pluck

Be weird. (twitter.com/__pluck)

Here’s what works:

  • vim/emacs/whatever editor you use (probably)
  • git and Github/lab/etc
  • email and G Suite (mostly)
  • Dropbox Paper (surprisingly)
  • Zoom, actually

Here’s what sucks:

  • Anything made by Atlassian
  • Heroku (could be great, if they didn’t go all Salesforce in the pricing department)
  • Slack (distracting AF, but also how the fuck does it freeze a brand new Macbook Pro so fucking consistently)
  • All the project management things (see: Atlassian, JIRA)
  • Basically every wiki tool (again: Atlassian, Confluence)

Here’s why:

  • The prices are not connected to reality
  • They all try to do way more than they should
  • They crave attention (Nobody needs all these email notifications, or gasp push notifications! And if they do, it should be opt-in, not opt-out.)
  • They all spend time and money developing mobile apps that nobody needs
  • It’s way more difficult than it should be to extend them or integrate them

We need simple tools that do one thing well.

Think about it. Obviously, there are some companies that are great at trading cash for software—Facebook, Apple, Amazon, Google, etc. But, given the value that those companies are able to capture by doing so, it is extremely odd that more companies haven't figured out how to do it yet. Banks, big-box retailers, insurance companies, airlines: their software all sucks, more-or-less. (They are admittedly improving, but at a glacial pace.)

This is a point that Patrick Collison has previously mentioned (in podcasts such as this one) and possibly Paul Graham as well, so it's not a new idea, but I don't think it's very well understood.

The facile answer points to complexity as the main barrier, but I'm not sure I buy that. Manufacturing processes, construction projects, and accounting are also complex, and yet they are routinely and efficiently procured by companies all around the world, every day, in exchange for money.

Here are my best guesses as to why this is the case:

  • Businesses are inclined to think of software requirements as “projects to be completed” rather than “departments to be staffed.” Software products are rarely “finished,” especially within the context of an evolving company. The great software giants understand this (Google is said to rewrite their entire codebase every few years) but dinosaurs don't.
  • Management does not have a very good sense for where the biggest gains may be realized from software. The software giants are all run by, well, software giants. I think anyone in the core leadership team at Facebook could serve as the CIO of any F500 company, while the inverse is not true. This is not a disparagement of intelligence or ability; it's a question of focus and education. Leaders need to understand not just that software is valuable, but where and how.

Or: How Conceited Could I Possibly Become?

It's an unfortunate reality of the human condition that success is illusory or, at the very least, wholly unsatisfying. That's not to say that failure is preferable (although I think it is a strict requirement, not just as a matter of course but also in service to that very same human condition).

I'm not the paragon of success; I know a great many people who are more “successful” by a variety of metrics. But I am successful, in that my needs and wants are entirely met, and I now find myself back where I started—that mundane pang of existentialism.

What's next? More accumulating of material things, or money? Further pursuit of influence?

Stoicism is a good starting point for these questions, but it doesn't really answer anything—indeed, all that the Stoics can tell us here is to hold fast. Which is great! I'm not falling apart at the seams. I'm just bored.

Presumably, the path forward is either to rest on my laurels (not really working) or to embark upon some new pursuit; some grand vision. And that's where, for the time being, my imagination fails me.

Well, not really my imagination. There's no shortage of ideas. I think what actually paralyzes me is the feeling that my ego won't allow me to do anything other than knock it out of the park while my id suspects that I will fail at doing anything truly great.

And thus, we have it: the human condition.

Is it possible to raise the bar of public discourse? Is it possible to bring about a new Age of Reason?

Imagine a world where our institutions were guided by rational thought, and our leaders selected for their intellect and clarity of mind. Can we do it?

WARNING: The following is pretty hand-wavy. I wanted to get these thoughts down, but they are admittedly not supported by references, although I'm confident that they could be.

It seems unlikely. Even the brightest and most optimistic minds of our generation seem to scoff at this notion. I mean, getting the entire world to do anything in synchrony seems beyond the pale, and surely basic human nature would not allow the powerful to behave selflessly for long.

