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Patrick Collison is one of the most fascinating people I’ve come across in my research so far into some of the world’s best founders.
Just like Christina Cacioppo, who I wrote about last week, he’s a voracious reader and maintains a massive book list on his website.
And like Tope Awotona, Tony Xu, and Iman Abuzeid, who I wrote about a few weeks back, he immigrated to the United States and certainly made the most of it.
His story, from growing up in a small rural town in Ireland to building Stripe, a company valued at $50 billion, with his brother, John, is nothing short of remarkable.
Patrick is quite literally one of the smartest people I’ve ever known. Like, he puts Larry Page on his heels smart. I don’t know anyone who has 1) read more books and 2) has the near photographic memory for what he has read. His thoughts are provocative and challenge the status quo. His success is no accident.
I love that last line, “his success is no accident,” because when you read more about his story it becomes abundantly clear.
Given that Stripe has been covered ad nauseam by some phenomenal writers over the years, this story will be much more focused on Patrick and the lessons we can learn from his journey. I’m also not going to cover much about the last few years of Stripe - I find the early days of most companies infinitely more fascinating.
Before we dive in, I’m just going to suggest two amazing pieces for you to check out if you’re interested in learning more about Stripe:
Patrick’s upbringing was incredibly influential in him eventually building Stripe.
He is the oldest of three brothers and grew up in rural Ireland, surrounded by farms and fields.
His mom was a microbiologist who started a corporate training company a few weeks after he was born. Patrick likes to joke that he must not have been that interesting since she started the business so soon after him being born.
When Patrick was 5, his dad, who was an electrical engineer, decided to buy a 24-room lakeside hotel that he’d run.
Growing up seeing both his parents start companies made this seem normal for Patrick and is an important lesson for all of us in the importance of the environment you put yourself in - by choice or otherwise.
While he’d eventually build one of the internet’s most influential companies, as a kid Patrick read about the internet for 2 years before he finally had access. Seriously. He’d read books about the internet and was fascinated by it. In reality, he not only read about the internet but about everything, developing the habit of reading at a young age.
When Patrick eventually did get access to the internet, it was initially so slow that he would read a book while waiting for pages to load.
But he eventually would get access to a faster connection and he dove in.
He started learning the programming language PHP at age 13 or 14, then tried to learn Java and kinda wanted to quit, but stumbled upon Python and eventually LISP.
All that to say, Patrick was hooked immediately.
I think I was actually really lucky where from an early age, my parents were very okay with myself and John charting our own course. And you get these real hothouse environments where there’s a lot of pressure to go to this school, go to this college, pursue this career path, whatever. You really feel like you’re on these narrow train tracks. And I would say that our upbringing was the opposite where really, our parents, even when we wanted to make very ostensibly strange and surprising decisions, our parents supported us.
So when I was a 15-year-old and wanted to take a year off school to just program full time, my parents were supportive of that. Or when I wanted to try to drop out of school to go take this totally different exam system, my parents were okay with that. And so we had this upbringing where our parents supported us in that way.
In 2005, at age 16, Patrick won first place in the 41st Young Scientist and Technology Exhibition for creating his own version of LISP called Croma.
That same year, he came to the United States for the first time, when he visited Stanford for the international LISP conference.
This had an influence on him and, as is a theme throughout his life, he wanted to come back on his own timeline.
He would eventually enroll at MIT at age 17, a year early, as he passed the standardized tests required of him to be able to do so.
The boys went to a school with fewer than 20 kids per grade. When bored in class, Patrick read books. “I would line up the angles so I was hidden from the teacher’s view,” he says, adding that he found out years later that an enlightened principal had instructed teachers to allow it.
Patrick spent his last year studying at home so he could take the required standardized tests early and graduate at 16. (“Surely the smartest redhead in Ireland,” read one headline about 16-year-old Patrick being named Young Scientist of the Year for developing a programming language and artificial intelligence system.)
