Have you heard the Slack story? Stuart Butterfield and his team were working to build a gaming company. The team needed a system to easily communicate and collaborate, but one that also integrated with all the other apps and services they were using. So they built Slack to address that need. Before long, they realized the gaming company wasn’t going anywhere, but that the team loved using Slack. So they pivoted to focus solely on that. The rest is history.

Similarly, my partner Jake and I have been working together for about a year and a half to build a software company focused on knowledge sharing. The company is called Vectr, and the idea is to better facilitate the flow of information across groups of people by empowering individuals to ask important questions. But this post isn’t about Vectr.

In building the company, we’ve run into a challenge that I imagine most (if not all) startup companies face. In building software, you end up using a whole host of different products and services as part of the development process. We use AWS for compute and storage, Heroku for app development, Stripe for payments, Chase for banking, and many others. So, the question we faced was, how do we effectively keep track of and share access to all of these accounts between the two of us?

This trend & challenge is equally present with regards to personal accounts. The other day I set a timer for 60 seconds and tried to make a list of all the different apps and websites I use. I came up with 65, and that only includes the ones I use regularly!

The early solution we came up with was simple. Use the same simple password across everything (I know 😂😂 two Einsteins over here)! I’ll refrain from elaborating on why this is a terrible approach given that you, dear reader, are smarter than we are.

Realizing we were being foolish and irresponsible, Jake and I sat down one evening and came up with a short list of ways we wanted to improve the way we manage our online identity as a company.

1. Passwords must be unique across every service we use.
2. Passwords must be virtually impossible to guess.
3. We will rotate passwords for core services once per quarter.
4. We’ll never write down passwords (on paper or digitally).

From there, we started to explore the existing solutions on offer.

At the low end of the market (with regard to complexity, capability, and cost), we came across password managers like LastPass and 1Password. We tested both, and to be honest, they work well. But they don’t fully integrate and enforce the principles we described above. If you log into a website and use the word “Password” as your password, these services will offer to save it. In fact, if your password is “Password” for every site and app you use, that’s perfectly acceptable to them. We wanted to find a solution wherein behavior like this is not an option.

Further, and perhaps this is the hippie iconoclast coming out in us, we didn’t love the idea of getting in bed with one company for something so important. What happens if their website goes down (Facebook, Slack, and Amazon Web Services have all experienced 12+ hour outages during the last year during which you could not use their services)? Then, of course, you have scarier things like hacks, data leaks, or companies storing passwords in plain text and unencrypted environments (cough, Facebook, cough, Google). So, we wondered if a more decentralized approach might make sense. (no blockchain talk today, I promise 😇).

At the high-end market, you have enterprise-grade identity management solutions. And while incredibly robust, the cost and complexity make these infeasible solutions for individuals and small teams.

After a few weeks of research, we couldn’t find what felt like the right solution. We just wanted to solve this challenge and be done with it. And what do you do when you can’t find what you want? Correction, what does Jake do when he can’t find what he wants? He builds it! And like the Slack story, we’ve absolutely fallen in love. At the start, we focused only on our most critical business apps. Then we added everything else. From there, because it was so easy to use and, to us, so valuable, we each started using it personally. I now manage 56 different accounts in one easy-to-use interface.

Naturally, we then told the women in our lives about it and they too fell in love. Now they both have their own accounts and are using it daily.

So, why am I telling you all this? Well, given how much value we take from the service, we thought other people might also find it valuable. So now we’re planning to roll out a limited beta to a small number of people to test the service and provide feedback. That’s where you come in! We’re hoping a small number of you (living in NYC) will join the beta! Anyone interested?

What’s in it for you? We’re planning to host a small “launch party” at my apartment in a few weeks and would love to have you there. We will, of course, give you food, drink, and a good time! We’ll spend about 20 minutes talking about the service, then I say we just kick back and get weird!

The total number of people will cap at 10, so don’t sleep!

What do you say??

