ISBN-13: 978-0273710516
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The Pyramid Principle
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Reading Is the Transformation of a Linked List of Ideas Into a Tree
We can only read one sentence at a time, but the resulting information received is tree-shaped. This presents a challenge to the writer to ensure the transformation matches the intended tree structure otherwise the reader may misinterpret the ideas shared. That’s why organizing ideas is important and explaining the connections between ideas so the reader doesn’t have to.
See also:
- The Minto Pyramid Principle
- Always give the summarizing idea first is a way of enforcing a hierarchy of information which makes writing more clear
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Conceptual Integrity
As mentioned in The Mythical Man Month, good system design (user friendly) requires a small (ideally singular) team of architects, separated from implementation, that decide what goes into the system and what stays out. This avoids rogue ideas making it in that muddy the overall product.
In No Silver Bullets, Fred Brooks adds that conceptual integrity is difficult to achieve because of the inherent complexity of software systemsβcomplexities can not be ignored as one would a simplified model in mathematics or physics because the complexities are the essence.
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The Stock Market Boom During the Pandemic Is Due to Increased Savings
Personal income was higher, lost wages were offset by unemployment benefits and stimulus programs. Consumers spent less on services (hotels, air travel), more on durable goods (e.g. better home office equipment), and saved 173% more money than last year. More people are buying homes, in part due to low interest rates and the pandemic. Low interest rates also investors into higher risk asset classes (they can no longer get the same returns from bonds for example) which pushes more capital into the stock market (lowering the federal funds rate causes all asset classes increase in value).
The stock market surge is fueled by people that escaped the economic damage from the pandemicβthose in higher paying jobs that can operate during the shutdown. In fact, some businesses are booming and the rise in wages from say a bonus due to strong company performance can offset the lost wages of low paid front-line workers.
Read the article from the NY Times.
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Writing Essays From a Zettelkasten Outline Is Much Faster
When writing essays, starting from an outline of Zettelkasten notes makes it much easier and faster to write. This method separates the structure from the narrative. For example, finding notes and related ones keeps your thinking at a higher level of abstraction (atomic ideas or concepts) instead of getting bogged down in how you will word it. Once you have the outline, you are filling in the narrative that connects the ideas. This leads to faster progress compared to doing both at the same time.
Example: the essay What I learned - 2020 was written from the outline Β§ What I learned 2020.
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Β§ What I Learned 2020
Personal
- COVID-19
- structural racism
- substituted economics for racisom
- stress and anxiety are cumulative
- zoom fatigue
- My morning practice
- Personal note taking practice
- Reflections on writing 500 notes
- https://www.alexkehayias.com/essays/zettelkasten-setup/
- Building Noteland
- actions should be dictated by values not emotions
- emotional thermometer
- Identity is a powerful motivation for behaviors
- VO2 max
- mindfulness
- self-compassion
Projects
Professional
- Moving on from Stripe Atlas
- Product
- Organization
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Consumers Buy Products, Enterprises Buy Platforms
The buying behavior of consumers versus enterprises can be characterized by the difference between products and platforms. A product is a specific solution to a problem or problem area whereas platforms are frameworks for implementing present and future workflows. This explains why, as businesses grow larger they start to buy from Oracle, Workday, etc. they’ve outgrown what a single product can do.
See also:
- This is an example of workflows are more useful than solutions
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Trailing Tax Liability
When employees move around they generate trailing tax liabilities for the time spent in a particular jurisdiction. This includes employment taxes and reporting as well as personal tax issues (for example, shares vested while in California will need to pay taxes once a gain is realized).
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Measure Progress Rather Than Outcomes
When you are feeling overwhelmed by something you are working on, measure the progress you are making rather than the final outcome. This helps to break down the larger work into actions you can do and control rather than fixating on the size of the endeavor. For example, rather than focus on having the perfect startup idea measure your progress by the number of things you learned, users you interviewed, and notes you’ve written.
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Back Office
This note does not have a description yet.
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Mousemove Events Fire When a Modifier Key Is Pressed
A surprising quirk of the
mousemove
event is that it gets fired when a modifier key is pressed on the keyboard (once on key down and once on key up).For example, run the following in your browser and press the control key without moving the mouse.
document.addEventListener("mousemove", (ev) => console.log(ev.ctrlKey));
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Heuristics for Hiring in a New State
Setting up operations in a new state has many requirements and can result in tax obligations. Tax, accounting, and legal professionals want to support the needs of the businesses, but also want to efficiently use resources. They often come up with heuristics to help guide the front-office when it comes to hiring in new U.S. states. For example, “Don’t hire someone in a state we have no other employees in unless you would be willing to give them a $30k signing bonus” and “Don’t hire unless you plan to hire 10 people in that state”.
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Trading Money for Time Is Leverage on Focus
The amount one can do is limited by the number of hours in a day. It’s zero sum, focusing one’s time on something means not focusing on something else. It’s useful to think of money as a way of leveraging one’s time by spending it to eliminate tasks one must do. For example, using a wash and fold service instead of going to a laundromat and doing it oneself will save about an hour of time that can be repurposed. In that way, money for time is leverage on one’s ability to focus on the right things.
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Startups Oscillate Between Operating Ignorance and Normalization
As companies grow their operations become more complex and they must constantly make changes. Startups prioritize speed and solving the most important problem, even if it is in exchange for future liability. A useful framing is to think of it as moving between two statesβoperating ignorance and normalization.
