So being willing to make those calls, being willing to back people when they make those calls, being willing to back people up and down the organization and when they say, “Hey I’m not an original gangster Stripe, I just joined two weeks ago and my role is not one that would normally have decision-making authority with respect to X. I’m actually, I do user operations which is a support oriented rolled Stripe, but I’ve got some thoughts with respect to this artifact.” And saying like, “Yes, we will listen to those thoughts because when we gave you an employee badge we were buying access to your brain cycles and we had we like those brain cycles,” and making sure that you increasingly get signal from the people that have been good at doing that over like previous iterations of the game, formally or informally.
David: What is it about, Stripe really talks about its writing first culture and I think that you show it sort of, a lot of the things that we do for marketing is presented as for outsiders but in actuality it’s also for insiders, and with Stripe Press, a lot of what Stripe Press is with the art of doing science and engineering, and Nadia Iqpal’s new book, and Revolt to the Public, one of my favorite books of all time actually, a lot of what Stripe is trying to do I think is raise the bar of thinking both within Stripe and then extending out to Silicon Valley, and then hopefully for the world. What is it about Stripe’s commitment to writing and what do you think the genesis of that is? What does writing so regularly do for a company?
Patrick: So I’ll make one observation which is that we have a lot of words that are available on the Internet via Stripe Press, via Stripe Increment, via the Atlas guides, Stripe Blog et cetera, et cetera. And that if you were to just do, just by word count, and just by word count of long documents, I think that upwards of 99% of Stripe word count would be internal rather than external. So granted, we have plus or minus 3,000 people working at the company, but the company’s total available corpus is massive. What does that do for us? So for obvious reasons, I can’t disclose things like the Stripe growth rate in terms of either business or in terms of headcount, just the way that typically describe by the number of people working at a company.
But say, hypothetically speaking, a lot of businesses go, well, some businesses on the venture trajectory go through a hyper growth phase, and a company in a hyper growth phase might be growing at, they’re doubling their number of employees every year. And this has some implications which are not broadly appreciated. One, is that if you joined in 2016, a company that it’s growing at 2X per year, the day you join half of your colleagues will have less than one year of tenure at the company. One year later, in 2017, half your colleagues will have less than one year of tenure at the company. One year later, in 2018, half of your colleagues will have one less than one year of tenure at the company. Continues for the duration that you’re on that hyper dressed curve.
And so, given that your corporate existence is constantly largely weighted to people who do not have the context of having been there for a number of years, we’re still getting spun up as members of the company. But while they are spun up, you can’t do work if half of your people can’t do work. So while you are imbibing the company culture and getting acclimated to how stuff is done, you’re producing that culture at the same time. You need to have force multiplier on the sort of democracy of the dead, that’s the traditional way to describe history outside of companies hopefully most of your prior employees won’t have died yet, be that as it may. Reproducing the culture and amplifying the culture of people who were there before who might be numerically, if you just go by the numbers, the people who have four plus years of tenure, that will be a very small portion of your employee basis if you’re doubling every year. But the impact that they can have by producing highly leveraged artifacts extends for years, decades, et cetera, et cetera, particularly when it changes the set point of the company culture and helps people build off of that set point in the future.
David: That works. Well I like the democracy that that idea… That that is what writing is doing, it is saying, from all these people who have been there before, as the company grows, you can still get their ideas. Actually you could almost use a Bitcoin metaphor, that they are on the chain and they’re there sort of permanently over time even as you begin to add to the ledger over time. I want to shift into talking about software companies. I think that one of the ideas that I’m just ecstatically excited about is building an online audience, writing online, then through that, actually validating demand and meeting people who could be future co-workers or future customers, future investors for your company and through that actually launching small software businesses.
One of the things I want to do with my career is basically take hundreds of people through this path. I have the writing online path now, then end up having a place where people can grow their audiences together and then basically create some kind of Y Combinator for bootstrap software businesses. That’s the path that I’m on and so my question to you is, what have you seen in terms of validating these small software businesses and then the go to market strategy, should we go to market once we have 100 email newsletters, 5,000 email newsletters, or is that not the parameter that we should be thinking about this at all?
