There’s a homeless tent encampment surrounding the SF DMV at the far east end of the Panhandle. It’s where I started my run yesterday.

Through the park, into Golden Gate, past the conservatory, and to the first bridge is 1.5 miles.

I turned around at the bridge, went back up JFK, past the conservatory, and back into the Panhandle.

As I passed the toddler playground, the only other person on the path was a woman 200 yards ahead.

As I got closer, I noticed she was talking to herself. As I got even closer, I noticed she was shouting at the trees.

About 50 yards out, she turned and starting running toward me, hands moving up and down, screaming, waving a crackpipe like a wand.

I swerved left into the grass. She threw the pipe at me.

Two women standing in the yard glanced at us, then turned their attention back to their young kids.

I kept running and didn’t look back.

Last night, as we waited outside for the table ahead of us to finish dessert and pay, the hostess walked out with two glasses of champagne. “I’m sorry we’re running behind,” she said. Elizabeth and I clinked glasses.

Back in the kitchen, we heard the hostess complaining to the chef about a woman who’d been sitting at a table by herself for three hours. “I don’t know what she’s doing!”

The chef was tempted to walk out and tell her to leave, but he didn’t want to risk another negative review. A month earlier, after reopening for patio dining, somebody had posted to Yelp: “Great pizza, nice staff, odd decor.” 1 star.

Hearing their sighs and shrugs reminded me of a story I once heard from my grandfather.

Grandad had joined an International Harvester dealership in Norfolk after the war. He’d worked there for several years before offering to buy the business from its nearing-retirement owner, Mr. Bell.

Mr. Bell agreed, so long as Grandad partnered with his nephew Lewis Gibson. No problem.

Grandad went to get a loan. “What’s the name of your business?” the loan officer asked. Hmm, he hadn’t thought about it. “G&S Equipment,” he said.

It was a Monday morning when Grandad and Lewis and Mr. Bell met at the dealership to finalize the transfer. Mr. Bell, after signing his final dotted line, stood up, grabbed his coat, and headed toward the door.

Grandad was surprised. “Wait! Aren’t you going to stick around for a couple weeks? Have a transition period?”

Mr. Bell turned around. He paused.

“All you need to know, is the public is a bitch.”

And then he walked out.

On January 22, 1970, a Pan Am Boeing 747 touched down at Heathrow for the first time.¹ It was the 747’s first commercial flight. At the time, British Airways had 11 of the jumbo jets on order.

I’ve always wanted to ride on one. I’m too late.

British Airways announced yesterday they’re retiring their entire 747 fleet. Permanently. Its cousins are also in trouble: the double-decker A380 is grounded worldwide.

Landing slots at Heathrow are scarce. In 2016, Oman Air bought a single morning slot from Air France for $75 million. So while the 777, A340, and 787 use less than half the fuel per passenger to fly, airlines need jumbo jets to maximize passenger throughput.

Nowadays double-deckers are merely a waste of fuel. Just like a species facing an extinction event, the 747 got wiped out by an economic chokepoint.

Intelligent-designers often cite gaps in the archaeological record as evidence against natural selection. If evolution inched along slowly, they argue, where are the fossils of almost-humans, and almost-almost-humans, and almost-almost-almost humans? Shouldn’t we find skulls of humans with tiny eyes, slightly-less-tiny eyes, all the way up to regular-sized eyes?

But evolution doesn’t crawl along in a straight line. Adaptation happens slowly, and then all at once. Chokepoints force the “all at once.”

For example, birds in Britain and Denmark have been under attack by asphalt for a century. In Britain, it’s popular to load birdseed into birdfeeders and place them in gardens. Not so in Denmark. Within 40 years, the beaks of British birds have grown 1-2mm longer than their Danish counterparts.²

For millennia the beaks have stayed the same. And then asphalt, in a mere half century, forced British bird beaks to grow up to 10% longer.

Business follows the same pattern. Innovation prods along slowly. And then one day the economy’s equilibrium gets punctured.

We are in one of those economic chokepoints. The 747 and A380 are collateral damage.

What else is facing evolutionary death because of COVID?

