Sunday, January 27, 2013

Thoughts on turning 30, and a decade's aphorisms

10 years ago I was living at the abandoned, beer-spattered house of the Ultimate Frisbee team over winter break at Wake Forest University, having recently been kicked out of my parents' home for leaving the Jehovah's Witness faith. I read "The Fountainhead" and in Ayn Rand I found an author with a kindred spirit. I became an atheist Randian libertarian.

My isolated Jehovah's Witness upbringing left me unskilled at negotiating personal relationships. I expected the world to become my friend upon my emancipation and I was disappointed to find out how hard it would be to make friends. There is no doubt that I was/am weird and that weirdos have a hard time making friends. 

But my earnest naivety must have been endearing to some people. I made a few friends, fewer close ones, and went on my first dates. For the first and only time, I even briefly fell in love with a girl that loved me back.

I worked my way through college as a waiter at an Italian restaurant chain and by cold-emailing professors to ask for handyman work. (Once, I sold a Smashing Pumpkins box set so that I would have the money to take my first girlfriend on a date to IHOP. It was all the money I had. I didn't tell her that. I wanted to look cool.) I did not know where web pages came from. When I graduated with a degree in economics and mathematics, I spent a half-decade struggling to find a career and many hours thinking, reading, and writing.

(One of my more embarrassing business memories is standing outside of office buildings in Atlanta, handing out resumes to businessmen like they were some kind of concert flyer. I walked into the Atlanta Bain Consulting office unannounced with a box of chocolates and some resumes in a gift bag for the secretary. None of this worked to get me a job. I was clearly an outsider. I overcame any hard feelings towards Bain in time to vote for Romney in 2012.)

I started adult life in Atlanta with a few hundred bucks in my pocket. I didn't have a plan but it was a big city and I figured that I would find something to do. My car died and the repair took up all my money before I found a job so I was forced to work as a waiter again. In Atlanta I was most happy. I struggled professionally, but I was surrounded with wonderful people. They struggled too, but we helped each other out. My roommates and I hosted epic house parties and dinner parties. Our rent was under $350 a month (each) and nobody worked more than 40 hours a week. The possibility of love was everywhere, which eventually coalesced into a very real and very fateful girlfriend living in DC. 

The siren song of Paul Graham's essays on startups almost made me move out to Silicon Valley from Atlanta in 2006, but I was convinced by that girlfriend to accept a position in an investment bank in DC that her family had helped me obtain. With their help, I was an insider. Investment banking wasn't a good environment for me, so I left two years later to try that tech startup thing. First I went to grad school for Computer Science in San Diego, and then finally to ground zero of the internet revolution - Mountain View, Silicon Valley.

(I planned to work first and save up money at a lucrative programming job before starting a company but that didn't work out. I had no programming experience outside of grad school and I was an outsider all over again. I showed up to one interview in a business suit - a big faux pas in California. I didn't get the job. So I started a company instead.)

I'm skimming over 6 years here, but they were mostly a grind and not that interesting. Also, they relate to things that are still recent and relevant so I don't feel comfortable discussing them publicly. It suffices to say that they taught me the value of leisure and doing a job you enjoy, mostly by counter-example.

That said, 6 years of emphasis on career skills made a big positive difference in my professional life, even if my personal life has suffered from lack of time and attention. At 30, I feel confident moving in the world. I have far, far more business savvy than I used to and I know how to portray myself as an insider. I have real, marketable experience in technology and software.

I am looking forward to my thirties - the decade when many men come into the prime of their expertise and power. I have surrounded myself with effective, smart people and I hope I continue to grow more like them. I reconciled with my parents. I'm writing this post sitting on a couch at their house. I am visiting for a week to see my new little nephew who lives with my sister in the neighborhood. (later edit: he's a darling, by the way. Such a calm, happy child.)

I am no longer a Randian, though I still encourage others to read her works. I am still an atheist, but I appreciate my Christian cultural heritage. You can often find me in a church service of a denomination less insane than Jehovah's Witnesses - I find it enjoyable and thought-provoking. I am still mostly libertarian, but I am more interested in good governance than maintaining libertarian purity. As I am more interested in good living than in maintaining atheist purity.

As a philosophy, eudaimonia is its own reward. 