Patrick: So scoping it to B2B SaaS companies for the moment because B2B SaaS is the kind of software that I know the best. As time goes to infinity, every B2B SaaS company will say, “Thump head, we should have a content marketing engine and every content marketing engine will eventually publish a book, either like an actual book book or something which is morally equivalent to a book based on word count, degree of intellectual depth, et cetera, et cetera. And the thing that I would suggest most people do is to pull the content marketing forward and sort of write the book before writing the software, if that makes sense? And why? One, when you think it’s like the production functions of books first to suffer, it is… Doesn’t have to be a book book, can be an e-book blog et cetera, et cetera, but broadly re-sequenced the usual sequence of deliverables.
If you are going to start a software company you’re pot committed into doing it eventually anyhow. If you do it earlier, it’s quicker to get up and running on the internet and quicker to get something worthy of the attention of others that have been running on the internet. So you get to start the clock on things like Google giving your domain some authority, you get to start to clock on things like social application via social media and attracting people to your banner, on getting newsletter subscribers, et cetera, et cetera, earlier, and those things tend to compound over time, both time that, there’s the distinction between wall clock time the amount of time that you were sitting at your desk periodically looking at the clock and doing the work and calendar time, just some things like Google Authority take just a while to bake, regardless of whether you’re physically hands on keyboard during it.
And if you sequence those activities earlier you get to have more opportunities to go through the learning loop, more opportunities for value to compound over a longer period of time versus sequencing them later. If you spend nine months in the code cave building out version 1.0 of your software and then launch to nobody, that’s nine months where you could have had developed a newsletter with thousands of people subscribing to it and then nine months after that, with relatively little additional work done on the newsletter, had people ready to buy everything on the first day. So that is the first thing I would suggest is rethink the mindset of becoming a software person who writes and think more about becoming the expert and then writing the software that sort of encodes your expertise in the software product. I think that really writing deeply about how you understand whatever your problem domain is will make your software product decisions better and I think that a company that brings us into sharp relief is base camp, and base camp to products as well, but if you look at their… Jason Fried recently did a 30 minute video of just taking you through product decisions for Hey, which is this new upstart email client and there’s a fascinating, fascinating document just done great product thinking.
And a lot of that is great thinking of the job to be done of email and how people use email in terms of workflows and what situations that fits into in their life. And a lot of people, if they just start from a software perspective of, “Okay I need to write a workflow engine for throwing my own products under the bus, and appointment management for dental offices,” it’s like, “Okay, well I’m going to need to have some way to create customers for this and some way to like create appointments and I’ll need some counter greater than yada, yada, yada.” If I were to re-sequence the order of operations in that company and say, “Okay, first I’m going to thoroughly dive into the challenges that dental offices have with regards to appointment management and what that does in their business, and that would cause me to think much more deeply on what is the sociology around changing an appointment time, what are the sort of events that cause customers to cancel, how do you get ahead of those events, and how do dentists get appointments in the first place,” was something I had no understanding of when the first day that appointment reminder open for business, which would have been a useful thing to know.
And so building a software that you’ve put in your brain push-ups and have a serious mind of how the user will use it will tend to create better software and also give you more of marketing assets to start marketing and selling the software on day one. So some of the things that I was just on folks that are going from that transition from writing about something to building a software product demonstrates that instantiates it. I also say the level of work you have to do to create the minimum viable saleable software product is relatively high relative to the level of work that you need to do to create the minimum valuable sellable word product. And interviews with the industry experts become a totally sellable ebook in, under weeks of work, it would be extremely difficult to have a modern SaaS app that was baked enough for production use within weeks of work. And yet, you can get people to pay you $50 for interviews or for any book that describes your method or any of a number of other artifacts that are primarily writing and that both the money, money is a nice thing to have, it allows you to buy things that are useful in accelerate the business.
Also rent, a cool thing, and it also trains people to pay you money with regards to the subject that you have. So the second time you ask them for much more money you’re not getting them over the penny gap again, it’s like, “Well, I paid this person $50 for an e-book or should I read about the subject, they seem to know what they’re talking about in that e-book, now I will do the additional work of no pushing them through the whatever the process is at my company if we’re green lighting a new software product,” first it’s like, “Ah, do I really want to have a discussion with security team and getting this approved, is that worth my time, I do want to put this software trial through its paces, et cetera, et cetera? You’re sort of pre-answering sales objections via producing written artifacts they can actually buy versus going directly into selling them a software based artifact.