It might be better to invert that question. What types of businesses will survive despite COVID? What traits do those businesses have that will spread like memes throughout the economy?

1. http://news.bbc.co.uk/onthisday/hi/dates/stories/january/22/newsid_3725000/3725963.stm↩
2. https://www.theguardian.com/environment/2017/oct/19/british-birds-evolve-bigger-beaks-to-use-garden-feeders↩

I’ve now lived in all four continental US time zones. Where I wake up impacts my routine.

Central Time has been driving this week’s zen. Easy to wake up at 6:30am, easy to take a mid-day break, easy to hit all my daily process goals.

Here’s how each time zone feels, ranked worst to best:

Eastern Time, “The Hangover”

The first morning in NYC is a gift. I get to choose when to start my day. I can read or write or relax until the rest of America brews its coffee. But I don’t get to choose when to end my day. Happy hour slips past 5pm. Everyone’s checking their email during dinner. I end up staying late to get that support ticket from the west coast done before finally getting in bed by 1am.

At 7am, I snooze the alarm. I don’t get moving until 8am or 9am. My first-to-wake-up advantage is gone. And I’m hungover!

Pacific Time, “The Anxiety”

There is no escaping the existential dread of morning email when waking up in San Francisco. There is no quiet moment of solitude between the first sip of coffee and the first swipe-to-refresh-email. NYC is already firing away!

I used to buffer this anxiety by walking to work every morning. It’s even harder when the office is the cafe and the cafe is the living room.

At least by 2pm there’s time for a guilt-free Barry’s. The ability to enjoy dinner without constantly checking my phone is what makes Pacific Time slightly better than Eastern Time, but I can’t seem to shake the nagging feeling of being hopelessly behind.

Central Time: “Wholesome”

I’ve spent the bulk of my life in Birmingham, Nashville, and Chicago. Central Time. It’s the “just-right” porridge of time zones. As long as I’m up by 7am, I feel like I have time to sit down and think before diving into the day. By dinner time, most things are wrapped up.

But while there’s space at the margins, there isn’t quite enough freedom in either the morning or the evening to feel like there’s time to really back away from the desk.

Mountain Time: “Reckless In A Good Way”

Getting out of bed at 6am in Idaho is perfect.

There’s a full hour before NYC starts going Full Send. And since people know you’re “somewhere in the mountains,” nobody will miss you until 8am.

Work, read, write, whatever. The best part comes at 2pm. NYC knows the work day is supposed to be over. And because you woke up before San Francisco, people on the west coast think you might as well by in NYC.

Go ski a few runs. Go for a hike. Go for a run. Nobody is going to miss you from 2pm-dinner, when you can pick up and answer any remaining questions in your inbox.

When we moved to Ketchum two winters ago, Elizabeth got a job waitressing at a little eight-table local restaurant.

The walls were still blank on her first day of work. They’d only been serving guests for a week.

January 2019 marked the restaurant’s first full month of pumping out pizzas and wine. They went on to do ~3x more “monthly” revenue than we did that same month at Bottle. And we had a three year head start!

If each business was reduced to an Excel sheet comparing only revenue, their “$100k of sales in the first month” narrative would outshine our “5-digit MRR three years in” narrative.

But pizza comes with significant marginal costs: flour, San Marzano’s, mozzarella, cooks, hosts and waiters. There’s a reason I’m happy owning Bottle’s current and future cash flow instead.

Everyone jokes about using revenue as a metric. “What we lose per unit we’ll make up in volume!”

But I’ll bite. For software businesses, revenue is a meaningful metric because costs are fairly fixed and familiar: engineers, ads, and AWS bills. This is why the entire SaaS market has been trading ~10x revenue, independent of vertical.

“Fixed and familiar costs” don’t apply to the newest venture-backed businesses, though. As revenue becomes the ultimate metric, software-enabled companies are hacking top line revenue. It’s Goodhart’s Law.

