more accounts signed-up, and expending the number of computers, the number of CPU cores, etc., which means more licenses required. After all, in the game of profiting from complexity, no one, except the press and the readers, believes in simplicity.

See deviation of reality? That’s every entrepreneur’s opportunity.

"What lies behind us

And what lies before us

Are tiny matters

Compare to what lies within us.” — Emerson

“The mind that opens to a new idea

Never comes back to its original size. “ — Einstein

4. Naughtiness
Though the most successful founders are usually good people, they tend to have a piratical gleam in their eye. They’re not Goody Two-Shoes type good. Morally, they care about getting the big questions right, but not about observing proprieties. That’s why I’d use the word naughty rather than evil. They delight in breaking rules, but not rules that matter. This quality may be redundant though; it may be implied by imagination.

Sam Altman of

Loopt is one of the most successful alumni, so we asked him what question we could put on the Y Combinator application that would help us discover more people like him. He said to ask about a time when they’d hacked something to their advantage—hacked in the sense of beating the system, not breaking into computers. It has become one of the questions we pay most attention to when judging applications.

- Paul Graham (source)

 

Though it’s rare to find “naughty” employees in a company with 200+ billion market cap, I do find some colleagues with potential/hidden/depressed naughtiness. They are smart, witty, and dare to make fun of the stupid corporate rules. Working with them always makes me feel great; more importantly, makes me smart.

Employees following rules tend to become political and bureaucratic in the long run. That’s how and why a giant company collapses.

I have always believed that the name of the game is to survive.

We ascribe to Lord Rothschild’s philosophy, which was to buy to the sound of cannons and sell to the sound of trumpets.

A really important lesson in investing is that being either too far in front of or far behind is when you get hurt, whereas being right at the edge of the wave is where the money is made.

- Jim Leitner

I don’t throw darts at a board. I bet on sure things.

- Sun-tzu, The Art of War

Every entrepreneur-to-be should read this line. Paradoxically, if entrepreneurs care about risk and possibility of success, they won’t be entrepreneurs in the first place. At the same time, every entrepreneur believes that whatever she/he bets on is sure to win. And they ignore, in practice, the ratio of a successful endeavor to a failed one is 1 to 10 on average.

It’s the entrepreneurial spirit that drives your gut, passion, and urge to set off, and it’s the hedging spirit that mitigates the risk of failure, guides you to the lucrative exits, and gives you peace of mind every night.

That’s why I come to believe that most great business owners are born with characters of a entrepreneur and arbitrageur. Think about Bill Gates, Warren Buffett, and JP Morgan.

I’ve read tons of blog posts, tech news and analysis since late 2006, most of which come from the writing of “armature” journalists (or those without formal training on relative areas). I was fascinated by the diversity of perspectives among the bloggers then. I remember that Robert Scoble used to be the first one jumping into the then newest online services and came up his own thoughts. Jason Calacanis always did surprising things like turning off his blog and starting a “traditional” newsletter subscription model for readers instead. Tim O’Reilly’s posts were always thought-provoking. He was the advocate of free-Internet. I also learned the concept of “unconference”, such as BarCamp, FooCamp, and BoF from him. During the peak of my information-addictiveness, I subscribed more than 100 RSS sources and read almost half of them everyday.

However, I don’t do this anymore. As I suddenly realized that content from social media can only expend the horizon of knowledge, but no the depth, I began to cut down the number of RSS subscriptions. Today I read only filtered feeds from Techmeme and Fred Wilson, my most admired VC’s blog. Sometimes, I may turn to Michael Arrington’s posts for the important issues. Meanwhile, I’ve reduced the time spent on social media activities because links shared by friends, though interesting nevertheless, always distract me from more important things. But I still read links shared from my friends via MSN messenger. As the saying goes, “if the piece of information is worthwhile, it will come to you eventually.” The time saved is allocated to book reading.