Business & Money

A couple of weeks ago I was on a plane preparing for takeoff. As I set there in my seat, there were a few investment ideas swirling around in my head as the flight attendant droned in the background about oxygen masks. As I gazed out the window thinking about how I might reduce some risk in my portfolio (I’ve been shifting from growth toward value as valuations have continued to climb), there was a thunderstorm brewing on the horizon. There were horizontal lightning strikes flashing through the sky which I found remarkably beautiful.

The mix of lightning strikes and thoughts about risk reminded me of an analogy I heard a while back. I don’t remember exactly how it went or where I heard it, but I’ll do my best to convey the gist.

In a lightning storm, there is a chance that a specific lightning strike will ignite something on the ground and lead to a fire. Californians know this all too well.

But risk is not the probability of a lightning strike on a specific place. Rather, risk is better characterized by the amount of dry plant matter on the ground. When there is little dry plant matter, the probability of a lightning strike leading to a fire is fairly low. By contrast, if you have an extended period of drought, leading to the accumulation of dried plant matter, the chance of fire resulting from a lightning strike becomes far greater (irrespective of where the strike happens).

Equate that to today, and I’d say we have a lot of dried plant matter laying around. Political unrest at home. Political unrest abroad. Lofty valuations in public markets. A global bear market (with the exception of the US). Extremely low interest rates, meaning the Fed doesn’t have a ton of recourse to act should they need to. Inverted yield curves. And on and on and on. So I believe we have elevated risk levels.

As a result of the heightened risk, I’m playing a lot more defense than offense at the moment. My cash position has risen to 33% from around 15% a year ago. Add another 7% of what I’ll call extremely safe bets (GLD, BRK.B, MKL, DIS, AAPL, GOOGL). And of what remains, I’m putting more emphasis on healthy balance sheets, consistent earnings growth, and profitability. Don’t get me wrong, I’m still a techno-optimist and still own a number of growth names (ETSY, TTD, MELI, SHOP, TDOC), I’m just not adding to those names at the moment.

Human Progress

The web browser was an incredible thing for innovation and technological progress. Before it came onto the scene, Microsoft ruled the world because it controlled the operating system. And due to that control, app developers basically had no choice, but to develop apps on the windows OS. To develop for a different operating system was to severely limit your chances of reaching tons of end users and thus building a business of any significance.

But the browser changed that. It meant that it didn’t really matter what type of hardware you purchased and what type of OS came pre-installed. It leveled the playing field. As long as someone had an internet connection and a browser, they could access web-based applications. This state of affairs allowed for companies like Amazon, Google, Ebay, Facebook and many others to thrive and wrest some power from Microsoft (the fact that Microsoft is once again the most valuable company on the planet notwithstanding).

Keep this in mind as we slightly change topics. We’ll be circling back to the browser and its significance.

Many of you know that I’m currently working with a friend to get a software business off the ground. And part of that equation involves a mobile strategy, given that mobile is taking an ever-increasing share of web traffic. And if you’re in the US, that means ensuring that your software shows up in the Apple App Store if you want to ensure easy access and maximum distribution.

If you’ve ever tried to publish an app to the App Store, you’ll know that it must go through a review process. An unbeknownst to many, this is a human review process wherein every app is reviewed by a human being. And broadly, I’d say this is a good thing. Apple is playing a gatekeeper role to protect consumers by ensuring that malicious software doesn’t make it into the store. But there’s also a downside. If you operate a company and you compete with Apple, your apps must also go through this review process. And not only does Apple get to review the apps, they also take a 30% cut of your revenues for providing this service.

This situation lies at the center of Spotify’s recent complaint against Apple filed with the European Commission. Spotify is suggesting that Apple is engaging in anti-competitive behavior because 1) it claims that Apple frequently rejects its app upgrades (degrading its customers’ user experience), and 2) Apple takes a 30% cut of Spotify’s revenues. It’s not that the 30% cut, in and of itself, is a bad thing (remember, the role that Apple plays as a middle man has value). But rather, Spotify’s main competitor is Apple Music. So given that both Apple and Spotify must pay a huge portion of their revenues to music labels and artists, as they should, to allow Apple to then take an additional 30% of revenues from Spotify does not leave them with much capital to operate the business, market to new customers, and the like. Thus, Apple has an inherent competitive advantage.

