Bitcoin as Store of Value

JP Morgan Chase CEO Jamie Dimon, on the back of China’s announcement to throttle cryptocurrency, made comments yesterday that shook the market.  (It’s not the first time he’s done this.)

He supported blockchain technology for tracking payments but then goes onto to say it’s illegal to trade Bitcoin at the bank and that’s it’s a currency that is associated with criminal activities.

It’s comical to hear this. How can the CEO of a Bank, both support Blockchain (the thing that Bitcoin invented) but trash Bitcoin? To me it points to one very obvious fact: Bitcoin itself is a threat and he’s on a consistent PR smear campaign.

Why Bitcoin is a threat
Customer deposits, where people store their money for protection, is the basis of banking. Banks use those deposits to then do lending activities that actually make them money, such as lending up to 10x what they hold as deposits in the forms of mortgages. Those same lending activities, not only make them money but can also be packaged into new financial products, such as mortgages bundled into securities (like the ones that created the 2008 credit-crisis).

Why is Bitcoin a threat? Because it has the potential to fulfill a function that only government fiat currency and gold have every achieved and that now banks are the custodians for: store of value.

If Bitcoin becomes the Store of Value in the world, people would move their customer deposits to Bitcoin. And the affect of that would be catastrophic to today’s banks.

Does Bitcoin have a fighting chance to be this?
Well, first of all its achieved an adoption that I think is irreversible. The only thing that could stop Bitcoin now is if governments make it illegal — but even then, it would require every government around the world to act in unison. Because all you need is one island nation, acting an a clearing house, to fulfill the needs of Bitcoin. (And the nation that realises this will become a new financial centre of the world.)

Secondly, the characteristics of Bitcoin are remarkable. What’s going on right now is real work is being generated, to create a hash. That hash and encryption function, will continue to be generated until 21 million Bitcoins are created. And then the supply stays constant!

The significance of this is there is a fixed supply: which means inflation will not exist (rather deflation), a pretty critical feature of where you want your Store of Value. Real work, and hence, value is behind it; and the token itself has a real use beyond being a string of characters — such as acting as a token to authenticate a Blockchain network which will underlay the future Internet.

I agree that there is a bubble right now: the hype driving it makes the price unstable. But I also believe that Bitcoin itself will get to $10,000 in value, without a doubt purely due to human psychology. But that’s not all, it should one day equal in my opinion  all the narrow money of the world which is $29 trillion  (if you want to be conservative, I’ll accept Gold which is $7.8 trillion). So if Bitcoin right now is worth $64,406,377,384 on 16,563,637 coins in supply, it’s price should be $3,888.42 but calculated on all the coins it will ever issue (21m), it’s $3066. But if the market value reaches $29 trillion, then 1 BTC will one day be worth $1, 380, 952 which is a 450x multiple on current prices ($371k if you use gold).

The question about Bitcoin is not about should it exist or not: the truth is, no one can control it. If you believe all the governments of the world will ban it, then maybe — but I believe human’s aren’t that capable on something that isn’t life threatening.

The question about it being a better store of value in the world is also not really a question: by design, it’s superior. (But admittedly the governance mechanisms behind it to create a secure system, are still being worked out and being tested– such as the SegWit2 rollout in November which put this question in doubt.)

Which leads to  the ultimate question, in lIght of the above:  do you accept it to be the Store of Value in the world? And that is the million dollar question (or, ahem, $1.381m question).

Is this the f—g button?

Islamic terrorism distresses me just as much as the nationalistic movements that Brexit, Trumpism and the rest of Europe are working towards for the same reason: it’s not progress towards future.

Islamism bothers me because it crushes individual freedoms. Nationalism bothers me because it kills open trade and travel, which has underpinned the stability the world has seen post world war two. Truthfully, both repulse me as forces because they divide humanity.

I’ve often half-joked to friends that the only time human’s will finally unite is when we get a door knock from an alien civilisation wanting to take us and our planet over. But we don’t need to wait for that either.