He condensed what’s normally a two-year test-taking process into a 20-day period in which he aced 30 exams. Then he ran a marathon to celebrate.
Not long after, Patrick would start his first company with one of his brothers, John.
In January, after Patrick finished his first semester at MIT, John came to spend a month with him in Boston to work on an idea they had to compete with eBay, a company that they thought wasn’t innovating much.
They wanted to build what Patrick would later describe as a combination of Amazon, Wikipedia, and eBay.
Moving back to Ireland for a few months, they rented a small office in Limerick and put their heads down writing code.
Eventually, they decided they needed to raise some money.
Patrick previously met Paul Graham, co-founder of Y Combinator, through the LISP community they were both part of and he was familiar with the startup accelerator so they applied to YC. They got it and, shortly after, the YC partners suggested they merge with another company they had invested in that was doing something similar.
The 4 of them came together to form Auctomatic in May 2007.
This company was going to provide a better interface for sellers who were making a living on eBay or selling a large volume of inventory - an audience eBay had largely ignored.
Patrick and the rest of the team got along well, raised some money from angel investors, and launched their product in October 2007.
Later on, when Patrick was asked about the difference in the tech scene in Ireland and Silicon Valley, he told a great story from this time about Paul Buchheit, who created Gmail.
Paul agreed to invest $75k in Auctomatic, but as Patrick described, he kinda forgot to fill out all the paperwork for the investment so, when Patrick and the team needed money to pay for servers at this eBay Live conference they were going to, Patrick posted a Tweet asking for help.
He got a call from Paul who simply gave him his credit card number to pay for the servers. Easy.
Patrick compared that to the complicated application process involved in getting funding from a prominent organization supporting startups in Ireland, one he could never wrap his head around.
It pays to be in the right environment and work with the right people.
Anyways, after launching the Auctomatic product, they got a good initial response, so good, in fact, that within a month and a half, they had their first potential acquirer show interest in them.
After two more companies came along wanting to buy them, they began negotiations around Christmas time, with a deal being signed in February of 2008 by Live Current Media. The $5 million deal officially closed in May 2008.
Patrick’s feeling after this?
After Auctomatic was acquired, Patrick joined Live Current Media and moved to Canada, becoming the director of engineering, with his brother going back to school in Ireland and eventually Harvard.
Patrick, after dropping out of MIT initially to work on Auctomatic, actually decided to go back to school after he spent some time in Canada.
And so I went back because I felt that I hadn’t really properly rejected the hypothesis that maybe I should try to become a professor; maybe physics is what I should be at least attempting to spend my career on. And after a year back at MIT, I decided that that was not the case.
I find this refreshing, especially for those currently trying to figure out what they want to do with their careers.
This experience, having gone through raising capital and building a real company for the very first time, reminds me of what Sam Altman wrote on how to be successful:
It’s useful to focus on adding another zero to whatever you define as your success metric—money, status, impact on the world, or whatever. I am willing to take as much time as needed between projects to find my next thing. But I always want it to be a project that, if successful, will make the rest of my career look like a footnote.
Auctomatic would undoubtedly look like a footnote in the life of Patrick Collison with the company that he built next.
The background context here is that under almost every ostensibly sane analysis, Stripe looked like a bad idea.
This was a crowded market, there were tons of existing incumbents, there were significant regulatory and partnership/institutional barriers to entry.
We had no experience in the domain. We were very young. We weren’t even U.S. citizens, and an ecosystem that again, just because of the regulatory dynamics, that sort of adds to the complication.
We had no obvious mechanism for gaining significant distribution, and we were not a naturally viral product or one with an organic adoption the way maybe a social network or a consumer product might have.
Patrick and his brother looked for a version of Stripe before they started it, couldn’t find it, and were perplexed that something like it didn’t exist.
Important context, at the time, 2% of all consumer spending in the world happened on the internet. That number is 10x more today.