But let’s come back to the power of the web browser. It seems many developers these days are opting to build what are known as “progressive web apps,” as opposed to native mobile apps. From Wikipedia:

Progressive web applications (PWAs) are web applications that load like regular web pages or websites but can offer the user functionality such as working offline, push notifications, and device hardware access traditionally available only to native applications. PWAs combine the flexibility of the web with the experience of a native application.

There are a couple of important things to note about PWAs (likely many more, but I’m not a developer).

First, you usually install them by navigating to a company’s mobile site. When you land there, you get the “add to home screen” dialog box. This adds an icon to your phone’s home screen so it appears just like any other app. But importantly, you have circumvented the App Store and thus don’t have to give up any of your revenue to Apple.

Second, from a development standpoint, things are far more simple. You develop one PWA that works for every browser, OS, and device type. So you don’t have to worry about developing an Android app, iOS app, lengthy review processes, and accounting for older device models that only support older versions of the OS.

For these reasons, my technical co-founder has opted to build a PWA for our mobile experience. Makes a ton of sense to me.

So again, it seems the browser may be playing a key role to level the playing field and wrest power from the giants (the fact that the leading browsers are owned by the giants notwithstanding). And I think that is a good thing that will ultimately lead to more innovation and more competition.

Philosophy

I’ve been meaning to write about something for a long time. But I haven’t done so out of fear and shame. But reading The Gifts of Imperfection by Brene Brown has illuminated the fact that embracing shame and vulnerability are what courage is all about. So it’s time to get this weight off my chest.

To put it simply, I’ve lied to many of you for years. I feel terrible about it and it’s time to put an end to the lies.

Up until age 18, basketball was a big part of my life. I wasn’t some superstar athlete, but I took the sport seriously and was confident in my ability.

But that all changed when I went to college. There were a number of schools (primarily division 3s, a handful of division 2s, and one division 1) that recruited me aggressively and where I could have attended on a full ride and continued to have basketball play a major role in my life. But when I visited New York City, I was enthralled by the lights and the energy. I was spellbound. Smitten even. She had me before she said hello. 🤤😍🤩🤪

In other words, NYU was a no brainer. The fact that it offered a top 5 undergraduate business program was just a cherry on top.

Unfortunately for me, I wasn’t good enough to make the team. Plain and simple (I think this is the first time I’ve set this aloud to myself or written it down). But for a long time, I embraced a multitude of excuses.

First was the fact that the coach that “recruited” me was nowhere to be found when I arrived for freshmen year (still unsure if he left or was fired). I put recruited in quotes because I don’t want to embellish the facts any longer. I received a few recruiting letters and went on an unofficial visit to meet the team, but nothing glamorous.

Second was the fact that the head coach favored a “different style” of basketball. There weren’t many black guys on the team and shooting threes seemed more important than getting out in transition or playing the pick and roll. But again, just another excuse.

I just wasn’t good enough and the team was not in need of another guard.

And not only did I not make the team freshmen year, I again tried out sophomore year and didn’t make the cut. I largely kept this a secret to avoid the embarrasment of telling people about it, then failing.

At the time I didn’t make a big deal about it or spend much time reflecting. The story I told myself was that I would have more time for partying and more time for studying.

But the reality is that this was one of the biggest failures and disappointments of my life. And it was a huge blow to my confidence and my feeling of self-worth. So much so that I’ve lied about it ever since. To this day, many people believe that I played basketball in college (because that’s what I told them). For those closer to the story or with a better chance of finding me out, I told them I played, but got hurt early in my collegiate career and thus decided to focus on my studies. I wouldn’t be surprised if there are a couple of other fabricated versions of the story floating around that I no longer remember.

But long story short, lies, lies, and more lies. I lied because I was ashamed of my failure and have always struggled to embrace vulnerability.

I’m writing this to apologize for all of the lies and to take a small step toward better dealing with shame.

