A prosperity index

I just read a thoughtful article by Eric Beinhocker and Nick Hanauer forwarded to me by my friend Rich Barton that makes the case for a new way to look at economic progress. Instead of single-dimension measurements like income and GDP, we need to look at prosperity. 

My parents are both artists, and I grew up poor. In the 1970's I lived for a time on beans and rice, and I saw a doctor every few years. Today, a family on the same income has access to far better food, more effective healthcare, and the kids have supercomputers in their pockets. Now that I’m on the other side of the divide, I often find myself in discussions with people who are so totally focused on an absolute income number in the rich-poor debate, they miss the explosion in prosperity in plain view.

I’m not saying everything is perfect, and we have real issues, but until we’re weaned off over-simple metrics like GDP, we won’t be prioritizing the right things.

Looking at progress through the lens of prosperity, it becomes clear that our #1 world priority must be education. Only education can lead to good choices in what to do with all those new inexpensive calories (the solution for healthcare), awareness of the environmental impact of new technologies and what Rich calls the right “conditions of invention” to continue the march forward. The stakes are higher than ever — I heard recently that the state of Arizona now plans its prison buildout based on the literacy level exiting 2nd grade.

If you can measure it, you can fix it. Let's start by measuring the right thing.

With my pops in our $60 a month 6th floor walk-up apartment. NYC 1971.

With my pops in our $60 a month 6th floor walk-up apartment. NYC 1971.

A 1962 letter to a son heading to space

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I ran across this inspiring letter, which was written over 50 years ago to astronaut Malcolm Scott Carpenter, the second American to orbit the earth, from his father the day before he left and printed in his biography.

I think a lot about what I tell my kids -- like a rocket, a few degrees of adjustment here or there at launch makes a huge difference later.


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More amazing letters from dads, including John Steinbeck and Ronald Reagan here.

"If You Don't Know It's Impossible, It's Easier to Do."

Neil Gaiman gave a brilliant speech with ten pieces of advice for young artists. I found it applicable to business or just about anything in life. 

Some of my biggest successes in business were where I had no clue that what I was trying to do was probably impossible. I just went ahead and did it. Sure it was hard, but it often worked because I was the only one who tried. Gaiman captures this perfectly:

When you start out...you have no idea what you're doing. This is great. People who know what they're doing know the rules, and they know what is possible and what is impossible. You do not. And you should not. The rules on what is possible and impossible...were made by people who had not tested the bounds of the possible by going beyond them. And you can. If you don't know it's impossible, it's easier to do. And because nobody has done it before, they haven't made up rules to stop anyone doing that particular thing again.

In our materialist world, money is seen as the key motivation for people. Steve Jobs dispelled this famously with, "Being the richest man in the cemetery doesn't matter to me... Going to bed at night saying we've done something wonderful... that's what matters to me." Gaiman agrees:

Nothing I did where the only reason for doing it was for the money was ever worth it, except as bitter experience. Usually I didn't end up getting the money, either.

But how do you start out? Before I knew anyone or had any experience, I used to have a 10:1 ratio -- for every ten calls I made, I wouldn't be discouraged if I could just get one person to call me back. Gaiman uses a metaphor of being stranded on a desert island, and every career attempt is like putting a message in a bottle and dropping it in the ocean. You may have to put out hundreds before the bottles start coming back. Eventually, they do.

Soon enough, however, you face the problems of success. When you do finally make it, the world starts coming to you -- the bottles start washing in -- and ironically that can prevent you from doing the things that made you successful in the first place.

The world conspires to stop you from doing the thing that you do because you're successful. There was a day when I realized I had become someone who professionally replied to email, and who wrote as a hobby. I started answering fewer emails and found I was writing much more.

And why you should continue to take big risks:

The things I've done that worked the best were the things I was least certain about, the stories where I was sure they would either work or more likely be the kind of embarrassing failures that people would gather together and discuss until the end of time…. Looking back at them, people explain why they were inevitable successes, and when I was doing them I had no idea. I still don't. And where would be the fun in doing something you knew was going to work?

Exceptional advice for anyone who's ever had success or sought it.

How I named EarthLink

In the fall of 1993, I was sitting in my apartment in Southern California trying to come up with a name for the Internet company I was about to start. I was 22 years old.

I recently came across my original notes from back then, and here's how it happened. I had first scribbled a few suffixes ("link", "soft", "works") and prefixes ("net", "super", etc.), then narrowed it down to some favorites, put them into a grid and called six friends, including my future wife, Arwen. The winner by a slim majority: "EarthLink". That was it.


