Tuesday, April 24, 2018

Snailmail #3: Quality, Culture and Standards by Eran Shir

Slow Ventures Snailmail

 Snailmail #3: Quality, Culture, and Standards by Eran Shir

Tuesday, April 24, 2018

Welcome to the third edition of Slow Snailmail.  Why are we doing it? Learn more here. Got this forwarded and want to subscribe? Go to: http://slow.claims
🥇This week we have an essay from Eran Shir, the CEO and Co-Founder of Nexar, which is the TLV based cloud dashcam you have probably recently seen an Uber or Lyft driver using around town (and obviously a Slow portfolio company).  We appreciate him sharing his views on Quality, Care, and Standards - and award full points for getting Pirsig, Isaacson, Jobs, Bezos, Chef Oka, GoT, Santo Domingo, and Rajasthan all in the same excellent musing.

💰 How to best distribute equity to employees

One thing that founders frequently ask us about is how to think about equity for employees.  A few years ago Andy Rachleff's shared the Wealthfront Equity Plan -- and a few years even before that Fred Wilson proposed a different widely circulated model in a post on AVC post.  

Broadly The Information has reported move towards cash and away from equity compensation over the last few years - and Sam has written about why this makes sense and broadly why the bonus culture in society will likely continue to spread because of technology.

🤔 Short Thoughts & Novelties:

  • Per usual, the TED conference yielded all sorts of content worth watching 2x. Jaron Lanier's talk on How We Need to Remake the Internet is worth a skim even if you do not agree with him. Just remember...if you are reading this and do not send us Bitcoin...you are the problem.

  • Arnav Kapur, a student in MIT's Media Lab, has developed a system to surf the internet with his mind. He silently Googled our questions and heard the answers through vibrations transmitted through his skull and into his inner ear (P.S. when is the last time you thought about 'surfing' the internet?).

  • BFF marketing is the core narrative behind the rise of some of the most successful direct-to-consumer brands, though personally we think you shouldn't forget about the good old WTF and BRB marketing.  

  • Despite SXSW, Austin is awesome. That said, unfortunately homelessness is a HUGE problem there - just like in SF and LA. But unlike SF and LA, Austin now has a blockchain that will fix everything - you are welcome to be cynical but at least this is better than Dentacoin.
💡 Did You Know

Partner Kevin in our Cambridge office used to work at Facebook and loves analytics - please click here for our personality quiz

🥇On Quality, Culture and Standards, by Eran Shir

"Care and Quality are internal and external aspects of the same thing. A person who sees Quality and feels it as he works is a person who cares. A person who cares about what he sees and does is a person who's bound to have some characteristic of quality." Robert M. Pirsig, Zen and the Art of Motorcycle Maintenance: An Inquiry Into Values

Today is the one year anniversary of Robert Pirsig's passing. Wildly known for his "Zen and the art of Motorcycle Maintenance" masterpiece, Pirsig was an advocate for a philosophy revolving around the concept of Quality. Quality not as an abstraction, but rather, as an experience. In fact, as the core of every interaction between a man and the world surrounding him.

Today is the one year anniversary of Robert Pirsig's passing. Widely known for his "Zen and the art of Motorcycle Maintenance" masterpiece, Pirsig was an advocate for a philosophy revolving around the concept of Quality. Quality not as an abstraction, but rather, as an experience. In fact, as the core of every interaction between a man and the world surrounding him.

"When you're a carpenter making a beautiful chest of drawers, you're not going to use a piece of plywood on the back, even though it faces the wall and nobody will ever see it. You'll know it's there, so you're going to use a beautiful piece of wood on the back. For you to sleep well at night, the aesthetic, the quality, has to be carried all the way through." — Walter Isaacson, Steve Jobs

Pirsig's focus was inward facing, into the character of the individual. What I'd like to do here is to discuss Quality in the broader context of a company, a society, a nation. I would like to discuss Quality and its relation to Culture, and in fact claim that when we are discussing this oh so important but elusive concept of culture, Quality (or its lack of) is lurking behind the curtain. I would also like to shed a light on standards, their relation to Quality, and their role as the DNA of culture.

