Stupid S*** I’ve Said Out Loud — Part I

Uh, Oh.

Don't you get embarrassed when you read the precious things you said?

I like to think that I was taught by great mentors how to do the “strategy thing.” Some of the most fun work in my career was when I was able to describe trends before they became well understood. Maybe I was able to make sense of market dynamics or come up with a novel way to position a product. Or perhaps I was able to explain industry changes in a simple manner during confusing times.

Of course, sometimes I’ve gotten my pronouncements wrong.

I mean, really, really wrong.

Do you ever have those moments when you look back at your past and say, “Damn, did I really say that out loud?”

And bad mistakes – I’ve made a few…

I recently was thinking about something I said and how wrong I was (see #2 below), and it prompted me to think about other times in my life when I went on record with an opinion and, frankly, just missed.

#1 – It’ll Never Work

I’ve been around new technologies most of my career — operating systems in the 1980s and early 1990s, the convergence of computers and consumer electronics in the late 1990s, the transition from analog video to digital video in the mid-2000s, and investing in deep tech companies and machine learning innovations for much of the last two decades.

I’d like to think I’m open-minded towards new developments and breakthroughs, and I often get excited and expound publicly on what I think is coming — or what won’t be coming. I’ve gotten more right than wrong over the years, but I have a few doozies where I just plain missed. This usually happened when I confidently predicted something would never happen.

And then it did.

As I looked closely at some of my more insipid comments, I realized there are patterns.

Some of my more brilliant pronouncements:

- “CDs will never replace vinyl records.” Yes, I’m so old that I remember saying this. I argued that consumers had too much invested in their existing album collections and stereo equipment. I forgot about the notion of sunk costs. I also frequently pointed out that the quality of the sound of the music was worse on CDs than on vinyl.

What I missed were the surrounding changes that CDs enabled, like putting discs in your car, and the development of portable CD players which did sound better than magnetic cassette tapes. CDs not only replaced vinyl records, but they changed the way we consumed music in almost every venue.

I believe this transition also helped with the movement to streaming music a decade later as people had already become used to changing platforms for listening to their favorite songs. “Owning” a music collection, and showing off that collection, became less valuable for a lot of people.

What did I get wrong?

I missed the system-wide changes.

- “Cameras will never be big in cell phones.” When cell phone cameras came out most people already had digital still cameras (DSCs), and the quality of pictures taken on cell phone cameras was an order of magnitude worse than pictures on most DSCs. The cameras in cell phones when they first came out “were just a toy.” The quality of the images was not only bad, but you couldn’t easily share the pictures with others. And people wanted to take pictures they could print and display.

Yeah.

I did not foresee the continued advancement in image sensors and shrinking pixel sizes that enabled substantively higher resolution images in cell phones, nor how the massive investment and global capability of wireless bandwidth for transmitting rich media would make sharing photos easy.

And, of course, who knew that Apple would invent the iPhone?

Finally, the rise of low-cost LCDs allowed people to see photos on larger screens on their desks when desired.

I missed the system-wide changes.

- “Softbank’s Vision Fund will only impact the growth sector of venture investing, but it won’t touch Seed and early-stage venture capital.” I actually said this to the Wall Street Journal. What I didn’t foresee was that most of the other prominent venture funds globally would have to raise enormous amounts of capital to respond to Softbank, and that the financial arms race promoted for “network effect” businesses encouraged entrepreneurs to take ridiculous amounts of money via investments. Suddenly, VCs had piles of cash to deploy, and they promoted the conventional wisdom that only hyper-scaling would lead to winners in technology.

In addition, in a world with zero percent interest rates, capital flooded into venture as investors sought returns from risky investments, thus perpetuating the “big is good” flywheel.

These dynamics hit small boutique Seed venture funds as the math no longer allowed investors to yield good returns on small amounts of capital when winning portfolio companies were raising $250 million to $2 billion. Small Seed funds needed to grow their assets under management to remain competitive.

And Softbank started it all with their Vision Fund.

I missed the system-wide changes.

In each of these instances, I looked too closely at the micro and missed the system-wide dynamics that enabled a new feature, a new product, or even a set of unintended consequences based on the action and reactions of an ecosystem. My focus on the minutiae prevented me from seeing the forest from the trees.

#2 – I’ll Never Write Another Book

What prompted this Substack was when a friend teased me recently about my pronouncement in 2022 that I’d, “Never write another book.” I realize now that this was another moment when I completely missed the system.

After writing my first book I told my agent and many close friends that I was “one and done.” The first book was painful. I had a publisher that did little in the editing process. I had to do all of my own marketing before, during and after the book launch.

As we were releasing the book I was asked by several people involved with the process how many copies I would buy at the beginning to show sales momentum in order to get on national “best-seller lists.” I was even coached on how to do this and spread purchases amongst different retailers so that my activity would not get flagged by these list providers.

It felt like the old “payola” scandals where record companies paid to get music played on the radio to drive sales. I had no idea that this was often how it was done for first-time authors.

Over the last four years I’ve come to learn and appreciate that authors do most of their own marketing for their books — we hire our own digital media and PR teams, we are very active on social media, and we build a “platform” to promote our work. In fact, in an initial book proposal, unless your last name is Obama, an author has to draw attention to the planned marketing activities and the “platform they have” in order to get a publisher’s attention.

The naïve and romantic notion idea that someone writes a book to share knowledge or a tell story isn’t reality – you are making and selling something, and the book publishing business for many authors is often just a distribution channel.

When I talked to other authors many shared that they had near identical experiences in their book writing journeys.

I was happy and proud that I wrote my first book, but I liked to joke that my second book was going to be about the book publishing industry — but that no one would publish it.

Then I met David Drake at Crown Currency.

David participated in an Executive Education program at Stanford and we had coffee after I taught a couple of sessions. He engaged deeply with me both on the content of my classes but also my previous book-writing experience. David opened doors to a brand-new group of people with whom I could collaborate, and he showed what a different set of outcomes could look like if I wrote another book. Basically, he exposed me to a new team (a system) and how working with great people could completely change what the experience of writing a book is like.

More importantly, I grew to understand what it means to write and sell a book. Yes, an author **sells** a book — writing a book is only part of the process. And while this is something that might not fit the preconceived noble notions of why someone writes a book, and it may feel unnatural to be constantly promoting one’s written work, or even that writing a book might be looked poorly upon in some circles of academia, making and selling a product is something I know how to do from my time as an operator.

And this second time in writing a book I’m not fighting the system — I’m learning how to work it, and even embrace it, with my team.

I learned to see the system.

#3 (Bonus): She Married Me Anyways

I think the third screw up is my best “stupid s*** I said out loud” moment. But you are going to have to wait for Part II to read it.