One day, an asteroid could wipe out all living species on earth like it did with the dinosaurs. And if that does not happened, then the next ice-age will give us a run on our gas bills (like how we had remarkably as low as 40 “breeding pairs” of homo Sapiens 70,000 years ago, and ice ages happen more often than you realise like the last one which happened 12,000 years ago). If we have any  hope of surviving as a human species, to not consider the need to colonise other planets, develop technologies to survive from our own earth’s changes, or address the need to one day eliminate all disease which is, quite literally, killing us — is short-term (human species) thinking. Life is a magical mystery but the survival of our species depends on further exploration and technology — but we can’t get there until we start thinking like this. 

(There is nothing wrong with short term thinking: putting your right foot ahead of your left foot as you breathe is critically important. I just hope you appreciate, that equally, you’re an idiot if that’s all you do when there’s a pot hole with a sleeping alligator two steps ahead of you.)

I get what’s going on with all the politics and why the actors are doing it. The cost of it, is they are just wasting our potential (and survival) as a species. That potential will only eventuate when we don’t squander our mind space and energy. Which is why I’ve decided I don’t have the headspace for it any more (outside of entertainment). Unless your survival as an individual human is at risk — and for some of you, that’s more pressing that others and I respect that — I’m going to ask you join me and start thinking about what really matters, as humanity. When you start thinking like that, hopefully that will follow with the doing which is what we need right now.

If you need help to get into this frame of mind, let me help.  Just ask yourself this question next time you catch yourself reading the news or getting into a debate with someone: how does this help us — and what are you doing — from not getting frozen by aliens or injected with a deadly disease and while we are at it did anyone remember to make a fucking eject button to get us to Mars?

Why automation excites me

Most of human society was engaged in farming once upon a time. Slavery meant richer nations (or classes in those nations) moved to others work as slaves focussed on farming — and then one day, after thousands of years, slavery was abolished. Ignoring the human element to this, what drove this economic change? Technology. No coincidence that this happened in the same hundred years of the industrial revolution starting. Machines are simply more efficient than humans — and yet I think you would agree wth me that we are working more than ever since this transition in the world happened. 
This is a good thing. It’s just the transition isn’t good — it’s friction. This is happening again and will continue to happen.
In the current form of friction, I believe automation is likely going to be one of the biggest political issues in the coming decade. The politics should be centered on how do we manage the friction (or if a country wants to fall behind, ignore it).  There is a trend toward nationalism in America and Europe especially, and foreign labour is the catch cry but truthfully, it’s also largely due to technology, or rather the automation in manufacturing replacing jobs. We need to realise this is a permanent trend and this will extend to other sectors of the economy like services in future (as we saw with farming in the last 200 years).
For those scared of a future where the machines replace our jobs or even for those who think profit is a bad word, you just need a different perspective. Let me try to do this in just four sentences.
  • Economic theory suggests that we can make money either through rent (land ownership), wages (your time), interest (tool ownership), or profit (creativity).
  • However, unlike the first three factors of production (land, labour, capital), entrepreneurship (creativity) is limitless.
  • (Well, almost unlimited — it’s limited only by our imagination and our time.)
  • Which is why we need to machines to replace jobs that have us rent our time by the hour to survive, as instead we need to be unlocking human creativity.

How any country can leap frog in technology

What if I told you we could time travel to 1989 — and be given a forecast of what a new implementation of the Hypertext technology (called the World Wide Web) could do. Would you jump at doing whatever you could to be on top of this trend? Smart phones (Apple’s came out 10 years ago), a technology like Hypertext, also made us rethink how we can use the Internet and recreated the world. Well, it’s 1989 and there is a technology that is poised to do this again.

I’m passionate about the future of health, and I can’t ignore what’s going on with cryptography, artificial intelligence, Internet of Things, and Virtual/augmented reality. But if I had to pick one thing right now, which is ripe for government leadership to leapfrog even silicon valley, it’s this: Focus on blockchain.

It’s a specific technology that’s matured unlike most of these other trends. Its got a hacker community innovating like how I can only imagine when the web started. Its got significant investor interest. It has consumer awareness. It has all the things ready for this to blow up.