David: What is, you had a thread about zero down a couple months ago, what is a small software business that you admire? And talk about how they use online writing and content to actually grow and validate the business? It’d be really interesting to get an example of some of the things that you’re saying, and it’d be even better if it’s a company that we haven’t heard of because I think that that proves the point well that, you like to say that the amount of money that’s flowing through capitalism would astound you. And I think that the reason why I love that is, it’s so the inverse of how a lot of us grow up, oh, there are six main jobs that you’re gonna go into it could be investment banking, management consulting, accounting, yada, yada, yada. But I think that what I’ve taken from you quite a bit is actually the number of options available to you is way bigger than you think, and give us an example of what you mean by that?
Patrick: So somebody, who is not me, coined … Mark McGranaghan again is a colleague of mine at Stripe, but he’s left to other adventures, coined Patio11’s Law, which is funny, no endorsement implied, but I think he’s probably right on this, said that, “The number of software businesses in the world is larger than you think, even after you’ve taken into effect Patio11’s Law, taken into account Patio11’s Law. And so there’s tens of thousands of extremely healthy software/SaaS businesses which you’ve never heard of, in which most people will never hear of. And the business will be born, it will successfully satisfy customers, it will grow for years, it will get sold, and at no point will it ever be legible to someone who is not a customer or employee of it. And Stripe has sort of a privileged vantage points on this, some people who are investors or business brokers have privileged vantage points on this.
I’ve been obsessed with this topic for many, many years just like, take this from faith, that when you think of legible examples, even legible examples from yours truly, of somebody who has a firm that has done the writing to bootstrap a business thing and done well by doing that. The best informed person that could tell you about examples like that is only scratching the surface of how many people who have used that tactic successfully. That said, Basecamp is often thrown out as an example here and I think far too many people say well you know Basecamp is internet famous and so that isn’t a replicable strategy, but Basecamp is internet famous because they like had no blog then they had a blog, and they continued writing for that blog for a while and internet famous is just the past tense of wrote a blog for 10 years.
Convertkit is another example. Convertkit is a company by Nathan Berry which does email marketing for writers. I think they have different definitions of writers, but I would probably say writers, creators et cetera, et cetera, and that was an outgrowth of Nathan’s own efforts doing… He wrote a series of e-books for the design community, e-books and other information oriented products for the design community. And then he wrote one book about the business of doing training products called, Authority, and said that the marketing and sales engine behind training products tends to be heavily email oriented and so Authority talked a lot about its tactical use of email and then he was like. “Uh-huh, I should really like build the email service that would exist if somebody was making email service specifically for people that were following this playbook that I just wrote,” and so that eventually became Convertkit, and Convertkit is doing fabulously well.
And yet, Convertkit is in some quarters internet-famous, there are companies that are less internet-famous. I’ll throw out an example, Moraware it makes essentially an ERP for kitchen countertop installers which is a section of the US economy, and if you’ve never installed a new countertop in your kitchen you might be underestimating price points but suffice it to say that a lot of money happens in middle class homes around kitchen remodeling, who knew? And so there is a large heavily distributed industry of mostly mom and pop businesses that have some extremely difficult planning and resource management questions around, if you don’t buy the right amount of granite at the store and it is not cut into the right amount of shapes you’re going to get to the kitchen and be extremely sad because physics and math will impose upon you the impossibility of delivering the kitchen table you have contracted to deliver and so shouldn’t you use more software than you have previously.
And so Moraware is that software and they do quite well for themselves, and for anything that you can think of that is… I don’t think that kitchen countertop installation is like the platonic minima of the size of business that you need to be to support a software business. There are multiple competing viable software businesses in like cemetery management. Not funeral management, that’s an entirely separate industry, just laying out cemeteries and ensuring that that somebody can manage the sales process for them, the maintenance process for them, et cetera, et cetera, and throw a dart at the dart board of the economy. If it hits a business it has a W-2 employee in it, that business will, at scale, consume billions of dollars to software. And there are many, many, many fractal ecosystems upon ecosystems of companies that are selling into these businesses. And so it is a wonderful, wonderful time to be alive and software.
