My Take:
Arthur Patterson co-founded Accel in 1983 and has been in the business of reading people – other investors, entrepreneurs, executives – for a living ever since. He made a controversial decision to back my first company 25 years ago and stuck with me through lawsuits, layoffs, recaps, the whole shebang. He’s known for his iron will and zero-fucks attitude. He is not a man given to confusion.
But when we talk about people we know in the valley who have let their success go to their heads, Arthur does something I’ve almost never seen him do. He looks genuinely puzzled. He shakes his head like a man putting the numbers to an equation that just doesn’t make sense.
He said something to me when we were on the cusp of the sale of my second company to Salesforce. “Here’s the thing. The day after your deal closes, everybody says you’re a genius. But the truth is, you’re no smarter or stupider than you were the day before.”
Damn, that’s good.
He’s right, of course. But his insight begs a question: if you’re the same person the day after, where does the self-made-man silicon-valley-genius mythology come from? The self-made story isn’t a character flaw. It’s a bookkeeping error. Somewhere between the day before and the day after, the record of how you actually got there gets deleted, and that deletion is the most expensive mistake you can make, because the record is the only thing that compounds. Last time I called the alternative the asshole bet. This is the case for the other one.
Any entrepreneurial undertaking worth a damn requires an entrepreneur who is on a mission from God to build the company in their head. Someone who sees the whole picture and covers the CEO’s critical Four C’s (fodder for a future post): Conception, Communication, Coordination, and Course Correction. These aren’t regular, everyday people. They’re touched. Monomaniacal. They never relent. They can’t know for certain that the company will work, but they’ll die with their gun in their hand regardless.
What propels them during the dark days and long valleys is a chip on their shoulder. The burning desire to prove the naysayers wrong. Righteous indignation at the fact that everyone is certain they’re bound to fail.
I understand the feeling. I’ve got that chip on my shoulder too.
You spend years being told no – and not politely. I remember one of the many no’s I received from a prominent VC when I was pitching my first company. She could’ve simply said, “Thanks, but I’m not interested.” For reasons that still perplex me, she felt compelled to go the extra distance and say, “Look, this is the worst idea I’ve heard in at least 12 months. You don’t have a chance. I urge you to put it away.” Eight years later, we sold the company to Microsoft.
The critical ingredient is to persist. And, as Arthur likes to say, to eventually enjoy a little luck, if you’re able to take a couple of licks and kicks to the head.
When you persist and finally get at least a little lucky, there’s a number in your account with at least one comma in a place it has never been, and a voice in your head says: I did this. I nailed it. Every single one of you was wrong.
I’ve heard that voice. Anyone who has built something from scratch has heard that voice. It’s not contemptible. It is the motor that makes Silicon Valley roll.
Soviet communism didn’t fail because of errors in a spreadsheet. It failed because it nullified the idea that you personally could show up, provide for your family, feel ownership and engagement with your work in a way that wasn’t owned outright by the state, and maybe even put a dent in the universe.
Obliterate that urge and you’re left with a make-believe economic engine that churns out shoddy products none of their employees care about and no one wants to buy. Agency and connection to your work is the precondition of a working market economy.
Here’s the fly in the ointment.
Extreme outcomes demand extreme justification. The only way to feel you deserve the commas in your bank account is to believe you earned it, and the only way to believe you earned it is to have done it alone.
So the story quietly gets edited. Not maliciously – silently. The VC who stepped up and bridged the company during a perilous time when everyone else on the board was waiting for the comet to crash becomes a faceless investor with no name. The co-founder who carried the water becomes “the team.” Absurd luck becomes vision. The founder comes to believe his own bullshit, and now shows up at cocktail parties in a reality-distortion field.
Hayek already ironed this out.
The delicious part is that the patron saint of this whole ideology wrote the rebuttal seventy years ago, and these guys canonized him without reading it.
The Constitution of Liberty, Chapter 6. Hayek’s claim is that in a free market what you get paid tracks the usefulness of your contribution to other people – and has nothing to do with your moral desert. He notes that readers will find this “strange and even shocking.” He was right. They found it so shocking they skipped it.