This is how you do that:

  1. Make cryptocurrency the same status as any currency. For example, in the US  Bitcoin’s are considered a capital asset which makes it impractical to use unlike regular currency which is treated on the income account. We need to remove this impediment as it makes it not practical.
  2. Offer incentives to businesses working on blockchain. Create a tax free corridor: anyone that that operations in an area is exempt for any taxation. This isn’t to just get the world’s best employing people locally and building technology which will together create an economy of agglomeration, but it will have a flow on affect on other cryptographic matters, such as cyber security which has now become the scariest frontier of warfare right now. Silicon Valley prospered because of technologies building off technologies. 
  3. Force the adoption of cryptocurrency. Require banks to offer it as a service and make all EFT terminals compliant. The moment the economy offers blockchain integrated into the economy — first with currency — we will see an acceleration of blockchain’s potential on the things that are truly exciting (such as Smart Contracts and Distributed Autonomous Organisations)

Implement these three simple policy concepts and it will make that economy the ground zero for blockchain innovation.

As I have already alluded, I don’t think Bitcoin is long term the goal of doing this: it’s the infrastructure that Bitcoin provides that is the exciting thing (ie, the block chain technology which is one of the four technologies that make Bitcoin outside of peer-to-peer, PGP and proof-of-work). The use cases go far and wide: not just for currency, but for things we take for granted like how websites are resolved (like DNS), contracts likes wills, voting, and anything else involving trust (such as simple but critical title deeds).  Blockchain is basically a decentralised database which is in line with the original design goal of the Internet. Efforts like Ethereum are effectively building a computer on top of the Blockchain concept. It’s a whole new paradigm in computing that goes far beyond currency.

But leave that to the entrepreneurs, who are already working on that — I could write many more posts on those ideas alone. But with leadership, anyone one of the three suggestions I’ve made could be legislated into law this year and overnight make that territory a global leader. 

This is what any  country could do to create the world’s best environment to foster this disruptive technology, which I am convinced will create a transformation like what the web did less than 30 years ago. 

 

America shouldn’t ban guns, but the world should learn from them instead

The US Supreme court this week reversed the Massachusetts High Court Caetano v. Massachusetts decision that said a “stun gun” does not qualify under the second amendment, with  a reason used because the technology did not exist at the time of the framing constitution. Actually, I agree with the US Supreme court on this, but it confirms something that I’ve long thought was bound to happen which is where do you draw the line for what constitutes “arms”?

Two nights ago, I was shown a semi-automatic rifle in the apartment of a friend and thought it was damn cool. But more broadly, my views on guns is simple: you need a gun, a human and a mistake or bad motive to create a tragedy. The political Right wing believe the answer to tragedies is mental health solutions (as my friend said, “people kill people, not guns”); the Left believe it’s banning the guns. I consider myself politically moderate and used to think the solution was banning them, but I’ve now realised it would be impractical (see the below video why).

How to Create a Gun-Free America in 5 Easy Steps

Want to create a gun-free America in 5 easy steps? Here's all there is to it.

Posted by Reason Magazine on Wednesday, October 7, 2015

Without going into a debate what the second amendment means in the United States (originally to protect citizens from a tyranny when organised into militias; which has now been clarified by the courts as a personal right, and a right to self-defense) my reasoning was not that I wanted to take people’s freedoms away; it’s that I think guns are correlated with violence and so controls on them make logical sense because it’s easier to control that then the people who use them unpredictability on innocent humans. As a case in point, when I asked my friend how easy  it was to get a gun and a license, even he grimaced at how easy it was — it should be as hard as getting your driver’s license.

What now?
I actually think people should keep their guns because it’s irrelevant. The reason I say irrelevant is for the same reason why they exist in the first place: technology. Living in Silicon Valley, I see and hear things ahead of the rest of the world. Everyone in my network — primarily investors and entrepreneurs — spend a lot time thinking about the future as a day job so naturally have developed insights about what a future world looks like. And one of the more chilling ones I’ve heard about are drones which is why the Caetano v. Massachusetts  interests me as you could argue one day drones are an ‘arms’ essential for self-defense as protected by the constitution.

But what can be used in self-defense and also be used in offense.

Let’s play a thought experiment: that drones one day can carry a payload that would blow up its surroundings. And let’s also assume that one day, miniaturisation technology enables them to be the size of a fly. So a would-be deranged human would fly in their drone through a crack of your window and blow you up. Think that’s unrealistic? Based on technological trends, it’s almost guaranteed to happen one day, technically speaking.