However:

  • Just because it's unlikely that this would work eternally for all does not mean that we shouldn't strive for a more rational world.
  • Current power systems are not striving for a more rational world at all; they're striving for more power.

It's also interesting to note that certain organizations have historically been able to achieve intellectually rigorous decision-making, with close to optimal outcomes. What can we learn from them?

  1. This becomes harder (non-linearly, probably n²) with scale.
  2. Incentive structures are very important.

Given a sufficiently long time-horizon for stakeholders and a sufficiently global outlook, capitalism seems to do a good job of providing organizational incentives at the corporate level. Unfortunately, long time-horizons and global outlooks are not common. Furthermore, operational inefficiencies frequently reduce capitalism's effectiveness within large corporations. Lastly, capitalism historically seems to have done a poor job of aligning incentives at the societal level. The lack of true economic incentives above the corporate level prevent regulation from being an effective guide toward long-term growth.

More succinctly: politicians, both personally and as part of the institutions they belong to, do not have meaningful economic incentives, especially not with a long time-horizon or global outlook attached.

How could this problem be solved?

I'm not sure, but an idea I've had recently that I think would be interesting is the following:

  1. A new, global, political party. Yes, new parties are unlikely to come to power in the short-term, but they may gain a voice at the table. And, more importantly, on a long time-horizon a global party has a greater chance of accomplishing global goals.
  2. This new party would participate in the elections of any democratic country.
  3. Members would be vetted for intelligence, and must agree to a pledge regarding long time-horizons and global outlook, but otherwise require no institutional credentials. They are encouraged to speak their mind and vote their conscience.
  4. The party would set global goals with multi-decade time horizons which gain the support of its membership.
  5. The party would adopt modern corporate standards for transparency in communication and decision-making, both internally and externally.

The above solution does not solve all of the problematic incentive structures which have been alluded to, but it does reduce the scale of the problem (by aiming to organize a single—albeit ambitious—political party first, rather than all of the world's political institutions) and it establishes long time-horizons along with a global outlook, both of which are critical components in bringing about a new Age of Reason.

It happens increasingly often lately that when I try to think of the forest, all I see are trees. I find myself centered around the personal when, in reality, I would like to think of bigger things. It's ironic that a true focus on human progress feels awfully selfish to me. We are all called upon to provide attention to individuals rather than the collective; mundane individuals.

Everywhere in the world is trying to be the “next” Silicon Valley. Prior to visiting, I assumed that meant that the “original” SV was on its way out.

Having finally seen it firsthand: Silicon Valley is in absolutely zero danger of going anywhere any time soon.

Don't get me wrong, there is lots wrong with modern-day SV. I've written about some of it, and I'll write some more, but essentially I do truly fear for the long-term future of Silicon Valley. And I know that sounds hyperbolic, but the reason I fear for its future is because the world badly needs the concept of Silicon Valley, and nothing else even comes close to the original at the moment, warts and all.

In the short-term, though, SV is safe. Here's why: Institutional knowledge combined with institutional resources. I had read about this before visiting, but it's extremely difficult to understand without seeing it firsthand. The valley has decades of inertia behind it, and the amount of deeply ingrained knowledge about how tech startups are supposed to work has an almost anthropological quality to it; it's reminiscent of tribal lore.

Even the most junior participants in the SV tech scene have an instinctive and almost visceral sense of how things are supposed to work. The average participant in SV understands the VC model better than most institutional investors outside of it. (I hesitated writing that, because it seemed impossible, but upon reflection I'm convinced it's true.) The average participant in SV understands the scale-up playbook better than most entrepreneurs outside of it.

All of this knowledge is reinforced by hundreds of thousands of participants, who each have friends/roommates/siblings with similar experiences at Netflix/Facebook/Apple/Amazon/Google and who are frequently comparing notes.

Technologists in SV have a deep understanding of what's already been tried elsewhere, what works and what doesn't. This is deeper than staying caught up on Hacker News - again, it's a tribal effect. Knowledge is shared quickly and the entire ecosystem benefits from it. There is no hiring pool outside of SV which is even 1/10th as capable or diverse in knowledge as the people available in SV. (That is not at all to say that there aren't extremely capable people outside of SV, and I think learning to leverage those people is going to become even more important to SV companies than it is currently - I have a lot to say about satellite offices and remote employees as well, but that is a different post.)