The idea to actually pursue Stripe came from John who went to YC’s Startup School in the fall of 2009 and, inspired by the event, convinced Patrick they should build a prototype.
Patrick recalled him saying something along the lines of “How hard can this be?”
Side note, at that time, Patrick and John were still making money from iPhone apps they had developed as teenagers, something that John recounted in an interview with Invest Like the Best:
We had a set of iPhone apps for the iPhone from the very start. You probably remember there was that one year between '07 and '08 when there was no app store. And so there were jail broken apps and Patrick and I ran a business that was offline Wikipedia for your iPhone.
And so compressive English Wikipedia was the largest by far, but as you stripped out tables and images and everything like that, you could compressed it to have a fit on a four GB iPhone. And it was especially popular overseas because, unlike in the US, the iPhone didn't launch often with good data ponds. And so you had people without internet access. It was really useful to have this Hitchhiker's Guide to the Galaxy.
But we were at the time, when we started doing this, we were teenagers. We were selling it on the app store and to teenagers, we felt like we were just raking it in. I mean, just absurd amounts of money for kids at the time.
And we would look at the app store, we'll give you these reports of where people are buying the app, and you have sales happening in Saudi Arabia and Mexico, and all these places buying your app. But again, these two Irish hooligans running a multinational business.
That should be the name of the movie about the Collison brothers someday. If nobody makes it, I’ll find a way to produce it. Looking at you, Hillary. IYKYK.
After deciding to pursue their idea for Stripe to fix payments on the internet, Patrick and John went to Buenos Aires to avoid the Cambridge winter and start working on it.
They’d write the first lines of code in October 2009, have the first version complete within about a week, and by January 2010, it was go time.
As I mentioned, the name of their company initially wasn’t Stripe, it was SlashDevSlashFinance, as Patrick described on The Tim Ferriss Show:
And so Stripe was originally incorporated as SlashDevSlashFinance, Inc., spelled S-L-A-S-H-D-E-V-S-L-A-S-H, etc. The slashes were actually spelled out. And the reason for that is we – well, it’s a long story. I won’t bore you with it. It was a programming joke, but we thought it was funny. The rest of the world, to our shock and surprise, did not quite find it as funny as we did.
And the first name of the product was SlashDevSlashPayments because we wanted a slightly broader company name than product name. And extremely confusingly, while the company had it all S-L-A-S-H stuff spelled out, the product was just D-E-Vpayments.com.
They obviously switched the name to Stripe eventually, but even then, they were seriously deciding between calling it “PayDemon” and “Stripe.”
Clearly naming companies wasn’t their strong suit, but they had many other redeeming qualities.
In thinking about how one creates a payments company on the internet, it becomes obvious quite early that you will need some relationship with a bank.
And how did Patrick find the first bank they’d work with?
He met a guy at a party and this guy’s friend happened to run a payments company based out of the midwest. He let the Collison brothers build a prototype of their thing and as Patrick described, he “didn’t ask too many questions.”
When a customer would setup their account in Stripe, Patrick and John would fill out the paperwork on their behalf and submit it to the company in the midwest. They did dozens of these manually in the early days.
In 2010, Stripe raised a $2M seed round from YC, Peter Thiel, Elon Musk, Sequoia, a16z, SV Angel, and a few others. This round reportedly valued Stripe at $20 million.
Early on in the life of Stripe, Sam Altman, who was a Sequoia scout, a program where they had select individuals invest $25k or $50k into companies, said they should put money into this payments company called Stripe. I’m sure they’re glad they did.
Over the next 14 months, from August 2010 to September 2011, Patrick, John, and their small team built infrastructure for Stripe.
By the time they launch Stripe to the public, they’ve got about 10 people on their team with 4 or 5 of them being Stripe users.
It took them 6 months to hire their first couple of employees, even with a great network already at this point. This was intentional and Patrick stressed the importance of being okay with waiting a really long time to hire people.
