Does Passion Matter?

Posted on October 13, 2013
Filed Under Critical Thinking | 3 Comments

Scott Adams, the man behind Dilbert, has a new book out about career success. He discusses some concepts from the book in this Wall Street Journal article, and the most interesting thing to me in the article is his rejection of the conventional wisdom that you should “follow your passion.” Here is his explanation.

But the most dangerous case of all is when successful people directly give advice. For example, you often hear them say that you should “follow your passion.” That sounds perfectly reasonable the first time you hear it. Passion will presumably give you high energy, high resistance to rejection and high determination. Passionate people are more persuasive, too. Those are all good things, right?

Here’s the counterargument: When I was a commercial loan officer for a large bank, my boss taught us that you should never make a loan to someone who is following his passion. For example, you don’t want to give money to a sports enthusiast who is starting a sports store to pursue his passion for all things sporty. That guy is a bad bet, passion and all. He’s in business for the wrong reason.

My boss, who had been a commercial lender for over 30 years, said that the best loan customer is someone who has no passion whatsoever, just a desire to work hard at something that looks good on a spreadsheet. Maybe the loan customer wants to start a dry-cleaning store or invest in a fast-food franchise—boring stuff. That’s the person you bet on. You want the grinder, not the guy who loves his job.

There are two schools of thought here. One says that passion is the thing that keeps you going when times get tough. The other says passion is fleeting and when you lose it, you give up too easily.

After nearly 5 years running Backupify, I definitely find myself in the latter camp. I look at a lot of the other startup companies of our vintage, and they were boom and bust. They rode high, much higher than we ever did in terms of hype and valuations, and then came crashing down. All the while, Backupify was grinding it out, slow and steady, constantly moving forward.

I can’t say that I had passion for cloud to cloud backup when I started. And even though I know so much about it now, and I love to talk about it, I’m not sure “passion” is the word I would use to describe my feelings. So what drove Backupify forward? Well, ask 5 different early employees that question and you will probably get 5 different answers. But here is what I think. I’ve always been a grinder. I was raised to be a grinder. My dad never preached “follow your passion” but rather “work hard and don’t be a drain on other people.” I’ve always had a lot of mental and physical stamina. In high school, college, and as an adult, I have always been able to focus longer, work harder, and deal with more crap than most people. In fact, when I raised the very first round of financing for Backupify, I pitched an at Open Angel Forum event at 7pm in LA, got on a red eye to Boston, tweaked my presentation during the flight, landed and went straight to the offices of General Catalyst to do another presentation on no sleep. (They invested).

I don’t think passion is a bad thing, but when it is the main thing you are looking for, beware that it is fleeting. I see this a lot in young employees versus more mature employees. Young employees read the startup blogs and want to come work for a startup where they can put their passion to work. They think startups should be fun. Mature employees realize that startups are harder, and more difficult, than other types of work. They are in it because they like the grind and are willing to tolerate all the extra crap because they know the career experiences are better. The battle scars help them climb the career ladder faster, learn more, and give them the opportunity to have an impact on the direction of the company.

Young employees often expect the passion to stay forever, and they give up when it is gone. They move on to the next passion, which is why they stay 2 years at every job, no longer. They blame the job because their bosses didn’t keep their passion engaged. They didn’t realize that it’s the people with the mental stamina to suck it up and work through their passion droughts who are ultimately successful.

So maybe Scott Adams missed something in his article. Maybe a “grinder” is just someone who has a passion for winning, a passion for pushing forward in the face of challenges, and a passion for growing as a person. Maybe the issue is that we encourage people to have the wrong kind of passion - passion for the thing instead of passion for the process or passion for the final goal.

There is a lot of research (see Carol Dweck) that says success is a matter of grit. That sounds like the key to being successful isn’t passion - it’s the ability to push forward even when the passion is gone.

Boston And Silicon Valley: Three Years of Experience Later

Posted on May 20, 2013
Filed Under Critical Thinking | 3 Comments

When I moved Backupify to Boston in 2010, I did it because I thought it was a much better place than Silicon Valley. And I still love Boston tremendously. It’s a city of ideas. I have interests outside of technology, and the Boston is more diverse in its intellectual interests as a city than any place I have ever been. But over the past 3 years, I’ve traveled to the Valley 6-10 times a year each year. Over the past 3 years, I feel like I have better come to understand the differences between New England and Silicon Valley for startups, and I think it can be summed up in one sentence:

Nowhere else in the world is unconventional thinking as admired and encouraged as it is in Silicon Valley

I haven’t seen the statistics on this, but my guess is that Boston hits singles and doubles, on a percentage basis, much better than the Valley. The Valley, on the other hand, probably has more strikeouts, but also more home runs. As I’ve talked to more and more people about this, I’ve come up with a good example than illustrates the differences in thinking pretty well.

