Patrick Mathieson: Venture Capital

“I was a golf caddy in the summers back in Illinois, and one day this guy came in. He was a start-up CEO.  The next day I gave him a call and told him I would get to California.”

Patrick Mathieson is a venture capitalist at Toba Capital. He writes about technology, companies, investing, and many other things.

There is no one direct route to becoming a venture capitalist. Patrick told me about his mindset for leaving a job at Dell to join Toba Capital. “I wasn’t thinking about compensation in terms of dollars. I was thinking, this guy is a mentor. When I follow this guy, good things happen. I spent a lot more time thinking about how much time I would get with him, and with executives.”

He wore several hats at Dell. As in that position, his current role is fluid, varietal, and based largely in communication. “I probably meet five new people a day at this job,” which is a big perk. “You have a pretense to be talking to people–a wider breadth than you would otherwise.”

“It leads to a lot of interesting conversations, which add on to one another.”

Investors sometimes talk about too many of their interactions feeling subtly transactional when people they talk to–even on a casual basis–are looking for money. Patrick has not had much trouble with this. “When I meet people and they have business ideas, if you take the approach of ‘that’s cool, tell me about it’, it doesn’t set the expectation that you are doing deals constantly.”

The popular image of the venture capitalist is something like the investors on Shark Tank: wealthy people who sit in front of an endless stream of enterpreneurs seeking money. But much of the trench work sounded more like the job of a researcher or reporter. “You try to cram as much emails and reading and conversations into your day as possible and hope you are going in the right direction…the whole thing isn’t a loose operation, but much of it is very unstructured.”

Patrick cited Quora as a crucial tool for improving his workflow. “Quora is one of the best things, one of the most exciting things that’s happening to my career. It’s feeding the things that I do at Toba Capital, and the things I do at Toba are going back into my writing.”

Venture capital is an investment vehicle that I don’t understand very well. I wanted to know some important metrics to measure success–is volume of deal flow meaningful? “I think a more important metric is what are the transactions we are doing. Over time, what deals got done? How many of them did you touch? The deal flow is a little imperfect, what is less imperfect is what deals actually got done.”

He highlighted a focus on communication and connection moreso than any particular tricks or tactics. “I think if you ask me that in a year, I would have better tactics and tricks. But right now, if I have any trick it’s just answering and giving people feedback when I can…I just try to respond to everything.”

I asked Patrick about the shift in investment dollars from consumer internet to enterprise. He gave a good reason for why there is such an opportunity for new enterprise software. “Everything partakes in the API economy now, which makes it easier to swap out old stuff. This makes it incumbent on people to keep making good software.” There is less lock-in.

In reflecting on his time at school, he said “I’m generally skeptical of anybody that’s following a path that seems to be safe. When I was at Michigan, quite a few of my classmates wanted to go to Wall Street and become an investment banker. And on the West Coast I guess the equivalent is you go to Google. I’m kinda bearish on both of these. It implies that these plans are worth anything. People underestimate how much breadth and creativity they can have.”

To conclude, I asked him for a broadly applicable piece of wisdom.

“Something I have had on my mind lately is process-oriented goals. If you base your goals on outcomes, you are setting yourself up for failure. You can’t control the outcomes, you can only control the inputs. How this applies to Quora is, all you can control is writing answers–you can’t control how they are received. The more answers I write, the more people are reading them. I try not to get hung up on the outcome.”

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Thomas Cormen: Algorithms and Academia

“Computer Science is not really about computers. It’s about how we solve problems through computing and through computation.”

Thomas Cormen is a Professor of Computer Science at Dartmouth College. He wrote the textbook “Introduction to Algorithms” with Charles Leiserson, Ronald Rivest, and Clifford Stein, and it is one of the default manuals for learning about algorithms.

With the growing scope of Computer Science, Dartmouth has been hiring lecturers into niche areas. I asked if the faculty responded to this by narrowing the definition of Computer Science.

“Actually it’s the opposite. We have been broadening what the field of Computer Science is. One of the things we find is that Computer Science is in almost any field.”

From Digital Arts to Machine Learning, Computer Science is being deployed to solve all sorts of problems–both theoretical and practical.