If LeBron hits the winning shot and the market pays him outlandishly for it. Good for LeBron. We hardly question it; the market is working. But what about Breaking Bad’s Walter White. As a high school chemistry teacher he was a decent man, barely scraping by and shaping young minds. As a murderer and a drug lord he stood on crates of hundred-dollar bills. The market wasn’t confused, and it wasn’t broken. It was pricing his usefulness to his buyers and their willingness to pay for his product. It had no opinion about Walter’s soul, because prices don’t pertain to souls any more than the idea of fairness pertains to a peach.
Your bank account is a price. It is not the measure of your character.
And Hayek didn’t get lost in translation. He got flattened, on purpose, by his own fan club. Naomi Oreskes and Erik Conway document this in The Big Myth. The actual Road to Serfdom is full of caveats: Hayek explicitly allowed government roles in pollution, deforestation, sanitary working conditions, social insurance. The businessmen who imported him decided all that nuance was too sophisticated for Americans. The 1945 Reader’s Digest condensation cut every caveat and reduced Hayek’s work to the inane summary that “government can do no good.” Then came a comic book handed out in factories and schools. Ronald Reagan met Hayek through the Reader’s Digest version. (His books were much too long for a politician to read.)
That same bumper sticker is what made it to Sand Hill Road. The book never did.
Greedy is an algorithm
Last time I called it the asshole bet, and I motivated it by a term from computer science: the greedy algorithm. It optimizes only for the next step. It never looks at the whole problem. It takes the free pawn and loses the game.
What I didn’t call attention to is the solution applied mathematicians have developed for these kinds of multi-stage optimization problems: Dynamic programming.
You break the journey into subproblems, back-solve for the thing you’re trying to optimize, and — this is the part that matters — you remember the answers. Dynamic programming provably beats greedy on exactly the problems that look like a career: long horizon, repeated decisions, payoffs that arrive late. And it wins for one reason. It keeps the record of what every earlier step cost and what it returned.
Now look at what the megalomaniac’s story actually is. It is the deletion of that record. He hasn’t merely failed to thank people. He has forgotten the whole journey. He is running a long-horizon optimization with no memory of his own subproblems and how they got solved along the way.
AI didn’t cause this. It poured gasoline on it.
I’ve watched this valley through a few booms and I have never seen the self-made delusion this thick. The mechanism isn’t mysterious: money is arriving faster than anyone can build an accurate story about why. When the outcome outruns the explanation, people reach for the cheapest one available, and the cheapest one is always: I’m a fricking genius.
Run the numbers
For every Jobs, there are a thousand who ran the identical play and are now advising, coaching, and posting. Sidelined, calls unreturned, monetizing the story of a thing that happened in 2004. You don’t hear about them, which is precisely the problem: you are estimating your odds from an outrageously biased sample of the ones that survived and won.
So price it honestly. The asshole bet pays out in roughly one branch in a thousand, and in the other 999 you have spent your career making yourself too expensive to work with. The Compounding Bet – the one that recognizes others who were in the boat and rowing furiously beside you – pays in nearly all of them, in the only currency that appreciates over a long career. People take your call. They want to work with you again. Investors recognize you as the guy who made good and didn’t punk out.
Vivek Vaidya has been my co-founder across four companies and more than two decades — Rapt, Krux, super{set}, and now Kana. He is good at the things I’m not, and he has told me I was wrong more times than I can count, always in private and always before it cost us.
I can name the parts of my career that don’t exist without him, and it’s most of them. I’ve never once had to wonder whether he’d pick up.
Arthur is on that list too, which is why I take his head-shaking seriously.
How to roll
Go to the balcony and trace the chain. Not gratitude as a feeling, but as an audit. Who took the meeting they had no reason to take? Who re-upped when the numbers said don’t? Who told you the truth early? There are names. Find them.
Give credit with specifics, in public. “Great team” is noise. A name and what they did is a signal, and everyone who hears it updates their view of you.
Keep the chip. Point it at the work. The chip is fuel. The mistake is aiming it at the ledger instead of the next hard problem.
Run the test. Name three people who materially changed your trajectory. Have you told any of them this year? If the list is empty, the problem isn’t modesty. It’s that your map is wrong.
You can take the asshole bet. It’s a real bet and it occasionally pays. But you’re betting on being the one in a thousand. The downside is a phone that stops ringing for the next twenty years.
Take the compounding bet instead. First, because reality is always the safest place to be. Second, because it’ll make you richer.