My Latest Discovery

If you subscribe to AT&T as your wireless carrier and you have an unlimited data plan, it includes free access to one premium entertainment service. The options include HBO, Cinemax, Showtime, Starz, Amazon Music Unlimited, or Pandora Premium.

I chose HBO. Duh! 😉

Business & Money

A couple weeks ago, the world lost John Bogle, the founder of Vanguard. For the unaware, Vanguard is the largest provider of mutual funds in the world and the second largest money manager when measured by assets under management.

But Bogle built Vanguard in an unusual way. To explain, let’s contemplate an unrelated industry for a moment.

In the energy industry, many investors focus their attention on the new shiny thing. They want to be involved in renewables, shale, battery technology and the like, all of which are exciting.

But from my perspective, the most exciting thing about the energy industry has been the massive efficiency gains. A 2019 Chevrolet Suburban has better fuel efficiency than a Ford Taurus from 1989. That’s an incredible leap in efficiency. If we get a similar gain in the next 30 years, and can keep fuel prices low, the transition to clean energy might be slower than anticipated.

Similarly, if you think about how to beat the market over the long term, you have 2 options:

You can outsmart other investors by timing the market and/or coming up with new and esoteric ideas.

Or you can aim for efficiency gains by spending less and saving more. (one of Bogle’s famous lines: “In investing, you get what you don’t pay for.”)

Bogle did the latter. He cut out brokers (and their massive fees) and sold funds directly to investors. And he sold these at cost so investors could keep more of their returns. And as a result of those lower fees, Vanguard funds outperformed the majority of asset managers.

And, of course, Bogle got extremely wealthy along the way, though not as wealthy as you might think. While the head of Fidelity is worth an estimated $7.4 billion, Bogle died with $80 million. And I think that’s because Bogle was more focused on his mission and less influenced by ego and greed.

Human Progress

I’ve written on this blog many times about the power of words and language. And I feel a need to return to the subject today. That’s because I keep reading about the concept of a “universal basic income”. I find both universal and basic to be troubling in this context.

I guess universal is being used here because, while the current welfare system is aimed at helping the very poor, the idea is that universal would mean that everyone would receive this benefit regardless of their financial position. But in reality, a word like national might be a better fit here given that any policy would be constrained by national borders.

More troubling for me is “basic”. This might be one of the most subjective words in the English language. Does basic mean access to a shelter, electricity, and running water? Does it also include access to healthcare? Does that healthcare just mean emergency healthcare, or does it extend to preventative care? What about access to contraceptives and reproductive health? And what about education? Would a basic income stop at elementary or high school? or perhaps it includes enough to cover a 4-year undergraduate degree?

These are big questions with big implications. And ones that are not served well by the use of ambiguous short-hand.

Philosophy

On Tuesday I was heading home from work while enjoying a podcast. While I was traversing the subway station toward the relevant platform, I began searching the Apple podcast app for the next episode that I would enjoy after the current one. I guess I was a bit nervous knowing that I would lose service in the next couple of minutes.

But the funny thing was that I was only 20 minutes into an hour-long episode. And a very good hour-long episode at that. And the ride home from the Bryant Park station is perhaps 6 minutes at most. There was virtually no chance of cell service becoming an issue during that brief window.

So I rewinded the current episode about 60 seconds to before I became distracted, locked my phone, put in my pocket, and continued peacefully on my way.

It’s so easy to become fixated with the next thing when the current thing hasn’t even run its course. It’s just like that old saying of thinking about those proverbial birds in the bush while ignoring the one you’re already holding.

My Latest Discovery

If you’re in need of some entertainment this week, check out this Mike Tyson interview by Joe Rogan a couple weeks ago. And if you’re strapped for time and only want to watch 2 minutes, I’d recommend starting around 11 minutes and 45 seconds when Mike answers the question, “What made you think you could get a tiger?”

Business & Money

Negotiation is an important component of doing business. And there are many different ways to go about it.

At times, you might make an extremely aggressive offer right off the bat, which is to say that your offer is best and final. I think this can sometimes make sense, especially when you have a large stock of trust and rapport to stand on. This is sometimes the case when you are dealing with someone with whom you’ve worked with many times in the past.