“If you are really looking for a major impact, it’s gotta go through industry,” Professor Cormen said. “People who have really good ideas in academia will often commercialize them themselves. ”

When I asked how about the state of academic publication , he expressed concern at the growing rate of low-quality material that floods academia in response to broadly defined Computer Science conferences.

“With the proliferation of conferences out there, a lot of really sub par papers are getting published, and I think that drags down the field quite a bit.”

I attempted to wade into Professor Cormen’s deeper intellectual waters by challenging an answer to a Quora question he had given. In comparing the past strategy of computer programming to the present, he asserted:

“Then there’s today.  Students have their own computers, which is a good thing, but the computer helps them maybe too much.  Interactive development environments tell them their syntactic and even some semantic errors as they’re entering their code.  Runs are free.  No need to understand your program; just randomly morph it until it works.  And then, once it works, you don’t know why it worked.”

To me, this seemed like an unfair criticism of modern engineering. Our most pressing engineering problems today all boil down to NP-complete problems.  My objection to Professor Cormen is based on the idea that an engineer submitting answers to his compiler is no different than a Turing machine submitting problems to an oracle machine.

The Turing machine is not ashamed to invoke dynamic programming and present all sorts of potential solutions to an oracle. A student with thousands of lines of code should not be ashamed to alter his code  until it executes.

“What we do for NP-complete problems is we have approximation algorithms. There, we can prove properties. The running time is related to the quality of the approximation in an inverse relationship. You don’t typically just send things to an oracle–the oracle doesn’t really guide your search.”

But, I argued, the oracle in this case is the compiler. It tells you what line of code your program failed on.

“I don’t see that as related to NP-completeness in any way,” he responded.

I took this as a sign that there is some fundamental problem with my whole compiler-as-an-oracle proposition and moved onto the next question.

Is there a friction between the world of academia and the world of engineering, which does not prove its solutions mathematically?

“Not as much any more. We’ve kind of given up on proving programs correct. We might try to prove algorithms correct, but an algorithm is different from a program. A program is an embodiment of an algorithm in a particular language. [For proving algorithms,] we are trying to explain the essence of a solution without getting mired in the details.”

Last year, Leslie Lamport told me in an interview that he was working with TLA+ to assure that some industry code was thoroughly correct. Thinking back to that, I wondered about other ways to prove higher-level structures as correct. For example, if you can write a proof for each of the algorithms within Quora, can you extrapolate that to being able to prove that Quora does what it claims it does?

“I don’t think it does. If there are algorithms behind Quora, you don’t know whether Quora is a faithful implementation of those algorithms and you don’t know whether Quora is handling all the other conditions that can be happening…memory leaks, user error, or overflow.”

But if you prove that all of the underlying algorithms of Quora fit the spec of what they are designed to do, can you pull out a proof of something that is composed of those algorithms?

“I suppose you can. You have to show that all of the pieces fit together. There’s also a couple of other factors–even if you have the Quora code and you could show that the Quora code does what it’s supposed to do, the Quora code is probably run through a compiler or interpreter, which have to do the right thing, and it’s running on hardware, and the hardware has to do the right thing. So there are lots of opportunities for error that can pop up, even if your source code is proven correct.”

As Professor Cormen said, the standards of rigor at the algorithmic level of abstraction are higher than at the programmatic level. So how can a programmer be sure that his code is correct?

“Often it is done statistically. You look at statistics and you have an idea of what is considered a good rate of having a right answer.” There are some problems where there is just no right answer, but you do still have criteria for what a right answer is.

Though Professor Cormen is not a hardware expert, he explored some obstacles to the continued march of Moore’s Law.

“Power is becoming a gating factor. Why did Google put their data farm on the Colombia River? Because they can use that to cool it.”

“Ultimately we have all these transistors and we need to power them. No matter what we are going to hit some limits and at some point we are probably going to be needing to be thinking about a completely different technology of devices. If we look 100 years from now, it might be a completely different technology, just as 100 years ago we were looking at mechanical computing devices rather than electronic ones.”

This segued into a short discussion of futurism. I asked what he thought of the Ray Kurzweil approach: speculate to the furthest possible degree in hopes that the speculation becomes a self-fulfilling prophecy.