What I'm trying to say is that Silicon Valley is a giant snowball rolling down a mountain, and it's getting bigger all the time. It's never going to slow down - if anything, one day it might explode. In the meantime, we should absolutely continue trying to replicate it, because one day we might need to.

I have to preface all of this by saying that it's more of a hypothesis based on observation and experience than a supported theory. I'm not insanely wealthy, but I do okay. I don't come from money, and I've only been at this for a few years.

This advice is for people in their teens, twenties, and early thirties, who want to retire in their 40s and 50s to do whatever they like. It is a “get rich slowly” scheme, but the advantage of this compared to any “get rich quick” scheme is that it should work reliably for anyone. It is not necessarily easy to execute, but it is straightforward. It does not require any special skills other than patience.

My goal in writing it down is in producing a repeatable and testable method for average people to accumulate wealth. I'll add updates here over time, based on what I learn.

1. It Takes Money to Make Money

This old adage is true, and what it really means is that, if you have no money at all, you need to get some. Ignore all of the get rich quick schemes in the universe, though! Just go get the best job you can, and keep your expenses extremely low. If you don't have any money right now, then that's good because you're already used to not spending much. When you have your job, continue not spending much. Don't fall into the trap that everyone you work with falls into, of spending their money. Keep living like a poor person.

Some people scoff at this; they say “what's the point of earning money if you can't spend it?” That doesn't sound so dumb, but those people are idiots, because their income will always be tied to the time they put in at their job. If you can have some self-control now, you'll be able to make money without working later.

The key to this step, besides living like a poor person for a while, is getting the best job you can. This could easily be its own essay; for now let us just say that this does not entail becoming an astronaut or a medical doctor. If you're young, it is worth extending your timeline somewhat by investing in education for a profession, but not if it introduces a whole bunch of debt. Truthfully this plan could be executed on a janitor's income.

Your goal should be to save more than 50% of your after-tax income every month. Yes, this is quite difficult, especially if you have a family to house and feed*, but again: a relatively short-term sacrifice now will result in long-term benefits later.

* If you are housing your family through property that you own rather than rent, then a portion of that 50% can go toward your mortgage, which will make things slightly easier.

2. Patience is a Virtue

As alluded to above, you have to be patient. When it comes to your finances, you should be thinking in 1-year, 5-year, and 10-year increments, not month-to-month. Stop trying to get rich quick! People have a very poor understanding of how entirely straightforward it is to get rich slowly by following basic steps over a 10- to 15-year timeline. Trying to get rich quickly gets in the way of this, and relies on a huge amount of luck.

3. Understand Your Goals

Understanding what you're after is important. It will change over time, and that's fine. But write down what your starting goal is, and when you reevaluate, don't let yourself raise the bar just because you can—sincerely contemplate what circumstances in your life have changed which are causing you to want more. Ultimately you will find a balance that works for your needs.

A simple way to define your financial goals is:

a) How much money would you like your primary residence to be worth? (You will own it outright at the end of this plan.) b) Once your residence is paid for, how much after-tax income do you want to earn every month to cover food, miscellaneous expenses, and leisure?

If your answer to (b) is more than you currently earn after-tax, it may be a sign that either your goals are unrealistic or that you need to re-visit step 1.

If your answer to (a) is more than 50x your monthly after-tax income, it may be a sign that either your goals are unrealistic or that property prices in your area are grossly inflated. If the latter is true, it will make it almost impossible to execute the rest of the steps without relocating, since owning real estate is an important component of this plan.

If your goals are unrealistic, don't be dismayed! That doesn't mean they're impossible by any means, but it does mean that you will need to find a way to either increase your income, increase your timeline, or decrease your expectations. I strongly suggest that you try some of all three: you should seek to increase your income at least once a year anyway, and learning to be happy with less is an important life skill. However, increasing your timeline is another interesting option! What if, instead of working on a 10- to 15-year timeline, you break this up into two 10-year plans? Keep your ultimate goal, but turn that into your 20-year goal while also creating an interim 10-year goal that is closer to your current reality. Work hard at it for 10 years, following the steps laid out here, and then re-evaluate and repeat. It may take 20 years instead of 10 or 15, but you will be much farther ahead than if you had given up altogether.