The next 3-4 people joined in the 6 months after those first few employees.
One of those important early employees?
They were introduced to Billy through Geoff Ralston at Y Combinator. At the time, Patrick was struggling to build a relationship with Wells Fargo, who he wanted to work with for Stripe.
The problem with hiring Billy?
Patrick only had a team of engineers at Stripe at this time and didn’t know what a non-engineer would actually do.
After Geoff offered to pay Bill’s salary if it didn’t work out, they ended up hiring him in April of 2011 and secured a partnership with Wells Fargo. Patrick would call it a “trajectory-changing event” in the early story of Stripe.
The other advantage of taking funding from YC at that time?
Patrick would later describe the advantage of YC being that, yes, you can get potential customers (He got 20-30 customers from YC early on), but the biggest advantage is just how smart Paul Graham and other YC partners are, given that they’ve started companies and seen hundreds, now thousands of companies.
Taking it further, Patrick described in an interview for Startup Grind, how he would be talking about some totally new area he’ll be thinking of and he’ll come back with like 10 ideas from Paul Graham that he didn’t think of. In other words, PG sees the world in a different way which ends up being helpful.
Back to those customers though, early on, Stripe was charging them 5% + 30 cents per transaction, a price way more expensive than anyone else.
They didn’t want anyone to use them simply because they were the cheapest, so they didn’t try to be even competitive on cost. This was to make sure they had a sufficiently better product - which they did.
Before the public launch, they had about 100 customers and many of their early customers came through word of mouth and blog posts customers were writing about their experience using the product.
Patrick and John were also hustling their asses off to get users as Paul Graham would describe in one of his famous essays:
Stripe is one of the most successful startups we've funded, and the problem they solved was an urgent one. If anyone could have sat back and waited for users, it was Stripe. But in fact they're famous within YC for aggressive early user acquisition.
Startups building things for other startups have a big pool of potential users in the other companies we've funded, and none took better advantage of it than Stripe.
At YC we use the term "Collison installation" for the technique they invented. More diffident founders ask "Will you try our beta?" and if the answer is yes, they say "Great, we'll send you a link." But the Collison brothers weren't going to wait. When anyone agreed to try Stripe they'd say "Right then, give me your laptop" and set them up on the spot.
As they continued to grow, leveraging word of mouth, and writing blog posts themselves, Patrick noted just how helpful it was to approach marketing this way as it created better incentives for the team.
Instead of focusing on a flashy marketing campaign, they were focused on creating the best product and building an organization around that.
If you have to compete on the merits of the product and just rely on people being honest about how well it works or doesn’t, that forces you to just build a product development organization that can compete on merits.
And so it might be harder to get that initial traction, but if you can get there, you actually really have an upper hand relative to more traditionally incentivized companies because they’ve probably gotten a bit lazy and a bit ossified and just a bit less competitive on this axis. And once you can make the battle about the quality of your product and the quality of your product development, if you can get the battlefield to be on that axis, you really have a huge advantage. And our experience was the incumbents just couldn’t react.
It’s such a deep cultural and organizational thing that it’s very difficult for competitors or potential competitors to shift there, whereas if you just have a better marketing campaign, that’s super easy to copy. Anyone else can buy a competing billboard or pay more for the Google Ads or whatever. And so again, we didn’t realize all this in advance. But I think that ended up really helping us.
Stripe took off early on, but Patrick and John dealt with challenges throughout.
Remember, they started writing code in late 2009 and didn’t publicly launch till September 2011, nearly two years later.
Early on, their payments engine broke, and, while it was only down for 30 minutes, it felt like a huge deal to Patrick.
On another occasion, due to circumstances mostly beyond their control, Stipe was down for hours.
We didn’t seriously think about stopping. I think both of us are – it’s less I think we’re both really determined and more I think we’re just stubborn. And so the idea of stopping just – it didn’t seem like a – I guess it didn’t feel like an option for us. Determination sounds glamorous to me. And I’m not sure we have that. But I think we’re just dogged.