Throughout the last couple of years, the number of English books I’ve read more than doubled or tripled what I’ve read for the previous time combined. I discovered Ayn Rand and Benjamin Graham. I read the biography of Warren Buffett and the making of Goldman Sachs. These are “brick-books” and I won’t bother reading them until I really believe that I’m able to finish them.

What I found is that I couldn’t remember the majority of blog post I read two weeks ago, but I can still recall the famous quotes from books even a year later. As the trendy topics yesterday fall apart, be it Kin or Google Wave,  I laugh to myself. Tim, were these applications worthy of your excitement? Was I excited because of the innovation by its own virtue, or I was excited because others were excited? In contrast, the thoughts-turned-texts on books are timeless. I was thrilled to hear Ben Graham lectured,  “You are neither right nor wrong because the crowd disagrees with you. You are right because your data and reasoning are right. ” It was true, it has been true, and it will be true. True wisdom never goes outdated. I so spend a majority of time seeking wisdom, and a minority of time chasing trends.

I’ve learned from a case-study interview today. I spent 5.5 hrs on the railroad and only 1 hr on the interview. Apparently it is not a good way to utilize your employee’s time. Some more problems:

1. The interviewee, who was the project owner, didn’t fully understand the details of the project. He kept saying about the applications while what we needed most is the pros and cons of infrastructure deployed.

2. The interviewer (writer) was not well-prepared. He didn’t pinpoint the critical issues such as reasons behind platform choices and comparative advantages of our solutions.

3. The partner representative, who introduced the case, didn’t mention that the project owner was not a qualified interviewee. The interviewee was not committed. The partner should have known the personality and inclination of the project owner through previous business contacts.

4. I didn’t ask for detailed briefing in advance, so when I found the nature of the case was not aligned with our goal, it was too late.

5. I followed what my manager told me to do, without questioning it. I knew the direction was wrong, but I didn’t take my own position.

In all, a phone-interview could achieve similar result (though it would still be a somewhat unconvincing case-study) at a lower cost. And if I took the courage to lead, perhaps, such an interview would not exist in the very first place.

Yesterday, I happened to read a line, “how do you survive in the world of capitalism while doing the right things?” It’s indeed a paradox. The opportunities of promotion are scarce so that you can’t move forward without taking advantage of your colleagues. Teamwork? If you threaten experts to tell the truth, they will admit that it’s actually a zero sum game. Remember the last time you pretended to be part of a homogeneous culture by sacrificing self identity ? My friend said that in order to survive in his company, he has adopted all the similar ways of composing emails, speaking at meeting, and even telling jokes. Meanwhile, the HR Dept. keeps reminding every staff the “one-[company_name] way”. However the executives, whenever appear on TV spots, always repeat the cliche, “we value diversity.” Most of the time, the CEO, delivering a speech at school, tells students that “be yourself”, “do whatever you like”, and “passion is what you must bring along with no matter what kind of jobs you do in the future.” In contrast, during dinner time, it’s not uncommon to witness managers complain about how boring their jobs are, or regret that they haven’t spent enough quality time with family. I believe only a few of us could ever understand the meaning of pursuing success.

One of the highest level executive, along with his secretary, went to the seat of a young intern students and had a small talk with him. Under normal situations, it is difficult for a new hire to obtain such a greeting, not to mention he is merely a kid just graduated from junior high school. What makes it possible is the acquaintance between the executive and the intern student’s father, who is a important client. Perhaps this kindness will lead to another transaction, who knows. Is it a bad thing? Is it unfair? It Depends. This is part of business. By doing someone a favor, you may get the return in the future. This kind of relationship building works especially well in Chinese culture in that everyone regards kinship as the prerequisite of successful negotiation or effective cooperation. The phenomenon is unique since no other animals will do the same to achieve their goals. One monkey may help another to fetch bananas by lending its own sticks, by it will never temporarily includes the offspring of another as one of the family members in exchange of future rewards. Maybe even more important is that does the student really want to be a “catalysts” to facilitate such a relationship?