David: That’s a wonderful answer thank you. You’ve lived in Japan for a long time now, what is the number one thing that you would like to export from Japanese culture in terms of tacit knowledge of what we can learn from, whether it’s Japanese craftsmanship, engineering, culture, elegance, music, what is it?
Patrick: Whoo, it’s a very complicated question. I’ll say as the person with the East Asian Studies degree, I’ll have to give the disclaimer that there is no one Japanese culture any more than there is one American culture, and that the degree of homogeneity of Japan’s culture is largely overstated. That said, there it’s also not the case that there is no such thing as an American culture. So some broad themes. A thing that exists in pockets in the United States and exists at more than pockets in Japan is a level of earnestness and optimism with respect to one’s work. I think there is broadly a healthy attitude for a society to have and one that I wish we’ve replicated more broadly. And I think Silicon Valley gets close to this in a lot of places although the sort of learned cynicism of the US educated classes has started to infect Silicon Valley in some ways.
But I’ll give you an anecdote, not that the anecdote is so representative of the whole, but I once met a man at a mall in Ogaki, Ogaki being the town that I lived in. And he was there at a crafts fair in the mall and his craft was sharpening scissors. Not making scissors, that’s a different company, he was just the scissor sharpening guy. and he had spent 40 years of his life getting darn good at sharpening scissors. And he talked to me for 45 minutes about the craft of sharpening scissors, his argument for why no household should have less than three pairs of scissors because you can keep scissors in like different states of sharpening and it’s clearly you would never use a fabric scissors on paper, well you wouldn’t want a sharp cuts, I’m not using the right words, but you would want one pair of scissors for sharp cuts on paper and one pair of scissors for more rough cuts on paper. Clearly you would not use these two things in the wrong place, why would you do that?
And just the level of passion he had about sharpening scissors defeats the level of passion most people have, not just for most things, but probably for anything. And a culture that has created a space where someone can say, without a trace of irony, I have devoted my career to being the best possible sharpener of scissors, is doing something right. And not ironic embrace of just loving what you do is that feels like a free lunch that the US and various other places could import from Japan, and there are many cultural socio-political et cetera, et cetera reasons why when someone says, I non ironically love what I do for a living, why sophisticated people in positions of authority would say. “Oh that’s just what capitalists want you to believe.”
But loving what you do is super power, both with respect to increasing your ability to do what you do well, and also get results out of what you want to do well, get better at what you want to do well, and just being happier with life such that all else being equal, choose to loves it the thing that you do, that is a choice available to you. Which interestingly is not the same advice as choose to do what you love. I think the advice choose to do what you love is generally bad advice because that will cost more people to want to be like professional World of Warcraft players and the market demand for World of Warcraft players is like lower relative to the market demand for whatever that my job title is right now. And so all else being equal I’m happy that I sell software for living and don’t play World of Warcraft for a living.
David: So talk about that. So within selling software for a living, I don’t imagine that when you were five years old, and maybe you went off to your first day of kindergarten, that when somebody asked what you wanted to do and all your friends said I want be a baseball player, I want to be a ballerina, I want to be a firefighter, I can’t imagine that you said I want to tell and be the foremost world expert on how to sell niche subscription as a software service, software products. How did that love evolve from being a kid to then now developing a love for the craft and the dedication that you bring to your writing, into your work at Stripe?
Patrick: So I would have been a singularly interestingly calibrated five-year-old to say I want to be a niche software sales expert. I was an interestingly calibrated five-year-old, my actual answer was I wanted to be the Commissioner of weights and measures. But yeah choosing the road less traveled since 1987. So I sort of, not to make this too much of the tell stories from years past hour, but I fell backwards since the thing that I’m doing right now. The sort of like continuing to travel up that gradient of what did we find yourself doing, find the parts of it that you like and double down more on those parts that you like, and the parts that are in that fun intersection of the things that you like, things you’re good at things that people want from you, and the things that the world is willing to pay for. But continue to travel up that gradient has worked reasonably well for me over the years.