I see people 10 years older than me living how I'm living, and I know I don't want to be doing the same thing when I'm 40 - single, bouncing from job to job and city to city, trying to be cool, trying to meet women. Being cool is exhausting - I can't imagine trying to be cool for the rest of my life. The Christians have a good thing going on with their emphasis on family (other traditional cultures in the US do too, but they are mostly based on ethnicity and therefore closed off to me). Hedonism is for happiness in the short term, building things you're proud of is for happiness in the long term. A good life needs a balance of both.

The most disappointing lack of personal growth over the last ten years is that I am still fairly bad at  personal relationships. In some ways I may have regressed - any endearing naivety I may have had is long gone. I have little idea how other people experience the social world. I think that may be a part of a matrix of qualities that goes with skill at math, nerdiness, instinctive iconoclasm, and being genetic cousin to an autistic. Part of my New Year's resolution is to approach the problem with Silicon Valley gusto. What do people who are well-loved do that I don't? I don't believe that problems must remain unsolved forever. And a brief period of happiness in my past gives me confidence that I can reach that state again. 

Finally, I would like to close with some bits of wisdom that I have accumulated over the last 10 years. Some of these aphorisms may sound obvious, but they were big revelations for me.

  • People like to help other people. Ask for a hand from people that are where you want to be. They will gladly offer it.
  • You will be happier spending your money on experiences than spending it on objects.
  • There is little value in doing hard things just because they are hard and no shame in taking an easy path that leads somewhere useful.
  • Having that difficult conversation is a lot easier than avoiding it.
  • Every time I lost my temper I was given cause to regret it. 
  • Good advice is so valuable. Access to good advice explains a significant amount of the difference in experience between children of the rich and the poor. 
  • If you see something awesome, world-changing, or historic happening on the news then you can go be a part of that if you want. I am working at Coursera and advising the Thiel fellowship, how cool is that? I feel like I'm living in a movie.
  • Most groups of humans have some wisdom to offer - (traditional, radical, hippie, conservative, religious, atheist, ancient, modern).  Acknowledging this will make you popular with nobody.
  • I have learned a lot faster outside of school than in it. I also kick myself for studying the wrong things in school. The "real world" gives a powerful dose of perspective. 
  • The marketplace is a doocracy. The ability to produce something of quality is rare and highly valued. 
  • If you can't have a respectful and productive disagreement with someone, then your relationship is going to fall apart because disagreements WILL happen. This applies to every kind of venture.
  • Human relationships are often valued too lightly.
  • Personal virtue is undervalued.
  • Love lasts. Anger doesn't.
  • Humans are often irrational. Therefore, I am often irrational. Therefore, getting myself to do what I want is a difficult task. Self-management is an art which we are cursed to eternally perfect.
  • Fashion drives belief. Fashions arise in cohesive cultural groups. As smart people have separated into more distinct cultural groups, smart people also believe fashionable wrong ideas. 
  • RE: that last point - the western world is the most egalitarian, free, productive, and just society that humanity has ever produced. Global capitalism has reduced poverty to a smaller proportion of the globe than ever before. Technology is connecting humanity into one people. Our species has never had more cause for optimism. But these things are not fashionable to know or say.
  • There is always someone who will be famous for saying what is bad is good and that what is good is bad. Human nature has a streak of perversity. 
  • You can't convince someone directly of an idea that is radically different from the ideas they already hold. You have to meet them closer to their idea space and lead them away one step at a time towards another perspective.
  • The easiest way to become what you wish to become is surrounding yourself with people that you admire.
  • To get great at something, you must first be a beginner. 
  • My attitude on cultures is "by their fruits you will know them". I choose to adopt what is useful and I leave behind what is not. 
  • Fun is a necessity. Emotional well-being is a necessity. Neglect them for your career and your career will suffer. 
It is impossible to make a single judgement on any period as large as a decade. Each decade is full of every emotion with a name.  I bro-fived my teammates after a successful software launch, laid in bed crying for a full day, danced in the desert, held my sister's child, addressed tough interpersonal situations and shamefully avoided them, sat at home by myself on weekend nights, hosted some raging parties, started a successful meetup that is still going, punched people in a boxing ring, saw my name in the news, broke up with cofounders, spent my last dollar, read hundreds of books, was overwhelmed with awe and beauty, wrote bad poetry, wrote good poetry, flirted with beautiful people, held my tongue against people I intensely disliked, changed people's lives and minds, pissed people off, watched my father start his own business after the age of 60, vowed vengeance against religion, defended Christianity to a room full of atheists, learned the lyrics to Christmas songs at the age of 28, cried while driving away from a city with all my belongings in my car three separate times, and identified a dream job and made it happen exactly once. I count myself lucky for the experience of the last 10 years and I look forward to the next. I am eager to see where my story goes. 