From very early on, Stripe grew like crazy.
While I normally like to frame a founder’s journey loosely around their fundraising rounds as milestones, I’m only going to include a few more notable ones in this piece.
Honestly, it feels like a broken record to include all of their fundraising news - they’ve just been that dominant.
In 2011, Patrick raises a $20 million Series A with a $20 million Series B coming in July 2012, at which point 100k developer accounts have been created on the platform.
By early 2014, the same year Claire Hughes Johnson joins Stripe as COO, they raise another $80 million, valuing the company at $1.75 billion.
They are officially a big company:
And remember how I mentioned the importance of the environment you’re in?
You’ll notice a few familiar faces who would go on to do some great things in John’s photo from a run of theirs:
By the end of 2014, Stripe raises another $70 million, growing their valuation to $3.5 billion.
In 2015, around the time Stripe has about 330 employees, Patrick offered up his approach to hiring in an interview on blitzscaling:
This is I think what you find when you’re trying to hire the best people. You can filter first by expressed interest and then you can secondarily filter by which ones are good. Or you can first look for the good ones and then try to convert them to expressed interest. I think the latter is the more effect way to go about it.
And multiple people at Stripe took them several years to hire, with Patrick mentioning in the same interview that he could, “think off the top of my head of five people who took 3+ years to hire.”
He’s playing the long game and he expanded on what they look for when hiring at a time when they’re growing like crazy:
I think there are a few things that we really prize and try to seek in the people we hire. First, a kind of rigor and clarity of thought. So many organizations prize smoothness, smoothness in interactions and trying to reduce or minimize the number of ruffled feathers. And they at least inadvertently, if not deliberately, prefer cohesion over correctness, and we really try to identify people who are seeking correctness and who don’t mind being wrong and who are willing to at least contemplate things that seem improbable or surprising if true or really divergent [from] that which is the generally accepted status quo. And that’s hard to find. I don’t think most of the educational institutions that we all tend to have attended do a great job of teaching that. We look for that combination of openness and rigor.
The default outcome is that you do not survive; and to survive over the medium or, even with more difficulty, over the long term, that is like an unnatural act. And so you need to find people who not just are willing to push against the expected trajectory of non-existence, but people who actually enjoy that, who want that. Because if they’re merely willing to do it but they don’t actually enjoy it, then the work is probably going to be less fulfilling for them over the medium term.
The cliché, of course, is that startups are extraordinarily hard, and they just are. You want somebody who is at a stage in their life where that’s the kind of challenge they want, where the fact that the particular area in which they’re going to be working is undefined or significantly under-built-out or significantly broken or whatever the case might be, that that’s what they’re looking for.
And then we try to find people who just have—again, to return to these words—interpersonal warmth and a desire to make others around them better and just a degree of caring for others and a desire to be, nice is kind of an anodyne word, but to be nice to them and to make them better off.
Already at this time, in late 2015, Patrick was confident in saying that Stripe had, “become the default thing that technology companies use when they want to move money around on the internet.”
Off of this growth, in 2016, Patrick achieves a new personal milestone.
In November 2016, Patrick and John become billionaires after raising a $150 million round of funding that values their company at more than $9 billion.
And yet, they’re still very much so acting like brothers:
They actually would be roommates as well for the first 8 years of Stripe.
And while they’ve launched a number of products since starting Stripe, in 2016 they announce one I want to briefly highlight - Atlas.
With their goal of increasing the GDP of the internet, Stripe Atlas certainly was a step towards doing just that, priced at only $500 and allowing entrepreneurs to gain access to, as they mention in the announcement:
an incorporated U.S. business entity
a U.S. bank account
a Stripe account to receive payments from anywhere in the world
basic services they’ll need to get started, including tax advice from PwC, legal advice from
In the first 5 years of Atlas, more than 20,000 businesses were started and those businesses generated more than $3 billion in revenue.