That’s not talking about another set of military technological feats that’s been consumerised, which can simply be called “hacking”. You don’t think that one day, the thing governments are doing to each other — like the literal cold war between China and the US happening right now — won’t happen at an individual level? When your “Internet-of-Things” fridge that talks to your microwave and front door lock and bed-warmer and thermostat — becomes remotely controlled to make you a prisoner in your own home? I’m not going to extend this thought experiment any further because it’s just scary what could happen as the home is just one area of risk.

What good are guns or stun guns when it comes to fly-sized drones and hacking you don’t see ? They are not. That’s why it is time to move the debate, globally, to not one of guns but of society and the individual. It’s about how much power we allow individual humans to inflict violence on other humans.

An individual has the right to life, which means security and dignity among other things. What penalties do we have when another human takes that away? And what power do we allow individuals to protect themselves, which as the Supreme court justices opined about Caetano v. Massachusetts argued was necessary, because the state wasn’t there to protect her due to ineffective restraining orders or a present police officer.

Here is my suggestion for some principles I think we can agree to:

  • In an urban environment, where there is population density, anything that is a tool who’s primary purpose is to commit some sort of violence, should be banned. No one should be allowed to possess them, more for the idea that if you have an arms race amongst people you will always have one who can out-do the other.
  • Self-defense and tools are to be encouraged. But only ones that can disarm and disable an attack, not kill. This is why I like stun guns over regular say regular guns and agreed with the Supreme Court’s comment.

The debate is not about guns. Or maybe it is now — but it won’t be in a few years.

The West and Islam (and soon, China)

clash-civilizations
Twenty years have passed since famed political scientist Samuel Huntington published his seminal work, The Clash of Civilizations and the Remaking of World Order. He predicted a world where there would be a clash with the Islamic civilization.
 
Here is a summary and critique. A nice summary from the article:
Like the Islamic world, the Sinic civilization believes itself to be superior to the West, and Huntington predicted it would therefore seek to challenge the West and its designs for global influence. China’s resistance to Western supremacy stems from its Confucian values, which emphasize the importance of hierarchy, authority, consensus and the state’s dominion over society and which clash with American beliefs of liberty, equality, democracy and individualism. The chasm between the two makes a Western-style political structure incompatible with Chinese cultural and civilizational traditions, just as it is incompatible with the Islamic world’s rejection of the separation of church and state. As a result, the relationship between the two civilizations would become increasingly confrontational, especially as China’s economic and military power expands and Beijing begins to pursue a role as a regional hegemon.
Despite the criticism, he did say one thing that Stratfor agreed with that I love:
Instead of promoting the supposedly universal features of one civilization, the requisites for cultural coexistence demand a search for what is common to most civilizations. In a multicivilizational world the constructive course is to renounce universalism, accept diversity, and seek commonalities.
We have politicians currently campaigning in America and Europe taking advantage of bigotry, racism and other despicable traits that take us a step back. To me, the above mentioned quote is a timeless reminder, that there is no one system that is superior so let’s just settle to be different and celebrate that.

Don’t trust the doctor

I’m going to share with you a minor but private battle I’ve had for the last 18 months. There is so much I want to talk about on this subject, but I’m going to keep this post light on ideas and focused more on my experience, which I hope can help you.

Back in January 2014, I went to get a blood test, specifically to test for high cholesterol. Previous tests (years back) said I didn’t have it, but a sibling, one of my parents and that parent’s side of the family have it. It ended up being a general check-up where the doctor spent more time talking to build rapport and he forgot to test my cholesterol levels. When I reminded him, he tried to talk me out of it to rush me out, knowing he had another patient waiting, but I insisted on getting another blood withdrawal for this specific issue that he has missed. He actually said, “don’t worry, you can go another 5 years before getting tested given you had a test a few years ago” and, “you only need to get a blood test once every 5-10 years”.

Lo and behold: when I received the results, I had high cholesterol. Moderate-risk total cholesterol, high risk LDL, high risk HDL, high risk triglycerides.

So this same doctor, already in my bad books for his bad judgement, said some people could do things with diet but my levels were so high that it wasn’t even worth considering. He said to not worry, as he had the same issue. “Just take statins and you’ll be fine”.