To understand the relationship between Quality and culture, we can go back to Jobs, who built a culture at Apple that his father would approve. Jobs was obsessed with product Quality as this small anecdote shows:

"Job's father had once taught him that a drive for perfection meant caring about the craftsmanship even of the parts unseen. Jobs applied that to the layout of the circuit board inside the Apple II. He rejected the initial design because the lines were not straight enough" — Walter Isaacson, Steve Jobs

To this day, Apple's culture with its 123,000 employees is known to be Quality obsessed. This culture was not built by a value statement. It was not built by providing great perks and even not by Jobs' inspiring speeches. No, this culture was shaped by decisions. Countless decisions like the one described above.

Decisions that reject the mediocre and demand the exceptional. Decisions that are the practical manifestation of high standards.

What role do standards hold in determining performance or success? We are always told performance comes from applying talent through hard work. That's the good protestant message that is the cornerstone of western society. It's a comforting message because both level of talent and hard work can be observed relatively easily. Performance, we are led to believe, follows the simple equation : P = T*W (P = Performance, T = Talent, W = Work ethics).

But what Jobs have shown so clearly, is that hard work and talent cannot explain alone the gap in performance and quality between competing products. You need to care about Quality. You need to define concretely and continuously what is acceptable and what is not. You need to set a high enough standard. You need to engineer that standard into your culture through repetitive decisions and setting examples so that it will be maintained when you're out of the room, or even after your passing. What he showed is that the right equation is: P = (T*W)^s (s = standard). Organizations that employ a culture built on high standards are exponentially more effective than those that are not.

The wrong lesson to learn from the story of Apple is that the path to success lies in copying Apple's standards. You are not Apple. There isn't a set of universal high standards that are right for everyone. Apple can spend five years building a new screen technology — you have a nine months runway. But more importantly, high standards are domain specific. As Jeff Bezos explains in his most recent letter to Amazon shareholders:

"I believe high standards are domain specific, and that you have to learn high standards separately in every arena of interest. When I started Amazon, I had high standards on inventing, on customer care, and (thankfully) on hiring. But I didn't have high standards on operational process: how to keep fixed problems fixed, how to eliminate defects at the root, how to inspect processes, and much more. I had to learn and develop high standards on all of that (my colleagues were my tutors)."

And as the vast difference between Amazon and Apple shows, you should not naively copy other people's standards even if you can afford them. Apple and Amazon are both exceptional, but each in its own way. To paraphrase Tolstoy's immortal words on unhappy families — "Mediocre cultures are all alike; every exceptional culture is exceptional in its own way".

And in that paraphrase rings a deeper truth. High standards and exceptional performance are driven by discontent, unhappiness, frustration, and a desire to change for the better. Every exceptional feat was preluded with a deep sense of unhappiness and perpetual frustration with the natural level of performance. There's no such thing as merry skipping towards high performance. You can't skip the high standards step and the rejection and frustration it brings with it.

Often, we have our own limited bag of domain specific high standards which determine our culture and as a result, define what we could create. My good friend and mentor, Avishai Abrahami of Wix, says it more succinctly: "Your culture determines your strategy which determines your products."

In contrast, the methodical curation of an exceptional culture starts by an active, self-aware, explicit choice of the facets in which you want the culture to manifest Quality, to be effective in pursuing a certain vision through a specific strategy. It follows with a process of deep inquiry, learning, and embodiment of what Quality in each of these facets actually means. Culture then is manifested by applying domain specific high standards through hard decisions that reject mediocre performance and strive for Quality. That culture then can lead an organization to build exceptional products or services which will allow it to carve its place in the world. Apple's culture will fail in executing Amazon's strategy and vice versa.

Startups are created in an accelerating pace. There are more startups today than ever before, and this trend will continue indefinitely into the future. As a result, the issue of setting the right standards is becoming increasingly acute, as every startup is an exercise in culture creation. Moreover, as high standards are typically learned by example, rather than taught in school, a startup founder cannot rely on her sheer talent and schooling to help her to set up the right culture. She has to be methodical and thoughtful in curating the culture that will allow her to achieve her vision.