Yesterday on the way to office, I saw two workers putting tiles on the pavement of an intersection. It was hot, and it would be pretentious to say that they were happy. Nevertheless, they were making meaning. If there were no tiles, pedestrians would find it difficult to pass through the way without getting wet during a rainy day. Toilsome, but meaningful. The same day, Steve Jobs announced that iPhone 4 sold 170 million unites in the first 3 days of sale. Were it be no such genius and dictatorship, the smart phone industry would grow at a much slower pace. Glorious, and meaningful. So, what do we learn? While some contribute either at the bottom or at the top of the value chain of economy, some at the middle of the pyramid take advantage of both at the top and at the bottom. Like parasites, these people drain the blood of a healthy organization. The bad news is: most people must go through the middle to reach the top. The good news is: we can change.

How do you spend most of your time at work, dealing with people or dealing with things? Admittedly, if more than 50% of your time and efforts are spent on relationship building and gossips gathering, and less then 50% of your time and efforts are spent on jobs to be done, you will be somewhat successful as an individual, at the expense of an organization. If more than 50% of staffs in a company do so, I will certainly short the stock of the company.

“The future is not set. There is no fate, but what we make for ourselves.” This is the motif of Terminator series. Brought with him the message, Kyle Reese, John Connor’s father, a member of the rebellion and sent by the leader John himself in 2029 to protect his mother, met Sarah Connor in 1984 and together they gave birth to John Corner. In everyday life, I’m not sure to what degree we can make our own fate, or the fate is already predetermined by God beyond our comprehension. However one thing is for sure: always be a fighter as well as a dreamer. Think like a dreamer, because the day you stop dreaming, you become part of the machines as dominated by Skynet; act like a fighter, because the “present” may act against you from time to time. Fight back. People may betray you, may lose confidence in you, may misjudge you, but do not give up believing in the bright side of human beings. After all, if a machine, a Terminator, can learn the value of humanity, why can’t we?

You never want to fail because you didn’t work hard enough. I never wanted to lose a competition or lose an election because I didn’t work hard enough. I always believed leaving no stone unturned. Mohammed Ali, one of my great heroes, had a great line in the ‘70s when he was asked, “How many sit-ups do you do?”

He said, “I don’t count my sit-ups. I only start counting when it starts hurting. When I feel pain, that’s when I start counting, because that’s when it really counts.” That’s what makes you a champion.

So let me tell you, as you prepare to go off into the world, remember those six rules:

Trust yourself,

Break some rules,

Don’t be afraid to fail,

Ignore the naysayers,

Work like hell, and

Give something back.

- Arnold Schwarzenegger, Commencement Address at USC (source)

Then there is another thing I want to tell you. You have achieved your goal, and now you are ready to begin another chapter. Now you really start real life. Real life may be more complicated. It is bound to face some unhappy things and hindrance and obstacles, complications. So it is important to have determination and optimism and patience. If you lack patience, even when you face some small obstacle, you lose courage. There is a Tibetan saying, ‘Even if you have failed at something nine times, you have still given it effort nine times.’ I think that’s important. Use your brain to analyze the situation. Do not rush through it, but think. Once you decide what to do about that obstacle, then there’s a possibility that you will achieve your goal.

- Dalai Lama, Commencement Address at Emory University (source)

Well, class of 2005, that about does it for me. I’m fresh out of material. I guess what I have been trying to say here this afternoon can be summed up by the old adage that “happiness is a journey, not a destination.” Bringing joy and passion and optimism to your work is not what you get to do when you get to the top. It is HOW you get to the top. If I have had any success as a journalist since I was sitting down there where you are 30 years ago, it’s because I found a way to enjoy the journey as much as the destination. I had almost as much fun as a cub reporter doing the overnight shift at UPI, as I did traveling with Secretary of State Baker, as I do now as a columnist. Oh yes, I have had my dull moments and bad seasons — believe me, I have. But more often than not I found ways to learn from, and enjoy, some part of each job. You can’t bet your whole life on some destination. You’ve got to make the journey work too. And that is why I leave you with some wit and wisdom attributed to Mark Twain: Always work like you don’t need the money. Always fall in love like you’ve never been hurt. Always dance like nobody is watching. And always — always — live like it’s heaven on earth.