And so, just to give a concrete example, Atlas, the service we launched for helping new founders incorporate companies, in particular without the geographic restrictions that tended to exist before — it’s essentially open to founders anywhere in the world.
There was no … one reason as to why that was a good bet. You can’t just measure that on any one axis. But when you look at it overall and you see that, “Well, if it doesn’t work, it’s hard to see how it could cause that much downside for Stripe. It’s not going to require an enormous fixed-cost investment in order to learn as to at least whether it’s initially working.
If it did work, it seems like it could produce quite significant returns. The kinds of things we’ll have to do for it directly are things that are probably valuable for us in other parts of the business, so we’ll learn interesting new capabilities and skills in the course of doing it.
Amazon & Indie Hackers
By 2017, Stripe has more than 700 employees and there are two events, in particular, worth mentioning.
First, they start a partnership with Amazon.
At the time, not much is known about the partnership, but in an announcement from Stripe in January 2023, they describe the initial partnership and their new, expanded agreement:
Amazon started using Stripe in 2017 to accelerate market expansion in Asia and Europe, and support millions of Prime Day, Black Friday, and Cyber Monday purchases around the world.
Under the new agreement, Stripe will become a strategic payments partner for Amazon in the US, Europe, and Canada, processing a significant portion of Amazon’s total payments volume.
Stripe will be used across Amazon’s business units, including Prime, Audible, Kindle, Amazon Pay, Buy With Prime, and more.
The second notable event is their acquisition of Indie Hackers, a community of entrepreneurs building profitable internet businesses.
I’m just a huge fan of Indie Hackers and have been part of their community for years, so, naturally, I had to highlight this.
I wanted to quickly chime in to emphasize that our goal in acquiring Indie Hackers is to simply ensure that the site becomes as successful as possible. The Stripe upside we're hoping for is that more companies get started and that they're more successful. We already see a very large fraction of new internet companies choose Stripe; we're mainly hoping that Indie Hackers can help us grow the overall number rather than to grow our fraction.
Scaling Stripe & Beyond
By mid-2018 Stripe has 1,000 employees and Patrick shared in an interview on The Knowledge Project the challenges of scaling:
I think on some level, scaling a business is both relatively straightforward and extremely hard.
It’s relatively straightforward in the sense that it’s usually not that difficult to see what the problems are, and too many times when you don’t see what the problems are, it’s usually because there’s kind of subjective blindness rather than because it’s actually difficult to see the problem.
And so it’s more of a question of “What are you oblivious to because of your own biases?” rather than “What is particularly difficult to observe and what are your corrective mechanisms to account for that?”
So I think straightforward in that sense, and I guess also straightforward in the sense that usually solving the problems is not outlandishly difficult. It’s not easy, but you have to hire someone in this role, you need to figure out how to raise this capital, you need to build this system, whatever the case might be. None of those are easy things, but they’re also not scientific breakthroughs. There are other companies that have done it. There are generally playbooks that exist, and while your particular strategy might need some correction or refinement and you might hit some walls along the way, it’s rarely unprecedented.
And then I think it’s extremely difficult in the sense that you don’t get to really choose the clock cycle and the time horizons. There is a category of flash games, desktop tower defense games, where you have all these little critters scampering across the board trying to break into your fortress or whatever—I start to feel a little bit like that, where you fundamentally don’t control the rate of problem appearance. You just control the other variable, of the rate at which you are building defensive or mitigatory mechanisms to deal with those problems.
Some days you almost have to smile at the unreasonableness of the swath of problems and challenges that have materialized on your desk or in your inbox. In the same way that you see the constellations in the stars, the problems look so implausible and so unreasonable that, like, someone must secretly be screwing with you.
But you could say that Patrick and Stripe press forward.