I didn’t like that answer so I did a separate test almost immediately. This time it was going direct to a blood testing centre, which also had the added benefits of being cheaper and faster (process and results) than going to at least this doctor. My total cholesterol was down to low risk, LDL to moderate risk, but everything was still high risk. But the change was huge, and I knew it was totally impacted by diet and lifestyle. I had been skipping breakfast, been under major stress in all factors of life, and I wasn’t committing to exercise. I also paid no consideration to my diet. So I took it on me to prove that I could change this without a drug.

I did another test 8 months later with a plan to review it with a nutritionist. The results showed that things were consistent with February, slightly worse even. This was despite taking fish oil tablets (albeit, incredibly inconsistently). However, despite the results being disappointing, I was now “aware” since my initial shock earlier that year. I had done research and was now checking the labels of what I ate so I was a lot more educated. I knew that stress mattered, breakfast mattered, and dietary supplements helped — but these tests proved to me that was not enough if I wanted real improvements.

So I finally got around to speaking to the nutritionist 4 months later (February 2015) to review my previous results. She suggested to drink more water every day, get fish oil tablets, increase vegetable and legume intake (the latter especially as they absorb cholesterol), reduce processed foods (the common factor to all health problems in society), eat vitamin E-rich foods (like spinach), eat protein with every meal (for triglycerides), not skip breakfast and exercise more (and specifically not do things that stressed my body, like rugby and weights that I have done most of my life).

This year, I’ve had to travel for two months of the year already. Not ideal for health improvements, but I made some big changes specifically around my diet. Things like cutting my meat intake (your body needs 1-2 portions per week to get the benefit it needs before costing you), eating more vegetables (up until dinner I eat fruit and vegetables only), eating more fish, and drinking a lot more water. Only now am I getting back into exercise (though it’s still the weights and rugby kind so shh don’t tell the nutritionist).
And the results? Not perfect, but in all the areas I was worried — total cholesterol, HDL, LDL, and Triglycerides — I was now low risk in all but LDL where I am now ‘moderate’ risk. I am sharing my results so you can see what a dramatic difference there is.

A comparison of my results over 18 months

A comparison of my results over 18 months

Whilst I could do better, and I will — I’ve now invalidated the advice of this doctor who prescribed me to go on what would be a lifetime of pills. More importantly, this new knowledge  I’ve acquired has now been tested successfully against real results where I can measure progress going forward. And having long controlled the cravings that pulled me down in past (my theory is that it takes a few hard weeks for your gut bacteria which processes food — the source of your cravings — to adapt to your new diet), I can see the light at the end of the tunnel.

Statins are a life-saving drug for some, however the fact that this was pushed on me as the only option highlights several fundamental flaws in the health sector that need to change. Without going into how this is a growing problem (in short: government regulations and society’s pace of developing new clinical knowledge is overwhelming doctors), the relevant point I want to make is that it was an option that could have led to other health problems.

As I now, officially, recover from my anger at the medical system that treats symptoms instead of causes and pushes drugs, all I will say is this: before making a life-changing decision, get a second opinion. And always question your doctor; they know a lot things about your body when it breaks and it involves therapy, but they also don’t know nutrition or how to manage your health as an interconnected concept.

Update 20 August 2015: In response to the comments on my Facebook account, let me be clear this is a casestudy about being proactive about your health and getting second opinions, not about ignoring universal medical advice nor is it meant to disregard the modern marvel of medicine. Dealing with a chronic health issue is different from terminal as well.

Legalise drugs if you want to deter their usage

The Age, an Australian newspaper reports today the following:

Australians should be able to buy a pure form of the drug ecstasy from their local pharmacy to curtail the harm caused by contaminated blackmarket pills, a Melbourne pharmacist and a leading doctor say.

I agree, for more reasons beyond just that. Let me explain.

Three things about drugs that changed my views

Growing up, largely due to the respect I wished to show my parents, I didn’t touch drugs and had no interest in them, seeing it as a moral issue. That perception changed when I was 21 and traveling the world, I read a book by Ariana Huffington of “How to Overthrow the Government” and she discussed how hemp was a major competitor to the cotton farmers, detailing how hemp had been used for hundreds of years as a way to make textiles. However based on the coordinated lobbying of the cotton industry, the marijuana plant was made illegal and so formed the basis of its illegality today. Times have changed and cotton is no longer the important (political) industry it was in past but the role of the cotton farmer has now been replaced by the pharmaceutical company. With that it remains illegal for the same reason (economics reasons) not health reasons: marijuana and a blue pill can both help you with depression and anxiety, the difference is you can’t grow a blue pill in your backyard.