Say you wanted to build a Gmail competitor. You walked into the office of a VC and said, “Gmail is broken, I am building something better. I want to take out Gmail. Boston and Valley VCs would both say the same thing. They would say, “That’s crazy. Gmail has 200 million users.” But, they would mean very different things.

The Boston VCs would think “that’s crazy” as in “that’s stupid,” and they would think “Gmail has 200 million users” as proof that it’s a waste of time, you can’t do it, they already have too big of a hold on the market.

Valley VCs would think “that’s crazy” as in “it’s aggressive and unconventional, so yeah, we like it.” They would think “Gmail has 200 million users” means it is a worthy market to go after, not a waste of time.

Obviously, there are some West Coast style VCs in Boston, and some East Coast style VCs in Silicon Valley, but I’m talking about general attitudes. And it’s not just VCs, I think the same thing can be said of the talent pool in each place respectively. The talent in the Valley is more unconventional, which is both good and bad. But in the end, it’s the unconventional ideas that bring the mega home runs, which is why the world changing companies are in the Valley.

You Are Not The Keynesian You Think You Are

Posted on February 6, 2013
Filed Under Critical Thinking, Economics | 11 Comments

I take a fair number of jabs on Twitter at President Obama’s economic policies because, well, frankly, I think he is terribly misguided. As a result, I’ve had to watch numerous liberals jump to his defense and try to explain Keynesian economics to me. Now, I’m not a professional economist, but I have taken several undergraduate and graduate economics courses, I read about a dozen books on economics each year (even some advanced textbooks) and I attend seminars in the Cambridge/Boston area from time to time about economic issues that interest me. I’ve spent the last two years particularly fascinated by the resurgence in Keynesian economics.

So, I do believe I have a better understanding of economics than most people, even most educated people, and what follows is my explanation of Keynes’ key ideas. I also want to point out that, this isn’t a right/left debate like most people think. Bush was a huge Keynesian, and I believe Obama’s economic ideas are closer to Bush’s than they are to Clinton’s, which is why it seems so philosophically inconsistent to me to hear Clinton fans praising Obama. Clinton’s ideas were closer in alignment to Reagan’s ideas, both of who were influenced by Milton Friendman.

Anyway, I’ll explain my understanding of Keynes, and will wrap up by explaining why I think his ideas are destructive in our current economic climate.

First of all, let me address a key point: modern liberals and modern conservatives are both Keynesians. The primary economic innovation that Keynes brought was this idea that the in the short run, aggregate demand and aggregate supply may not match up, and that aggregate demand is the part of the equation you want to influence. There are two ways to do this. One is to have the government spend more to increase demand. The other is to cut taxes so that individuals have more to spend to increase demand. The former is the Keynesian path preferred by the Democratic party. The latter is the Keynesian path chosen by the Republican party. The point though, is that both are Keynesian.

Secondly, when Keynes advocated increased government spending, he was not referring to the stuff we do today. His logic at the time, when Britain faced high unemployment, was that the government was paying a lot of money to the unemployed, and that it would be better to just hire them and put them to work, instead of paying them to do nothing. Putting people to work would stimulate the economy and give everyone a psychological boost (let’s face it, most people like having a job) and the rest would take care of itself.

What I constantly hear is “hey, don’t we want to spend to make investments to grow the economy and get out of this slump?” But, the Obama administration is not doing that. This administration has decreased the federal workforce and has cut non-defense discretionary spending. In other words, the services the government provides and should provide are the areas being cut. Why? Because politicians are cowards who are more concerned with re-election than anything else, so rather than touch entitlements, the real problem, they nip and tuck here and there and say they are doing something about the problem.

So our problem is that, even if we were trying to be Keynesian, we aren’t. The “investments” we are making are actually very little. We are cutting things we shouldn’t be cutting, and are making the government primarily an entitlement machine mostly concerned with the transfer of wealth. Not all government spending is Keynesian, and based on what I have read about the man, I don’t believe he would have supported a massive entitlement state. Why are we doing this? I don’t know, but if I had to guess, I would give three reasons.