But you have to be careful because there are tons of people that will say something like, “I have no interest in a drawn-out negotiation. So please just give me your best price.” I have found that people that say things like that often are the ones that enjoy negotiating more than most others.

On some occasions, it might be prudent to bake in considerable cushion expecting that there will be a lot of back and forth. From my experience, this is often the case when the relationship between price and demand are inelastic (meaning that people are insensitive to price changes), or when pricing is opaque in a market.

Whatever the case may be, I find that it’s always helpful to walk into a negotiation being aware of your must-haves and non-negotiables. And I wouldn’t suggest revealing these at the start as it’s never a great idea to start with 0 leverage.

Human Progress

Another week, another congressional hearing that puts the incompetence of congressional leaders on full display. This time it was Google’s CEO Sundar Pichai taking the heat.

Congressman Smith: To my knowledge, you have never sanctioned any employee for any type of manipulating the search results whatsoever. Is that the case?

Pichai: It’s not possible for an individual employee to manipulate the search results. We have a robust framework including many steps in the process.

Congressman Smith: I disagree. I think they can manipulate the process.

Or how about this one.

Congressman King: I have a seven-year-old granddaughter who picked up her phone during the election, and she’s playing a little game, the kind of game a kid would play. And up on there pops a picture of her grandfather. And I’m not going to say into the record what kind of language was used around that picture of her grandfather, but I’d ask you: how does that show up on a seven-year-old’s iPhone, who’s playing a kid’s game?”

Pichai: Congressman, the iPhone is made by a different company.

Don’t these elected officials have aids or staffers that are screening their questions and prepping them for these sessions? Perhaps not.

So I’m poking the bear a bit, but that’s not to say that this is not a serious topic. I’d say that the dominance of the big consumer technology companies is problematic in more ways than one.

First, it seems that government oversight and regulation is basically a non-issue for them. Our consumer welfare-centric antirust approach leaves them immune to any real antitrust action. You might even say that consumers benefit greatly by taking advantage of often free and incredibly useful products and services.

Second, innovation in consumer tech seems to be stagnating. Investors seem wary to invest in what has become known as “kill zones” (markets adjacent to those dominated by the big tech companies) and enterprise tech firms seem to dominate IPO headlines.

So it seems difficult to conceptualize what might unseat the tech giants and what might be the next big thing in consumer internet. But it was probably equally difficult to conceptualize what might unseat Microsoft and IBM in their heydays.

Philosophy

Human beings are inherently social creatures. We all yearn for cohesion with a group. And you might say that those groups radiate outward in a series of concentric circles. So first might be your nuclear family, then extended family, then your religion, your city or country, and so on and so forth.

Problems arise, though, when the circles for different people radiate out to different distances. For example, one person’s circles may stop at a national or racial border, while another person has a circle with a larger radius that includes all human beings.

The question is, how do we reconcile such differences? Or better yet, is such reconciliation even possible?

If you look to history for examples, it seems it is possible, but not without the drawing of new circles. Put differently, the creation of common enemy is a great uniting force. But this solution often leads to warfare, so it is perhaps less than ideal.

You might also look for the corollary of new circles, namely the erasing of circles. Take the founding of the United States. In one sense, you DO have the creation of a new circle, but you also have the erasure of existing circles. By that I mean that many Americans seem to put their US identity ahead of that of their preceeding heritage.

So I wonder if people are erasing enough circles as they go about adding new ones.

My Latest Discovery

I’ve written here before about using Robinhoob as one of my brokerage accounts. And it has been great and continues to be great for that. So I was excited and intrigued last week when they announced 3% checkings and savings accounts. But it turns out that when things sound too good to be true, they often are. It turns out that these are not traditional bank accounts at all, but instead money-market accounts with couple extra bells and whistles. That means that cash stored in those accounts are invested in US Treasury Bills (the closest thing to no-risk assets) and that it also is not subject to FDIC insurance like it would be if stored in a traditional checking or savings account.

I know I talked to a few of you about this, so I wanted to ensure that people are fully informed before making any changes to your money management strategy.