I saw a tweet by Garry Tan yesterday, sharing Truepill’s latest $25 million round:

“Truepill revenue reached $48 million in 2018 and nearly $100 million in 2019; it could reach an estimated $200 million this year as it pushes further into working with health plans, drugmakers and pharmacy benefit managers.”¹

Maybe those revenue numbers are compelling. Maybe the aren’t. I can’t tell because revenue has lost its meaning. It got me thinking about three things:

1. Restaurant Revenue

I propose a new term: Restaurant Revenue. Restaurant Revenue is revenue that comes with real and significant costs. A pizza. A pizza delivery. A short-term tenant inside a long-term lease. A flu shot. A prescription. These things are inherently different than HTTP packets.

Pharmacies in particular come with incredibly high marginal costs.

I used to think Walgreens used Doritos and Coke to lure people in to buy high-margin drugs. It’s actually the other way around. The pharmacy is a loss-leader to get people to come buy toilet paper and razors. Pharmacies are so low-margin that the undisputed king of low-margin is struggling to make drugs profitable. Their rival Target gave up completely.

Truepill is an API-enabled pharmacy. It’s a great idea. But how much of the $200 million in projected revenue is zero-margin prescription drug revenue?²

If it’s mostly Restaurant Revenue, then it’s a vanity metric.

2. Alpha Revenue

Restaurant Revenue isn’t all bad. Lots of software-enabled companies genuinely reduce costs and induce demand in novel ways.

Thus I propose a second term: Alpha Revenue. Alpha Revenue is the contribution margin that, with a straight face, you can say is added because of software.

Cloud kitchens and Chick-fil-a both sell fried chicken sandwiches. Let’s say a cloud kitchen has trained a robot to hand-batter all the chicken breasts. In doing so, they might knock $0.50 in cost off each chicken sandwich. Alpha Revenue.

Or take Bungalow. They can induce demand from a well-designed website. They can make it easy to split the house and rent by the room. This enables them to turn 3-bedroom houses renting for $3k/mo into 4-bedroom houses renting for $1.2k/room. The Restaurant Revenue is $4.8k/mo, but the Alpha Revenue is $1.8k/mo.

3. Business Models

Eventually, the market will sort the valuations out. But, for any business that lists software engineers in its S1, the market is struggling to discriminate between Restaurant Revenue and Alpha Revenue.

It’s how you end up with an app-driven insurance provider worth $4 billion.

The downstream valuations are having a negative impact on new startups. There’s a pressure to build revenue as fast as possible, Restaurant Revenue or Alpha Revenue be damned.

My friend is starting a women’s hormonal health company. She wants to pair women with PCOS with providers. VC’s are pushing her to “own the entire stack” and bring healthcare providers onto payroll. It’s an easy way to book a lot of top line Restaurant Revenue. She’s wary.

In fact, Truepill just invested in Ahead, a company with full-time therapists on staff ready to provide Telehealth treatment for ADHD, depression, and anxiety. Lots of Restaurant Revenue. Can they produce Alpha Revenue, though?

If Airbnb was raising a Series A today, it’s tough to imagine VC’s not pushing them to “buy the real estate yourselves.” Get the top line revenue to swell, raise the next round, pass off to the public market.

There are better business models than restaurants. Google, Lyft, and Airbnb all invented not only new products, but new business models. Where did all the business model innovation go? I don’t know if it’s a failure of vision or the fact that VC’s got sick of battling independent contractor employment law.

I’ll be curious to see which of these restaurant models end up with enduring Alpha Revenue.

1. Truepill revenue reached $48 million in 2018 and nearly $100 million in 2019; it could reach an estimated $200 million this year as it pushes further into working with health plans, drugmakers and pharmacy benefit managers.

   — Garry Tan (@garrytan) July 8, 2020

   ↩

2. Based on known public information, I think Truepill is a fairly capital efficient business. My criticism of revenue as a metric is not a criticism of Truepill as a business.↩

I was wrong to think I needed to appear buttoned-up online.

When I was a teenager, I had a personal website with an About Me page. It read like I’d built a compiler for PHP, sold two companies, and achieved alpha day trading. My email signature was five lines long.

I didn’t realize how much people simply crave raw personalities. Typos. Mistakes. Thinking out loud.