- Thomas Friedman, Commencement Address at Williams College (source)

Leadership is consisted of a number of attributes. Among them, finding the possibilities and creating opportunities for your people is two of the  most important elements. In the short-term, leadership is similar to ownership and managerial-ship; in the long run, leadership leaves much prolong impact to an organization and to people than ownership and managerial-ship do. Leadership is not a means to fulfill personal interest, instead, leadership is a means to serve a vision larger than everyone under its umbrella. Leadership in our organization is loosely defined, and is usually confused with ownership and dictatorship. True leaders don’t need your compliment. It is tyrants who needs it desperately.

Every individual has blind spots. Bill Gates, Confucius, Gandhi, your boss, and you all have blind spots. The first step to overcome blind spots is to admit that we all have blind spots. Interestingly, we can find blind spots of others more easily than those of ours. I don’t know why people are made of this way, but I do know that reminding colleagues, friends, and family members of their blind spots is art that deserves more appreciation.

A secret to succeed has been existed but hasn’t been told. The secret is – finding out the single most import factor in every assignment your manager delegates to you. That was what I learned in a talk with a senior manager yesterday. Take event organization for example. Content plays the most significant role in a PR event, while logistics play the pivotal role in an executive-reception event. As someone who is accountable for thorough implementation, understanding the key factor is a sure way to guarantee staying in the right track. To adopt the strategy, premises should be remembered: Don’t analyze different issues from the same perspective and don’t use the same hammer to fix any problems. The most important factors vary case by case.

Sorry for being abstract. Today I would like to talk about meaning. Although each individual has his own definition of meaning for work, I do believe that doing certain things during work makes no sense for meaning. First, doing whatever your boss tells you is meaningless. Second, doing for the sole purpose of flattering your boss is meaningless. Third, planning to minimize the part of a project for which you are responsible is meaningless. Forth, helping colleagues because of potential benefits you may harvest later is meaningless. Fifth, giving up your ideal and enthusiasm due to rejection from your boss or colleagues is meaningless. Sixth, worrying about political consequence before pressing the “send” button on your Outlook is meaningless. Seventh, communicating your accomplishment, which will be ignored otherwise, is meaningless. Eighth, managing things without managing people is meaningless. Ninth, challenging the above is meaningless. For some, all they want is to survive in an organization; meaning or meaningless, that’s not the question. All that being said, there are still a lot of people who are positive and eager to contribute. One day, I believe, they will find the meaning.

Friends familiar with me know that I like to observe subtle interactions among colleagues. I like to separate managers into two categories, those who lead naturally, and those who lead by position power. Sometimes you follow orders not because you believe it’s a right decision, but because you fear that the manager might score you at the bottom 5%. Most managers have the power to lead because they can impact subordinates’ fates. They review your performance, they decide your salary, and they are your step-stones to higher positions. living in the bubble of power, a manager tends to regard herself/himself as a leader while actually it is the position that exerts every single order.

To know whether one is a “equipped” manager or a natural leader, just calculate the ratio of the number of his/her subordinates to that of friends at workplace.

Students in Asia are used to be judged by short-term performance, or to some extent, the performance of one-time exam. Our education as well as measurement systems are designed to facilitate the painful process of selection, but they doesn’t reflect the quality of the end result for a prolonged period of time. One student may get a high score in a math test, but his ability to sustain the same level of performance is not being tested. Likewise, during an interview, a candidate may impress the interviewer at one moment, but outstanding performance in one or two hours can’t guarantee stability of performance in the future. Therefore, past records that demonstrate persistence and consistence of certain capabilities are necessary, as educators in the western countries are taking these factors more seriously. Call-to-action: start to accumulate your records and build evidences to show that your profession is a sustainable one.