Sunday Reads #121: How about "Move fast but don't break things"?
Plus notes from the future, blasts from the past, and other link love.
|Jitha Thathachari||Mar 21|
Welcome to the latest edition of Sunday Reads, where we'll look at a topic (or more) in business, strategy, or society, and use them to build our cognitive toolkits for business.
If you’re new here, don’t forget to check out the compilation of my best articles: The best of Jitha.me. I’m sure you’ll find something you like.
And here’s the last edition of my newsletter, in case you missed it: Sunday Reads #120: Bad Startup Ideas, MVPs, and the chicken-and-egg problem.
This week, let’s talk about speed. We’ve all heard (and said), “Move fast and break things.” But there are situations and companies where breaking things doesn’t equate with moving fast. In fact, it’s the exact opposite. You can move faster by not breaking things.
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1. Move fast, but don't break things.
Since the beginning of the Internet era, business builders have split into two clans:
The stodgy Boomers who build businesses slowly and steadily - grow 5% a year, but do so for decades.
The new-age tech entrepreneurs in a hurry, best symbolized by Facebook's motto, "Move fast and break things".
You've got to choose which kind of company you're building. And as software eats the world, it's become more and more obvious that speed is a competitive advantage.
Most markets today are winner-take-all, so you better be sprightly, son. Move fast, it's OK to break things.
Well, this is a false dichotomy. You can move blindingly fast, without breaking things.
Why am I writing about this now?
Because last week, Stripe became Silicon Valley's most valuable private company (and the world's second most, behind ByteDance), valued at USD 95Bn in its latest fundraise.
But this story doesn't start with Stripe. It starts 25+ years ago, with what is undoubtedly the world's most valuable company today.
Gradatim ferociter. Step by step, ferociously.
There's a new book out about Amazon, called Working Backwards, by Amazon veterans Colin Bryar and Bill Carr. I haven't read it yet (it's next on my list), but in the meantime, I read this interview of the authors. Here's an excerpt:
"More so than most companies, Amazon thinks about creating value for customers, focusing specifically on how they can create unique and distinct products. Many companies get tripped up and think about innovation as something where they need to come up with ideas, quickly get them out and test them, in the sort of agile method of iterating quickly," says Carr.
But time and time again in Amazon's story, they went in the opposite direction. "Take AWS. …What's remarkable is that they didn't get there by forming a team, writing a lot of code, and then testing and iterating. In fact, it took more than 18 months before the engineers actually started to write code. Instead, they spent that time thinking deeply about the customers they were trying to serve and forming a clear vision for what AWS should be," he says.
Read that again: 18 months before a single line of code. Analysis paralysis, some might say.
But here's the output: AWS reached $10Bn in revenue in less than a decade.
And in general, Amazon absolutely smokes the other FAANG companies, when it comes to speed of execution.
Stripe is similar. Like Amazon, they also have a writing culture. They think carefully. They move slowly. They make very few breaking changes.
Patrick Collison @patrickcDespite crazy transaction volumes over the holiday period and record growth rates, @Stripe API availability was 99.996% over the past 90 days. Proud of what our infrastructure teams accomplished last year and lots more global infra + latency improvement planned for 2021.
That's 10+ new versions a day!
The ETTO Spectrum.
There is a management concept called the ETTO Spectrum. As far as mental models go, it seems obvious. Still, it's helpful to give things a name.
ETTO stands for Efficiency-Thoroughness Trade Off. It’s a good way to think about this.
As the thinking goes,
People (and organisations) choose between being effective and being thorough, since it’s impossible to be both at the same time.
At the thoroughness end of the spectrum, you find industrial companies - manufacturing, pharma, etc. Here, the cost of an error can be huge.
At the efficiency end of the spectrum, you have a young tech startup. Errors are not costly, and moving fast is as valuable as can be. Speed is a critical, and often the only, competitive advantage.
When you're a small B2C software startup with 1 million users, yes, you can't wait till all risks are negated, to launch a feature. It's OK to break things, in your bid to move fast.
But there are two situations where you can't make the same tradeoff:
If you're building a B2B business, and your product is used in a revenue / cost flow (think payment gateway), then any error can be prohibitively expensive.
When your distribution is a crazy large number of users, you sometimes can't afford edge cases. The law of large numbers applies. When you're serving 100M people, an edge is a mountain to you.
An edge case of 0.001%… means your customer service team is busy for a month.
In such cases…
Slow is smooth and smooth is fast.
When the cost of errors is high, breaking things isn't equal to moving fast. The more things you break, the slower you move, as you get stuck in a morass of customer complaints, service requests, and PR fires.
But if you move with caution and prioritize not breaking things, a year later you look back and can't even see your more startuppy competitors on the horizon.
As Bezos says, "Slow is smooth and smooth is fast."
PS. Although this applies perfectly to Amazon, Bezos didn't actually say this about Amazon. He said this about Blue Origin, his company focused on space travel.
PPS. Blue Origin’s mascot is a tortoise.
2. The future is here, and it looks like Tom Cruise.
Last edition, I shared a deepfake of Tom Cruise.
Turns out, he's now become the unwitting barometer for the rise of Deepfakes.
At dinner parties, your friends will ask you, "I hear you're in software. How worried should we be about Deepfakes?". And you'll answer, "It's scary, but not worrisome yet. Fake Tom Cruise still can’t ride a bike".
But for now, here's Tom Cruise stumbling through a joke about Mikhail Gorbachev.
There are more examples in this Verge article.
"The future is here, in the form of Tom Cruise".
3. Blast from the past: Two technologies that have transformed the world.
I loved this article on Microsoft Excel from Packy McCormick's blog.
Most software we use at work exists in one of two categories:
It’s new and we love it for now.
It’s old but we have to use it and we hate it.
But there’s one software product born in 1985, before many of us were even a twinkle in our parents’ eye, that inhabits its own category: it’s old, but we love it, we always will, and you’ll have to pry it from our cold, dead, fingers.
That product, of course, is Microsoft Excel.
…If you want to see the future of B2B software, look at what Excel users are hacking together in spreadsheets today.
It’s a love letter to Excel.
Lots of interesting trivia about Excel here. Including, for example, that Microsoft built the first version of Excel, not for Windows, but for the Macintosh!
And here's a video from 1984, showcasing another 0 → 1 innovation, the humble 'E mail'.
4. Other interesting reads.
Vitalik Buterin, the inventor of Ethereum, wrote a great blog post on how he made $57K betting against Trump winning the Election, after he had lost the election!
I found a couple of points interesting in this article.
#1: Markets are not always efficient.
The prediction market still valued Biden winning at 0.85 to the dollar, even after he had won!
But even when markets are inefficient, they're often inexploitable. Or at least very hard to exploit, unless you're Vitalik Buterin.
Here's the flowchart of what Vitalik had to do to place his bet. Very few would have the fortitude (and knowledge) to jump through these hoops.
#2: Blockchains are still a very nascent industry.
Still difficult to use. And when they become easier to use and usage skyrockets, well...
And I loved this comic about the nature of ambition.
That's it for this week! Hope you liked the articles. Drop me a line (just hit reply or leave a comment through the button below) and let me know what you think.
PS. I’m slowing down to a fortnightly newsletter for the next few weeks, as I’ve been busy on a couple of things, and haven’t been able to read (or write!) as much. Will be back to weekly soon!
As always, hope you’re staying safe, healthy, and sane.
Until next time,