When Churchill was asked to replace Chamberlain in the spring of 1940, he kept the 28-year-old John Colville on staff as his secretary.

Colville didn’t like Churchill. He didn’t want bombs to drop on London. He didn’t want his brother to die in France. He wanted to make a deal with Hitler.

He thought Churchill was rash, erratic, and such a blatantly bad choice that Hitler must have been behind Churchill’s rise:

“One of Hitler’s cleverest moves has been to make Winston Public Enemy Number One, because this fact has helped to make him Public Hero Number One at home and in the U.S.A.”¹

Within a few months, Churchill had won him over.

Colville would walk in on Churchill naked in his tub, reading papers and dictating speeches. He’d catch the muttered jokes that came out of his mouth after reading disastrous news. He saw Churchill’s tears when ordering to open fire on the French naval fleet.

The standing ovations in the House of Commons didn’t win Colville over. The demands, the jokes, the light blue bathrobes did.

I’m not saying to get drunk and tell jokes until 2 A.M.

But it’s easier than ever to appear professional online. It’s harder than ever to make people laugh out loud.

1. From John Colville’s diary. The Splendid And The Vile by Erik Larson↩

If Bush had given his famous bullhorn speech in 2020, I’m not sure I’d have seen it. I’d have likely seen a little clip of the end, when he puts his arm around the fireman and says, “The people who knocked these buildings down will hear all of us soon!” But I doubt I’d have seen it in its entirety.¹

I’ve yet to listen to an entire Trump speech. He gave a 10 minute national address from the Oval Office back in March. I saw maybe 2-3 minutes of it.

It’s hard to tell if this is unique to Trump, or an indictment of our times.

The last time I can remember watching an entire speech was on May 1, 2011, when Obama walked down a long hall in the White House up to a podium and announced that Seals had killed Osama Bin Laden.²

The news had leaked a little before his address. I had been studying for a test in the library. I walked back to my dorm to watch with everyone else. As he spoke, people started streaming into the streets with American flags and Roman candles.

Before the “Captured And Killed” address, I remember watching both Obama and McCain give their convention speeches. I watched Obama’s infamous ’04 DNC speech. And I remember seeing Bush that day at Ground Zero.

But in the last 8 years, I haven’t watched a single speech start to finish.³

Instead, I see shorter clips uploaded to Twitter. If I’m curious, I’ll Google the quotes to try to find the original video. This often takes me to YouTube, where I’ll search for “Trump Speech Rosegarden”, only to be met with a wall of MSNBC and Fox and CNN and TwoGuysNamedDan videos showing the same 10 second clip of Trump followed by 9 minutes of discussion.

Tucker Carlson, Rachel Maddow, and the Twitter Industrial Complex behave like high-frequency traders, front-running news stories with speed and opinion. We the citizenry are retail investors, our leaders are institutional investors, and the news is the black box in the middle. They’re taking advantage of our information asymmetry to tell us, “You got a fair deal! You don’t need to see the whole market to know you got a really good price! We promise :)”

Years ago, I thought Twitter and Instagram meant I’d get to learn more about our leaders and current events. But I don’t see raw bullhorn speeches anymore. Everything is trimmed.

Where can I hear a Senator speak for longer than 15 seconds?

CSPAN, I know. But there’s some self-deception going on. We’re tricked into thinking we’re plugged in to what’s happening. Oh cool, AOC is showing us around her apartment!

The reality is much different. Imagine going to see the Mona Lisa. You get to the Louvre and walk up to the painting. When you get there, the painting is behind a curtain and instead you’re shown a photo of the Mona Lisa, with arrows and circles drawn over the top, directing your attention specifically to her left eye.

I’m finding it increasingly hard to just see the Mona Lisa.

1. ↩

2. ↩

3. I watch lots of old speeches by Clinton, Reagan, Bush, Johnson, and others. But something feels different about these old-school speeches, I’m not sure what.↩

Yesterday on Twitter, Andrew Wilkinson asked why anyone would optimize for something other than personal and family happiness.¹

Leah Culver responded that she at least wants to make an impact and contribute to society. And then, in an Internet rarity, she said “Maybe it’s really good for society to have both viewpoints!”²

Her comment reminds me of something I’ve been thinking about lately: it was good for humans to have both picky and adventurous eaters.

