Since PEOs are the employer of record, they shoulder the insurance risk for health care, workers compensation, and unemployment. They must be mindful of this exposure as they grow and control for it with risk management.

For example, if a PEO takes on a client with a higher likelihood of physical injury (like a construction company) they risk more workers compensation claims and thus a higher workers compensation insurance premium. This will cause them to either lose margin or pass it on to their customers raising the price and potentially causing churn.

That’s why it’s useful to think of a PEO as an underwriting business where they must carefully manage their exposure and unexpectedly lower or higher revenue as a result.

See also:

• The flipside of PEOs offering better healthcare is the exposure to rising premiums

Paul Graham argues in How people get rich now that we are returning to a period where wealth is mostly generated from starting companies (as opposed to inherited wealth from oil and natural resources) and that’s a good thing even though wealth inequality is growing. He argues that it’s that rich people coming from tech get rich faster and much more wealthy and not something more sinister that technology companies growth correlates with rising income inequality.

Of course, it’s not that simple and Just be rich, a reaction to the essay mentioned above, points out that Paul Graham’s essay is meant to make rich people feel better for being rich and that the answer is to start a company and be rich. That’s a bit of a straw man which makes it easy to poke at PG, but it seems they are both right. Declining middle income is bad and causes struggle and lack of access to opportunity. Also, tech is better than what we had 40 years ago when most wealth was generated by exploitation of natural resources or inheritance.

While the reaction blog post got a lot of airtime on HN, it’s a bit sensational. The reaction offers no alternatives and draws no new conclusions about what to do about the problem.

See also:

• We seem to be entering a Plutonomy

The percentage of employees working for enterprise companies (500+ employees) has increased as a percentage of the workforce compared to SMBs. From 2007 to 2017, the percentage of the workforce employed by enterprises increased 1.9%.

See also:

• PEO has a market size of $56 Billion in the US

One of the benefits of a PEO for small businesses in the U.S. is access to better healthcare plans. Since the PEO is an employer of record, they have many employees which improves their buying power when negotiating plans. A small business on their own does not have many employees to negotiate better rates.

See also:

• Back office
• PEO has a market size of $56 Billion in the US
• PEOs taking care of everything is a myth

The overall opportunity for PEOs is $56B (source: JP Morgan) which represents 21.5 million SMBs with 10-99 employees. However, in the US, workers are increasingly working for larger enterprise companies and those enterprises have the resources for in-house employment.

See also:

• Back office
• PEOs taking care of everything is a myth

Curtis Yarvin wrote in a blog post announcing his departure from Urbit, that building a product is like an annealing process. It starts as gas (an idea, amorphous and unconstrained) and ends in metal (a product in the hands of users). In the process, it can cool too fast causing structural weakness requiring heat to temper it (iteration and refinement).

Read the blog post

See also:

• Product work is hard because it necessitates change
• The number one job of a startup CEO is finding product market fit

NASA uses a Human-Rating Certification for vehicles transporting a human crew into space. The vehicle must have a 1 in 500 probability of a loss on ascent and a 1 in 500 probability on descent.

Read the requirements Read Certified Safe

In a tweetstorm from Andrew Wilkinson about how their task list app Flow was out competed by Asana. To summarize, his team built an early SaaS task list web app that was growing fast until Asana arrived and quickly outpaced them. Their growth slowed and eventually decided to shut down after many years. He frames the underlying causes as bootsrapped vs venture backed and how, “Good product with great marketing beats amazing product with no marketing.”

He offers a word of caution about bootstrapped businesses that are in a highly competitive space with low barriers to entry (like a todo list app) and how a well capitalized competitor can win.

See also:

• 7 Powers might offer some more explanation. It seems like Asana used it’s process power in engineering to outpace Flow (e.g. building iOS, Android clients) and branding to market and position the product.

There are two approaches for creating something of significance, the cathedral and the bazaar. The cathedral is best for creation and the bazaar is best for growth.

The cathedral is unified coordination mechanism that is well suited for reaching a singular vision. It is hierarchical which provides a clear line of decision making. This consolidation of decision making makes it efficient for coordination.

The bazaar is a distributed and loosely coordinated mechanism best suited for growing something that is well defined. By agreeing on a few rules (like commerce, or open source code) it can grow autonomosly—far exceeding what a single person or group (cathedral) could do on their own. However, the bizaar fails to create something new that’s also great (like designing by committee).

Read Curtis Yarvin’s blog post A Founder’s Farewell.

See also:

• The path from concept to product is an annealing process
• Putting both together, the bazaar is like compounding interest and the cathedral is the initial investment

The core thesis of Monetizing Innovation is that product failure is rooted in the failure to put the customer’s willingness to pay at the core of product design. Designing around the price—which measures value and priority—helps guide product design based on the customer. Companies often build the product and then do marketing and pricing, but that amounts to a leap of faith at best and a painful disconnect that leads to failure at worst.

See also:

• Build an initial product a small group of users love is YC and Paul Graham’s answer to this problem
• The number one job of a startup CEO is finding product market fit
• Methods of product ideation seems to leave pricing out (as does most startup advice)

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Inspiration quickly fades and is not enough to sustain a prolonged effort. That’s why you should act immediately when inspiration strikes. For example, when you have the idea for a blog post, jump straight into writing it—waiting causes the inspiration to pass and the likelihood of writing it goes down.