There is, as someone who is in a career situation for plus or minus six years, where I was not enjoying what I was doing and I was sort of intellectually aware on any given Monday morning I’m going to do something that I affirmatively disliked today. And that’s kind of on me because I could make a choice to not do this, or not have to do this for next Monday morning, but I avoided making that choice for again six years of my life. And life’s too short. I make obvious improvements perhaps earlier than then I did, and if not next Monday’s new day, if you’re if you’re not loving what you’re doing right now either figure out the parts of what you’re doing right now that you can love or I figure out ways to alter your situation such that you can be doing things that you enjoy more or that you can make yourself enjoy more.
I think people underestimate the ability that they have to change and particularly to change the way that they look about things and one of the interesting parts about the Stripe cultures is Stripe hires for people who are ambitious and Stripe hires for people who are optimists and being around a lot of ambitious optimist tends to make you both more ambitious and we’re optimistic, and one would think that one’s level of resting state level of optimism, resting states level of ambition is relatively constant over the course of your life. And having 15 plus years of experience on this side, I would say, “Actually no, I think one is surprisingly able just to become more ambitious or to just say starting now I think I’m going to be more ambitious than it was previously,” and so the Silicon Valley rational set would say like self modify, recompile your own code to be more X, recompile your own code to like what you do more is an option available and solution sets and perhaps you should do that.And if you find yourself doing something that it’s like, “No, I’m just fundamentally incompatible of the thing that I do for work is not something that I will ever love, and consider changing that.
David: Last question. You once said, and I think this ties everything that we’ve discussed together, and I’ve taken this to heart that the amount out of luck that you have in life is how much value you create, times how many people you tell about it. Why don’t you wrap this conversation up in a bow-tie by explaining what you mean by that?
Patrick: Let me give a shout out to the Texting Podcast which first articulated the idea to me and their idea, their framing for it, was the luck surface area. By the way, Texting made their own luck by putting a name on that piece of advice and then by getting into my ears such that I just told you about the Texting Podcast and like 99% of you have probably not heard about it. Observation out of the way. It is too easy to hide your lamp under a bushel, or whatever the cliche is, to think that you know I’m just going to do the best work possible and I will naturally be rewarded for that. And the world is not set up to reward people just for doing great work. There’s an incentive structure around you, there are decision makers around that who will largely not be apprised of the value you’re creating unless you make it your mission to also apprise them of the value of that.
At the same time, being a professional social-media influencer in the topic of influencing people seems to be like a way to under create value versus actually doing something which produces value for the world and then promoting the fact of that value creation versus just promoting the fact of promotion. Unless you’re a PR professional, I don’t know. And so you sort of have to balance both ends of this and you also have to kind of, this is another thing where you recalibrate your own understanding and I am a very modest person, I was raised in an environment where one is heavily discouraged from tooting once on horn et cetera, et cetera. I think I’ve talked to a lot of people from various personal and professional backgrounds where that’s best case and I come from a community where “self-promotion” is heavily discouraged.
Self-promotion is kind of like self cooking, if you don’t do it and you don’t pay somebody to do it, and you are at family with somebody who’s going to do it for you then you’re gonna go hungry. So I understand that you probably need to consider that to be one of your professional skills that you probably need to get good at doing it. And there’s good ways to do it there’s less good ways to do it but that’s something which is ultimately going to fall on you. And similarly like you’re going to probably if you are employed by someone you’re going to need to own your own career advancement versus expecting management to decide based on your contributions et cetera, that you are ready for that next step.
David: Okay. Hopefully they will be doing that too but have a written record available which is ready to show them the great value that you’ve created, have actually produced that great value and be advancing that conversation forward periodically. So yeah, I probably take ownership over your own outcomes over the various different facets of creating the value that you’ll create in the world optimized for creating more value and optimized for doing it over a very long arc of your career and things will. Knock on wood, tend to work out for you. Patrick McKenzie that was fantastic, thank you very much, that was just a wealth of incredible knowledge, it’s always a treat to chat with you.
Patrick: Thanks very much for having me and if I can ever help anybody on anything my email address is patrick@kalzumeus K-A-L-Z-U-M-E-U-S .com. I started using Hey, the new email thing recently so if you email patio11@hey.com Hey, H-E-Y.com, that’ll reach me. I always love getting email from folks so hit me up.
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