For those that are familiar, you’ll know that was a terrible attempt to say that they launch Stripe Press, getting into book publishing.
Later that year, Stripe has 1,300 employees in 9 offices around the world and is worth $20 billion, doing 200 million API requests a day and processing billions a year for millions of companies.
They just continue to grow, raising capital and hiring more employees.
In the next few years, Patrick would get engaged, start Fast Grants in response to COVID-19, publish a couple of pieces in The Atlantic, and launch the Arc Institute:
By 2021, Stripe reaches a $95 billion valuation, the highest in its history, raising $600 million to fund more global expansion. This valuation would shrink to $50 billion after a $6.5 billion raise in 2023.
While a lot was written about this decrease in valuation and their fundraising journey of late, one thing still remains clear to me - they are an incredible company.
The press seems to like to knock companies that “stumble” but the reality is that it’s so damn hard to build a company.
What Patrick, John, and the entire team built is remarkable and, with a long-term view, Stripe will continue to win.
As I mentioned at the start, much has been written about Stripe. The company has been a darling of Silicon Valley for years.
My interest, as always, is in the founders behind companies.
Why did they build this company?
These newsletters are as much for me as they are for you.
That said, below are a few more interesting notes on Patrick Collison.
I run quite a bit, and I don’t even run because I enjoy it that much. I enjoy it, but it’s nothing kind of in the immediate moment; it’s not like it’s euphoric or anything close to that... it’s pretty painful. There’s the Greg LeMond quote about how—it’s very dispiriting when you think about it, and it is very deeply true—how “it never gets easier; you just go faster”. And that’s true of running. Like if I stay running for the rest of my life, it will never get easier; I will just—maybe—go faster. But it feels like something I ought to do, I vastly rather [prefer] having run than not having run. And so I continue to do it.
With reading, I don’t feel like I’m weird; I feel like everyone else is weird, in that there’s just … so much stuff to know, and I guess I just feel stressed out by... like, it feels important, it’s obviously important, and I don’t know it. And so, shit, I better get to work. When I’m reading, I’m not in this … especially blissful place. I enjoy it perfectly fine, but I think there are extremely important things that I really should know and I don’t, and that feels problematic.
Two other things about Patrick I found interesting:
He’s a pilot
As of 2017, he paid for a physics tutor
He’s an absolute learning machine!
In each edition of the Just Go Grind newsletter, I like to include a few more quotes at the end from my research into the founder who is featured, sharing their wisdom.
When you’re starting a company, you have to be both the super-long, optimistic, “I’m just going to buy this stock and hold it for decades,” trader, and you have to be the catastrophic, Taleb-style, “The world is going to hell in a handbasket,” catastrophe trader. And you have to be both. And that’s just weird.
And so I guess the thing that I think is maybe important to understand for folks is it’s intuitive that if a company or a new effort of any sort is not going well that things will feel hard and you’ll often feel dejected, and life, at least insofar as work goes, is not great. But the weird part is that even if things are going well and the effort or the company or whatever is succeeding, things will still often not feel great. And no one told me that before I started.
I reach out to people whose work I admire and tell them that, and often it leads to a dialogue. And in some cases, I’ve gotten to know them pretty well.
I’m fortunate that Tyler Cowen, whom I mentioned, is a friend, but I was never introduced to him; I just randomly emailed him years ago, actually invited him to a Bitcoin Meetup that I held in 2011. And I did not, however, buy any bitcoin, but I invited him to that Meetup and he replied and apologized [that] he couldn’t make it, but we ended up in a dialogue after that.
When you reach out to other people, half the time they don’t respond, but half the time they do. It’s asymmetric; it doesn’t really cost too much when they don’t, and it can be incredibly rewarding when they do. If I did not do that, I would have missed out on a huge amount.
I thought that, “Well, if the company’s succeeding, then clearly, it’s going to be – not necessarily fun but at least it’ll feel good day to day,” whereas the actual reality is that you’re always necessarily operating at the outer edge of what you can handle because if you have spare capacity, you just take on more.
