Are Privacy Laws the New Blue Laws?

Once upon a time in this country the consumption of alcohhol on Sundays was seen as a great danger, so we passed laws banning the sale of liquor on Sundays. In many states we still have this law, which we find antiquated today.

Today we feel that exposing our data is a great danger, and so we are creating laws to ban what companies can do with our data, and when they can collect it. I wonder if 100 years from now privacy laws will be the new Blue Laws: out of touch legislation that doesn't actually protect us any better.

We need to develop a legal and criminal system that acknowledges that our data is going to be out there no matter what we do about it, and figures out ways to protect and serve in that reality.

Imperial Overreach and the Cost of Health Care in America

All empires peak when they no longer have the resources to sustain their mass. For most empires, it is a war that triggers this: it causes both spending on the battlefield as well as displacement of otherwise productive labor and a rapid consumption of capital. It's hard to reinvest something that just exploded.

If you win the war, great, you get the spoils, but if you lose - or win but aren't able to take the spoils - you just burned up most of your productive resources for no return.

Our empire will be different. We've learned some of the lessons of military overreach, and we live an era where it is not accepted for the winner to plunder the spoils of war so the incentive for conquest is much diminished.

Our empire will achieve overreach because of health care costs. When the age of American greatness ends we will look back on it and say that the trigger for decline was not our WWII (British Empire), nor our Afghanistan (USSR), but a decision the Supreme Court made in 2012.

I hope that our Justices are wise.

Learning to Be a VC: Giving Feedback to Entrepreneurs and Friends

Probably the hardest part of being a VC is having to say no. You get into the business because you want to help great entrepreneurs succeed, and then you find yourself in a reality where you have to say no over and over. One of the first expressions I hear of this was from Ashmeet Sidana, who told a group of Wharton students I was part of that his job was to say no 99% of the time and write one check a year. When I interviewed for Genacast Gil told me that VC was like fly-fishing: although you know what you're aiming for (catching a fish / investing in a great entrepreneur), you have to enjoy the process because otherwise you'll burn out quickly.

I felt OK with this, but nothing prepared me for the worst: having to say no to people you really like genuinely want to succeed. Many if not most of my friends are tech entrepreneurs and much of my social life takes place in the tech scene. This creates an additional layer of complexity to say no. Learning to balance doing the right thing personally and professionally in these situations has been emotionally exhausting, but it has definitely made me mature in both aspects of my life.

David Biesel wrote a great post about the challenges of giving overly direct feedback to an entrepreneur when passing on their business [1]. One of his interesting points is that "The more negative the feedback (even if genuinely constructive), the less likely an entrepreneur will return ... whenever his business and/or financing details have markedly progressed." VCs know that an entrepreneur whose business they don't think is a good fit today may be a great fit somewhere down the road; David's fund has made more than half of its investments in founders they previously passed on.

For me the "aha" moment came when reading this line:

... great entrepreneurs ... hear critiques as a learning opportunity to refining their business or how they effectively communicate about it.  Great entrepreneurs also value people who are honest and direct about their concerns, and use those points as a foundation for addressing them to build a relationship over time.

In other words, great entrepreneurs are people to whom you can give blunt and honest feedback without worrying about their holding it against you. Honest and blunt feedback may turn away some entrepreneurs, but these are not the people we want to invest in.

This realization also helped me reconcile with the difficulty of having to professionally say no to people I personally like: the best friends, like the best founders, are mature enough to handle criticism, know in what circumstances certain relationships and people fit together and when they don't, and these are the people I want to surround myself with in work and life.


[First in what will hopefully be a series of posts about learning the VC trade]


[1] http://genuinevc.com/archives/2012/3/8/overly-direct-feedback-to-vc-pitches.html