New Year's Resolution

My goal for this year is to never use an angry tone when discussing politics. Anger is powerful for rallying the base but it is useless in convincing others to come to your perspective. As someone with extremely heterodox politics I have no base to rally, so anger has no utility for me.

Living in the SF Bay Area, I'm often exposed to bad arguments against fracking, GMOs, or whatever is causing the latest environmentalist panic (environmental issues tend to tug at the heart and therefore silence the brain more than other issues). I need to prevent my frustration from wearing through. In any given conversation, it may be the hundredth time I am hearing their perspective but it is likely the first time they are hearing mine.

This quote from the year's best rationality quotes leaps to mind:

[About the challenge of skeptics to spread their ideas in society] In times of war we need warriors, but this isn't war. You might try to say it is, but it's not a war. We aren't trying to kill an enemy. We are trying to persuade other humans. And in times like that we don't need warriors. What we need are diplomats.
So if you see me getting testy on any political issue, feel free to call me out on it and remind me of this resolution.

Saturday, January 12, 2013

Aaron Swartz - remembering a freedom fighter

Democracies struggle with the oppression of minority populations - it's a problem built into the idea of majority rule. But the modern world is a strange place where everything is flipped upside down. Aaron Swartz fought for the oppressed majority.

A tiny elite has access to the results of publicly funded science published in academic journals. These are the privileged few who are employed by a major university or who pay upwards of $40,000/year for temporary residency at one. The remaining 99% of the world's population is cut off from the mechanism of scientific progress.

If scientific progress is so vital for the future of humanity then why do we turn away the vast majority who want to partake in it? I dream of a world where the scientific enterprise grows beyond academia. I dream of a world where the collective intelligence of humanity can be brought to bear on humanity's most important problems. I dream of a world where the conversation of science is conducted in indexible, searchable, linkable, accessible, and modifiable public media. To reach that world we will first have to smash the barriers that academic journals have built to keep out curious minds.

Today, many conversations are happening around Aaron's death. Lawrence Lessig denounces the bullying tactics of federal prosecutors and the injustice of disproportionate punishment - Aaron faced 50 years in jail for the "crime" of downloading scientific journal articles with the intent to make them available to the public.

But Lessig is wrong to frame a discussion of Aaron's prosecution around disproportionate punishment because a lesser punishment would have also been unjust. Aaron deserved no punishment at all. Aaron violated property rights, but property rights based on injustice are invalid. Aaron's crime is theft in precisely the way that a member of the underground railroad was an accomplice in theft. The proper punishment for his actions is a medal of honor.

Aaron's suicide is a sad loss for those who knew him personally and for people like myself who admired his work from a distance. And his death is an indictment of a system that repays justice with evil.

I often disagreed with Aaron's writing (our assumptions come from opposite sides of the political spectrum). But his activism broadly moved the world in the right direction. And you got to admire someone that puts his ass on the line while the rest of the world merely talks about it.

I'd like to close with Aaron's open access manifesto, a cause very dear to my own heart:

Information is power. But like all power, there are those who want to keep it for themselves. The world’s entire scientific and cultural heritage, published over centuries in books and journals, is increasingly being digitized and locked up by a handful of private corporations. Want to read the papers featuring the most famous results of the sciences? You’ll need to send enormous amounts to publishers like Reed Elsevier.

There are those struggling to change this. The Open Access Movement has fought valiantly to ensure that scientists do not sign their copyrights away but instead ensure their work is published on the Internet, under terms that allow anyone to access it. But even under the best scenarios, their work will only apply to things published in the future. Everything up until now will have been lost.

That is too high a price to pay. Forcing academics to pay money to read the work of their colleagues? Scanning entire libraries but only allowing the folks at Google to read them? Providing scientific articles to those at elite universities in the First World, but not to children in the Global South? It’s outrageous and unacceptable.

“I agree,” many say, “but what can we do? The companies hold the copyrights, they make enormous amounts of money by charging for access, and it’s perfectly legal — there’s nothing we can do to stop them.” But there is something we can, something that’s already being done: we can fight back.