“To some degree it gives people something to shoot for and think about. I grew up thinking about Star Trek, and it’s a wonderful thing to try to shoot for. These things aren’t necessarily rooted in reality in any way; Kurzweil makes predictions, and some of them will come true and some of them will not.”

To conclude, I asked what kept him from stepping from academia into industry.

“There’s one thing that keeps me in academia and that’s the students. I really wanted to teach. To me, the important thing was to be able to work with students. It turns out I like it even more than I thought I would.”

“I really like taking students who are taking an introductory Computer Science course for who knows what kinda reason, and getting them excited and interested in Computer Science and what I really love is when there is a student who is not planning to study Computer Science, and they take a course from me and they end up studying Computer Science.”

“The advice I give to teachers is to be yourself. Don’t be your teachers, be yourself. Let your personality come through. Don’t be anyone else.”

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Marie Stein: Adventures in Finance

Marie Stein

Marie Stein has worked as a risk manager, banking executive, attorney, mediator, securities analyst, and ice-cream scooper. She came onto The Quoracast to talk about her life and career.

Most recently she has been working with Kiva, a non-profit organization with a mission to connect people through lending to alleviate poverty.

“They leverage the internet and a worldwide network of microfinance institutions to let individuals lend money to other individuals throughout the world. They lend from everything to retail shops in Colombia to pig farms in Kyrgyzstan.”

“Kiva has built this online platform where you as a lender can go online and select a country, or type of initiative that you want to be involved in, and give money to support that. And the borrowers receive the funds and apply it to build their business.”

As a Kiva Microfinance Fellow, she was “Kiva’s eyes and boots on the ground.”

Marie has a varietal background in corporate finance. She says this experience was relevant to her work at Kiva, but not directly applicable. “In a sense this microfinance experience was narrowing it down, and bringing it to the most granular level.”

After spending many years in finance, she has a catalog of experiences and memories to draw on. “There are a lot of characters in finance, especially when you are dealing with a lot of money.”

How does someone who has spent so much time studying financial instruments assess the personal tradeoff of time versus money?

“There is a real risk that we think of having enough cash as the primary unit of measure for everything else in life. You can’t really balance time and money because they are not at all the same thing. It’s not OK to say your time is worth this and my time is worth that–you can use money as a proxy for time only in very limited ways. But the primary element of our life is not time or money, but our relationships.”

But what is the action to take in response to that philosophy? Does that mean that we should not focus as much on our career, and specifically focus on relationships?

“You make relationships in the context of your career too. It’s relationship-building, with any career. To be successful in the financial world, it’s  about building relationships.”

Her time on Quora is spent writing about a wide range of topics, including many outside of finance–life, movies, human behavior, and relationships.

“I’ve learned a lot from Quora. There is not necessarily a right or wrong answer to any question. Everyone has a unique spin to the story, which is where the value is.”

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Dutch Boyd: Poker Tilt

“When poker is portrayed on television, it’s given this glamorous gloss. We are expected to believe that every bracelet winner is living high…most of them are struggling just to keep the lights on.”

Dutch Boyd is a poker player and author of Poker Tilt, an autobiography of his experiences as a poker player, a founder of an online poker site, and his issues with drugs and mental illness.

It’s one of the most transparent accounts of professional poker.

“There is that upper tier of the pyramid, where you do have guys with seven-figure bankrolls. But for the most part, any poker player who has gotten rich has done it through some sort of business or investment.”

Why does he stay with the game, despite recognizing the severely negative side of it?

“I ask myself that same question every time I have a losing session. One of the main reasons I stick with it is because I’m really good at. I also have a lot of hope for poker…it has the potential to become this positive-sum game.”

It is difficult to leave an occupation that guarantees fame.

“Your identity gets wrapped up into poker. I’m at the point where I can walk into any cardroom in the world, and people will say ‘What’s up Dutch?’ When your identity is wrapped up in it, you get to a point where you can’t leave…it’s nice to be really good at something.”

Dutch was closely featured in the 2003 and 2004 World Series of Poker. I asked Dutch to describe the poker scene around that time, including “The Crew”, a young group of players that found success around that time.

“Back then, poker was very much an old man sport. It was smoky, and kinda greasy, and the big game was a $20/$40 limit game, and that was just huge…we built this thing called The Crew…in 2004 we did pretty well at the World Series…it was a big deal, and ESPN featured us, saying ‘this is the new type of poker player’.”