I was a lightly-fried-chicken-tenders, crust-off-my-PB&J, only-cheese-pizza-please picky eater. I marveled at my friends who could pick up whole pickles and bite into them.

Perhaps I’m justifying my childhood. But humans needed people who’d eat those new berries and also people who wouldn’t.

We don’t appreciate how the differences between us are features instead of bugs. We crave to know what’s The Right Thing To Do and what’s The Wrong Thing To Do.

There’s rarely Right or Wrong, though.

Richard Dawkins has run models to find out if philandering is a more successful male mating strategy than being faithful. The steady state always ends up being a mixture of Hugh Hefners and Carl Fredricksens. Usually more Carl Fredricksens, but a mixture.³

Is that good or bad? Wrong question.

Almost every story - whether it’s a “Man In A Hole” story or a “Boy Meets Girl” story or a “Cinderella” story - involves good people facing bad situations who eventually triumph.⁴

Like Liam Neeson fighting and shooting and punching his way through terrorists to get his kidnapped daughter home.

Or Rachel Chu getting rejected by her boyfriend’s family, only to overcome their doubts and marry him in the end.

There’s a clear line separating good from evil, right from wrong, good guy from bad guy.

And then there’s Hamlet.

Hamlet’s father dies. His mother remarries his Uncle. Fine. He goes to see a ghost of his father. Is the ghost real? Who knows. He stages a re-enactment of his father’s murder. The re-enactment flops. As he talks to his mother, he sees curtains blowing in the wind and he accidentally stabs Polonius. Nothing happens. Then he dies in a duel. Is he going to go to heaven or hell? Maybe.⁵

“We are so seldom told the truth. And Hamlet tells us we don’t know enough about life to know what the good news is or bad news is. Thank you Bill.” -Kurt Vonnegut

The truth is “Yes.”

1. It's truly insane to me that people optimize their life for anything but lifestyle/personal/familial happiness.
   
   What else is there?

   — Andrew Wilkinson (@awilkinson) June 15, 2020

   ↩

2. Maybe it’s really good for society to have both viewpoints!

   — Leah Culver (@leahculver) June 16, 2020

   ↩

3. The ‘philanderer’ strategy was postulated, not as the way males behave, but as one of two hypothetical alternatives, the other being the ‘faithful’ strategy. The purpose of this very simple model was to illustrate the kinds of conditions under which philandering might be favoured by natural selection, and the kinds of conditions under which faithfulness might be favoured. There was no presumption that philandering was more likely in males than faithfulness. Indeed, the particular run of the simulation that I published culminated in a mixed male population in which faithfulness slightly predominated (Dawkins 1976a, p. 165, although see Schuster & Sigmund 1981).

   ↩

4. ↩

5. This is a condensed version of Vonnegut’s wording. I haven’t read Hamlet since middle school and I struggle to read Shakespeare. To me, the ambiguity of Vonnegut’s stories are what make Vonnegut brilliant. I like that he feels the same way about Shakespeare.↩

Back in February, I had a routine. My light alarm would turn on. I’d chug some water, put on my shoes, and head outside. There wouldn’t be cars on the road yet. I’d watch the sun rise somewhere around Van Ness. After 2.7 miles, I’d be at Industrious.

The office would be empty. The lights would be off. Nobody was expecting an email from me. No calls on my calendar. No nagging tasks.

I’d pour myself coffee. Sitting by the window with a steaming mug waiting for the world to wake up was the best part of the day.

Since March, we’ve been making French Press every morning. We buy nice beans. We grind them ourselves. We use an electric kettle to hit 212° water.

The coffee doesn’t taste any good.

Perhaps I’m waking up too late. It’s tough knowing New York is getting ready for lunch by the time I fill my mug. Or perhaps I’m checking my email too quickly.

I’ve tried getting out of bed, walking around the block, and then coming in for coffee. It doesn’t help it taste better.