The second thing that has struck with me is Portugal, which is now well documented since they decriminalised drug use in 2001. Now that it’s *not* illegal, it turns out people take drugs less, continuing drug use is in decline, drug induced deaths have decreased steeply and HIV infection rates have dropped to a manageable level. Read more what 14 years of decriminalisation has done.

The third thing that has struck me since living in America, is the prison population and it’s size. (Today, the US is 5% of the World population and has 25% of world prisoners.) More specifically, how it’s dominated by certain races, whereby African Americans now constitute nearly 1 million of the total 2.3 million incarcerated population. Source: Criminal Fact sheet. And why is that? Because poor black young men turn to drugs as an income source.

Make drugs legal

One of the biggest reasons people say we need to keep drugs illegal is because it acts as a deterrent. We need to accept it’s failing at that.

We should legalise all drugs for the purposes of controlling their supply to eliminate impurities and better monitor their consumption by individuals. But the big realisation I had today when I read that article by the Age, is the best way to deter people from something is to educate then, not to make the supply illegal (which has has the unintended affect of not eliminating the supply, but simply making it less pure and harmful). Imagine if we spent all that money on law enforcement into health advertising and education instead? That’s a much better way to deter the public from harming themselves.

Legalising drugs could have dramatic social change around the world, not least the US which is improving the increased racial tensions of its African-descent population despite progress for civil rights. Legalising drugs will also means the supply can be better regulated, to reduce the harm on the people who consume it — MDMA, cocaine and heroin are all drugs that damage due to impurities. And by legalising, it also means we can free up resources (primarily enforcement) from trying to restrict the supply to instead dampening demand by educating society on the dangers of drug consumption.

Let’s accept the fact that criminalising drugs has done little in restricting supply outside of making it more expensive and less pure. If you want a deterrent, do that through advertising and education; if you want to keep the prices high to reduce demand, do that through price controls. And if you want reduced drug consumption in society, accept it’s time we think about the demand side not the supply side as the only solution.

Series Seed and Series A

Back in the ‘ol days, the first money that went into a technology startup was called  “Series A”. This not only marked the first money coming in but also set the valuation not to mention the terms of equity which impacts all other types of investment.

However, those were the days where you had to raise $5-10m to get servers up, which you can now do for $10 with companies like Amazon, Rackspace, and Digital Ocean.  It’s a very different world now with the change in cost from marketing to hiring and beyond. During the last half decade, we have also seen an “accelerator” boom and an Angel investor boom where startups can get $20-100k in “seed” financing which accomplishes the same thing as the original Series A but without the traditional terms.

Actually, it’s even crazier than that: entrepreneur friends of mine are raising “seed” rounds now of $1-3m which was what you would raise as Series A. What the hell is going on?

Series Seed

It’s been remarked Series Seed is the new Series A.  Why bother calling something an A-round? Well, for one good reason: there’s a valuation.  A distinguishing difference between raising seed money and Series A money is you price the equity you are selling verses deferring it.  In Silicon Valley, “convertible notes” have become the standard now. You raise the funds from an accelerator or angel investor, but don’t discuss the valuation (as you have no idea about revenues yet which is what you really need for a valuation).   The investment is presented as “short-term” debt that converts into equity.  The option, which always happens, is that the investor will receive shares instead of the principal based on the agreed terms. Another reason: If you’re raising Series A from VC that means you’ve graduated into a different type of startup.  You’re more of a growth business.  No longer testing the market but building to scale.  For a VC to participate as a Series A, it’s a partnership decision that thinks you can be a billion dollar company and not just an idea.  Not more worried about cash in the bank, but that you’ll need enough people to grow quickly (or more commonly, that you can’t grow exponentially without the cash)

Language matters
I know of a lot of people who are forced to price their seed round. So, if the first money you receive is “seed” and the first priced money you receive is “Series A” then this definition doesn’t work.