I'm not sure if I conducted a trademark search, but I went with it. 

Then, in late 1994 after we had launched and we were growing like a rocket, I was notified that the word "EarthLink" was already trademarked and owned by a major US cable TV company. We were facing a disaster. Our lawyers wanted to start writing letters. Instead, I just cold called the cable company's headquarters back East, talked my way to their general counsel and explained our predicament. He thought about it for a few minutes, and in a stroke of enormous generosity, released the name to us, completely and at no charge.

Looking at this nearly two decades later, my conclusions:

  1. The name EarthLink worked well because it was descriptive, but also whimsical and memorable. It made a technological mystery sound approachable. It sounded disarming and helpful, and that perfectly summed up what later made the company successful.
  2. A name doesn't make or break a company. It's an empty vessel you fill with the right strategy and execution. But the vessel can be too small or it could have leaks. EarthLink was a perfect name for a very big, embracing idea: make it easy to connect to the Internet and bring it to the masses.
  3. Years later, I would be involved with start-ups that paid hundreds of thousands of dollars to hire specialized agencies to come up with names. Back then, my net worth was less than a hundred thousand dollars. I just had a pure idea of what I was trying to build, sat down and came up with a name. My biggest successes to date have all gone that route, and I still think it's the best way.
  4. Sometimes big companies seem unfriendly and impenetrable, but they are staffed by people just like you and me. When I called the general counsel of a big cable company, he listened to my honest plea, and he decided to help me. I'm sure saving my life made him feel really good. Sometimes it's better to just take a chance and reach out to the person who can make a difference.
  5. I'm glad I didn't choose "WanSoft"!

EarthLink went on to help millions of people onto the Internet for the first time, and in the process became a Fortune 1000 company.

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Bezos on the long game

From a great interview in Wired by Steven Levy:

Our first shareholder letter, in 1997, was entitled, “It’s all about the long term.” If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow—and we’re very stubborn. We say we’re stubborn on vision and flexible on details.

In some cases, things are inevitable. The hard part is that you don’t know how long it might take, but you know it will happen if you’re patient enough. Ebooks had to happen. Infrastructure web services had to happen. So you can do these things with conviction if you are long-term-oriented and patient.

Pure gold.

Challenging the Mundane

Some of the best business ideas are borne from the dull and boring. A simpler way to take credit card payments: Square. Easier access to town cars: Uber. Sensible dental insurance: Brighter. Notes synched on all computers and devices: Evernote. Renting unused office space: eVenues.

And now, a better thermostat: Nest.

This is what happens when a bright entrepreneur decides not to take an everyday inconvenience for granted. How many ordinary problems do we live with that we'll one day say, "I can't believe we used to..."?

Here's a few off the top of my head:

  • Traffic lights that stay red when there's no crossing cars
  • Logging into social networks and seeing stuff from people we don't care about
  • Alarm clocks that suck; it's the first thing we look when we wake up and last thing we look at before we go to bed, and it's ugly and still thinks it should be programmed like a 1980's VCR
  • No way to tell which water bottle belongs to whom at home, with guests, when playing basketball, etc. (yep, I said mundane), resulting in massive waste globally
  • The hundreds of billions of spent each year to pay people to prepare tax returns, a total waste
  • The 99% of boats that sit in harbors unused 99% of the time
  • The billions spent by advertisers reaching people who are totally outside their target audience
  • Paper money, a model left over from centuries ago

And countless other troubles and inefficiencies small and large that vex and hassle us on a daily basis, and which we assume are just a given. In solving these problems, entrepreneurs will build hugely valuable businesses. For example, Square looks like a simple device to scan a credit card, but it opens the door for small merchants to manage their customer relationships like never before, and Nest seems like a better looking thermostat but could allow consumers and producers of energy unprecedented control over their costs.

The trouble we take for granted today could turn out to be a billion dollar opportunity for the entrepreneur who sees things differently.

Steve Jobs created the most valuable company in the world

I remember the first time I met Steve Jobs like it was yesterday.

It was 1998, and Steve had returned to Apple the previous year. The first Internet gold rush was under way, and EarthLink was signing up the masses who wanted to get on the Internet for the first time. A long time Apple user, I had worked hard to make EarthLink the best ISP for the Mac, and I guess Steve had noticed, because he asked us to come up to Cupertino and meet with him. Steve walked into the conference room in jeans and flip flops and introduced himself. I told him I was an Apple fan boy since forever and asked him to tell us what his strategy was for the company. Steve got up on the white board and drew out his plan, confidently explaining how he was drastically simplifying Apple, cutting it back to four computers: a desktop and laptop each designed for home and business. And then he proposed to to make EarthLink the default ISP for Apple's new home desktop (the iMac) and eventually all Apple products.