Operating ignorance is both real ignorance or intentional. For example, a startup may hire someone in another state and not realize they need to register with the state’s employment agencies (real ignorance). Or they may willfully ignore employment requirements for now because the likelihood of being audited is low and they accept paying fines at a future date is not worth the short term hassle.
Normalization is putting these operations into compliance and doing it right. To reuse the example about employment, the company decides it is time to do the proper registration, pay back taxes and fines, and operate in compliance.
See also:
- Back office
- Employers of remote workers are unsure they are remitting taxes correctly they may decide it’s not worth figuring it out right now.
- It takes two months to hire in a new country so a startup may knowingly misclassify someone as a contractor.
- Remote native companies don’t have real addresses so a startup might use a different address they won’t actually receive mail.
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SAFE Note Terms
Most investors use the ‘post-cap’ version of a SAFE note (post-money valuation with cap). The terms to negotiate and how they impact the value of the company are:
- Total amount to be raised (the total cash that will be transferred to you)
- Post-money valuation
When you divide the total being raised by the post-money valuation you get the percentage of the company being given to investors in the round (usually 20% or less).
In addition, the largest investors in the round will typically ask for a side-letter with additional terms like prorata rights, future board seats, and management rights.
See also:
- How a seed round works
- Information asymmetry during fund raising is a big advantage for investors
- Pro rata rights causes conflict between early and late investors
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Information Asymmetry During Fundraising Is a Big Advantage for Investors
Founders that are fundraising for the first time do not know how venture capital works and need to rapidly learn in time to negotiate terms. Investors have access to more dataβthey see many deals, know the terms, and how the negotiation went in those deals. Founders need to ask investors about comparable deals or have a network of other founders that can provide this information because it is not public.
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Stock and Flow
Stock and flow is an economics concept referring to static value (stock) and transactions over a period of time (flow). This is a useful metaphor for producing content on the internet.
Flow is like the ephemeral feed of content we create on social media and forums. Stock is the evergreen content we create like blog posts and essays. Flow spreads quickly (viral sharing), but is short lived (pages out of the feed in hours). Stock spreads slowly (Google search), but grows steadily over time.
See also:
- The blog post this comes from by Robin Sloan
- Effects of note blogging on SEO that talks about the advantage of search traffic over social media traffic
- The Garden and the Stream is a similar, but different metaphor about content creation
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How a Seed Round Works
Companies need to be incorporated and founder stock must be issued before executing a SAFE and taking any investment. There should be some time between issuing/paying for founder stock and receiving the investment, to ensure the founder stock purchased was at the correct price (rather than at the price the investors paid) as this is a potential tax issue.
They first step is to nail down a lead investor. They will set the terms for the rest of the round (usually everyone participating in the round gets the same terms to keep things fair).
You should share a high-level plan for how much you are looking to raise. Most investors will expect that you will give up 20% or less for a round so you shouldn’t low-ball yourself by saying you are raising X amount at Y percent.
If they are ready to commit, a lead investor will offer a term sheet (usually for a SAFE convertible note) for the largest amount of the total round. You negotiate terms (there’s really only a few terms in SAFEs) and then their lawyers send you a SAFE to review with your lawyers before signing. The money gets wired to your bank account on a funding date.
After closing the lead investor they help you fill out the rest of the round by providing introductions (angel investors, other funds), but it’s probably better to find angel investors yourself with people of strategic importance or have contacts in a specific industry (angels have incentive to help you and, since there is an abundance of angels, you might as well get the additional benefit of expertise).
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False Precision
When exact numbers are used to express something that can not be described with exact numbers (e.g. 15% smarter) this is fake precision. When making calculations using data of a certain precision, one can’t claim a result with more significant figures than the original precision (this often happens with floating point math).
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Key Considerations for How Much to Raise in a Seed Round
The key considerations for how much to raise in a seed round are:
- What are the milestones? (e.g. MVP product, iterate with early customers, early team count and makeup)
- Working backwards from there, what will you need to do it? How much runway?
- What do you need from the funds / angels in the round? (e.g. intros, access to portfolio companies, expertise)
- What similar deals are being made and what are those terms?
- What are the additional expenses or timelines that are needed for the product? (e.g. manufacturing, inventory, professional service fees)
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Be Upfront With Seed Investors About Bringing on Another Co-Founder Later
Seed investors are primarily evaluating the team and the space in order to make an investment decision. Having an unknown co-founder they would need to work with in the future is a red flag. If you still intend to do that, be up-front and work closely with them in finding the right person. This is important for dilution in future rounds. You want your investors to share in the dilution if you bring on a co-founder later with material amounts of equity instead of diluting just the current founder(s) share.
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List of Fully Remote Startups
The following are remote native companies with all employees working remotely.
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Employer of Record
A payroll partners that is responsible for employment compliance and liability of employees. Companies contract with them to outsource the work of setting up operations in all jurisdictions in which they have employees.
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Differences Between PEO and EOR
An EOR is much more expensive because they take on all of the liability and compliance on behalf of the company. Company’s use an EOR to hire employees globally where they do not have a local legal entity.
A PEO is a co-employment model and helps the company set up the compliance, tax, payroll, benefits, and HR processes, but tend to operate more as a consultancy. Company’s use a PEO to outsource HR functions where they have their own local legal entity. Most company’s find it too expensive to have a PEO after 100 employees.
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