That’s why I would define Series A as having two of the three following characteristics:

  • Done by a multi-partner venture capital firm, not individuals. Your first real institutional money that also has the potential to lead your Series A round.
    • Important to distinguish is this is not an accelerator or a micro-VC (the latter could be $5-25m with one partner, which for all intents and purposes, is  a VC fund). These are new breeds of investors that aren’t the traditional, and have very different motivations as well as likely not being able to participate in Series A rounds, let along lead it.
  • Done with a price. Your valuation is now defined.
  • Done for the purposes of growth, not “startup”

This isn’t just semantics, language matters for millions (of dollars) of reasons.  Entrepreneurs ask me on a daily basis how to fundraise and this same advice applies.  Understanding these differences could save you from wasting 12 months of your life.  Raising seed money is a whole different ball game to raising a Series A, with entrepreneurs not realising this until they have three months of cash left, a payroll, and a lot of users/customers.

My advice is be sure to know the importance of the bar between Series Seed and Series A:  vision is 60% of how you raise money with Series A (don’t confuse vision for plans.)  Even if you raised $3m seed it doesn’t mean you’re Series A worthy.  More cash in the bank doesn’t mean you’re a growth company and you’ll run out of money before you know it, which is the main reason small businesses fail.

What Vivek Wadhwa taught us

Background
Over the past few weeks, I’ve seen two people I know become involved in an intense situation. They are Mary Trigiani, a board director of one of my companies, StartupHouse, and Vivek Wadhwa, the writer and speaker who I met several years ago and for some time was on his private mailing list.

Separate to the above, as a guy who doesn’t like how someone, on the face of it, was promoting women and was trashed quite explicitly — I’ve been talking to Trigiani to reconcile my own thoughts on what is happening.

I had no desire to enter the public conversation because there are enough people jumping on that bandwagon. But after being referred to a Facebook thread of tech personalities discussing the issue, seeing how Francisco Dao misses the point, and reading “What kind of a message does this give to other men who want to champion women?” I feel it’s no longer a question.  We are missing some perspective here.

Been under a rock? There’s a lot of background to this, like the Newsweek article that kicked it off, Amelia Greenhall’s blog post, the podcast that was taken down, the replacement podcast and the Verge interview. But if you only have time for one, here is The New York Times about the whole episode.

Why Vivek Wadhwa Failed
What Wadhwa did in the wake of Amelia Greenhall’s blog post and NPR chat is a lesson for anyone, male or female, in how not to react to criticism.

The issue is grounded in the fact that Wadhwa decided himself to become the champion for women, using what he calls his research as a platform.  He wasn’t elected, but he has been deposed, I think, because of the lack of leadership — openness, understanding, listening, managing — he exhibited when criticised for his behavior (like for example, how he used his research to claim authority on behalf of women in areas the research didn’t cover).  He caused outrage because he silenced female critics and challengers (what fueled the fight), using bad Twitter and social media etiquette (where the discussions occurred), and what they believe was just his hogging of the limelight (the basis, for some, of their initial frustration).

To put a specific example of showing my point: Wadhwa called women “ token floozies” and Trigiani expressed concerns. Wadhwa then claimed it was due to his non-English speaking background and claimed she has personal issues. That’s not what a leader does.

Wadhwa damaged his own credibility by doing things like this.  As sorry as some of us may feel for seeing what some considered to be a good name trashed (including myself), he did this to himself — and it disappoints me he won’t take responsibility.  As a leader, you need to listen and adapt. You need to own your mistakes and move forward. You need to be aware what you say and do has an impact — but also realise that not responding is a statement in itself. Wadhwa, despite the impression of doing good in the big picture sense, has failed in the details as a champion and has actually done harm to the conversation he claims he was trying to lead by letting his ego get in the way.  As another case in point: after promising quite dramatically that he was exiting the conversation, he continues to return each time someone mentions his name in good favour on the topic.

Let’s stop denying the truth
It’s obvious to say, but I’m going to say it anyway: men and women really are different.  As in every endeavor when people of different cultures, wiring, and experience come together, there is scope for misunderstanding and potential conflict.  So for now, there is at best discovery and at worst tension between the sexes and we’re lying to ourselves if we don’t admit that.