1. Obama believes that by shifting the burden of healthcare to government, he can fix the system. I believe this will turn out the same way it did when the government tried to fix education and tried to fix home ownership… they will make it worse, or have no impact except to waste a bunch of money. I know liberals disagree and believe that smart people working through government can solve big problems. But there are very few examples of government success at this scale, particularly when they meddle in economics.

2. No one will touch social security because old people vote in larger numbers than other people.

3. The Democrats and Republicans both want to prop up the economy artificially, even if it leads to inflation, because that helps the rich and protects their investment portfolios and leads to more campaign donations. Inflation will slam the poor’s standard of living, but they don’t donate big money to campaigns so who cares.

I don’t think Bill Clinton was a Keynesian. Why? Because he passed NAFTA, he cut unemployment benefits and reformed welfare, and he was concerned with balancing the budget because he believe a government deficit sapped money out of the private economy that could be used to fund growth and innovation. Reagan, despite cutting taxes, didn’t do it because he was a Keynesian, he did it because he philosophically opposed government and wanted to minimize government’s impact.

Now, some Republicans will claim that Republicans don’t believe in tax cuts for Keynesian reasons, but rather, because cutting taxes can lead to more revenue. Why do they think that? Because in the past, tax cuts at certain times actually have led to more tax revenue (but most times they haven’t). But, this happened when tax rates were very high, and were significantly slashed, so they actually changed behavior. I don’t honestly believe that most Americans change many of their decisions for a tax increase or decrease of a few percentage points. But when you are taking a massive ax to marginal rates like Reagan did, yeah, that can matter. But the truth is, Bush’s tax cuts were intended to be Keynesian.

I don’t believe what Obama is doing would actually be considered Keynesian by Keynes himself. But that said, I am not a fan of Keynesian stimulus in general. Why? Well first of all, Japan has tried it for two decades and it hasn’t worked.

But even beyond that, it just doesn’t make sense for the current situation. The economy that existed when Keynes proposed his ideas was not the economy we have today. In his day, he was trying to smooth out the business cycle and what he believed were inefficiencies in the free market that occurred because of over investment, or sometimes over saving. I believe that Japan’s boom, and the boom in the U.S., were created by playing with the money supply, and Keynesian economics can’t cure that type of hangover. Let me give you an example. There is a big difference between when your body is naturally tired, so you take some caffeine, and when your body is tired because you have been oscillating between caffeine and some downer drug for months, and you try to take some caffeine. If your body is tired for the first reason, caffeine will have an impact. If your body is tired because you are trying to modify it constantly with all kinds of drugs to control your energy level, the caffeine may have a very different impact. It may even fall flat, or cause more problems. All you can do at that point is suck it up and go through withdrawal.

The U.S. economy is the same way. Keynesian ideas worked back when the economy was otherwise left to its own devices. Then we could go in and guide it a bit. But we started trying to guide it more and more, and now we are trying to use the same medicine to solve our problems that got us into these problems in the first place.

I don’t think there is any way out of this mess except a few painful years of austerity to get back on track, or at least feigned long term austerity by major entitlement reform that may provide some confidence to the economy. My guess is that our politicians don’t have the guts to do that, so they will continue trying to stimulate the economy for another decade, we will see many false starts where we believe it is working, only to be disappointed again, and then finally, a new generation of leaders will take us in a new direction.

To end, I want to point out something very very important. Economic ideas are actually very difficult to test in a controlled environment, so we have to rely on real data which is messy and has a zillion variables influencing it, some of which we may not understand yet. I believe that the economic ideas en vogue at any given moment have more to do with which economists are popular, not the validity or accuracy of their ideas. In the 80s and early 90s, Milton Friendman was king. He was witty, smart, and usually won debates with his great aphorisms. (My favorite may be “if you put the federal government in charge of the Sahara desert, in 5 years there would be a shortage of sand.”) As he aged and his influence waned, Greenspan was the go to guy for a brief while, but then Paul Krugman rose to the top.

Krugman is the most prolific and popular economic writer of the past few years, so his ideas therefore permeate the consciousness of the American thinking class, who of course all believe they are open minded and independent thinkers but really just repeat the things they hear on NPR, read in the NY Times, or watch on the Daily Show. Why pick up a book that might challenge your thinking when you can listen to pseudo-intellectual babble and pretend it’s gospel?

The Republicans put their faith in Rush and Fox News. The Democrats have their gods too, those I mentioned above. Those brave enough to think for themselves usually find that it isn’t worth the time, and no one cares anyway. A vote is a vote. How much time you devote to understanding the issues doesn’t factor in.

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