san francisco

I moved to San Francisco three years ago.

The closest analogy to living here (I imagine) is working on one of those remote offshore oil rigs in the North Sea. It's mostly men; there's nothing to do outside of work; everyone knows everyone; your employer feeds you; half of America thinks you're evil; and, every so often, a bust comes through and wipes everything out.

But it's the only place on Earth where you can seriously participate in your industry. And, with some luck, you can become rich without starting with much.

I'm being facetious. People regularly die on oil rigs. It's real work, where your compensation is driven by both a skill premium (for knowing how to operate machinery) and a compensating differential (for being stranded in the middle of the ocean).

The strange thing about SF is that while compensation is also driven by a skill premium (for being a great engineer), you don't get paid to live here (quite the opposite) and there's an unknown variable that lands anywhere between zero and one hundred million that you have minimal control over.

I call this last part the "lottery ticket economy" and it is part of my working theory that the gold rush never really ended. 

To be clear, I don't think startup success itself is random. Behind any equity value is a set of people willing a new reality into existence. But how the equity gets distributed is often arbitrary. A ten-thousand-dollar angel check, lobbed into the right company, becomes ten million. The early office manager at a company that IPOs out-earns the PhD who spent a decade doing genuinely hard science at a biotech that didn't. 

I don't think personal financial outcomes are a good measure of individual success. And, the PhD has something the angel investor doesn't: the professional glory of being compensated for your intellect. 

But there is a legibility problem. There are too many companies launched every week. The products are too complex for anyone to evaluate. Why expend the time trying to understand how impressive someone's work is when you can look at a company's valuation, someone's role, and their join date, and intuit how much they've made? Your financial outcome isn't a measure of your success; it's the only part of your success anyone can read.

I believe that this underlying financialization is what makes the city neurotic. It's not envy. It's that every path that isn't the fastest path to wealth is a path to becoming illegible. And the stories of the lucky angel check are pervasive enough that everyone suspects the fastest path is one they're not on.

After I left my job, I went to London and Paris. When I told people in those cities I was unemployed, they congratulated me and shook my hand and (in one instance) invited me to a pub for a celebratory Guinness and fish and chips. When I meet people in SF and tell them that I'm unemployed, they break down. They start stuttering. There is no way to rationalize a life out of work. The next question is always, invariably, "when do you think you'll start your next thing?"

I had the misfortune a few months ago of being invited to a dinner by a good friend at a house in a posh neighborhood. When I arrived, I realized that I had been hoodwinked and that the dinner had been organized by a venture capital firm. Before I could dart out, the door had been locked and each person started going around the table one-by-one and describing what they were currently working on.

The legibility problem doesn't stay at work. Because every interaction you have anywhere is either overtly or subtly professional, and your social relationships can yield access to speculative but high-performing financial assets, everything is networking. You would never hit on someone at work and your cap table is at the bar. Thus, every interaction is due diligence.

Beyond the office and the bar, there is also this strange exercise of going out to coffee with people to meet them and no one is really sure why they are doing it. And the worst part is that no one's getting any dates out of it either. 

The funniest part is that, for how financially centered this city is, people in SF seem conspicuously bad at spending money. (Only slightly better is Miami, where they at least buy a Lamborghini, although it's a Urus and in some unbelievably garish set of colors like pink and green that you can't believe they let off the factory line.)

In contrast, people in LA seem much better at converting money into outcomes. Plastic surgery is pretty good now and everyone is very attractive. If the social fabric of SF is LinkedIn, the connective tissue of LA is Instagram. I once participated in a 45-minute conversation in Venice where three guys tried to figure out who had the least degrees of connection to Tyler the Creator.

When people in SF ask when I'll start my next thing, I've begun saying "soon." Not because it's true, but because it's the only answer that ends the conversation. I aspire to become the most inscrutable man in this city.

the virtues of looking stupid

People understand skill and chance as individual concepts but struggle to reason about games that involve both. 

In chess, we can rank players by ability (Elo) and the higher-ranked players reliably beat the lower-ranked ones. This is skill. On the other end, you have games like roulette, where you can't really be "good" and it wouldn't make sense to rank the best players. This is chance. 

Startups are somewhere in the middle and intuitively closer to poker. There's an extreme amount of short-term variance, but we know who the good players are, and over sufficient timescales they outcompete everyone. This explains why people we think are mediocre sometimes have early success, and why incredibly bright people often struggle to get anything off the ground. 

In other words, the only mechanism of justice is time. Success requires being relentlessly persistent over the course of a few decades. 

The frustrating thing is that it's really hard to learn lessons about persistence by reading books or watching interviews, because it's not something you can glean from outcomes. The most useful thing about working with excellent people is seeing their marginal behavior, instead of just the absolute outcome. 

It turns out that to be well-read, you have to read a lot, and to read a lot, you have to do things at the margin like sitting down with a book on Friday evening instead of doomscrolling. It turns out that to go from being overweight to being lean, you have to cut calories, which translates into marginal behavior like turning down dessert after a nice dinner. And yet, despite the fact that this is all intuitive, we all delude ourselves that there's some way to achieve the absolute outcome we want without these changes in marginal behavior. It's only when we see someone else actively making these tradeoffs over an uncomfortable period of time that we internalize that this is a valid way to live. 

One of the broader trends that worries me is the extent to which younger people feel that success is a product of luck. Short-form slop makes this worse, because the people who are easiest to understand and imitate are the ones whose success looks like a single event. Their marginal behavior is simple to replicate. You can buy the same speculative, loss-generating, Jane-Street-is-on-the-other-side-of-this-bet financial assets they bought. 

What you can't easily replicate is the marginal behavior of someone who has been working on the same problem for eight years with nothing to show for it. One of these is a lottery ticket and the other is persistence. But from the outside, the outcome seems the same, and that confuses people. 

Understanding the marginal behavior of extreme persistence is really difficult. What does it mean to do something for eight years, not succeed, have everyone else label you a failure, and then eventually, in year nine, see incredible traction? What does it feel like at the end of five years or seven years? How do you explain your work at dinner parties when, on a five-year timescale, it seems abundantly clear that you've lost? 

People celebrate the virtues of contrarianism, but the marginal behavior here is looking really stupid for a long time. How comfortable are we with that?