Today’s leaders need to celebrate the differences and make it work for whatever endeavor is on the table.  I’m not using that as a line to make this post cliche-perfect but because I’ve actually seen it with my own eyes. I’ve worked on Sand Hill as a VC, in SoMa at a startup, travelled around the US, Europe and Australia to speak at events and mentor startups. But more relevantly, as a founder who runs two very different businesses (but have in common that they are community-centric businesses) — the global events-based “StartupBus” and the Silicon Valley real-estate based “StartupHouse” — I’ve always felt the need to understand these issues because it concerns my customers, employees and board of directors.

I have seen first-hand how a gender-balanced team leads to a stronger business both strategically and in operations. For example, we’ve attracted and retained a lot more customers because some women feel more comfortable when they see women in staff and management positions.  We’ve also become aware of issues that didn’t even cross the minds of the males on the team — including the board of directors that Trigiani sits on — that we’ve now acted on as a priority, making both male and female customers happier. Female employees bring a different perspective and have brought insights to me before anyone else in the team that affected team dynamics and even insights into approaching the market.  I could list many more but I cannot without giving specific examples that affect the business’s competitiveness.  The point is, it’s good business to have a gender-balanced team. The advocacy of stories like this is what Wadhwa should be remembered for his contributions, despite his failed leadership.

What we can do about it, together
To make the differences work in the female-male realm, both men and women in positions of leadership need to acknowledge the frustrations some women experience (such as unwanted advances and idea thievery). We need to stop denying these are ingrained habits, stop ignoring them, and stop them when we are in a position to do so.  Perhaps most important in this particular situation at this particular moment, all men — not just those in leadership positions — have to honour women’s outrage and support their expression of it.  We have to listen and suppress the “buts” as this anger is based on personal experience.  It is real and we have to welcome the expression of it.

As an executive and as a guy, I have made gigantic mistakes and wound up on the firing line.  What I’ve done differently from Wadhwa is that I took it.  Every shot with no reaction.  I asked what I did wrong and went to great effort to understand what I did to cause my offense.  My lesson from this is when you are criticised, you need to display humility. You need to stop feeding the anger by denying another person’s experience or criticising how they express it.  You need to issue one public statement saying you acknowledge what you did without pretending you didn’t say it or making excuses; simply acknowledge you now understand how you may have been wrong.  Do yourself the favour and make a genuine effort to understand it.

What I learned in this time of reflection is that men need to be conscious of how anything we say or do can be interpreted as patriarchal, intimidating, or sexual.  It may be we are none of those, but by ignoring our tone, we give people ammunition to further pull us down — but this is key, as language matters. Instead, give people what they want:  that we listened and heard them.

You may feel women should not share their personal experiences or express outrage regarding this particular situation with Wadhwa.  That may be debatable, but the presence of and need for women in the workplace are facts of life.  So whatever your position on how people express themselves, make sure you realise that women deserve to be heard.  By defending Wadhwa’s reaction to his challengers and criticising women (who he claimed to represent) for sharing their personal experiences with him and their subsequent outrage, you are denying those experiences and ignoring their voices.  That’s not helpful.

Dudes — let me just make my point super clear. When it comes to women’s issues in technology and society, before you open your mouth, let the women have the mic first. Get comfortable with amplifying their messages and supporting them — rather than putting the message out there yourself. We’ve had our shot at being the messengers, and from my vantage point, not only are women more qualified on the topic, but we’ve messed up enough that it’s time to stand back. There is enough debate between women themselves on how they approach this issue: our role is to listen and support the viewpoints that makes sense for men and women.

Which means the next time something like this happens (and you know it will), do us all a favor and be quiet.  Which is what Wadhwa should have done in the first place.

So to follow my own advice, here are the words of Jamie Roth, a woman on the StartupBus Global Council (what I’m developing to be the community elected aspect of the board of directors for StartupBus, my other company) which is this: “I’m glad you’re posting this — it’s important for men’s voices to be a part of the conversation. I don’t think the answer should be ‘keep quiet,’ though. It should be ‘don’t be a dick’.”

Many thanks to Jennifer Shaw, Jamie Roth, Falon Fatemi, Rose Jeantet and Mary Trigiani for their feedback on the draft of this post