I’ve tried taking the coffee with me on a morning walk. I’ve tried drinking the coffee while wearing a robe. I’ve tried drinking the coffee in jeans. I’ve tried reading while sipping. I’ve tried writing. I’ve tried programming.

I end up staring out the window, my mind jumbled.

I don’t know how to make it taste good again.

Most of my friends growing up had the same hair style: long bangs, swiped across the forehead. The style is often paired with boat shoes, Costa Del Mars, and golf shirts. Brodie Croyle and John Parker Wilson both have vintage “Southern Swoops.”

I have a version of the swoop.

Like the dropping of R’s from “Harvard Yard”, bangs over the forehead give away people’s childhoods. Dressing and talking are identities. Identities grant access to tribes.

The problem with identities is all the maintenance. It’s like trying to trim all the bushes in the Biltmore gardens. Endless.

However far you can run, somebody can run further. However much Vonnegut you’ve read, somebody has read all his books and essays and personal letters. However many fish you have caught, somebody has caught more and has epic stories to tell about all of them.

If somebody sacrifices even more for their kids than you, are you a bad parent? If you take a day off work, are you a bad entrepreneur?

Exhausting. So I swore them off. “I Am Nothing,” I pronounced in the words of Paul Buccheit.¹

I like this viewpoint. Seneca and Marcus Aurelius and Munger teach others how to reduce the surface area of their identities. I am me, nothing more.

But recently I discovered a positive use case for identities.

If you’re standing in front of the fridge and trying to avoid packaged food, ask yourself, “What would a healthy person eat?”

If you’ve got a pile of Amazon boxes and you’re sick of tripping over them, ask yourself, “What would an organized person do?”

James Clear suggests using identity in this way in Atomic Habits. Our human brains try very hard to be consistent. By defining who we want to be, we can drive our behavior.

If we tell ourselves we are studious before deciding how to spend our time, we’re more likely to read Slaughterhouse Five than to binge Schitt’s Creek.

Here goes nothing: I am disciplined.

1. http://paulbuchheit.blogspot.com/2011/08/i-am-nothing.html↩

We moved to SF in October. After 18 months of lugging my Osprey around, I wanted an office to walk into and a coffee shop to meet new friends in.

Industrious is now closed.

Bean Bag is closed.

So much for having an office and meeting new people.

Our one bedroom is $3,400/mo, not including the internet, water, electric, and trash. We aren’t allowed to sublet. It’s a two-month penalty for breaking the lease.

Bottle is remote. Elizabeth is now indefinitely remote. We are mulling three options.

Option 1: Leave. $

We break the lease, suck up two months of rent, visit family and friends, and then move somewhere new in the fall. Maybe we move across the country. Maybe we build an a-frame in Idaho.

Option 2: Wait it out. $$$

Stay in the lease. Visit some family this summer or rent a house for a week or two somewhere just to get out of our little apartment. Recognize that people will be willing to make new friends again, perhaps sooner than we think.

Option 3: Create a hacker house. $$

We break the lease, find a four-bedroom, granite-countertop home in a climate where it cools off at night, convince 4-6 other people to join us, and spend the summer with a tightknit group of people* who want to work during the day and split cooking duties at night.

*Romantically this would be either close friends or people who are also building companies.

I feel like I’ve been late to everything in life.

I was late to learn to talk.

Late to walk.
Late to start kindergarten.
Late to learn phonics.
Late to read Harry Potter.
Late to get an Xbox.
Late to black out.
Late to choose a major.
Late to make real friends.
Late to start programming.
Late to buy a suit.
Late to get a job.*
Late to drink coffee.
Late to open a 401(k).
Late to start writing.
Late to learn design.
Late to get married.*
Late to move to a new city.
Late to thank my parents for everything they’ve done.
Late to start blogging.
Late to start tweeting.
Late late late late late late late.

It’s why I like this quote: “Don’t mistake speed for precocity. The world doesn’t need wrong answers in record time.”¹

*Still pending…

1. Cennydd Boyles, on product management. (Not life)↩