The Role of Cultures in our World

A year ago, while visiting Tokyo, I got to experience Japanese culture, first hand, and captured that experience in a blog post: Sumo, Sushi, Startups & The Death of Perfectionism?. As you walk the streets of Tokyo, or travel Japan on the Shinkansen bullet trains, the extremely high standards are all around you. In the cleanliness of public bathrooms, in the quality of the random $5 Ramen bowl, in the craftsmanship of a knife master in his shop. The Japanese culture is one that puts care and quality above all. Japan is the ultimate culture of 'Doing Things Right', even if not always 'Doing the Right Things'.

What was clear in watching superb artists like Chef Masakatsu Oka is that they are driven by a drive to improve every day, and a sense of pride in their and their mentors' artistry. Financial success is of little consequence for a chef that hosts seven guests for dinner and could easily charge three times as much and still be fully packed.

More recently, my family and I went traveling through the great state of Rajasthan, India. The largest state in India, Rajasthan is primarily a vast desert, dotted with several major, picturesque cities, once local kingdoms ruled by various Maharajas. It hosts amazing palaces and forts built long ago and function as memorandums to past times of greatness. To experience the greatness of India's past even further, visit in Delhi the Sanskruti Darshan — a 'Disney's it's a small world'-style boat ride which explores the Vedic era in India history — 1500–600 BCE —  and shows the fascinating innovations and advances the people of this era created. One of the most vivid examples is Baudhāyana's theorem of squared triplets, which you may know as the 'Pythagorean theorem'. It was discovered in India 1,000 years before Pythagoras was even born.

As I was taking this boat ride, surrounded by countless modern Indians filled with pride for the ancient important heritage of their nation, I was filled by sadness. As you dive into the India's ancient history, and its impact on the world at large, you understand this great people were primed to rule the world. They had an amazing lead on pretty much any other people around.

To my biased, western eyes, they squandered that lead by adopting a culture that kept them in stasis for thousands of years, and to a large extent, keeps many of them behind to this day. A culture of castes, where your life trajectory is determined on the day you're born, without any chance for social mobility.

Such a culture generates little incentive for progress, and pushes people to be content with their destiny, be it as hard as it may. To this day, you can visit the rivers of Rajasthan and see people washing clothes in the river just like their grandparents and great-grandparents did. Such a culture is the Quality killer. It pushes standards to the floor. There is no sense in setting a high bar in such a world. You walk the streets of Jaipur, a 4,000,000-people city which can give GoT's King's Landing a run for its money, and you see poor standards all around you. You see merchants and restaurateurs and hotel administrators that are trying to do the bare minimum required to continue for another day.


My purpose in bringing these two distinct cultures was to illustrate how the standards a culture upholds have massive effects on the human condition in its society — more than many other aspects we typically focus on like level of education, resources etc.

Where things get even trickier is if we dare to ask whether the standards held in high regard are the 'Right' ones. By definition this is a question about values, and as such, is itself biased by one's culture. I found a great illustration of this challenge a few years back when visiting Santo Domingo, the capital of the Dominican Republic. As you stroll the streets of Santo Domingo, surrounded by crumbling buildings, you'll stumble every hundred meters or so into a group of men congregating around a small table. Get closer, and you'll see in the middle of the group two men sitting and playing fast chess. Their high standard of chess playing requires significant investment in studying and practicing and a high regard for Quality in chess. These standards, however, do not translate into high standards of industrious productivity and economic development. This brings the question of whether some standards are 'better' than others, and how would we even judge. My personal take is that in comparing two sets of standards, we should, extending Kant's categorical principle, choose the one which further minimizes human suffering.


Fast Chess in the streets of Santo Domingo
A follow up question emerges then. Can a nation's culture be defined purely by the standards it holds? Can we sequence the DNA of nations by capturing their high standards? If you'd like to join me in answering this question, go ahead and fill up 'The Great Cultures DNA Survey'. A 2-min anonymous survey to crowdsource the high (and low) standards exhibited in different cultures. Everyone's answers are open and you'll be able to browse them once you finish the survey. As this dataset grows, it will be intriguing to see how well it captures the essence of particular cultures.

In our day and age, we look at science and technology as the main forces governing the world. And they indeed do. It is, however, our relationship to Quality, and the culture that emerges from our standards, that decides our path. As such, we have an obligation in our own realms to think and act methodically to curate the right culture. We need to embody high standards, and that will drive our organizations to Quality. As Pirsig said best: "You want to know how to paint a perfect painting? It's easy. Make yourself perfect and then just paint naturally."

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