4. Understand Risk

Risk is a difficult topic to teach, but almost everyone who is adept with money understands it. “High risk, high reward” is an oft-repeated phrase, but poor people take that to mean they should earn a greater appetite for risk in order to reap more rewards. That's not really true! In fact, getting rich slowly is all about understanding which parts of our financial system protect you from risk, and how you can take advantage of that. For example, basically the only kind of debt that is smart for most people to use is mortgage debt, since that has a lot of protections built into it which limit your risk exposure. That's why owning real estate is important—it gives you access to credit which is extremely inexpensive (relative to the alternatives) and protected from downside by the property value.

5. Understand the Efficient Market Hypothesis

A good book to read about this is Burton Malkiel's “A Random Walk Down Wall Street.” Effectively, there are not really any secret shortcuts to making quick money in the stock market, or anywhere else, because markets are efficient. What you can do instead, though, is understand how diversification can be used as a tool to maximize returns and minimize risk. (Furthermore, the efficient market hypothesis might cause us to start looking for markets that are structurally less efficient, and therefore provide slightly better opportunity for returns; normally such markets are that way because they're harder to access. This is a legitimate strategy, and worth understanding, even if it may not fit into your 10- to 15-year plan.)

6. You Must Use OPM

“OPM” stands for “Other People's Money.” Basically, saving diligently and even investing wisely does not make people wealthy on its own. In order to do that, almost everyone uses OPM. In the general context, this could mean debt or outside investors, etc. In your case, there's only one acceptable form of OPM: a mortgage from a bank.

Banks lend huge amounts of money at very low rates whenever real estate is involved. You should take advantage of that!

After executing on #1 for a year or two, you should be in a position to make a down payment on a home, if you don't already have a mortgage. Do it! And then continue executing #1 diligently, to pay off that mortgage as quickly as humanly possible. This is where patience will help, but not as much patience as Joe Public, please! “Normal” people take out 20, 25, or 30 year mortgages (and beyond!). You should get terms based on 20 years, but use payment top-ups to pay it off in 10. (This will be possible if the home you buy is less than 50x your monthly income after tax.)

Now, this is where it gets really interesting. You own a home! And it only took 10 years—congratulations. We're not done yet, though! Your next step is to buy a second property. Having paid off a mortgage so efficiently, banks will be happy to lend to you again. However, this time your intention will be to buy a property that you can rent out, so that the mortgage on this property effectively pays itself. (The simplest option is probably to buy a second home that is similar to your first, and find a family to rent it.) Unlike the mortgage for your primary residence, it is completely ok (and even encouraged) to take out a longer-term mortgage for this second property.* It is easy to over-think this step; you simply need to find a property which you can rent out for slightly more than it costs to pay principal, interest, and maintenance on.

* You should not finance anything against your primary residence. Now that your home is paid off, keep that as your nest egg. But taking long mortgages on and/or re-financing secondary properties is fine.

7. Multiply!

Once your second property is in place (this should happen by year 10-12) you have some options:

a) You can wait about 2 years, re-finance your second property (again: never re-finance your primary residence), and use the equity from that property as a down payment on a new one. Continuing this process allows you to multiply the equity you're earning from rent over time. If you repeat this process once a year for 5 years, by the end of the 5th year you will have built up enough equity overall to pay for the initial investment property outright, thus continuing to earn the rent from that property as income. (Not to mention the significant equity it represents!) b) You can re-finance the property every year or two and invest the resulting cash in the public stock market. When you're ready to retire, you can continue the re-financing process to generate cash for yourself every year and supplement it with the interest that you're earning from the stock market, reaching into the principal eventually if you want.

The key in both cases is that you're relying on the bank to keep lending you money which is secured by real estate, and multiplying your cash flow through either the stock market or additional real estate investments. You can also mix and match both approaches to great effect. Your risk is limited, since the loans are secured by the property and (unlike your primary residence!) your goal is not necessarily to maintain ownership of the property long-term.