And so you’re therefore, inevitably always on the cusp of feeling like you’re going to fall over. And even as we record this podcast, at this moment, I feel right on the edge of what I’m able to handle.
And on the one hand, I don’t wish it were otherwise in that I enjoy testing myself and finding my limits and developing and stretching myself. But on the other hand, when you stretch your muscles, that’s painful.
On metrics before product-market fit:
Generally speaking I think that sort of pre product-market fit metrics are actually relatively unhelpful, and I think you really want to bias very strongly towards as much sort of inspection and kind of high throughput qualitative feedback as possible, because probably not that many people are using your product, right?
And so if it's 20 users, you can kind of, in some sense, afford to just look at everything they're doing, and try to understand what's working and what isn't.
Pre-product market fit, you should be scrappy and iterative and just focus on the product exploration in the space. Once you have product market fit, I think all the lean startup intuitions don’t carry over. And you become super focused on building a leadership team. And the question is always, “Who’s your leadership team and how well is it working?” And that’s a complete inversion from before. So maybe actually six-year-ago me, I would say focus more on your leadership team.
When you see a smart person holding a point of view, and especially strongly holding a point of view that’s different to your own, rather than try to figure out how they’re wrong – that’s valuable, but you’ll inevitably do that. Your emotional brain will ensure you do. Try and figure out how they’re right. What is a sensible worldview in which what they believe or what they’re saying actually does make sense? That doesn’t mean they’re right, but trying to figure out, if they’re not stupid, why would they believe this?
And I think for whatever reason, the ability to not take offense and to inspect and to try to understand and even try to really extrapolate from an idea or a set of ideas or a worldview without taking offense at it, that’s not something that for whatever reason is really valued in our culture but I think is actually super important.
Sometimes you have a true binary decision like, “Do I go to this college or that college?” “Do I take this job offer or not?” And it’s an investing or investment-like decision. But it’s not usually that.
I think that the question I would encourage people to think more about is, “How do I get to make better decisions?” as in, “How do I make sure the decisions I’m confronted with end up being better?”
It’s not like, “How should I choose between option A and B,” but, “How do I make sure that both options A and B are as good as possible, and there’s also a C, D, and E, and that those options are great too?”
And that’s about how do you explore the space to make sure that you – well, just to return to the example we just mentioned, it’s like, “Do I go to this college or that college?” There’s also a C there which is, “Well, should I go to college?” Or it’s, “Should I become a doctor or a dentist?”
I think there are four big differences. The first is... I now just place more value on decision speed. If you can make twice as many decisions at half the precision, that’s actually often better. And then, given the fact that the rate of improvement of decision making with additional time almost necessarily tends to flatten out, I think that most people—certainly that Patrick of five years ago and partly from Patrick of today included—should be operating earlier in that curve.
Make more decisions with less confidence but in significantly less time. And just recognize that in most cases, you can course-correct and treat fast decisions as a kind of asset and capability in their own right. It’s quite striking to me how some of the organizations that I hold in the highest regard tend to do this.
The second thing is to not treat all decisions uniformly. I think the most obvious axes to break them down on are degree of reversibility and magnitude. Things with low reversibility and great impact and magnitude, those ones you do want to really deliberate over and try to get right.
The third thing is, I now try to fairly deliberately just make fewer decisions. “Why am I making the decision?” And for some kinds of decisions, there are some good reasons for that, and there are some decisions the CEO ought to make and is fundamentally on the hook for, but there are some decisions where if I’m making it or if I have to make it, that probably suggests [that] something else organizationally or institutionally has broken.
And then fourth, when I realize that I would make a decision differently [to] how someone else would make it, not even really discussing the decision itself but trying to dig into, what is the difference in our models such that they want to make Decision A and I want to make Decision B?
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