See also:

• Naval Ravikant writes about this in ‘How to get rich’.
• When it comes to writing, it’s like getting naked in public so you probably do need some inspiration to put yourself out there.

Public data from San Francisco revealed disturbing statistics about buildings and homes that show how difficult it is to create new housing. 54% of homes inn SF are in buildings that would be illegal to build today and 34% of buildings would be illegal.

See the map

See also:

• Zoning laws are a well known example of structural racism. By making it difficult to build new homes, property values go up and become unaffordable—disproportionately effecting Black people.
• Substituting economics for racism

A product design partner is an early user and potential customer that provides regular organized feedback about your product. In return, they get a hand in designing the product to fit the needs of their organization, early access to the product, and discounted pricing once it launches.

These partners should match the target market closely otherwise you will end up getting misleading guidance (or guidance on a different problem). A good sign of validation is when several design partners convert into paying customers after launch.

See also:

• Product work is a pursuit of facts about the user, market, and their problems
• Founder-led sales
• Founder led sales helps identify product problems

In the early years of his career, Robert Moses—with all of his idealism and arrogance—failed to reform the New York City government and improve efficiency as he proposed. None of his reforms were ultimately taken up and Tammany Hall retook the mayorship from the ‘Boy Mayor’, John Purroy Mitchel the reformist, after three short years.

After his brief stint in local government he was out of a job and bounced between jobs or was fired.

It wasn’t until Belle Moskowitz chose Robert Moses to be her Chief of Staff did his career take off.

See also:

• The Power Broker

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PEO’s often position themselves in the market as a service where you can entrust them to do everything for you. However, that is not the case.

For example, while using a PEO you still need to handle leave of absences (e.g. customizing a leave letter), prepare for involuntary separations, develop a parental leave policy, set up harrassment prevention training, and even set up certain employer tax accounts (i.e. Client-reporting states).

See also:

• Back office

The probability that belief A is true, given new evidence B is equal to the probability of B given A times the probability of A (regardless of B) divided by the probability of B (regardless of A).

For example, suppose you are getting a medical test to find out if you have a disease. The disease only appears in 1 out of 100 people and the test is 99% accurate. What is the likelihood you have the disease if you receive a positive test result?

Plugging it into the equation:

P(A|B) The probability of having the disease given a positive test result (what we want to find out).

P(B|A) = 99% Probability that the test is accurate if you actually have the disease.

P(A) = 1% Probability of having the disease regardless of the test.

P(B) = (1% x 99%) + (1% x 99%) The probability the test is accurate means summing a positive test result and the probability of a false negative test result. To get the false negatives if you have a population where 100 people have the disease and take the test which is 99% accurate, you get 1 false negative.

Result There’s a 50% probability you have the disease given a positive test result

(99% x 1%) / ((1% x 99%) + (1% x 99%)) = 50%

A traditional rhythm which is a variation of the Chaabi found in Northern Africa. It’s characterized by low beats (like a base drum) 5 and 10 with ‘high’ hits (like a snare drum) on 3 and 8 in two bars of 6/8. This creates a unique groove that, for western listeners, can be difficult to find beat 1 (which is not important in the Moroccan Chaabi rhythm).

Conventional ways people (and law enforcement) use to spot a liar is pseudoscience. Research studies have found that markers like fidgeting, looking away, and emotional response are not science-based and no better than guessing. This is problematic in the justice system and other law enforcement like the TSA because they are convicting people based on appearance of guilt that is baseless.

Alternatives that are found to be effective and science-based include withholding evidence to catch contradictions and sketching interviews which aids in recall (liars are less detailed).

Read the article

See also:

• This is an example of structural racism e.g. cultural differences about eye contact will result in racial profiling
• Interrogators may believe spotting liars is tacit knowledge, but that was also found to be incorrect

Being all consumed by engineering (writing blogs, contributing to open source, giving away your time) is not good because it leads to burnout and perpetuates more people to do the same. Open source for example, is co-opted by large corporations to exploit passionate developers that provide high quality code for free and putting the training burden on the person rather than corporation.

A counter argument to that is most effective people care a lot—a subtle difference, but you can be both dispassionate and care a lot.

Read the blog post

See also:

• Open source and ‘passionate developers’ have greatly increased the productivity of the field and contributes to Baumol’s cost disease (managers did not get 10x more efficient in their field, but salaries have gone up nonetheless)

In Bayes' Theorem, the probability of something occurring is based on probabilities of other parameters of the problem. Put simply, using the theorem builds on prior knowledge of the problem domain to update a prediction. This became very popular because, in the real world, there is much uncertainty and Bayes Theorem provides a way of modeling that uncertainty through probability (e.g. machine learning).

A survey by Microsoft found that 41% of employees are considering leaving their current job and 46% say they are likely to move to work remotely. This would result in a major change in the percentage of remote workers at companies compared to before the pandemic. A survey by McKinsey about remote work found that 20-25% of workforces in advanced economies could work from home after the pandemic.

See also:

• Two-thirds of remote workers want to continue to work remotely
• Topeka Kansas estimates a 10x return on relocating remote workers to their city

Thousands of Ice Age paintings were discovered in the Amazon rainforest in Colombia which earned the nickname ‘the Sistine Chapel of the ancients’. Researchers date the artwork in part because of the depictions of long extinct animals (including mammoths) and plants around the time of the Ice Age.

Read the article

See also:

• Brewarrina Fish Traps is another example of a long lasting artifact from 40,000 years ago