As a result of that meeting, EarthLink became the first ISP presented to a new Mac user as soon as they turned on their computer for the first time. Apple later invested $200 million in EarthLink and one of Steve's most dedicated and insightful lieutenants, Phil Schiller, joined our board.

Today, as he steps down as CEO to battle problems with his health, many people are sharing Steve stories. Here's one from me: It was a hot August evening in 1998, and I was living in a little rented house in Toluca Lake, California. The phone rang, and I picked it up. "Hi Sky, it's Steve Jobs." After quickly getting over how he'd gotten my number, I asked him what was up. It turned out that one of EarthLink's PR team had gotten a little overly excited and briefed a reporter on our new partnership in advance of the press release. Steve had gotten wind and politely asked me to reign them in. I told him I really appreciated the heads up, and I'd do that right away. Steve gave me his home number and told me to call him if I ever needed anything. This was a guy who had at least 10,000 employees at the time.

A lot about being a great manager is knowing how much or how little detail to focus on. Howard Schultz has said, "Everything matters," and Steve Jobs certainly embodies that idea. But to me, it's as simple as, whether the outcome is accomplished directly or through your team, a great manager truly cares about everything. Steve truly cares about every detail of the user experience, far more than anyone I've ever seen, and he has an indomitable combination of being unrelenting and right.

Steve's legacy already spans generations. My 9 year old daughter isn't prone to idolize anyone, let alone me or the founder of a computer company. Last night, she asked me if I knew Steve Jobs, and when I nodded my head, she said, "cooooooool."

How I survived the Valentines Day Massacre of 1995

It was early 1995, and EarthLink was in one of its earliest growth periods. We'd just moved from our first 800 square foot office in Los Angeles to a 3,000 foot space down the hall in the same building. Even then, we quickly filled the new office, and people were sitting at desks in the hallway. We were adding subscribers at a rate faster than we could handle, sometimes growing 10% a week, and our systems were straining under the demand. We were barely managing to keep up.

Then, on February 14th, 1995, our main subscriber database — the file that held the usernames and passwords — got totally corrupted, and suddenly, we could no longer authenticate our users when they dialed in. (It was modems in those days, remember.) EarthLink was completely down. Fortunately, we had a back-up tape at the office that was only a few days old. Our engineers went to load the tape and restore our system. We would be back on in an hour, still a horrific outage, but survivable. Then, we discovered that the back-up tape was damaged and totally unreadable. We were dead in the water. If we couldn’t figure out how to get the data off that tape, EarthLink would be out of business, and I would be back to running a coffee house.

I put the word out to everyone I knew for a data recovery expert. An EarthLink customer referred me to a firm in San Diego, and within minutes, the damaged tape was speeding south in a car. We fielded calls from angry customers while waiting anxiously for news. Many hours later, we received word that although some of the data was was lost, most of the information on the tape had been taken off bit-by-bit and reconstructed. We were saved! The recovered file was loaded onto a hard drive and driven (there was no Gobbler back then) back to EarthLink's offices in LA. Our engineers stayed up all night and got us back online.

At EarthLink, February 14th, 1995 became known as the Valentines Day Massacre. We survived, and although our customers were rightfully angry with us, I think they also sensed that this was the early days of the Internet. Stuff didn't "just work" the way it does now. The next day, our modem banks were once again full of happily connected EarthLink customers. And I was back to figuring out out to hire and expand faster to keep up with demand.

Like many start-ups, there times in those early days at EarthLink when we were up against seemingly insurmountable obstacles. But we knew we had something that people wanted, so we kept going, forging ahead despite it all. Being successful, especially in a start-up, is all about perseverance. 

For a future post: How we blew up our building's power transformer and ran EarthLink for two months on a generator in the parking lot.

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Regenerative medicine is on the verge of mainstream

Cytori makes a device that harvests stem cells and other regenerative factors from one's own adipose (fat) tissue. The resulting concentrated mix of adipose-derived regenerative cells (ADRC's) can then be injected back into the body with all kinds of benefits, from breast augmentation and reconstruction, to treatment of heart disease.

After doing a ton of research over the past two years, Cytori became my first and only investment in the medical field. Congrats to the team on the huge cover story in the November issue of Wired.

And we're all thankful that when Wired put me on the cover many years ago, they didn't ask me to take my shirt off.