Those with access to these resources — students, librarians, scientists — you have been given a privilege. You get to feed at this banquet of knowledge while the rest of the world is locked out. But you need not — indeed, morally, you cannot — keep this privilege for yourselves. You have a duty to share it with the world. And you have: trading passwords with colleagues, filling download requests for friends.

Meanwhile, those who have been locked out are not standing idly by. You have been sneaking through holes and climbing over fences, liberating the information locked up by the publishers and sharing them with your friends.

But all of this action goes on in the dark, hidden underground. It’s called stealing or piracy, as if sharing a wealth of knowledge were the moral equivalent of plundering a ship and murdering its crew. But sharing isn’t immoral — it’s a moral imperative. Only those blinded by greed would refuse to let a friend make a copy.

Large corporations, of course, are blinded by greed. The laws under which they operate require it — their shareholders would revolt at anything less. And the politicians they have bought off back them, passing laws giving them the exclusive power to decide who can make copies.

There is no justice in following unjust laws. It’s time to come into the light and, in the grand tradition of civil disobedience, declare our opposition to this private theft of public culture.

We need to take information, wherever it is stored, make our copies and share them with the world. We need to take stuff that's out of copyright and add it to the archive. We need to buy secret databases and put them on the Web. We need to download scientific journals and upload them to file sharing networks. We need to fight for Guerilla Open Access.

With enough of us, around the world, we’ll not just send a strong message opposing the privatization of knowledge — we’ll make it a thing of the past. Will you join us?

Aaron Swartz

July 2008, Eremo, Italy

Thursday, January 10, 2013

Silicon Valley's Fiscal Sacrifice

The startup ecosystem depends on the recycling of the profits from successful startups into new angel investment, venture capital funds, and bootstrapped ventures. This flow of capital is the lifeblood of Silicon Valley.

The story of Elon Musk is a well known example. When Paypal was bought by eBay, his stake in the company was liquidated for $180 million after tax. Musk resisted the urge to retire to a nice beach and reinvested every last dollar he owned into three daring and innovative new companies: Space X, Tesla, and Solar City. Exhausting his once-mighty bank account, he borrowed money from friends to pay his rent. Today, those three new companies look like three winners.

Musk's story shows how the world-changing ventures of today rely on seed capital from the successes of five years ago. This process depends on the ability of founders to keep their winnings from the startup game so that they can play again. That is why the rate of the capital gains tax is so important to the health of the tech economy. The capital gains tax rate determines how much of the proceeds from successful startups stays with founders in Palo Alto and how much gets shipped to Sacramento and Washington D.C.

In recent decades the governments of the United States and California have developed a nasty habit of running unsustainable budget deficits, putting upward pressure on tax rates. Fresh tax measures passed during the 2012 election and immediately thereafter, combined with tax changes mandated by President Obama's signature healthcare law, will increase the capital gains burden on entrepreneurs by 52% this year - from 24.3% to 37.1%. The details are shown in the chart below.




The crop of new capital available for seed and angel investment will be 20% smaller next year than it would have been without the tax increases[1]. The state and the nation are being called to shared sacrifice to address our massive public debt problems and no one can say that Silicon Valley is not doing its part.

The negative effects of higher taxes on investment growth are exponential. If a would-be successful venture is not funded because of higher taxes then that also reduces the size of the next round of capital that would have been funded from that venture's success. This is the mathematical effect of reducing an exponent. The growth rate of wealth is slowed and future tax revenues are reduced with each would-be successful startup that is not funded.

I don't doubt that Silicon Valley can absorb a 20% hit to its new capital stock, especially if the money is used to pay for worthwhile public infrastructure projects. And it is likely that fewer than 20% of future success stories are found in the marginal 20% of investment. For that to be true we have to assume that investors have some sort of expertise, that they are better at picking good investments than random choice. I feel that is a reasonable assumption

But there is some magnitude of tax increase that the startup ecosystem could not absorb. Today, we take for granted the ability of a talented young team with a bright idea to raise $100,000 or $200,000 to get off the ground. With high enough taxes the seed funding ecosystem will shrink to a much more conservative level.

It could be worse. The top marginal tax rate on ordinary income in California will climb over 50% next year - the highest in the nation. It is fortunate that the capital gains rate is significantly lower.

I hope that the US and California governments use this new tax revenue to shore up their leaking balance sheets so that they do not need another pint of blood from the tech economy. We only have so much to give.

[1] a 14.8% tax increase divided by a previous base of 75.7% pretax income