Is the stigma against gambling overblown? Would society be better off if we didn’t have that stigma?

“I don’t know the answer to that. There are a lot of good things that come from playing poker. Money is not an end in itself–you see money as a tool, and hours as a resource…but losing money hurts. And it can turn people ugly, and you see people making pretty poor decisions. There wouldn’t be as many of those stories if not for gambling.”

Why is the World Series of Poker so important? What is the motivation behind wanting to win so badly?

“There are some things you can’t buy. You can’t buy a championship. You can’t buy a Superbowl ring. And you can’t buy a World Series bracelet…it’s a cultural event. It’s like running with the bulls but you don’t get gored.”

A decade ago, Dutch was diagnosed as bipolar. I asked him about his current take on that diagnosis, which he write about in Poker Tilt.

“Bipolar disorder was something that I struggled with for a long time. 2008 was the last time I had an episode. And for the last seven years I haven’t had any problems at all. I just stopped doing drugs and stopped staying up…[but at the time] I don’t think it was a misdiagnosis because I wasn’t really in control of myself…for me personally, a lot of it was just fueled by high-stress situations, plus drugs, plus lack of sleep.”

“Mental health and mental illness has such a negative stigma. People don’t want to talk about it. If you are diabetic, people don’t think less of you as a person, even though it could very well be because of things you are putting into your body of your own choice. With mental illness, it’s not treated the same way. When someone’s mentally ill, society treats them like there is something wrong with them…like they are defective, and there’s really nothing that will change that. And I think it’s really unfortunate.”

Dutch distilled his poker experience, and provided some parting wisdom.

“Think about your life in finite terms…when you are playing poker, it gives you a lot of opportunity to think about what life is and where you are, as individuals, as a society…try this–get out a calculator and figure out how many hours you have left. It’s kind of a small number. Think about what you want to do with it. Think about the system we are in. Life doesn’t have to be the way it is. Don’t waste it.”

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Kaiser Kuo: Baidu and Chinese Innovation

“I was able to make people understand that Baidu is a company that does not labor under the illusion that people would prefer to have censored search results…it does everything in its power to expand the information horizons of normal users of the Chinese Internet.”

Kaiser Kuo spoke to me about his work as Baidu’s Director of International Communications.

“Baidu’s mission is to find the best and most equitable things that people are looking for.”

When Google pulled out of China, the American search leader was celebrated for its uncompromising position on censorship. In the same narrative, Baidu became the opportunistic “black hat”. Baidu cemented itself as the best search engine in China. This would not have been possible without a willingness to negotiate with the government.

“Don’t be dismissive of the argument that stability should, in some circumstances, trump freedom in China,” says Kaiser. “[Stability] resonates with lots and lots of Chinese people, irrespective of how jarring such an assertion might sound to an American or a Briton.”

Kaiser also dismissed the idea of China as a non-innovative fast follower. In the past, this may have been true. Up until very recently, China was imagined more as an agrarian society than a booming center of innovation. But no longer.

“You’re seeing an unfathomably large number of start-ups in Beijing.”

We also discussed the Balkanization of the Internet. When I posited that the Internet is in some ways on a path towards becoming Balkanized, Kaiser pointed out many ways in which the Internet is already broken up into regional subsets. The way the Internet is browsed in China is very different than how it is browsed in America.

“I’ve always seen it as my role to bridge these two worlds. To devote my energies to explaining one to the other whenever possible.”

Kaiser hosts the Sinica Podcast, a show about current affairs in China.

“It’s one of the things I love most in my life right now. I end up reading a lot of books that I otherwise would not have read and exploring issues which I might not have gotten into at the same level of depth.”

I asked Kaiser what one piece of wisdom he would impart to listeners.

“As a bridge-builder type, there’s been an intellectual laziness on the part of Americans. We don’t understand all the things that had to go right for enlightenment values to emerge, and become the norm for Americans. I think that this creates a lot of our problems when we deal with the Islamic world, with China…we have a great deal of difficulty understanding how it is that they don’t leap to embrace all that is wonderful about our civilization.  If people took the time to understand just how contingent that is, that would really go far to helping people get other perspectives.”

“What I always encourage is informed empathy.”

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